2.22.2006 ET

(CSRwire) SANTA FE, N.M.--(BUSINESS WIRE)--Feb. 22, 2006--The law presumes that a company's management and affiliates, i.e., the "insiders," always know more about the company than the man-on-the-street. This is not always the case in a global economy. A publicly traded company can have shareholders who know more about the marketplace than can be known to the company's management. This is the situation for CytoDyn, Inc. (OTCBB: CYDY). As previously reported, CytoDyn hopes to do business in China. If the Company were to send a clock as a gift to an associate in China, it would be tantamount to saying, "We wish you a short life and speedy death." CytoDyn has several Chinese-American shareholders who know about this cultural taboo but the Company's management would otherwise be unaware of it.

As another example, CytoDyn is developing Cytolin(R), the first targeted immune therapy for treating HIV/AIDS that significantly reduced viral burden in preliminary human studies. Although, biologically speaking, HIV disease and AIDS are an immunologically-mediated infectious disease and an illness, respectively, HIV/AIDS has also become a sociopolitical movement in the United States. It can be difficult to navigate the plethora of public and private AIDS organizations without standing in the shoes of an HIV-seropositive shareholder.

Suppose a company's managers need to be aware of arcane information that is known only to some of its shareholders who belong to a subculture or cohort. Then the flow of information needs to be controlled in order to prevent selected shareholders from receiving information from the company before it has been publicly disclosed. Of course, it is impossible for a company to prevent selected shareholders from independently knowing more than the man-on-the-street or from talking to other shareholders.

To keep information flowing in one direction, CytoDyn uses a valve or firewall that has two elements. The first is to keep the insider pipeline empty of shareholder input by using CytoDyn's web site and the news wires to promptly disclose any shareholder-provided information on which the Company might act. The second is to anoint certain shareholders as consultants who report information to the Company but who have no way of knowing whether the Company is going to act on their information, or even pay any attention to it, unless and until it has been publicly disclosed. If and when the information is disclosed, then these individuals become "consultants" in the usual sense of that word. CytoDyn has worried about hurting their feelings in the meantime because no one likes to be ignored or kept in the dark. Fortunately, shareholders who are aware of pertinent arcane information tend to be sophisticated, and sophisticated shareholders tend to understand the problem.

Copyright Business Wire 2006

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