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

To: Zeev Hed who wrote (6312)	12/27/1998 11:35:00 AM
From: FMK	Read Replies (1) \| Respond to of 27311

Zeev, thanks for appearing to concede that the change from $1.65 to $2.50 per watt hour is a more significant positive than all the negative effects of the worst case possible doomsday dilution that existed before the January 27 deadline was removed by Castle Creek and the terms were improved. It amounts to enough extra earnings to have 45 mln outstanding shares as compared with someone's 40 mln worst case dilution. Regarding the disclaimers in the September 10Q, a statement such as "the batteries may never work" or that they may never be able to sell any is typical boilerplate disclaimer that appears on an SEC document that is intended to present required financial information. The cautionary wording is added by the attorneys as standard operating procedure. If you stop to think about it, Castle Creek would not have lent them the money if their investigation found that they were unlikely to sell any batteries. Such statements are intended to discourage other attorneys from finding even a shred of evidence for a lawsuit. If you examine 10q's for other companies, successful or not, you should find similar statements. As far as the accounting for the inventory, It was explained by David Archibald that when the first shipment under terms of a contract is announced, the accounting rules change and the company is no longer an "R&D" company. While officially still an R&D company, shipments of (and payments for) finished product as samples or laminate to joint venture partners and Delphi can be accounted for as reduction of inventory. I'm sure you could have found most of this out on your own, but I am glad to help. Did you find some of my old posts with the $1.65 per watt hour? I remember consistently coming up with around $1.25 earnings per production line as a rule of thumb, and Don Wolanchuk's $80 to $100 per share was indicated even with the lower watt-hour figure. The outlook with the lower, $1.65 was very impressive, wasn't it? Would you agree that if the doomsday dilution never occurs, that earnings potential is significantly higher with the $2.50 per watt hour price paid by Valence customers?

To: Zeev Hed who wrote (6312)	12/27/1998 12:26:00 PM
From: Tickertype	Read Replies (1) \| Respond to of 27311

<<Furthermore, if the company had an inventory of batteries, the balance sheet would have shown some inventory under assets, but no such inventory exists. What gives?>> Would this really be the case? Making the batteries would result in an equal reduction in raw material inventory. The inventory in effect was just transferred from one part of the building to another. Unless we count the value-added effect of putting it through the assembly line, which may be small compared to the material value. - T -