Replies to post #141109 on Cytodyn Inc (CYDY)

[Chuckles759]

Since there is a display of cognitive understanding of what "full ratchet" means in the loan agreement, is there anything in the agreement that makes the "full ratchet" clause execute automatically?

Meaning.....Wouldn't Fife, or his organization, have to deliberately make the decision to make it "toxic"?

Or, could there be a relationship between Fife and CytoDyn that would deter Fife's organization from making it "toxic"?

I think everyone has to admit that "gentlemen's agreements" are a rare thing nowadays - but they do still exist.

Gentlemen's agreements and Honesty are two rare character traits in modern times that extraordinary people still pride themselves in.

[Scooter McCabe]

How The Fife Loan Actually Works.

So a "Full Ratchet Agreement" protects a lender from dilution in the event of a second offering.

https://www.investopedia.com/terms/f/fullratchet.asp

So you have to have a second offering to trigger it. It makes sense because if you loan someone 21 million and use equity to secure it you don't want that equity to get nuked.

Vesting and Taxable Obligations On Options

https://smartasset.com/investing/how-do-stock-options-work#:~:text=When%20a%20stock%20option%20vests,known%20as%20the%20vesting%20period.

A lot more information, and a lot less complicated.

[RTBhub]

I tend to agree, although I think the "ratchet down" price is $3.40. I base this on the December 18 s-3, in which 2,205,882 shares were registered in order to achieve a $7.5 million reduction in the notes payable. This is exactly $3.40 per share.

I think the private sale that you reference may have been unregistered shares and therefore may not have triggered the ratchet. CYDY could not possibly be dumb enough to trigger the ratchet for just a $1 million sale.

I have one question, however......they are using some tool called a "partitioning" of notes to execute these conversions and repayments. I wonder if somehow Fife has agreed not to fully and automatically claim the ratchet was triggered, and this is a negotiated settlement for "partial" ratchets. (Maybe the private sale you mentioned was in the grey area for triggering the ratchet and this was the resolution. More likely, I think they were forced in to the $7.5 million principal reductions and $3.40 was the approximate price at the time the December payment was due.)

I also expect that there are more SEC filings coming very soon, as another $7.5 million is due, which will likely result in a filing similar to the December 18 filing. Will be interesting to see the price on that one. Does is float with the stock price, or will it be $3.40 again?

I also agree that dealing with Fife and his ilk is very, very dangerous and the companies almost always lose. Frankly, the only hope here is trial results that are great, which result in the ability to sell the drug. This wipes away all debt and financial sins, even if diluted via a $3.40 price (which isn't really all that bad).

The other hope is "good, not great" CD12 results which result in a "good, not great" buyout of the company by a larger company that feels it can effectively execute future trials and bring Leronlimab to approval. Maybe this type of buyout is somewhere between $3 and $12.

But, I don't think they can string along this pile of debt much longer. It is currently over $50 million and if any defaults are triggered, it grows like crazy.

Last point to SF Anon. The s-3 filing on January 15 is NOT evidence of conversion by Fife. It is simply a registration that was required under the terms of the November 10 note. The 10Q says the registration was required within 5 days of the 10Q date, which was January 8. The $21 million debt has NOT been retired and converted to stock.

[justdafactss]

Yup! And this- The selling stockholder may convert the entire outstanding balance of the Note into shares of common stock, at a conversion price of $10.00 per share, in its sole discretion, at any time after the date that is the earlier of (a) six months from the issue date, and (b) the date on which the registration statement of which this prospectus is a part is declared effective by the SEC.

https://www.sec.gov/Archives/edgar/data/1175680/000119312521010122/d945908ds3.htm

[bluefish1]

Having not slept at a Holiday Inn, I feel refreshed.

I looked to see if there were any discussions yesterday about my question. Sadly, there were none, so I thought I would ask again.

No one has adequately explained this footnote in the S3. See below.

As described in greater detail in the prospectus contained in this registration statement, the shares of common stock to be offered for resale by selling stockholder represent 2,100,000 shares of our common stock issuable upon conversion, at a fixed conversion price of $10.00 per share, of a long-term convertible note issued November 10, 2020, assuming for purposes hereof conversion of the entire outstanding principal balance of $21,000,000 as of January 15, 2020.

Since we learned already what a ratchet is, I need to know what the purpose is of including the highlighted statement in the filing document. Someone famously said, "Those words mean something."