Around Jan. 16, in response to ZYL's announcement of the...

Around Jan. 16, in response to ZYL's announcement of the discounted capital raising, I wrote:

'Shareholders can wear a significant dilution (which is what this represents) if its purpose is to fund a specific project that offers strong revenue potential or a foothold in a burgeoning market. In the absence of such information, doubts as to the reasons behind the raising can have a bearish impact on the stock, causing it to drift so low that the discount incentive to take it up is compromised.

QPX disastrous capital raising for "sophisticated investors" last year bears witness to this; it belted the share price while failing to attract enough subscribers. I really hope ZYL's management do not emulate this staggering stupidity. Shareholders need info on the reasons for the issue now in order to know how to respond. If it's a simple cash crisis, expect a stampede for the exit but if it's to fund contract obligations, new deals etc I'm sure there will be renewed interest.'

Nevertheless, I was prepared on the basis of the prospectus to give management the benefit of the doubt and hoped some news on contracts might tempt the punters. Well, here we are some 6 weeks later and the SP has drifted down to the "discount" offer. There goes the incentive to participate, I would have thought.

Without more info on the specific revenue-generating applications of this capital-raising, I can't see the market warming to it much. Such a pity too as ZYL's technologies are frontline products with significant potential in the insecure times we confront currently.

Anyone else have a view on price movements from here? I am hopeful that the SP will recover to pre-announcement levels once this raising is out of the way but one can only guess at the take-up rate when the "offer price" can be accessed on market and - at this rate - soon below!

What has been the effect of the raising? Significant dilution, a plunging share price and weeks of uncertainty. Well done management!

Specifics on contracts signed would help turn things around but I'm not holding my breath.

Holding but smouldering,

Gupper