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

To: Larry Brubaker who wrote (6549)	1/1/1999 2:04:00 PM
From: Jibacoa	Respond to of 27311

<<< I would suggest that a constant evaluation of the relative risk/reward ratio......>>> I would agree with that premise and suggest that the most up to date information is the stock price itself. Best to go with the trend and not to fight the tape. Have a happy Holiday

To: Larry Brubaker who wrote (6549)	1/1/1999 2:45:00 PM
From: Mark Johnson	Read Replies (1) \| Respond to of 27311

Since the inception of Valence technology none of the SEC worst case disclaimers have put Valence in any sort precarious situation. My philosophy is to not assign great value to obscure paranoid possibilities. Should an investor decide to pull out or not invest in Valence because of the chance of failure or would heed the alarmist premise of the naysayers first reconsider the example below. Happy 1999!!!! <<<The title insurance policy on some property I own states the government retains mineral rights and in case of nuclear war the government has the right to expropriate the land if uranium is needed for nuclear devices. This piece of real estate is particularly desirable in this area and considered to be a good risk investment even though the threat of government expropriation looms over the property. Most investors who own these parcels have chosen to disregard the insurance policy disclaimers at the risk of losing their investment (I'm sure a risk Larry would not take). I bring this example up because SEC documents contain certain disclaimers similar to the above. Larry and his extremist group have taken literal negative context and excessively elaborated on very very remote scenarios. This extremist group has systematically ignored the reasons for long term investment dogmas. I've chosen to ignore these zealots and pursue a more level headed strategy. The proliferation of negative propaganda will follow but the more rational approach will prevail! Beware of the "when in doubt, run in circles scream and shout club". Happy 1999!!!>>>>

To: Larry Brubaker who wrote (6549)	1/1/1999 3:33:00 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 27311

Larry, I hear a lot how the SEC documents and warnings are unimportant, and indeed, a lot of these are nothing more then CYA statements, yet it is always worthwhile to look at each one and assess the likelihood of the warnings becoming reality. A cash flow analysis might be helpful in this respect. VLNC finished the last quarter with $6.7 MM, their cash flow for that quarter was negative $9 MM ($4.8 MM was capital equipment). Since then they had an injection of $7.5 (the floorless Preferred B), thus we should assume that their cash on hand starting the quarter and including the preferred is $14.2 MM. The numbers of employees at the end of the last quarter was 95 (at least according to Hoover's), now it is 270 (according to IR and the thread). If the burn rate without capital expenditures last quarter was $4.2 MM, what would be the burn rate with all these additional head counts? I come to $44.2 k/employee, by taking $4.2 and dividing by 95 (in the year before they had 91 employees, so I assume this to be the ratio, which, by the way is well in the framework of industry average of $175 k/year per employee). Let say we have added the additional 175 employees not for the whole quarter, but only for half, we get therefore an additional $3.5 MM in burn rate for the quarter just ended, or a cash outflow of $7.7 MM. I do not know what additional capital equipment was added in the current quarter, so, I'll assume none. Thus we are ending this quarter, according to these calculations at $14.2-$7.7 = 6.5 MM in cash. The next quarter, will have the full addition of the 175 employees, thus the burn rate should be closer to $11 MM. Thus, unless we have billable sales that trigger the IDB largesse in the first six weeks of the next quarter, we will be out of cash come the end of February. This analysis depends on the assumptions that indeed the head count has increased by 175 heads and that the additional burn rate per quarter per head is $42 K. Rational people can disagree over these assumptions, and might even advance an argument that many of the new employees are paid less and require smaller overhead charges. I do not know, and until we get financial report for the latest period I can only guess. Someone may want to run the same cash flow analysis taking into account a cost per head of only 30 K per quarter, and on the other hand may want to add additional capital equipment to accommodate all these new employees. A true cash flow analysis will also have to account for increases in inventories (now nil) and accounts receivable (now nil as well), thus, even if I erred on the cost per employee per quarter, it is quite possible that the picture painted is not too far from reality. It is quite possible that VLNC has more then $4 MM in inventories of saleable batteries that can be shipped before Feb 15, but I would say that relying on such an eventuality is a little more risky then assuming no nuclear war in the next six month. It is my conclusion that VLNC will have to approach those additional funding entities (that FMK said were in the wing and the reason that CC had to yield on the preferred A floorlessnes feature), and if these funding entities are not as generous as CC, then automatically, the CC floorless will get the same (presumambly) better terms. I do not view this as a "low risk" or one chance in a 1000 that things will all be nice and dandy. Zeev PS, I will not respond to posts questioning my motives on this post. Argue the numbers and I will reason with you.