Any CR News?, page-17

How long this trading halt could go on for is anyone's guess. Back when they did the IPO they were trying to raise $15m, and it took them about 8 weeks, including 2 extensions to the IPO period, to scrape together the minimum of $5m.

This CR is the third time they have had to raise funds in less than a year, and with the share price at half of what it was at the IPO they need to sell twice as many to raise the same amount of money. Given that they burn through $1.5m per quarter, if they don't raise $6m this time round they will just be back asking for more within the year.

They have lost the enigmatic advantage of the IPO. They are no longer the dark horse which might be worth a punt. Anyone can now look at their accounts and see the pitiful revenue they generate. A year's worth of history is now out there, showing no new products and no significant sales. All they have to show for spending $7m of investment within 10 months is a deal with Telstra which I am told has produced "very disappointing" results.

Speculators have done their thing with IWG. The share price quadrupled on a wave of speculation, but has now dropped 50% as reality has appeared. The concern for new investors has to be that the market cap, and hence the share price, will continue to fall to a more realistic level. What is a reasonable valuation for a company with zero earnings? The current market cap is based on the potential people see, which is subjective. But in the face of 14 years of consecutive losses, and now another year of things getting significantly worse, a market cap a tenth of what it is now seems generous to me.

So, another round of fund raising. If they are trying to sell several million dollars worth of stock to investors who are pondering a potential 90% loss in the short term, well, you can see it might be taking a while.