DD Support Board and Research Team

[Arthur]

Sometimes, toxic lenders are patient and crafty.

They offer a loan at attractive prices, not even convertible, maturing in 6 months.
The penny stock company, of course, is as broke as usual 6 months later.
So the loan gets "refinanced" in a full-fledged toxic loan, convertible at a hefty discount off the lowest trading price. To add insult to injury, a "penalty" is added to the initial amount.

When you factor in the fees, the penalties and the discount, you discover that the company has borrowed at a 300% effective annual rate.

And while the hapless shareholders a busy paying of the old loan, their company is busy borrowing more at even worse rates. And wasting the money so borrowed.