You are correct that NEOM would not exist without YA. Here is why you may not want to warm up too much to YA because this not such a good thing for the long-term common stock investors in NEOM. Of course my position is that NEOM's common equity is worthless but the point is that the longer the game goes on, the more money that investors will lose and YA gains. Anyway, here is the view from YA's perspective:
YA keeps loaning $450,000 to NEOM about every 5 weeks. YA earns a $25,000 due diligence fee each time they make a loan to NEOM so they really only loan $425,000 but NEOM still has to pay back $450,000. But still you may wonder the reason that YA would continue to risk the $425K.
YA earns about $400,000 in interest over a 5 week period on its portfolio of past loans, so I believe YA's strategy is to convert at least the accrued interest to common stock at the current average conversion price which is in the range of $.0065 per share; meaning that YA gets about 62 million shares by converting only the interest they are earning. Then YA sells those 62 million shares at whatever the market will bear- a few months ago they were selling at $.02 and bringing in $1.2 million for those 62 million shares. Pretty much a no brainer to keep feeding NEOM $425,000 when they can turn that into $1.2 million, just by keeping NEOM alive. Based on yesterday's close, YA can sell today at $.009 which only brings in $558,000 but still more than they lend to NEOM.
YA will keep playing this game until investors are unwilling to risk any further capital by buying NEOM shares. And if you think NEOM is worried if the price drops to $.005, you need to understand that the conversion price resets daily by taking the lowest trading price in the last few months and then multiplying that price by anywhere from 80% to 97% to determine the conversion price. The game is seriously rigged and there is no reason for YA to stop funding NEOM until investors quit buying.
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