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TOPIC: Death Spiral?

Death Spiral? 11 Jul 2018 09:39 #12051

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Sure looks like the professionals (Swiss) are shorting ahead of exercising rights for a low risk arbitrage trade. I wonder if Cytori is in direct contact with these players? Classic death spiral financing and this is the result. They needed retail investors to bite on the news and it failed.

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Death Spiral? 11 Jul 2018 15:24 #12056

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07/10/18 15:23:58

The Rights Offer has been extended from 07/13/2018 to 07/20/2018.
In addition, the offer terms have been amended: 1 right will entitle you to
purchase 1 Cytori Therapeutics, Inc. Unit at a subscription price of $1,000.00
per unit.

Each unit consists of 1 Cytori Therapeutics, Inc. Series C Preferred share and
621 Cytori Therapeutics, Inc. Warrants expiring 30 months from the date of
issuance. Each Warrant entitles the holder to purchase one share of common
stock at an exercise price of the lesser of (a) $1.27 per share and (b) the
conversion price per share of the Series C Preferred Stock.
.
06/29/18 11:58:55
Cytori Therapeutics, Inc. has announced a rights offering for the holders of
their common shares, CUSIP 23283K402, and their Series B Preferred Shares,
CUSIP 23283K303. You received 1 non-transferable right for every 1 share of
common stock and preferred stock you held as of the record date, 06/26/2018.
1 right will entitle you to purchase 1 Cytori Therapeutics, Inc. Unit at a
subscription price of $1,000.00 per unit.

Each unit consists of 1 Cytori Therapeutics, Inc. Series C Preferred share and
200 Cytori Therapeutics, Inc. Warrants expiring 30 months from the date of
issuance. Each warrant will entitle the holder to purchase 1 share of common stock at $3.17 per share.
Units will be immediately separated into its components upon allocation.
The basic subscription may be subject to proration.
If you exercise all of your allocated rights, you have the opportunity to
oversubscribe for additional units, subject to availability and proration.
Cytori Therapeutics, Inc.. is seeking to raise only $25 million dollars in
gross proceeds in this rights offering and will only accept subscriptions for
25,000 units.

All rights exercised are irrevocable.

Information agent: Broadridge Corporate Issuer Solutions, Inc.
Phone: (855) 793-5068
A mailing has been scheduled to be made to holders of the common stock and
preferred stock who held the shares as of the close of business 06/26/2018.

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Death Spiral? 11 Jul 2018 17:27 #12057

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WST
Don't you think those new numbers were negotiated for at least part of the deal vs picking them out of the air ?

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Death Spiral? 11 Jul 2018 20:50 #12058

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Hedge, not sure but could be. I think that shorting by these backdoor underwriters in advance of the RO is a given and the reason for this recent anhihilatuon. But you can't blame Cytori because they are out of options. I think that very few retail investors will excercise the RO this time. I hope nobody on this board is still buying this BS. I still recall clearly, you and I not buying the Azaya bullshit but we were the minority here.

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Death Spiral? 13 Jul 2018 10:14 #12059

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Pathetic manipulation, market cap just after RS was a little over 18 mil, now less than 7.
These major players are shorting it down to make money and now will probably jump on the RO with money they’ve made from it.
Hedrick and company have done a superb job in screwing over the long term retail guys who have kept him in his luxury 600K job.

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Death Spiral? 13 Jul 2018 12:01 #12060

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First of all, due to the $13 million of short term debt on the books, the enterprise value of CYTX about $15MM, is a more accurate evaluation of Cytori's valuation. I would NOT call this manipulation at all. The Swiss were brought on board to provide a service to Cytori, raise capital at any cost to keep the company afloat. They are not in this for the long term growth of stem cell or a fantasy oncology business. They are in it to do their job as arbitrageurs and make a profit. If there is any agreement between these players and Cytori, it should be disclosed to shareholders. How Marc Hedrick could accept his lofty compensation level is another issue. He has followed in the steps of his predecessor and, in all fairness, does not deserve a dime.

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Death Spiral? 13 Jul 2018 18:01 #12061

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One wonders though what is the end game for both CYTX and the arbitrageurs: retail investors are not material anymore. There is I assume a hefty short position that has been created in the share price drivedown which will no doubt be easily covered by the arbitrageurs participaion in the RO. Also i is quite likely that there has been some capitulaion by retail investors wih increased divestment. It is clear that retail investors will not be likely to have purchased shares on the way down.

Therefore the question is will the arbitrageurs take up the rights issue in full and act as underwriters or will they let the company go bankrupt and force it to either do a deal under pressure or surrender its IP to the true debt underwriters via their proxies.

We are now close to the point of finding out if there is any real value in the technolgy, and interest from people/companies who belive in the potential of ADRC. With this RO the retail investors are annihilated. If the issue is underwriten then we are close to finding out who we have we been truly funding all these years. If underwritten then this company has new owners. I would appreciate knowing who they are.

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Death Spiral? 15 Jul 2018 03:25 #12062

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rongside wrote: Therefore the question is will the arbitrageurs take up the rights issue in full and act as underwriters or will they let the company go bankrupt and force it to either do a deal under pressure or surrender its IP to the true debt underwriters via their proxies.

We are now close to the point of finding out if there is any real value in the technolgy, and interest from people/companies who belive in the potential of ADRC. With this RO the retail investors are annihilated. If the issue is underwriten then we are close to finding out who we have we been truly funding all these years. If underwritten then this company has new owners. I would appreciate knowing who they are.


I agree. Main thing to consider- in my view- is that Switzerland is the country who´s main assets are their legal system, which promotes discretion and secrecy. No wonder therefore, that their main export are banking and broker services and the institutions, which accommodate these services to customers thru-out the globe, tend to be rather large with gigantic net assets. For the same reason, it surprises that for the two affiliated investor broker-banks, only filings related to crypto-currencies and Cytori can be found at EDGAR. No FB, AMZ etc or pharma. Why would gigantic bankers, want to destroy Cytori in a Sabby-like fashion? i.e. a peanut Company? I think that assumption is ludicrous.

Anyway- we will find out soon enough, what the answer on your questions will be. by the way- Calhoun found a new job in San Diego. Celactive is less of an issue now, but not totally irrelevant in my view.

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Board moderator and Site-owner. I still regret the day I started analysing the prospects of MacroPore (now Cytori) back in 2004- a left-over from the tech-bubble at that time from the century change in my portfolio- and became addicted to Cytori´s fat cell technology. :cry:

Death Spiral? 16 Jul 2018 08:59 #12064

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"Why would gigantic bankers, want to destroy Cytori in a Sabby-like fashion? i.e. a peanut Company? I think that assumption is ludicrous."

I agree Fas, destruction was never the Swiss goal, IMHO. Their goal is to make a spread on distributing Cytori shares as a back door underwriter. Sell short first, which just happens to drive down shares, and cover with RO exercise and also get free warrants that can be used as a hedge to short more shares. If they execute the RO Cytori gets cash, Hedrick keeps his lofty compensation level and retail shareholders are the victims. The alternative is bankruptcy, where again, retail investors are the victims. Basically it was a lose, lose from the start because a phantom partner would never materialize to save the day. If you want to call out manipulation here, the only thing I would point to is any emphasis by management on "ongoing partnership talks" that were disingenuous. Doubt there were ever ANY serious partnership discussions but the protections afforded by "forward looking statements" makes any legal liability moot. There is no money anyway for a class action lawsuit so this entire situation is ending were it had to.

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Death Spiral? 16 Jul 2018 09:24 #12065

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Section B is the definition of death spiral financing.......


"The unit pricing remains $1,000 per unit, each unit consisting of one share of Series C Preferred Stock with a face value of $1,000 (and immediately convertible into common stock at a conversion price of the lesser of (a) $1.45 per share and (b) 85% of the lowest daily volume weighted average price for our common stock, as reported at the close of trading by Nasdaq, during the five trading days prior to the expiration of the rights offering (including the expiration date), subject to adjustment) and 621 warrants."

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Death Spiral? 16 Jul 2018 09:58 #12066

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“Sell short first, which just happens to drive down shares, and cover with RO exercise and also get free warrants that can be used as a hedge to short more shares”

I know it’s perfectlt legal WST but sounds like outright manipulation to me.

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Death Spiral? 16 Jul 2018 10:02 #12067

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WST, you are right about the Section B being the driving force in repeated short selling to drive down the conversion price. The share price is being driven down on low volume so ''they'' can't be making very much from this stock at these levels, as there does not appear to be many buyers around.

There is an element of risk, unless of course they are supremely confident in managements drive towards bankruptcy...... a not altogether unreasonable assumption. Seems to be a bit of whipping a dead horse going on. If the RO is completed the number of shares issued will no doubt be a huge negative for the existing shareholders ............. but will it not mean that the backdoor underwriters have indeed underwritten the issue? If yes at these levels it has to be for control.

Do you believe that they will (with management) be able to spin a new story for new suckers ????

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Death Spiral? 16 Jul 2018 10:24 #12068

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IMHO these terms were carefully crafted to attract buyers. IMHO at least some agreed to these terms knowing they could get pricing they felt they needed.
Cytori has the same leverage as existing shareholders...NONE !!!!
I agree with rongside on the shareholder count....if Cytori survives and somehow revenues do increase in the future little will be reflected in the always increasing share count.
IMHO, money is coming from this RO. The full $20 million is unknow but I believe it will be at least $12 million and the deal may fully subcribe giving the pricing.
Even so with $20 million...it wont last long.

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Death Spiral? 16 Jul 2018 14:48 #12069

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"If yes at these levels it has to be for control."

Not if they were shorting for a long time and have built a sizeable position.

"Do you believe that they will (with management) be able to spin a new story for new suckers ????"

I think they are running out of suckers. Time for a corporate name change to attract new suckers, IMHO.

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Death Spiral? 16 Jul 2018 15:03 #12070

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DId not realize that the float is down to 6,000,000 shares. Not many shares out there to short. Honestly, I don't know what is going to happen with the RO. Only a portion of those shares would be available for short sellers. I'd be surprised if they get more than $5,000,000 through the RO. Something has to give. Breaking a buck soon.

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Death Spiral? 16 Jul 2018 15:25 #12071

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Well, its certainly hard to say with any certainty were this RO finishes.
A few further observations:
As I thought ! :10 RS was going to be a mistake
Management suddenly got religion and is trying to pursue a above average cash raise. (given where we are)...only about a dozen years too late.
Last years trial failure was quite telling....it meant much more than a simple trial failure but reflected how far a pipeline to market really was and that meant big $$$ was going to be needed. How many would jump at the chance to sell at $4.60-$4.70 0n a split adjusted basis today ? Heck even $5.40 was possible for a few shares..
All we can do wait and see, let alone learn.

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Death Spiral? 17 Jul 2018 09:15 #12072

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RS has been an absolute disaster, I expected it to be knocked down below a buck again but the pace has been astonishing.
Hedrick wants help in making this survive but is unwilling to give up his lofty salary.
PATHETIC!

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Death Spiral? 17 Jul 2018 09:59 #12073

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b7
IMHO the salaries are moot compared to the debt.
Yes they got a few more months of interest only but the maturity date is the same at June 1 2019
They also still include $5 million of the raise going straight to the debt. With the near term reasonably maturity why ? Can they further push out the most expensive loan to man man by doing so ?

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Death Spiral? 17 Jul 2018 13:33 #12074

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Don’t know the financing like you do Hedge but if what you are telling me is that they are planning to ante up 5 mil in debt payoff prior to the 06/1/2019 maturity?
Salaries cut by management would be at least a goodwill gesture at this point. Let them experience a little pain, we certainly have for ever getting involved in it.

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Death Spiral? 17 Jul 2018 13:46 #12075

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b7...from the filing:
>>>Assuming that all 20,000 Units are sold in the Rights Offering, we estimate that the net proceeds from the Rights Offering will be approximately $18.1 million, based on the Subscription Price of $1,000 per Unit, after deducting fees and expenses payable to the dealer-manager, and after deducting other estimated expenses payable by us and excluding any proceeds received upon exercise of any Warrants. If all Warrants included in the Units are exercised for cash at the exercise price of $1.27 per share, we will receive an additional $15.8 million. We intend to use approximately the first $12.0 million of the net proceeds from the exercise of Subscription Rights for research and development, including the development of our current oncology pipeline, approximately $5.0 million to repay a portion of the amount outstanding under the Loan Agreement, and, if funds remain, for further research and development activities. In addition, we intend to use any remaining net proceeds for general corporate purposes, primarily sales and marketing initiatives relating to our potential commercialization of our ATI-0918 in Europe, and any other remaining net proceeds for general administrative expenses, working capital and capital expenditures. See “Use of Proceeds.”<<<

As far as your second point...Hedrick brought in consultants to bump up his salary a bit last time it was restricted a bit....LOL There is no changing corporate culture with independent "yes men/woman" BOD's
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