Let's make these complete sentences.
Tell me if I'm correct:.......Items in [ ], I added to make a more clear picture.
"Augustine [fund] was a prominent shareholder" [of basically defunct IPVO].
So, they [Augustine fund] had IPVO management (who was essentially dormant at that point) issue the note [for$3.3MM.... issued to Augustine Fund]....the day of the signing the current IPVO officers resigned (IPVO was hardly even operating at that point).
[VTI (which owned Vergitech and ?????) bought out defunct, basically worthless shell, IPVO, which was a public company (the only real value to VTI/VergeTech). In the process, VTI/VergeTech inherited the responsibility to cover this note. Since IPVO was worthless, owing a major investor $3.3MM for a worthless shell was probably a bad situation. Obviously that debt included, AT THAT TIME, essentially 100% of the value of the sold-off IPVO, other than the high value to VTI/VergeTech of the issue being a public entity. So let's say, the note pretty much covered 99.9% of the value of IPVO, and this was owed to Augustine Fund. So PV starts working at bringing in some value to IPVO, but he is using assets that he had built up in VTI/VergeTech to get this built up. Knowing that this $3.3MM note is a lead weight around the neck of IPVO, it appears that PV arranged with Augustine Fund to tie some assets to that owed value by agreeing to convert that note to 22MM shares of the newly revised IPVO that is using VTI/Vergetech assets to build up its value. Now this was obviously a "toxic convertible agreement" and PV & Augustine Fund knew that this should NOT allow Augustine Fund to have such a majority interest in a company that PV had built asssets in apart from the IPVO that originally owed Augustine. Such an arrangement was not appropriate since the assets came from VTI/VergeTech on which Augustine Fund should not have any claim to. Certainly not merely because the directors of a defunct company had issued a note to Augustine for an investment in their company (defunct IPVO) that had gone bad., issued just before selling that shell to VTI/VergeTech. So, evidently PV did a smart thing and, BEFORE LETTING HIS ASSETS OF VTI/VERGETECH BE USED TO BUILD SOME VALUE INTO DEFUNCT IPVO, PV had the Augustine Fund agree that if PV would agree to convert the debt to 22MM shares in the new IPVO company, the Augustine Fund would only hold these shares under a "stand-still agreement".
Now you and I both know that, at some point in time, Augustine is going to be allowed to have those shares and sell them if they want. But, by the time they have control of those shares, they will certainly NOT be worth 99.9% of IPVO (now, NMKT) but will be a much, MUCH smaller percentage of the total value of NMKT. What I do not know is what is the difference between restricted shares and shares held under a stand-still agreement?]
A year later, VTI converted the $3million note payable into 22million shares of IPVO/NMKT.
All this is my best understanding of the issue and I am sure there might be an error or three or more in how things are actually worked out. One such is I was told that a stand-still agreement means the fund WILL NOT convert, but I do not know how enforcable that is and what the legal enforcement options of such an agreement are. Also, If they WILL NOT CONVERT, then this says to me that the note is still held by Augustine fund saying that $3.3MM is owed to them and that it has not been converted to 22MM shares yet, but evidently somewhere a decision that 22MM shares will equal the $3.3MM has been set down in words. Don't know how it is worked out.
