Deep-dive legal and financial investigations to trace historical share issuances, validate SEC exemptions, expose toxic debt miscalculations, and address suspected improprieties in the cap table.
In the microcap and OTC markets, a company’s corporate history can often resemble a black box. Over years of rapid financing, management changes, and convertible debt rounds, shares are sometimes issued without proper board authorization, without valid SEC exemptions, or based on manipulated conversion formulas. When a toxic lender demands millions of shares, or a shareholder derivative lawsuit alleges unauthorized dilution, you cannot rely on assumptions. You need a careful forensic record of how, when, and why the relevant shares were issued.
At Ishimbayev Law Firm, we act as corporate forensic investigators. We review the capitalization history from the underlying source documents. We cross-examine corporate resolutions, trace fund flows, and audit complex derivative mathematics to identify potentially unauthorized issuances, lender overreach, and regulatory issues.
racing every historical share issuance back to its original Board Resolution and reviewing the claimed or available federal and state securities exemptions (e.g., Section 4(a)(2), Rule 506).
Reverse-engineering the complex, variable-rate conversion formulas used by predatory lenders to identify mathematical overreaches, hidden penalty triggers, and potentially abusive or non-compliant conversion practices.
Investigating “leak-out” agreement breaches, phantom share issuances, and unlegended stock dumps that may contribute to unexplained pressure on the company’s public stock price.
Drafting the comprehensive forensic legal memos and expert evidentiary binders that may be used in SEC inquiries, FINRA matters, board reviews, or civil litigation involving lenders or other parties.
We collect available historical data, bypassing messy internal spreadsheets to pull original term sheets, cancelled physical certificates, SEC Edgar filings, and transfer agent transaction records.
Our attorneys and financial analysts rebuild the transaction history. We recalculate every convertible note conversion and warrant exercise, flagging instances where a lender may have received more shares than the governing documents support.
We subject every major stock issuance to a strict legal stress test, identifying issuances that may raise registration, exemption, rescission, disclosure, or other legal issues under the Securities Act of 1933 and applicable state law.
We present the Board of Directors or Special Committee with a forensic report outlining potential legal exposure, together with a remediation plan that may include corrective corporate action, negotiation, claims analysis, or other appropriate next steps.
Standard corporate attorneys read the contracts; accountants check the spreadsheets. We do both. We understand the complex interplay between SEC regulations and the predatory mathematics of toxic debt, allowing us to find discrepancies that others miss.
Predatory lenders rely on the fact that most management teams cannot audit their complex conversion notices. When we uncover that a lender has mathematically over-converted their debt, we use that evidence to support negotiations, potential injunctive relief, or other appropriate responses for the issuer.
An unexplained block of shares or an undocumented financing round can delay, complicate, or impair an M&A process or exchange listing application. Our forensic audit helps surface and address historical issues before institutional due diligence begins.
If a Board suspects unauthorized share issuance and does nothing, they risk personal liability for breaching their fiduciary duties. Engaging outside counsel to conduct a forensic audit can help the Board build a record of informed, good-faith action.
A stock issuance may be invalid, void, or voidable if it lacked required corporate authorization or exceeded the company’s authorized shares. A sale made without registration or a valid exemption may also create securities-law exposure, rescission risk, or enforcement risk, even if the corporate-law status of the shares requires separate analysis.
Reconciliation is about organizing and fixing a messy, but generally legitimate, cap table to establish a “single source of truth.” Forensics is an investigative process used when there is suspicion of wrongdoing, fraud, hidden toxic debt math, or impending litigation.
Potentially, depending on the facts, governing documents, applicable state law, and available equitable remedies. If the record shows unauthorized issuance, over-conversion, or breach of a financing contract, the company may have grounds to seek cancellation, damages, settlement, or other relief.
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