Those who follow this thread would have known that I have been cautioning on Falling Knives stocks for sometime.
One of these is Yojee (YOJ), which is doing another round of CR at 5c to raise another $2m after having issued 70m shares earlier to instos at the same price, for a total of 110m new or additional shares to its books.
The reason for the CR:
Proceeds to be used to build out sales and implementation team to grow customer and revenue base of existing and pipeline customer base along with continued leadership in technology
Yes but its been trying to grow its revenue base for a long time now with barely another traction. $1.2m projected revenues over next 24 months !! 24 months!! The reason is as I previously mentioned is its low valued ARPU customer base. The reality is that the CR is to fund working capital, without which it cannot possibly survive.
Readers such as below, who took the cue to exit early on, could have indeed saved themselves more than a 50% loss. Since 30/10/19 when I have been tracking Falling Knives index, YOJ has plunged 33% in value. Its market cap post CR is around $48m (960m x 5c) which is still dear for the business traction it has to date.
Holders need to ask if the period they have had so far since commercialisation is adequate to determine if their business model can ever be a success- if given the time they have had and still barely any traction, why would additional time and money make any material difference going forwards? While holders can take consolation from the fact that Thorley Investments continue to support them in taking up the CR, but you do not know if this could be the last tranche they're prepared to back them. When the time arrives for the next round of CR and Thorley is not there for them, retail investors will be the last to know and by then it would be too late (we've seen this too often). IMO their business is hinging on life support from their major shareholder.
For me, a business that cannot keep its major customer Scharf (Fedex partner) satisfied is not good enough to be on a global stage.
