What happened was last year the share structure was close to maxed out and they filed a 14c to increase the A/S by a billion shares. A lot of us were concerned about dilution, especially since the price had come down a lot and emailed the company. We received back an email from the CEO that said the reasons for the increase was only being used because they had to reserve common shares to back preferred shares they had issued (because it was in the company bylaws) and that they also needed shares to be available to negotiate with celebrity endorsers who had want shares in lieu of cash. Many here figured those would be restricted for some time if that happened, pursuant to standard endorsement agreements.
The 14c that increased the A/S did not restrict the company to using the shares only for those purposes and they were issued to instead buy a distributor and provide shares for payment on existing convertible notes. Currently there aren't as many convertible notes outstanding, but as of the last filing there is one due in October and also the outstanding amount on a line of credit up to $3 million due in its entirety mid-next year and a $250K note that was just made in June. If the company has made any further notes recently, those won't show up until the annual filing, which isn't due for awhile still. They could be due at any time based on whatever the terms are of the agreement, so they could be due years later or months.
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