Great deal – who do you think ends up paying for this?It is worth noting that the Black-Scholes value of 0.68p could have been calculated at the time of the initial investment so it would have been a lot easier to understand the initial RNS and the funding structure if that value had been stated and if it had been clearly stated that the shares were free, but I guess there might have been uproar at the time if that was the case. However, clearly not all of Vast’s investors think that Black-Scholes were simply the Man United central midfield partnership of the 1990’s as some worked out that this was an incredible arrangement and asked for the same.However, out of the blue, Vast was approached by a potential fairy godmother, who would be able to provide Vast with all the funding it needed, in the shape of Crede Capital.

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Did anyone signing up to this even understand this second option? This second option is set out in incredibly complex language, the main aim of which I imagine was to confuse management and shareholders alike.

However what it means in practice is that the number of shares that the warrant-holder gets in return for each warrant is linked to a fixed Black-Scholes value, which in this case, works out as 0.68p, and if the share price drops below that price, more shares are issued for each warrant to make up for it.

Roy Pitchford argues that he had no alternative to Crede for the funds, but surely a hugely discounted placing at say 0.3p or 0.4p when the price was at 0.8p would be a far better place to have ended up.

I just don’t think he understood the deal and not convinced he still does as he was wondering in the interview this week why the volume in his shares was so high this year.

Secondly, Roy Pitchford gave a long interview in which he seemed to be blaming the existing shareholders for not supporting the share price sufficiently in the first place. I am not sure it can sell all of those in the short-term due to volume constraints; however, one would imagine that Crede selling would add further downward pressure to the share price just in time for the second tranche of funding which can be drawn down at the start of April and the whole thing can happen all over again.

By way of example, should the share price fall to 0.25p, Crede would then subscribe for 500m shares which would account for close to 20% of the issued share capital, which would now be in excess of 2.5 billion shares, from below 2 billion at the start.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions.

I am not receiving compensation for it (other than from Share Prophets).