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

To: FMK who wrote (6516)	12/31/1998 2:40:00 AM
From: Larry Brubaker	Respond to of 27311

<<Larry, I didn't feel the finances were precarious when the January 27 date was an issue.>> Fred, if the previous state of VLNC's finances did not seem precarious to you, I don't know what would. Maybe an announcement of Chapter 11? Let's review. As of September 30, working capital was negative $2.5 million. The recent burn rate has been over $5 million per quarter, meaning that by the end of December, VLNC had probably at least negative $8 million of working capital. The most recent 10-Q indicated they probably had sufficient funds to get them through December. They had a floorless variable rate conversion staring them in the face in late January. A floorless that was based on deadlines that now appear almost certain to have been missed. If the above situation is not precarious, maybe you could explain what situation might be? Now the situation is not quite so precarious. The additional $7.5 million probably got them close (but not quite) back to even on working capital, and bought them another few months. The floorless conversion was moved back 6 months. I don't think the terms of Berg's line of credit changed however. It still appears VLNC must meet milestones (e.g. contracts) in order to draw down further on the line. It looks to me like it is now put up or shut up time for VLNC. The recent IR pronouncements about "shipping in earnest" in January give some hope to what was otherwise a grim picture painted by the S-3. If it were not for the precarious nature of VLNC finances, further delays would not have been so worrisome. But you saw nothing precarious about VLNC's finances, Fred? What do you think such comments say about your credibility? Maybe the lawyer who felt the need to further emphasize the warning about how you can lose all your money investing in VLNC didn't think the situation was precarious either?