That is 100% false. Ganthet paid VLDI $400,000 IN CASH that was spent on product development. The money was received a couple of years ago and WAS REAL, and WAS SPENT by VLDI. In return for that cash infusion, VLDI issued a secured note that accrued interest.
Later, when VLDI and Ganthet agreed to work together to develop the Ganthet Messaging App that would benefit Ganthet from sales and end points, and would benefit VLDI by giving them unrestricted use of the Ganthet app to demonstrate the full spectrum of features that were possible because of VP, they agreed that another $400,000 note would be issued to Ganthet. That made TWO notes issued on ONE $400,000 cash payment.
The second note was issued as a way of giving Ganthet some assurance that if VP turned out not to be a perfect fit with the Ganthet mobile messaging app Ganthet would have some recourse to help them recover any possible losses.
As it turned out VP was apparently a perfect fit with Ganthet's mobile messaging app.
It appears that the contract between Ganthet and validian actually required Ganthet to pay a 400,000 licensing fee. However, because it was understood that Ganthet had no guarantees going into the agreement that the VP product would work with theirs it was apparently agreed that they would not have to pay the $400,000 in cash.
It now appears that the agreement between the two companies was that if Ganthet was satisfed with how well VP worked, they would return the $400,000 note to Validian. The logic of the agreement seems to be that in the end both companies would benefit from the contract.
As stated in the press release Ganthet would eventually have to pay renewal fees and endpoint royalties if they chose to continue using VP with their mobile application. So it was a win-win for both companies even though there was no transfer of the $400,000 in cash for the second note.
As it turned out, according to the press release and the 10K, instead of returning the second note, Ganthet chose to return the first note for reasons known only to their company. Their reasons are not important. The only thing that is important is that validian got $400,000 in cash from Ganthet because of the original note, and they got unlimited access to Ganthet's messaging app to make demonstrations of their VP product because of the second note.
There are some who would have you believe that such quid pro quo agreements are unusual in the business world. That is total nonsense. Both companies got something out of the deal, and the value to VLDI far exceeds $400,000.
And in the case of the $400,000 note that was released back to validian's treasury it is my understanding that it allowed validian to retire a secured debt in favor of an unsecured, and a debt that was earning interest in favor of one that was not.
Both notes were business necessities that could not be avoided. And both notes were going to be redeemable in Common shares that would have increased the fully diluted float of the company.
Because the notes were a business necessity, and could not be avoided, the increase in the fully diluted could also not be avoided. And it is unrealistic for anyone to try to make the argument that these two notes were not required by the circumstances, and it is even more absurd to try to argue that VLDI gave away something without getting something of equal or greater value in return. Nothing could be further from the truth.
When that $400,000 note was returned it had a net effect upon the fully diluted float exactly as Bruce Benn described in his press release and in the 10K. And that reduction in the fully diluted float was real no matter what anyone says to the contrary. And the net benefit to the value of the shares of stock at the time of a buyout are un-calculable at this time but I think it is safe to say they far exceed a $400,000 cash value.
The fact that it was the first note that was returned and not the second has absolutely nothing to do with the issue. That was done because the companies involved came to the conclusion it was the most advantageous way to resolve the issue.
When all the dust settled validian had received $400,000 in cash, they had a new paying customer that was going to pay royalties into the future, they had a messaging app that was a perfect demonstration product to show off VP to all of Validian's prospects, and I have no doubt there were other benefits to Validian that we know nothing about.
TPP
