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

To: Larry Brubaker who wrote (9735)	3/23/1999 12:31:00 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 27311

Larry and Rich, they received $15 MM for the preferred, the $3.553 is a non cash charge to earnings for the future value of the warrants according to a formula dictated by the SEC and accounting principles. The "Up to $25 MM" is the $15 MM from CC and "Up to" $10 MM in debt from Bacharat (Berg). Any options exercised are not "additional financing" from up to then non existing sources, but from holders of options exercising (it is still money in the till, however and you will find this in the increases YOY of "Paid in capital".) If they exercise their 895,000 options, they will pay to VLNC an additional $5.4 MM not part of the $25 MM financing in place. CC of course hope that by then the shares will be north of 20 and while paying $5.4 MM in additional funds cango and get $18 MM for them. As for the $2 MM in additions to capital, it should not show in the income statement (except as it is reflected in additional depreciation included in SG&A or R&D and later in COGS), but in the cash flow statement (as decrease in cash and addition to fixed assets). Zeev

To: Larry Brubaker who wrote (9735)	3/23/1999 3:59:00 PM
From: add	Read Replies (1) \| Respond to of 27311

Larry, In the cash flow statement, the market value of the options would not be used since Valence did not pay that out as an expense. The total cash cost to Valence was 750K to Gemini plus less than 100K of their own admin costs. I don't have the exact numbers in front of me but you can get it from the various filings over time. So roughly you can say, they received $14.2 Million. What did they give in return for the $14.2 million ? The Pref. A, the Pref B, and the warrants. This is the important point, they sold Pref. Shares AND warrants for the $14.2 Million. Thus, the cash they received for the warrants is embedded in the $7M. line for issuance of stock and warrants. It roughly equates to $2.4 Million for the warrants(14.2 - 11.8).