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

To: Greg Smith who wrote (5755)	12/4/1998 12:47:00 AM
From: HQ	Read Replies (1) \| Respond to of 27311

Hi there. In case Paul's busy, I believe re: #2 that Paul's excerpt from the filing stated that the 'beneficial ownership' was what was being listed in this case, not actual converted shares. That is, the preferred have voting rights equivalent to that number of common, hence it is 'beneficial ownership' of that many. Right, Paul?

To: Greg Smith who wrote (5755)	12/4/1998 11:55:00 AM
From: kolo55	Read Replies (1) \| Respond to of 27311

Read my post again carefully. Your first question: 1. I see where it says CC is limited to 4.9% ownership, but how does that statement fit with this one: "the aggregate number of shares of Common Stock issuable at a discount from market price upon conversion of the Series A Preferred Stock may not exceed 19.99%"? The footnote clearly says that the 4.9% is a condition of the preferred shares and warrants (hence of the agreement reached with Castle Creek), and the 19.99% is a general rule imposed by NASDAQ. The proposal to be voted on at the Annual Meeting in January will essentially remove the NASDAQ limitation. 2.If CC didn't convert, are you of the opinion that they acquired their million+ shares on the open market? Why would they do that? The footnote clearly spells out how the Common Stock Beneficially Owned Prior to Offering was calculated. The first line says "Includes warrants to purchase 52,415 shares of Common Stock at a price of $6.78 per share and 1,269,543 shares issuable upon conversion of shares of Series A Preferred stock." Add these two numbers together and you get the Common Stock Beneficially Owned Prior to Offering. I think the "Beneficially Owned" part is throwing you. According to footnote 1. the "Beneficial ownership is determined in accordance with the rules o the SEC and generally includes voting or investment power with respect to the securities." Essentially, just by holding existing Preferred shares and warrants, Castle Creek has a Beneficial Ownership at this time of 1.32M shares. They didn't really own any common shares outright at the time of this filing. Hope this clears this up for you. Paul