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Technology Stocks : WAVX Anyone? -- Ignore unavailable to you. Want to Upgrade?

To: andrew peterson who wrote (3517)	8/4/1998 12:24:00 PM
From: Pure Folder	Read Replies (2) \| Respond to of 11417

cpa and andrew: I've been following your discussion somewhat. Aladdin's accounting treatment for its holdings in WAVX (assuming all its "marketable securities" are WAVX and nothing else) could be complicated by the fact that it acquired the shares as part of a licensing agreement, it is an Israeli company (on the other hand it trades on a US exchange), and these holdings involve both outright ownership of shares and warrants to purchase shares. I have no idea how it has computed its basis, whether it uses ave. cost or FIFO, and whether it carries them at cost or market or both (viz. the lower of the two at any particular time). Page F-26 of WAVX's 10-K probably has some answers. Aladdin bought 500K shares for $900K in Q3 of 1997, which was at market at the time. In June, 1998, Aladdin exercised warrants to purchase 1 million shares for $2.5M. Sometime in Q2 1998 it apparently also sold an unknown number of shares resulting a gain of $460,000. Aladdin still has warrants good for another 1,185,437 shares at $1.70 plus an interesting warrant arrangement allowing it to take a 7% position in WAVX, albeit essentially at market. (I don't get this one, frankly. We all have that right, if we can afford it.) See page F-24 of the 10-K. By the way, the table of Common A ownership on page 23 of the 10-K is somewhat confusing at first glance insomuch as it includes "exercisable options" for 4,037,973 shares in calculating Aladdin's 4,537,973 share position. This must refer to the warrants described above. At the end of 1997, it appears Aladdin held only 500,000 shares. Have fun with this one. Pure Folder