Artificial Intelligence Tech Solutions Inc (AITXD)

[JustJack]

Hey Chat G P T:

In a penny stock a toxic funder buys shares at a 20 % discount and can resell them, correct?

Yes — that’s essentially correct, and it’s why these arrangements are called toxic or death-spiral financing

Here’s how it typically works in penny stocks:

The funder provides cash (often via convertible debt, notes, or preferred shares).

They are allowed to convert into common shares at a discount to the market price — 20% is very common (sometimes 10–30%).

The conversion price is often based on a look-back period (e.g., the lowest closing price in the last 5–10 days).

What the funder does next

After converting, the funder immediately resells the shares into the open market.

Because they bought at a discount, they can:

Sell below the current market price

Still make a profit

This selling pressure pushes the stock price down.

Why it’s toxic to shareholders

As the price falls, more shares must be issued to satisfy future conversions.

This causes:

Severe dilution

Price collapse

A cycle where the funder profits while retail shareholders lose