On 2 March, someone borrowed 691,661 KZA shares. The stock...

On 2 March, someone borrowed 691,661 KZA shares. The stock closed at 58 cents that day.

On 6 March, a single trade of 500,000 KZA took place at 64 cents. At that point the stock started to plummet, reaching 40 cents on 1 April. The CR was announced on 8 April.

Hypothetically, let’s assume that someone thought a CR was imminent, decided to capitalise on the well-known fact that it would be offered at a discount to the VWAP, borrowed nearly 700,000 shares and sold them shortly thereafter. If the SP rose, that person would have been able to cover the short for a small loss at most, but if the SP tanked then a handsome profit would eventuate.

I estimate that this short will earn the instigator about $150,000 but cost the company dearly.

It is quite possible that KZA intended to raise funds at a price higher than 40 cents, but by the time everything was in place the horse had bolted.

Minnows like KZA and NOX are vulnerable to share price manipulation when a CR is clearly needed. Just because the KZA CR is at 40 cents does not mean that James Garner is incompetent.