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

To: Rich Wolf who wrote (9732)	3/23/1999 1:35:00 AM
From: Larry Brubaker	Read Replies (2) \| Respond to of 27311

Rich, from the Consolidated Statement of Cash Flows in the 10Q from the December quarter. (This is my paraphrasing since I don't know how to make SI read columns). Cash flows from financing activities: Proceeds from issuance of preferred shares. Series A = $6,040,000 Series B = $5,800,000 Total = $11,840,000 Note that if you add $3.2 million (the value placed on the warrants, according to the S-3s) to the $11,840,000, you come up with $15 million, give or take a few thousand. Note also that there is another line that is proceeds from issuance of common stock and exercise of warrants, which is about $7 million for the 9 months through December. This item would include all stock options purchased by company employees and directors between March and December, and any warrants exercised by Castle Creek, Gemini, or Baccarat. From this, it appears to me that the description of the financing being "up to" $25 million is accurate. Of this $25 million, they have received $11.8 million for the preferred shares, $2.5 million (of a possible $10 million) of the loan from Baccarat (Berg), and an unknown amount from purchases of warrants. That's the way I read it. The good news is that regardless of the fact that they received less money from the sale of the preferred shares than I assumed they did, it doesn't subtract from their cash or working capital position at the end of the quarter. Their working capital (actually, the working capital deficit) going into the current quarter does not change because they received less proceeds from the sale of the preferred stock than I was assuming.

To: Rich Wolf who wrote (9732)	3/23/1999 1:41:00 AM
From: Rich Wolf	Read Replies (1) \| Respond to of 27311

Math correction: I had noted almost 900,000 warrants at $6.03 apiece, which would bring $5.4M from CC (not 4.5). Sorry! If they get 1.289M common from the preferreds alone, that's close to (but not exactly) the $7.5M they claim to have paid. And it doesn't refer to including the warrants in that count, those are separate. Adding in Carl Berg's and Gemini's warrants doesn't quite provide the $7.5M gap to get the total possible to be as high as $25M, and this doesn't include the $7.5M remaining on the loan, either....but it's close. So what gives? Also, the number of common from the preferred (1.289M shares) was quoted from another table in the S-3 filing.