The money I loaned the company came back to me in stock. That is true. What is also true is the fact that I lent the company my money.  I was paid back in stock which I can not sell to recover the cash for a year. When I can sell, I can only sell 1% of the outstanding shares.  So I went from having money in my money market which was 100% liquid and safe, to shares in the company which are not 100% liquid and can't be sold for over a year.  In return for putting my money at risk I received the shares at a discount. That is not toxic funding.