I called the company to find out why they issued so many shares because the math doesn't make sense. I'm told by the company that this is just the way the deal structure is with Ironridge. Ironridge requests a large block of shares in case of potential issues...whatever they may be. The deal is based on the closing price the day the deal is settled with a 20% discount to market. So we're looking at .35 at 80% or .28 per share. There's a complicated pricing period, but if things continue to perform for the company, then its about $0.28 that Ironridge will get the shares for to sell back into the market for their 1M investment, which comes out to be 3.5M shares. After the pricing period, they return the excess shares. Deal looks good to me and helps move the company forward.
That's not what the 8K says - the filing they made said 8 million shares for $1 million. It is strange, though, that about that number of shares were traded a short while ago, though that date is before this transaction. Still, this is not something that a publicly traded company should be doing - if I was a shareholder, this would make me very angry!