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

To: kolo55 who wrote (9625)	3/21/1999 2:18:00 AM
From: Larry Brubaker	Read Replies (1) \| Respond to of 27311

Paul, keep reading. Rule 13d1 requires a filing within 10 days if a holder owns more than 5% of the equity securities of an issuer. The filing must be on a form 13D or 13G. Castle Creek has filed neither form. Paragraph i of Rule 13d1 defines equity securities. The rule specifically states that the term equity securities does not include non-voting classes of securities. To put this into terms you might understand, by holding preferred shares (or warrants, for that matter), which have no voting rights, Castle Creek does not own equity securities for which beneficial ownership must be reported. Since they do not own equity securities for which beneficial ownership must be reported, they do not have to report a change in beneficial ownership, since they have no reportable beneficial ownership to begin with. Ergo, they can short the stock without filing.

To: kolo55 who wrote (9625)	3/21/1999 10:26:00 AM
From: Zeev Hed	Respond to of 27311

Paul, I believe that the preferred are not "registered" securities, and thus ownership of the preferred does not trigger the 13D registration, probably even if upon conversion they would own 11%. Note that in the registration statement they always keep their ownership before and after the "potential" sale of the converted stock to under 4.9%, that might be significant. As of the last statement, it seems quite clear that no conversion has occurred, so even if they did sell short against the block, they would not have to report. I must admit however that some of these filings are confusing to me. In the S-3 they are always portrayed as owners of about 4.9% of the common stock, could that be actual ownership of the commons, outside of their ownership of the two preferred? There are quite a number of "non traditional" accounting rules used in the 10Q as well. First the number of warrants is stated to be 895,000 and later it says 985,000 (I presume an unintenional digit reversal, but which is the real number?). Also the 3,353,000 millions in Sholes charges is counted in the income statement as a "loss", in essence financing loss, it should therefore hit the cum. deficit line in the balance sheet, not reduction in the face value of the preferred. When they are going to convert these, let say at the ceiling, they will add $15 MM to the additional paid up capital, I presume and will have to backcharge the $3.353 MM to the accumulated deficit. As I said quite confusing, and what led me to assume that partial conversion had occurred. Last, it is quite difficult to determine if CC is shorting or not (once again, I presume they are shorting when the stock gets up and covering around the present prices), since the numbers reported are really the status on the 10th to 12th of the month, they could easily go in and cover a bunch going into these dates and reshort after these dates, if that is what they wanted to do in order not to "show" their hand (G). Zeev