Cal-Bay International Inc (CBYI)

[Shinoki]

Death Spiral…

A type of loan investors give to a company in exchange for convertible debt, which, like convertible bonds, typically has provisions that allow investors to convert the bonds into stock at below-market prices. This can cause the original shareholders to lose control of the company. (Investopedia)

8k 3/21/06 “SENIOR SECURED CONVERTIBLE PROMISSORY NOTE”
“1.3 Conversion.
The Holder may at any time convert this Note, in whole or in part, upon written notice to the Borrower specifying the amount to be converted, into freely tradable shares of the Borrower's common stock, CUSIP# 12802P208,at a per share price equal to 80% of the average closing bid price of such common stock on the OTCBB for the three days immediately preceding the date conversion hereof is
exercised.

All amounts owed under this Note shall be payable in full on March 14, 2007 (the "Maturity Date")”

At this time I haven’t noticed anything that says this was payed. There were three companies in this deal.
PROFESSIONAL TRADERS FUND, LLC (NOTE $555,486.11)
PROFESSIONAL OFFSHORE OPPORTUNITIES FUND LIMITED (NOTE $1,070,972.22)
Professional Traders Management, LLC (respective assigns)

Later 10QSB
“The funding was provided by an offshore group "Professional Traders Fund LLC" who in May 2006 filed suit against the company for failing to file the Registration statement to register shares for the repayment of the loan.”

On 4/13/07 the company goes pink. The following months the A/S increases, wile new PRs are puffing a revised business plan for the company. There were two notes totaling $1,626,458.33. Around March 07 the pps was about .02. To get that total in share’s one would have to sell something like 85mil at that price. I don’t think they could have sold that many at that time. So it seems logical to assume they sold at lower prices wile increasing the share count. My guess is that Rizvi bought those shares and took them out of the float.

If anyone that understands notes would be willing to correct, and educate me on this, I would be most appreciative.