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Strategies & Market Trends : ZixIt Corporation (ZIXI) -- Ignore unavailable to you. Want to Upgrade?

To: Ron McKinnon who wrote (1802)	2/27/2000 10:41:00 AM
From: Rick Smith	Read Replies (3) \| Respond to of 4120

Ron, I'll take a swing at that one. First, in case you haven't read any one these 1800+ posts, and seen the fun I have here, I am long and thus biased to a certain extent in that direction. That said, let me give you what I believe to be rational thoughts on the questions you pose. There has NOT been a full commercial release of ZixMail as of this moment. Therefore, any of those firms mentioned in press releases with an interest in this product can only be considered part of a beta test, set by the standard you set forth in your query. Quantitative analysis will only carry you a short distance in ZIXI at the moment, as there is frankly nothing being released by Cook. His strategy of holding contracts and partnering agreements has worked well so far for his sales team, but has been met with some negativity by shareholders. One of the things that I continue to believe is that he owes us NOTHING right now, if the information he is withholding will help capture additional business by catching the competition flatfooted. Without a full release, it is unlikely that anyone is actually paying for a beta copy of this encryption system. Thus, the revenue stream up to the point of actual commercial release of ZixMail will be expectantly non-existent. The company has obviously given some guidance to a few firms and large institutional shareholders with respect to revenue expectations, but once again there are more qualitative than quantitative issues to base judgements on currently. One trap that I find many of the shorts falling into is relating the cash burn rate of the past year to the year going forward. If you will allow an analogy here...if your state puts in a new stretch of four lane highway the expense is many tens of millions of dollars, while the following five years of maintenance will be only counted in the tens of thousands of dollars. While examining the fundamentals of ZIXI, I find a striking similarity to this example. The speculation of a secondary or convertible offering has been presented by some shorts in an attempt to give cause for concern to long shareholders due to the potential dilution. I am unaware of any credible person expecting an offering, but if the company comes with one due to the increasing demands of the Public and Corporate America for ZixMail...I for one, am all for it! Investment bankers would obviously need to determine if it made more sense to use their stock or debentures as currency for any needed expansion of their system, but at this point it is speculation, although I believe this will be the GOOD news when it ultimately occurs. One last point, and one of the few that is fact and openly reported by unbiased sources. The float continues to decrease, and the short interest has continued to increase. Only one side can be right. Good luck with your trading. Enjoy the ride!!