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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: golden_tee who wrote (14083)9/1/1999 1:14:00 AM
From: Larry Brubaker   of 27311
 
Mr. Yoest. I don't know how you define "several months" but I usually think of "several" as more than 2.

If you recall, FMK posted as recently as late June. When he reported that VLNC had been added to the Russell 2000 index (several days after the fact) and mistakenly predicted major buying by index funds was about to occur. I reminded him that the index funds had already bought several days prior. While Fred argued with me about that issue also, it is just one more instance in which history has proven Fred wrong.

But history is history, let's talk the present. On June 27, VLNC had negative $8.5 million of working capital and a $3 million per month burn rate. Assuming they continue to burn cash at the same rate, they have now burned through the $6 million they have raised since June 27, leaving them, once again, with a working capital deficit of $8.5 million.

I'd guess that with a working capital deficit this large, they need to raise money again very soon. Given the steady decline in the stock price and the fact that Daddy Warbuck's latest investment is about 30% in the red, I'd guess Warbucks is going to be somewhat reluctant to continue pumping in money at only a small discount to the market.

So what's your prediction for the amount and price of the next round of financing?
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