A full-ratchet adjustment is a dollar-for-dollar adjustment to a conversion price. In some transactions, a series of preferred stock is issued by a company in desperate circumstances, and therefore the company might be convinced to provide the preferred stock investor with a full-ratchet adjustment mechanism. Under the full-ratchet adjustment mechanism, when or if a company issues a single additional share of stock at a price below the investor's conversion price, the investor's conversion price is adjusted by reducing it to the price at which that new share is being sold or committed to be sold. The conversion adjustments also would apply not only to issuing more common stock but also to the case of issuing any securities that are convertible into common stock or that provide a right to acquire common stock exercisable from time to time. From the investor's point of view, a full-ratchet adjustment to the conversion price is a sensible way to treat the investor fairly and equitably as compared with later investors. When a company desperately needs funds, it hopes to be in a good bargaining position and to achieve a price and terms that are favorable to the company and its previous investors. A company's bargaining power is a function of its risk profile, its growth prospects, its financial results and its financial position. With bargaining power, a company issuing preferred stock would probably instead base the adjustment on an average, taking into account the number of shares previously issued, which a full-ratchet adjustment does not take into account. See "Broad-Based Weighted-Average Anti-Dilution Protection". When the full-ratchet mechanism is applied, a lower price means that thereafter more shares of common stock will be issued to the holder of the convertible securities with a full-ratchet adjustment. At a low enough price, a holder of a larger amount of convertible securities with a full-ratchet adjustment could become entitled to an extremely large number of shares. Whenever new shares are issued, the adjustment mechanisms of all other convertible securities need to be considered. The other convertible securities may become entitled to more shares of common stock. When these additional shares are issued, the adjustment mechanism under all other convertible securities must be considered, and some of them may beneficially acquire additional shares of common stock, which will again result in a possible ripple effect on other series of convertible securities.