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Technology Stocks : VALENCE TECHNOLOGY (VLNC) -- Ignore unavailable to you. Want to Upgrade?

To: William Epstein who wrote (12535)	6/30/1999 11:24:00 AM
From: Im-patient	Respond to of 27311

Hey, William.... I've got a logic burp....If the statements that VLNC is making w/ respect to the operability of the current machinery, the current production prospects, etc are not accurate.... Aren't they liable to the SHORTS for misleading statements..and consequent losses? I just don't understand the seeming double-standard...that a company can mislead by understatement but cannot mislead by overstatement. And I'm talking here of statements of fact, not "disclaimers." Can anyone clarify this for me? Obviously, the credibility of statements is the crux of all this issue's problems! Thanks, Fred

To: William Epstein who wrote (12535)	6/30/1999 11:33:00 AM
From: Rich Wolf	Read Replies (2) \| Respond to of 27311

Bill, regarding Castle Creek: I believe they hold a large part of the short position, but without reporting it. They have crossed a very fine line regarding the SEC reporting requirements, which are intended to keep shareholders apprised of the activity of those who hold large positions. But that is a separate issue. On this mark, if they've shorted as much as some here think they have, then there are only 500,000 or fewer shares left in their arsenal. If they spend most of those by shorting to drive the price down, what can they gain? As of July 27 their conversion price on the 1.25M shares is $5.85/sh. They can only reduce that by getting the average of SIX closing bids (out of ten days in a row) lower than that price. But if they spend their shares to get there, and say get a 10% reduction (down to $5.25), they get 125,000 'extra' shares (loosely calculated). BUT THEN THAT'S ALL THEY HAVE! They've WASTED all their shares to get the price down, and have nothing to show for it. If you do the math, it really makes little sense for them to waste what shares they have left to drive the price down, because their marginal return is not very great. Having shorted so many shares already, they do better by simply going long at this point in time, with the shares they have left. (NB they also have warrants for 900,000 more shares at a price of $6.78/sh, so I don't include those in the shorting calculation, since they are not part of the 'floorless') FURTHER, Valence would not want this to come to pass, and I expect that if they did not anticipate a contract announcement prior to July 27 that would naturally elevate the share price, then Valence would allow CC to lend them more money, with the provision that they once again waive the floorless provision as they did back in December. So I am comfortable holding my shares. I believe the new investor, who just put in $3M for shares at a FIXED price of $6.24, did so with full knowledge of the possibility of CC's floorless conversion, yet this did not put this person off. One would presume that Valence informed this person of contract and production status that made this person confident that their investment would not be withered by a floorless conversion taking place a mere month after they bought such a large number of shares (480,824). This person is also comfortable holding their shares.