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

To: FMK who wrote (6718)	1/4/1999 9:23:00 PM
From: Larry Brubaker	Read Replies (2) \| Respond to of 27311

<<If you add 7.5 from CC plus 7.5 from CC plus 7.5 remaining on Carl's $10 million credit line plus $3 to $6 mln from insider options exercise plus laminate shipments to Delpi, Alliant and Hanil and subtract maybe 8 or 10 mln burned since the first 7.5 from CC, don't you come up with between $10 and $20 million working capital?>> Fred, I'll try this again. They had over $2 million of negative working capital as of Sept 30. They probably spent more than $5 million (based on historical burn rate) between Sept. 30 and December 30, making negative working capital in the range of negative $8 million. They received $7.5 million from Castle Creek on December 21 making working capital at about negative $500,000. The $7.5 million from Berg cannot be counted yet. That money is contingent upon VLNC meeting milestones. As of December 21, they did not have this $7.5 million. If insiders have exercised $3 to $6 million of options then add that, but this is speculation right now. Same with payments for samples or laminant. We have no evidence they've been paid for these items. So, without counting money from options exercises, Berg's $7.5 million, or any payments for products, I get negative working capital of $500,000. Cash is probably somewhat above $7.5 million, but that money has already been spent, its just a matter of when the debts must be paid. That they have cash which probably exceeds $7.5 million means they can juggle the debts and operate for a few more months, but they clearly need more money. Berg's $7.5 million is probably the first likely source. As I've said several times, if they can ship $4 million out the door soon, they will probably be all right. They would then get Berg's $7.5 million (contingent on a contract) plus funds from the IDB. If they are shipping they also could probably tap non-toxic sources for whatever else they may need for cash flow purposes. But, my point is that this time better not be a false alarm as it has been so many times in the past. There are only so many rabbits Lev can pull out of the hat.