"Nothing about this transaction makes any sense, at least not at the moment anyway."
At the moment, for sure. Here are the cash numbers that I'm aware of: At 9/30 per the 10Q...$7.3M 10/1-11/16 raised $1.4M
So they had $8.7M minus whatever cash was disbursed between 10/1 and 12/9....on 12/9, the date they needed to put their hands on an additional $3M.
Operating costs typically run less than $2M per QUARTER so under the operating conditions that were in place prior to 9/30 it would be reasonable to assume that they had $6M in the bank on 12/9 when they banked the EXPENSIVE (double discounted***) $3M.
"They could have tapped that for their immediate need, and then gone with Aspire to shore up their finances. Nothing about this transaction makes any sense, at least not at the moment anyway."
I can't argue with that. Something unanticipated must have come up or they should have been able to accumulate funds from Aspire prior to 12/9.
***Aspire money is much cheaper: "“Purchase Price” means the lesser of (i) the lowest Sale Price of the Common Stock on the Purchase Date or (ii) the arithmetic average of the three (3) lowest Closing Sale Prices for the Common Stock during the twelve (12) consecutive Business Days ending on the Business Day immediately preceding such Purchase Date (to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction)." (additional share can be put at a different price formula)
In the new deal the investor buys $1,080 worth of paper for $982.50 and gets to convert that $1,080 into common at "85% of the lowest VWAP of the Common Stock on a Trading Day during the ten (10) Trading Days prior to and ending on, and including, the Conversion Date (the “Conversion Price”)".
Both deals have conditions under which transactions can't happen... Aspire has a floor price of a dime. The second closing on the Preferred (for $2M, scheduled for 2/9), requires this: "The respective obligations of the Purchasers hereunder in connection with the Second Closing are subject to the following conditions (the “Equity Conditions”) being met: 1. Minimum trading price of the stock for each of the past 10 trading days prior to the 2nd Closing date shall be greater than $0.07 and 2. Minimum daily dollar volume of the stock for each of the past 10 trading days prior to the 2nd Closing date shall be greater than $50,000."
It's no wonder that it has been suggested that Aspire has bailed.... I just don't believe that they could (legally) or would.
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