Pricing on the stock/warrants offering.
I think the buyers immediately sell the stock, probably even shorting the market before they actually own the shares, and the cover with the shares they received or even do covering buys as they drove the price lower. Assuming they didn't do covering buys, they cover with the received shares and hold only the warrants which have a cost of $0 because they were covered by the sale of the shares. Also likely had a profit.
So the warrants effectively cost them nothing and if price rises they have infinite % profit plus what they got if they shorted and then covered, in which case they also have more shares in hand to sell that cost them less than the "advertised price".
I've seen this exact behavior on some other micro-cap stuff I've followed that had to due financing under duress and the agreements included some very nasty "ratcheting" provisions that reduced the exercise price of the warrants as the stock price dropped and they got issued new shares at reduced or $0 cost that they could sell.
Ratcheting provisions are a toll that assures the funders have 0 risk and are almost always assured of a great profit regardless of what pps does. The ratcheting only works going down usually as they don't have to worry about a loss or making less profit if pps rises.
Needless to say, the shares outstanding got very bloated very quickly and since the company made no headway pps never ever had a chance to recover.
Bill
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