"Why would the reverse not apply to all shares equally, issued or not? It seems that they are all part of the same pot."

That's what I thought. You have read the entire section. It seems to be a plan to ensure the existing shareholders will eventually, and probably very soon after the vSHAM, hold a very minor stake in PTSC. It is the BoD end game. I feel we have to vote it down, and in fact vote counter to the BoD recommendation on all matters.