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  • pjv2xyw9dww4b5 pjv2xyw9dww4b5 Nov 24, 2006 6:16 PM Flag

    Securities Put Agreement

    The 2nd quarter 10-Q ( http://www.sec.gov/Archives/edgar/data/1004673/000114420406033086/v050075_10qsb.htm ) stated, "In connection with the Company�s election to exercise its equity put rights in the aggregate amount of $2.5 million during the quarter ended June 30, 2006, the Company and the investment funds agreed that the Company would issue its secured convertible promissory notes (�Put Notes�) to the funds instead of the Company�s common shares. The Put Notes are convertible into shares of the Company�s common stock at the Put Conversion Price calculated at the time of each election. Two Put Notes in the aggregate principal amount of $1.5 million are convertible at $2.05 per share and a third Put Note in the principal amount of $1 million is convertible at $1.92 per share. The Put Notes provide that all principal under the notes shall automatically convert to shares of the Company�s common stock at the Put Conversion Price upon the earlier of (i) the date that the Company obtains approval of its shareholders for the conversion of the Put Notes, or (ii) August 31, 2006."

    It seems that August 31, 2006, turned out to be the earlier date, that the $1.5 million note converted into (1,500,000/2.05) = 731,707 shares on August 31, and that the $1 million note converted into (1,000,000/1.92) = 520,833 shares on August 31, for a total of 1,252,540 shares.

    The 3rd quarter 10-Q ( http://www.sec.gov/Archives/edgar/data/1004673/000114420406047790/v057555_10qsb.htm ) stated, "In connection with our election to exercise our equity put rights in the aggregate amount of $3.5 million during the quarters ended June 30, 2006 and September 30, 2006, we issued 1,852,781 common shares to Bricoleur."

    It looks like another (1,852,781 - 1,252,540) = 600,241 shares were issued to Bricoleur for the next $1 million received from Bricoleur upon the put exercise that I surmise must have occurred during the 15 trading days ( http://finance.yahoo.com/q/hp?s=VNX&a=07&b=14&c=2006&d=08&e=4&f=2006&g=d ) after the filing of the 2nd quarter 10-Q on August 14. (From http://www.sec.gov/Archives/edgar/data/1004673/000114420406018877/v042172_ex10-2.htm : "�Subscription Notice� shall mean a written notice to the Purchasers, delivered via facsimile, setting forth the Subscription Amount that the Company requests from the Purchasers, including the Subscription Price and the Closing Date. The Company shall be entitled to send a Subscription Notice only during the fifteen Business Day period immediately following the Company�s filing with the Commission of an Annual Report on Form 10-K or 10-KSB or Quarterly Report on Form 10-Q or 10-QSB.")

    This is all water under the bridge now, as the PRE14A ( http://www.sec.gov/Archives/edgar/data/1004673/000114420406048704/v058317_pre14a.htm ) filed on November 17, 2006, states, "Since the Closing Date, we have received four advances under the Put Agreement in the aggregate amount of $3.5 million for which we have issued shares of our common stock at prices below the Threshold Price, and two advances in the aggregate amount of $1.5 million for which we have issued the Bricoleur Notes." Since Proposal Three is for approval of the issuance of 741,624 shares, it seems that VNX must have exercised the last $1.5 million during the 15 trading days after the filing of the 3rd quarter 10-Q on November 14?/15?/other? (I cannot tell which it is), but since the PRE14A was filed on November 17, that leaves just a few possibilities for the exercise date ( http://finance.yahoo.com/q/hp?s=VNX&a=10&b=10&c=2006&d=10&e=20&f=2006&g=d ). Since (1,500,000 / 741,624) = $2.02, and ($2.02 / 80%) = $2.53, it looks like November 13 trading may have set the exercise price.

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