This excerpt taken from the CYDS DEF 14A filed Jul 16, 2007.
Why are we seeking stockholder approval of the Issuance Proposal?
Because our common stock is listed on the Nasdaq Capital Market, we are subject to the Nasdaq Marketplace Rules. Rule 4350 of the Nasdaq Marketplace Rules requires stockholder approval for, among other things, (i) any issuance or potential issuance that will result in a change of control of the issuer and (ii) in connection with a transaction other than a public offering involving the sale, issuance or potential issuance by us of common stock (or securities convertible into or exercisable for common stock) equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the stock.
If the Issuance Proposal is approved, Mr. Kraif will own 8,915,171 shares of our common stock, or approximately 25% of our outstanding common stock, and will have the right to acquire up to an additional 8,685,715 shares of our common stock upon the conversion of the remaining outstanding principal amount of the note and exercise of a warrant to purchase shares of our common stock. If Mr. Kraif acquires these 8,685,715 shares, he would own approximately 40% of our outstanding common stock. As a result, stockholder approval is required under the Nasdaq Marketplace Rules before we can complete the Issuance Proposal.