Top Shelf Brands Holdings Corp. (DKTS)

[hedge_fun]

Perhaps Unicorn, Bigfoot & Leprechaun are attorneys....

as well, because your case doesn't appear to take into account NV law, or the spirit of it. I am trying to be respectful. Please follow me.

I understand your claim of lenders making loans to TEMN/DKTS. I understand they haven't been repaid. But why would the corporation owe the lenders when the corporation, not the lenders, had 75% of it's assets taken? Under what statute(s) would the corporation required to repay loans in total?

Shareholders theoretically have 95MM shares that need to be disbursed among them, and you say Alonzo used the corporations money (the money loaned) to bring about the assets (Besado and DZIAQ), correct?

And 75% of those assets went to ISBG, did they not?

So what is the consideration given to DKTS for 75% of those assets, as NV law requires?

Shareholders get the ISBG divvy but the corporation lost the assets you claimed the MONEY LENT was suppose to be used for. Under NV law, and using your own argument, an auditor could not possibly sign off on such a transaction, and they would have to see the original notes.

You claim there is a "use of proceeds" spelled out, correct? And aren't the terms of the notes spelled out for the issuance of shares? Well Unicorn, Bigfoot & Leprechaun need to write an attorney letter explaining that one.

I don't think what you are arguing will fly. And I surely don't think an auditor could sign off on DKTS paying debt for consideration they eventually didn't even get.....except for 25%.

I see three issues with your argument in NV law. Some of these may or may not apply, that can be argued, but you can see Alonzo would be setting himself up for other lawsuits if he paid lenders in full with DKTS shares. But again, a lawyer and an auditor would have to sign off. I think 78.288 suggests the 95MM shares would have to be sold by DKTS to pay lenders using your scenario, but that was suppose to go to shareholders, not the corporation.

NRS 78.225 Stockholder’s liability: No individual liability except for payment for which shares were authorized to be issued or which was specified in subscription agreement. Unless otherwise provided in the articles of incorporation, no stockholder of any corporation formed under the laws of this State is individually liable for the debts or liabilities of the corporation. A purchaser of shares of stock from the corporation is not liable to the corporation or its creditors with respect to the shares, except to pay the consideration for which the shares were authorized to be issued or which was specified in the written subscription agreement.

NRS 78.288 Distributions to stockholders.
1. Except as otherwise provided in subsection 2 and the articles of incorporation, a board of directors may authorize and the corporation may make distributions to its stockholders, including distributions on shares that are partially paid.
2. No distribution may be made if, after giving it effect:
(a) The corporation would not be able to pay its debts as they become due in the usual course of business; or
(b) Except as otherwise specifically allowed by the articles of incorporation, the corporation’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the corporation were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the distribution.
3. The board of directors may base a determination that a distribution is not prohibited pursuant to subsection 2 on:
(a) Financial statements prepared on the basis of accounting practices that are reasonable in the circumstances;
(b) A fair valuation, including, but not limited to, unrealized appreciation and depreciation; or
(c) Any other method that is reasonable in the circumstances.
4. The effect of a distribution pursuant to subsection 2 must be measured:
(a) In the case of a distribution by purchase, redemption or other acquisition of the corporation’s shares, as of the earlier of:
(1) The date money or other property is transferred or debt incurred by the corporation; or
(2) The date upon which the stockholder ceases to be a stockholder with respect to the acquired shares.
(b) In the case of any other distribution of indebtedness, as of the date the indebtedness is distributed.
(c) In all other cases, as of:
(1) The date the distribution is authorized if the payment occurs within 120 days after the date of authorization; or
(2) The date the payment is made if it occurs more than 120 days after the date of authorization.
5. A corporation’s indebtedness to a stockholder incurred by reason of a distribution made in accordance with this section is at parity with the corporation’s indebtedness to its general unsecured creditors except to the extent subordinated by agreement.
6. Indebtedness of a corporation, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations pursuant to subsection 2 if its terms provide that payment of principal and interest are made only if and to the extent that payment of a distribution to stockholders could then be made pursuant to this section. If the indebtedness is issued as a distribution, each payment of principal or interest must be treated as a distribution, the effect of which must be measured on the date the payment is actually made.
(Added to NRS by 1991, 1187; A 2001, 1369, 3199)

This suggest lenders have to take action......

NRS 78.300 Liability of directors for unlawful distributions.
1. The directors of a corporation shall not make distributions to stockholders except as provided by this chapter.
2. Except as otherwise provided in subsection 3 and NRS 78.138, in case of any violation of the provisions of this section, the directors under whose administration the violation occurred are jointly and severally liable, at any time within 3 years after each violation, to the corporation, and, in the event of its dissolution or insolvency, to its creditors at the time of the violation, or any of them, to the lesser of the full amount of the distribution made or of any loss sustained by the corporation by reason of the distribution to stockholders.
3. The liability imposed pursuant to subsection 2 does not apply to a director who caused his or her dissent to be entered upon the minutes of the meeting of the directors at the time the action was taken or who was not present at the meeting and caused his or her dissent to be entered on learning of the action.

Lenders may have waited too late to act. I have seen lawsuits threatened for some time now, but no one has stepped up to the plate....for some reason. But here's the NV Rev Statutes that apply below. Feel free to explain which one you are arguing.

https://www.leg.state.nv.us/nrs/NRS-078.html#NRS078Sec191

That's why I have said this mess needs to be cleaned up FIRST. But now we see the same thing going on at ISBG that went on here. Announcing launches and the like without FIRST getting the corporate affairs in order.

And folks are now claiming DKTS is undervalued and will soon be audited.....again.

Geez