Your questions don't speak to either......
1) An outright sale of the company or
2) The ability of private shareholders to buy or sell shares between themselves
Leaving those aside for now......
Your first question....as I understand it.... is directed toward why FASC would choose to distribute dividends to its shareholders in the future, as a private corporation.
Here's one way......using the assumption of sufficient growth of profits to allow for such.....and looking at things through the lens of management only being interested in itself.
The conversion of any remaining debt to management to shares/equity following a reverse split......as a private corporation.....could well provide additional incentive for management to distribute dividends pro rata to its shareholders.
Your second question refers to FASC requirements as a public corporation. Those requirements were not met and should have been. There are no excuses, but there are other factors to consider.
Along those lines, the same CEO was part of about 12 years of prior SEC reporting, before those last 3 years. And his CFO partner passed away in Feb, 2011.
Both of your questions point to the need for additional staff to maximize the value of the KDS and future shareholder growth. My 15 years of due diligence on this company, its technology, and the biomass industry also tells me that even as currently constituted, significant sales/revenue growth can still occur and provide significant additional value to shareholders.