Replies to post #301547 on Digital Brand Media and Marketing Group Inc (DBMM)

[THall]

Wrong once again. DBMM is loaded with toxic debt according to their SEC filings. Claiming debt is not toxic when its secured with company stock is a complete lie. DBMM has over $2.5 million in toxic debt. They have 0 money to repay said debt making it toxic. Those who seek the truth and understand how to read a financial report know...

Convertible notes payable $ 517,24.

This information can be found on page 12 of DBMM latest 10q.
https://www.otcmarkets.com/filing/html?id=16561642&guid=tnu-kFMehiFUdth

Debt can be a powerful tool to raise the money needed to fund the growth and expansion of your business. However, debt, as we all know, can also be dangerous, especially when you’re unable to pay it off, for whatever reason. If you borrow too much and your business does not perform as expected, the debt can quickly become toxic.

Many people don’t understand what toxic debt is and why they should avoid borrowing money under such onerous terms.

Identifying Toxic Debt
In the micro-cap space, the term “toxic debt” refers to defaulted loans that start to convert into the company’s stock at a substantial discount to the current market price. Toxic debt is a form of legal loan-sharking that has the potential to impose harm to a businesses’ financial position. No matter how great one’s ideas, products, or technology may appear, failure to properly manage convertible debt could be the death knell of any company. Toxic debt typically contains the following features:

Interest rates that are subject to discretionary changes
Default rates in double digits
Principal amounts the lender does not expect to recover via typical principal and interest payments
Typically, convertible toxic debt is between $25,000 and $100,000 and has a 6-18 month term. It comes with an interest rate of 8-12%, which can shoot up to 30-70% upon default once the loan starts to convert into the company’s common stock.

Some lenders will have an additional fee built into the value of the loan in addition to the interest rate. For instance, an upfront payment of $10,000 might be due from the borrower when agreeing to a $100,000 loan, which increases the cost of the money. As a result, the company would owe $110,000 plus the value accrued interest rate at the end of the term.

Debt becomes toxic when the company fails to repay the loan and is forced to sell a percentage of the stock so that the lender can receive it a discount. The company’s stock’s value can significantly decimate over the term of the loan, and by the time the CEO realizes it, the company may not have enough shares that the lender can covert.

In this case, the company will have to amend documents to allow for authorization of more shares and, just like that, the company has lost significant shares that will never be recovered. Moreover, since the lenders are not “investors,” they will not care about the company, its CEO, or its shareholders. They are just lenders who have figured out a legal way to reap big on monies loaned to small public companies.