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

To: Rich Wolf who wrote (9573)	3/20/1999 11:56:00 AM
From: Larry Brubaker	Read Replies (1) \| Respond to of 27311

Rich, there is another, much more ominous scenario (you knew I had to find one, didn't you <VBG>. Castle Creek decides that a liftoff is not imminent and decides there is more money to be made by a declining price. Castle Creek simply sells the shares from the first tranche without covering any short position they may have acquired. The sale of 1.7 million shares (yes I know they are restricted as to how much they can sell in the open market each day) puts pressure on the stock price making their existing short position more profitable. The next round of financing (another floorless?) puts even greater pressure on the stock price making their existing floorless more profitable. End result, huge dilution. I am not predicting such a scenario, just throwing it out there as a possibility. However, it does fit with the increasing elaboration of the warnings in the SEC filings, and the statements from these documents that commercial samples have not yet been provided to customers. At any rate, as I've been saying for some time now, the terms of the next financing should be the tip off. If, as you suggest, Castle Creek waives the floorless terms of the 2nd tranche and does a third tranche similar to the first two, it would certainly suggest the above scenario is way too pessimistic. However, a better scenario would be for VLNC to eliminate the floorless provisions of the 2nd tranche and raise more money by selling shares at a fixed price. I would be a buyer under this scenario.

To: Rich Wolf who wrote (9573)	3/20/1999 5:04:00 PM
From: Bob Childers	Respond to of 27311

Rich - Very insightful post. If my memory serves me right Lev said he wanted to sell stock to raise cash, but at a higher price. I always wondered how long that would take. Here's an hopeful cut on the situation: The only way CC can dispose of this much equity quickly is if the price is above $12. Let's say there is an announcement, and what do you know? - CC sells their offering (< 50% of their holdings), CC recoups total investment plus a return, and still hold about 6% of company. Then use cash for third round of financing. Maybe...