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

To: Larry Brubaker who wrote (12865)	7/6/1999 8:51:00 PM
From: Rich Wolf	Respond to of 27311

Well, Larry, you're not going to like my answer, but here it is: the $25 million is to pay for all aspects related to the FOURTH line (you forget there IS a THIRD line already there, reported on at the shareholders meeting, but not in the SEC documents). They anticipate taking delivery of this fourth line at the end of summer, and need to pay on delivery. I concur that it would have been nice to have someone ask more specific questions about these items during the conference call, but that didn't happen. If you work the numbers, the 30 million cells/year capacity that Lev was quoted on, in the London Financial Times article, comes from assuming the maximum production rates of the first three lines they currently have in place, as: line 1, 10 cells/min (large format laptop cells, 4x4 now, maybe 4x5 later); line 2, 25 cells/min (startac cellphone cells currently); line 3, 25 cells/min (other cellphone sizes, at shareholders meeting was proposed as the model 43D cells we saw there, designed for GSM phone makers, as in the 1/99 spec sheets). Max output of 60 cells/min (10+25+25) * 504,000 minutes (in 350 days) = 30 million cells per year (350 days leaves 15 'down days' per year). Yes, something doesn't match. Are they misleading, in not updating the SEC documents fully? Or being overly conservative? You can keep claiming there are only two lines there, and you will continue to be wrong. BTW, the 4th line is for laptop cells, with max output rate of 40 cells/min.

To: Larry Brubaker who wrote (12865)	7/6/1999 9:48:00 PM
From: Rich Wolf	Read Replies (2) \| Respond to of 27311

Regarding accounting for materials expenses: my understanding was that they would continue to appear as part of the R+D budget until they went into products which were sold as 'commercial products' during the same quarter (the samples sent out during and since that quarter don't count, though I expect the cells being shipped to Alliant will count). Since the manganese oxide materials reportedly cost 1/10 that of the cobalt materials that their competitors use, it's not surprising that even the 'tens of metric tons' of raw materials that Lev reported buying during the 4Q99 (Jan-Mar) would be dwarfed by the capital equipment expenses. JMHO. I agree it would have been nice to have been able to ask such questions. Yet the facts we do have are sufficient for me to make my investment decisions. You would clearly do better to wait until a PO is announced, since then you'll have your certain knowledge.