The most damaging piece of info that traders have seized on is the lack of a minimum conversion price:
"At any time from the date of issuance until the maturity date of the Debentures, the Purchasers have the right to convert the full face amount of the Debentures to common stock of the company at a price of equal to 75% of the average of the volume weighted average prices of the Company’s common stock for the 5 consecutive trading days immediately prior to the date of conversion. In no event will the conversion price be greater than $1.80 per share. "
The assumption has been that the hedge funds would work in concert to keep price down in order to get shares on the cheap. Whether or not they did, trading in the stock created a self-fulfilling prophecy as a lot of confused and uncertain longs exited the stock since the release of the 8k.
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