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

To: HQ who wrote (5699)	12/1/1998 1:07:00 PM
From: kolo55	Read Replies (2) \| Respond to of 27311

I think November 30 prospectus allows open market sale. I'm not an expert in this, but I believe the original S-3 registered the shares, and hence would have allowed a private sale to a qualified professional or institution. The Nov30 prospectus allows a public open market sale. As for the number of shares, the S-3 assumed variable conversion, and used the then current market price to estimate the number of new shares. The current prospectus assumes conversion at the $6.03 price for Castle Creek and Baccarat, and exercise of all the outstanding warrants by both parties, and sale of all the shares. The number of shares listed in this prospectus, was the amount of shares we talked about in July/August, before the big worries of the variable conversion clause. I'm intrigued by the timing of this prospectus. Why now? Why not earlier, if the intention was to allow Castle Creek and Baccarat to sell to the public at any time? Why not later, if the intent was to allow Castle Creek to sell to the public, shares acquired under the variable conversion clause? I think the timing is due to the recent run-up in the stock price, and possible additional share price appreciation. Castle Creek and/or Baccarat now want to be in a position to sell these shares on the open market. Before now, they weren't so concerned enough to issue the prospectus then. There is a sizeable chance that Castle Creek won't hold the preferred shares to the eventual variable conversion date, either January 27th, or July 27th. If they are anticipating breaking news that will push the price up significantly, then the timing of this prospectus makes a lot of sense. Paul

To: HQ who wrote (5699)	12/2/1998 11:07:00 AM
From: Greg Smith	Read Replies (1) \| Respond to of 27311

My understanding is that these 2.5 mil shares are on top of the 5+ million already allotted for the purpose of conversion. I think these 7.5 mil shares are the maximum the company can currently provide for conversion. Note that the 8-K requires the company to seek shareholder approval ASAP (i.e. at the annual meeting) to issue EVEN MORE shares to satisfy potential conversion of both preferred stock and warrants (increasing dilution further).