The new financing looks great. Convertible at 1.69 is nice. Looks like they are going to run this much past that. I also just reviewed the conference call. They investors may know that the expanded work with the government is going to happen. Looks like now they will not be delisted as the net equity will be above the threshold and the stock price should likely get past 1.69 when word of this financing and other good news gets passed around.
The last piece is the antidilution provision which could further adjust the conversion price of the preferred. However this is subject to a vote by the shareholders to approve a financing at the next annual meeting. I believe the last annual meeting was end of May so if the timeframe is the same then this issue won't come up until end of May.
In the meantime plenty of time to get a nice tax selling rebound hopefully.
The way I read it VCMP nets just over $2 million upfront after paying the finder's fee. In exchange they will pay the purchasers of the preferred stock an annual cash dividend of $230,000 (10% dividend). The preferred, the way I read it, will be convertible into common stock at about 50 cents per share after March. So the preferred will be convertible into about 4,600,000 common shares. Also a little over 1,000,000 million warrants were issued. Of course if the warrants are ever executed that will bring in an additional $500,000 to VCMP (assuming a 50 cent exercise price).
Maybe you should read it again. Yes the conversion price will be reset. But not to the then current price in March 06. It will be reset to the average closing price of the five trading days prior to closing. And that is a huge difference.
Because if the reset was based on a future price in March then those who purchased the offering would have every incentive in the world to drive the price down as low as possible to get the conversion price as low as possible. That happens all the time and is normally a disaster.
In this case, the way I read it, the reset price is already set to about 50 cents which is the average closing price prior to closing. Therefore there is no incentive at all for the purchasers to short or do whatever to drive the price down now. Their only chance to benefit from a lower price was prior to closing.
So with the conversion price set to the current price I think this financing was okay and surely does not qualify as massive dilution.
This is all in my opinion and I could certainly be reading it wrong also.