The latest 8K is exceedingly irresponsible of the CEO.
He has an obligation to abide by forbearance agreements with numerous note holders who were gracious enough to not report their $3 million of notes in default. Part of the agreements (made in November 2015) is to have in place a reserve of shares to cover conversion of any remaining balance of the late notes. Conversion rights were suspended contingent upon the CEO making regular cash payments that would pay off a portion of what is due ($1.7 million) within 12 months. To date, he has reported paying only about $200,000 (to unspecified debtees) and paying off only one of about 14 notes due. At least two and maybe even three note holders exercised conversion in the past month, which suggested that Schadel fell behind on payments. Now, Schadel has violated the terms of agreements with ALL note holders in a desperate attempt to save the stock that will very likely only lead to a pile of litigation notices and, ultimately, bankruptcy.
Logically, to avoid further litigation (Schadel is already juggling two lawsuits against note holders- one suit is new and the other he has indicated is not going well for him- and a counter lawsuit) Ryan Schadel will need to either increase the AS again, or do a reverse split. Schadel will not be keen to the damage to his ego by reversing course on the AS, so an RS is most likely the next course of action short of bankruptcy.
Well, what about bankruptcy? Some companies actually preserve shareholder value through BK. However, that is rare for top tier companies and unheard of for the OTC. "But Schadel is the most amazing CEO on the OTC"....
Here is the ultimate reality check:
Ryan Schadel currently has a long-term payment arrangement with the IRS for $1 million in late 2013 payroll taxes. In 3Q of 2015 we saw payroll taxes payable DOUBLE to $2 million. There is no bankruptcy protection for being dumb enough to not pay payroll taxes!!! So long as Schadel owes the IRS he desperately needs this company to keep going and, even more important than that, for shareholders to believe this company has a chance despite piles of debt building.
And we haven't even gone into the additional loans Schadel has gotten at horrendous rates in the second half of 2015 to cover operational expenses that revenue is coming short of. You can't pay people if you can't pay the bills, so Schadel is hopelessly hooked on loans to keep the fantasy going AND avoid prison time.
That's right...prison.
There are very good reasons that this stock is trip zero and will remain down here among the lowest of the lowest stocks.
