Convertible Notes, PIPEs, and Toxic Funding
Convertible Notes, PIPEs, and Toxic Funding are common financing tools for emerging companies, but they carry significantly different structures, risks, and implications for both issuers and investors. While these instruments can provide fast access to capital, they may also lead to substantial dilution, pricing pressure, and regulatory considerations if not properly understood or managed.
Over the past 15 years, OTC issuers and investors have witnessed seismic changes across the microcap landscape. We’ve paid particular attention to OTC issuers in this blog. We’ve followed them from the high-profile stock promotions days, which made m…
Read MoreThe petition filed in Xeriant, Inc. v. Auctus Fund, LLC, before the Supreme Court of the United States, presents one of the most consequential securities-law questions in recent memory. It challenges a Second Circuit opinion that, if left standing, c…
Read MoreToxic convertible financing, also known as ‘death spiral financing,’ is a common pitfall for small and emerging companies trading on the OTC Markets . These financings typically involve convertible promissory notes that convert into stock at deep dis…
Read MoreOver the past few years, we have closely followed the Securities and Exchange Commission (the “SEC” or the “Commission”) as it has brought a parade of actions against lenders that purchase variable-rate convertible notes from public companies. In eac…
Read MoreIn the past five years or so, we’ve written many times about “toxic lenders” . These toxic lenders have been active since the end of the last century and have flourished, providing financing to small publicly traded companies quoted by the OTC Market…
Read MoreFor decades, microcap issuers on the OTC Markets in need of financing have largely been forced to turn to what are known as “ toxic funders ” or “ toxic lenders .” The money they offer comes with a hefty price tag. It’s paid in exchange for convertib…
Read MoreFor those looking to deepen their understanding of convertible notes, PIPEs, and toxic funding, the resources below provide detailed insights into legal, financial, and regulatory considerations, including regulatory actions against toxic lenders.
