Citron Says Valence (VLNC) is "Developmentally Challenged"

As shares of Valence Technology (Nasdaq: VLNC) are up about 100% so far in 2008, Citron Research is out with an extremely skeptical note on the Company. Investors may be trading the stock based on the negative article, as Valence has fallen about $0.74, or 16%, throughout the day. Valence most recently traded at $3.72.

Citron calls Valence a "developmentally challenged" company as it has continually promised to deliver breakthrough technology, but has yet to prove itself. Citron is also concerned with Valence's fundamentals: the Company has barely any cash, but continues to take on debt.

The research website points out several "schemes" that Valence has created recently. First, Citron calls out contract news related to The Tanfield Group, reported by Valence on February 7. According to Citron, the Company misled investors by announcing an order of "up to" $70 million, but never included a minimum amount or gave the chances of these revenues being realized.

Next, Citron mentions a Valence announcement made on February 19 that it would be shipping additional units to Oemtek for its Toyota Prius add-on kit. Citron said the news became "funky" when it found out that Oemtek had initially been funded by Carl Berg, Valence's Chairman and largest shareholder. As it was never disclosed that Berg is involved financially in Oemtek, Citron once again calls this misleading as it implied that Valence was chosen by Ometek because it produced "superior technology, not because of the subsidy of an investor who stands to benefit by the transaction."

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