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I am not quite understanding why CYDY would put their patents at risk, so my question is this: does this mean that partnership or BO are not really in play at the moment?

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Simply put, the patents are only at risk if there is in fact a chance they couldn't raise the amount required to payoff this amount. And, if we get to the point where it is a problem, we have no hope of anything at all as regards this investment.

Iy makes much more sense that Sidley signed off on this as the most expedient way to deal with it, without coming up with a dime.