Straight from the 10Q

1. There remains a $6,369,000 principal amount of Convertible notes outstanding.

2. This is potentially convertible to 21,962,000 more shares (29 cents per share), a 9% increase. This is only if the lenders chose to do so.

3. Conditionally, if the share price (30 day vol.weighted average) goes above $3.00,$4.50 and $6.00, then vonage must pay some of the loan such that the remaining balance be no more than $6,000,000, $12,000,000 and $0 respectively. since we are already below 12 million, in the former scenario (pps hits $3), Vonage be required to pay 369k.

4. For the upcoming quarter Vonage must also pay $326,000 and $0 for the first and second lien senior facilities, respectively.

Concluding, if the lenders don't convert, it should be a sweet hindrance free quarter
If they do this debt will be over and I will see you at the 2010 first quarter earnings
I have made my conclusions regarding this debt
make yours

I am not sure why they did not just convert the whole thing, but there are a couple of well founded speculations that hint that this decision may be heraldic of great prospect for the stock.
Imagine the stock goes to 6 bucks next months (be still my beating heart) The lender now has 240 mill from 11 million (>2000%), compared to the 11million + the compounded 20% per quarter, immediate payment conditionally required if the stock goes to 6 bucks; thats a no brainer.

the letter requesting conversion was received during the third quarter so anytime between then and now the shares could have been dumped or are they being held? do we know who converted and owns/owned those shares? the sec must have something?

Knowing the answer to those questions above can give us a lot of deep insider thinking