MyDx Inc. (fka MYDX)

[DarthYoda]

I'm now not even sure why you think a no action letter was required at all for that debt settlement? Most 3(a)(10) transactions occur without them.

Regarding fairness to shareholders, ALL 3(a)(10) transactions result in dilution by definition, so, what amount of dilution would have become "unfair"? In this case, more than 4.99% Phoenix ownership of MYDX at a time would have been unfair.

All 3(a)(10) transactions include, by definition, debts that are younger than 6 months. That is it's point. Debts older than 6 months don't need 3(a)(10) for anything. But, for the sake of accuracy, the debt in question was 9 weeks old, not 2 weeks old. You do not date debts based on any date but the date of debt origination. When Phoenix acquired it has no bearing on anything. Likewise, 1 week, 2 weeks, 9 weeks, 20 weeks, doesn't make a difference for 3(a)(10). In other words, there is no minimum age for debt under 3(a)(10).

Anyway, let's look at it from beginning to end:

Debt Settlement

On April 1, 2016, the Company entered into an agreement with Investor Relations Partners (“IRP’), to render certain investor relations and financial communications services to the Company. IRP agreed to perform investor relations, public relations, stock surveillance and other ancillary services as requested by the Company (the “Agreement”). For the requested services, the Company was to pay IRP a one-time payment of Two Hundred Fifty Thousand Dollar ($250,000) (the “Claim”) upon the signing of the Agreement.

On May 24, 2016, the Company and Phoenix Fund Management, LLC (“Phoenix Fund”) entered into a Claim Purchase Agreement with IRP to purchase the Claim held by IRP. Phoenix Fund executed a Settlement Agreement (the “Settlement Agreement”) whereas the Company and Phoenix Fund agreed to resolve, settle and compromise the Claim. In settlement of the Claim, the Company shall issue and deliver to Phoenix Fund shares of its common stock as requested by Phoenix Fund, periodically, at a fifty percent (50%) discount from the average closing price of the Company’s common stock for the three trading days prior to the date of issuance.

On June 13, 2016, Phoenix Fund elected to have the Company issue 1,041,348 free trading shares of the Company’s common stock in exchange for retirement of $72,895 of the initial Claim. As a result, the Company recorded a loss on debt settlement of $73,935 reflecting the difference in the discounted conversion price and the market price.

During the three months ended September 30, 2016, Phoenix Fund elected to have the Company issue 18,828,088 free trading shares of the Company’s common stock in exchange for retirement of remaining balance of the initial Claim. As a result, the Company recorded a loss on debt settlement of $202,933 reflecting the difference in the discounted conversion price and the market price.

It was Phoenix that held shares, not IRP. Phoenix is not the promotional company, IRP is. So, there was nothing for IRP to disclose. You've stated IRP was selling shares while promoting without disclosing their ownership. That was not the case as IRP never owned shares.

Ultimately, 19,869,436 shares were issued to Phoenix for proceeds of $276,868. IRP was paid $250,000 by Phoenix. Phoenix was paid by MYDX.

Why in the world has ANYONE been referring to the Phoenix Debt settlement as a source of future dilution? The Phoenix debt settlement was paid off in full back in September. Agreed?