| VLNC looks to be hovering around/under $3/sh, and Berg's legacy financing was in that area, worst-case. If the company is financing below Berg's price, but it is not from Berg, that is a less than bullish sign. With a burn rate of $8M/Q in the past, potentially lower now, the company would need to sell a few million shares at this pricing. Where would the buyers be coming from? They would have to be institutional. But if so, why not finance directly with interested institutions rather than running through a hedge fund? I am not certain the entire number of shares will be shorted in advance, as the demand for the stock is not large enough to absorb that much selling. Consider also that a large seller came in recently, one rumor placed it as SAIC (no longer a 5% owner, hence no need to file with the SEC). With such a one-two punch of selling, again the question is, who is buying? Another possibility is a financing scenario wherein some shorting is used to lock the stock down for pricing, and then later the stock would be manipulated up by the same funds in order to unload more profitably. This was the method apparently used for financing at $16/sh through Guardian Capital in early 2000, e.g., and similarly for earlier converts etc.. I suspect that those most deeply invested in Valence have not given up hopes of recouping a profit on their investment, since the prime trump card all along was ostensibly the phosphate material patent. That card is being played out now and over the next year. For this reason, I do not think the company will yet be resorting to a financing scheme that would put the stock at risk of becoming a penny stock. OTOH, a prior CFO made the mistake of doing a hedge-fund deal and Berg almost misplayed it; I don't think he's forgotten, so I don't think they'll let that happen again. FWIW. |
