Larry, that is the "land mine" they planted alright. Issuance of stock under the conversion ceiling is dilution for CC and thus their ceiling should be reduced to equal that of the new shares, IMHO. That is not a nice scenario, as long as VLNC has to go to the market for more money, that will happen at progressively lower price. I think that this clause introduces a "variable ceiling" which readjust the ceiling for securities as well as convertible.
If that interpretation is correct, then one must assume that there is no pressure of conversion on CC since the bar has been permanently lowered to $4.35. I must say that the language there does not take the cumulative effect of different independent transactions that dilute CC (the last three tranches, the first of which was not truly dilutive), but CC could claim that any single transaction should be fixing the new conversion rate. So, if in two months, a new $3 MM is issued at let say $3/share, then, the new ceiling is fixed at $3/share and the floorless exercise starts from there. I think that only one thing will get this death spiral arrested, shipment of batteries, or at least the announcement of a major OEM PO. So, where are those PO? By the way, even a PO now may be looked at by the market as "too little too late". When it rains, it pours.
Zeev |
