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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: Tmoore who wrote (3184)6/29/1998 9:14:00 PM
From: MGV  Read Replies (1) of 27311
 
The 10k was released today. It is reasonable to assume that the statements reflect the current state of affairs. The 10k indicates that samples have been delivered. But it also indicates that the delivery of samples is far removed from any readiness to produce, even if a contract were to be won. Regarding contracts, it indicates no buyer is even close to making a buy commitment. It goes further to suggest that at best there will be substantial time required - in the event that a buyer would commit to buying product - to allow design batteries to fit the buyers requirements. It suggests that this will involve a substantial amount of time.

I read the statements as much more than "forward statement" caution. There is an explicit suggestion that it is unreasonable to expect that any batteries will be produced for shipment anytime soon or that a contract will be signed. Rather, they are still in testing/R&D stage.

They have negative working capital. That means their short term liabilities exceed their short term assets. That means they are facing default on obligations. They dont have enough to pay their debts. Either they renegotiate the term, obtain capital via debt and/or equity markets or do a combination of both. The consequence is default/bankruptcy. The 10k could not be much more clear about the dire circumstances the company faces. In the light of this statement, the departures of high level executives, including the R&D head is much more serious.
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