Pervasip Corp (PVSP)

[mdimport]

Debt per se isn't a problem, more that there's:
1. no revenue being acquired that will service the debt (and leave a little on top as net profit)
2. the CEO turned to toxic financing, as opposed to straight, or some fixed convertible financing
3. some CEO's will cut any deal to try and say they have something. Sometimes its better to walk and take a short-term hit to the share price, rather than mislead the market and take a long-term hit to their credibility and the share price

Toxic debt in a way like the NINJA loans U.S. banks and lenders flooded the housing markets in 2000-2006. Those loans were later turned to RMBS and CDO's. The structure of RMBS and CDO's aren't problem, but the lack of ability by the borrower to repay the loans was the problem.

Another side of toxic financing is the way the ongoing convertible feature works. A straight loan isn't a problem, and neither is a fixed price convertible. Toxic financing encourages the debt holder to hit the Bid over and over until finally the entire market support is broken.

I don't know why VSTR went dark, but they seem to have been smart enough not to undertake toxic financing to try and build their business. I can give them that much credit.