Share price jumped nearly 67% on a trading volume of 3 million. The price now lingers near the 52-week highs, but the failed attempt of blue skies breakout on April 26 might cast a shadow of doubt on the current sentiment.
No additional news were issued for the day, so the rally was likely a follow-up reaction to the corporate update from April 26 and the announcement of planned fundraising that was published on April 29.
The update was the management’s assurance that no material changes took place since November 20, 2010 when the company published their last press release. This was done to address the $300 thousand senior secured convertible debenture that had matured on October 15, 2010, without repayment by the company. The holder of the debenture had the right to enforce its security which included all of the assets of the company. Apparently, such an action hasn’t actually been carried out to date.
In another recent news-release, the company stated they will seek to secure $2.45 million private placement. The offering consists of 35 million units made of one common share and half a warrant, priced at 7 cents per piece. The warrants will be convertible at 12 cents per share.
The new funds will help to deal with the debenture in question as well as serve as a general working capital. The potential dilution to shareholders from such a transaction is around 150%, assuming the current count of outstanding common shares is really 34.99 million.