Agree IBB, this is the first working theory which specifically reconciles the players, timeline and head-scratching 8-k. It also outlines areas worth further research.
Why give the shares to RD?
We now have several key parts of the timeline and players aligned:
*RD already had pre-existing investor and lender relationships with each of FPVD and SRAX, separately (see 8-k and prior filings). In that sense, RD put this deal together.
*We know Lou was in orbit as early as July 2020 and 8-K confirms Aug 5 was date RD agreed to forbear collection on debt and “about the time” RD agreed in principle to exchange its debt. Actual terms of debt exchange were negotiated in Q3/Q4 2020 (per 8-K). At the same time, RD invests $1M in Oct 2020 for Series B shares separate from debt exchange agmt for common and Series C shares.
*It seems a relatively safe assumption that the crypto play and probably even Lou's input was well-baked into the plan during the Q3/Q4 debt exchange negotiations with RD and RD's decision to invest an additional $1M. Lou also said BigT crypto was the "the holy grail of our crypto roadmap, which is the potential to leverage our own cryptocurrency(s) that can provide significant value to our users, at little to no cost to BIGtoken."
*RD's outsized role in setting up the deal, putting in the $1M equity financing and buying into the vision leads to outsized shares. If Lou is correct in his quote above - how, I'm not exactly sure still - RD's share don't depress the valuation.
*RD's shares still seem way too "outsized" even with this explanation, but it does give a bit more primary to their role. They are also perpetually capped at converting their preferred shares (convert to ~25B shares) to 4.99% of OS. If the overwhelming majority of the shares are for crypto, perhaps this just equates to a perpetual 5% ownership stake in exchange for all the prior risk and capital they put in.
Areas for Further Research
-Regulatory advantage: Specifically, what advantage does BigT have being public now in issuing tokens vs. other Security Token Offerings (e.g., to accredited investors only).
-Crypto Adjacent vs. Centric: Lou refers to this distinction in his article about joining. My initial take was that crypto was a tactic to build user acquisition given the incredible competition they face today (there is a lot). Lou has many outside activities carved out in his employment agreement disclosed in 8-K and perhaps some of these may give a clue. He also hinted at acquisitions in his note about joining and may also have relevance in share count:
1. CryptoOracle LLC - spinning out assets to shareholders, monetizing CryptoMondays, a Meetup group active in more than a dozen cities around the world
2. Blockchain Coinvestors Syndicate on AngelList - with over 150LPs, the syndicate sources investments in blockchain/crypto projects and makes them available for our LPs
3. SWAG - a personal token project in development
4. Advisor
1. SilverCastle - an Israeli digital asset manager
2. TNS Total Network Services (BoD) - cloud infrastructure, domain names, blockchain technology
3. Vesto - white label platform for banks to offer cryptocurrency related services
4. Quantum Economics - crypto analysis, advisory, and money management
5. Blockchain Coinvestors - a crypto- fund-of-funds
6. Detomena - a blockchain data company
Dumping Now?
Paul (ex FPVD CEO) is the odd one out in this deal and got a nice windfall of shares equal to the size of the current float. As I guessed before, I'd guess again that he's the one who's been selling in those large blocks the others mentioned. And partially RD, too.
