Zimi Issues 250M Shares, Saves $400K Annually, Faces Sales Suspension to Major Distributor

Capital Raising and Financial Position

Zimi Limited (ASX: ZMM), an Australian IoT technology company focused on smart electrical connectivity, announced the successful completion of a $2.495 million capital raising during the December 2024 quarter. This was achieved through an entitlement offer and a shortfall placement, resulting in the issuance of nearly 250 million new ordinary shares. The funds, net of costs, are earmarked for working capital, marketing initiatives, research and development, and securing the production pipeline for 2025.

Despite the capital injection, the company reported a net operating cash outflow of $818,000 for the quarter, impacted notably by the suspension of sales to GSM Electrical, a major distributor. This suspension, pending ASX’s determination on a compliance matter, has materially affected revenue and earnings. Zimi maintains ongoing discussions with ASX and expects to provide further updates soon.

Board Reshuffle and Governance

In a strategic move to strengthen governance and commercial expertise, Zimi appointed Simon Beissel as Independent Non-Executive Chair, effective October 25, 2024. Additionally, Joshua Newell and Richard Brown joined the board as Non-Executive Directors from December 1, 2024. Former Chair Simon Gerard transitioned to a Non-Executive Director role. The expanded board now comprises five directors with diverse skills aimed at guiding Zimi through its commercialisation and market expansion phases.

Operational Efficiency and Cost Management

Amid efforts to extend its financial runway, Zimi undertook a comprehensive cost base review and initiated restructuring measures expected to yield annualised savings exceeding $400,000. These include redundancies, alternative sourcing, and resource optimisation. Some cost-saving initiatives were implemented in Q3 FY25, with the remainder scheduled for Q4 FY25. The company remains vigilant in seeking further efficiencies to enhance sustainability and shareholder value.

Product Development and Market Positioning

Zimi is progressing its product portfolio with the new Matter Connect device undergoing certification testing at TUV Lab. This product aligns with the emerging Matter standard, enabling interoperability across major smart home ecosystems such as Amazon Alexa, Apple Home, Google Home, and Samsung SmartThings. Additionally, pilot production of Smoke Connect was completed, supported by $481,250 in customer pre-orders, validating the manufacturing process and paving the way for full production.

Regulatory Compliance and Sales Suspension

The company disclosed that sales to GSM Electrical, a distributor linked to a major shareholder, may have breached ASX Listing Rule 10.1, which governs related party transactions. As a result, Zimi has suspended sales to GSM Electrical pending ASX’s review. While all sales were reportedly on arm’s length terms consistent with other distributors, this compliance issue has introduced uncertainty and negatively impacted revenue for the quarter. The company is actively engaging with ASX to resolve the matter and has highlighted that reinstating sales will require ASX and shareholder approvals.

Looking Ahead

CEO Jordan Tentori emphasised the significance of the recent capital raise and board enhancements in supporting Zimi’s growth ambitions. He highlighted the company’s commitment to innovation, particularly through integration with the Matter ecosystem, which is gaining momentum globally. Tentori also noted his upcoming participation in the Matter Members meeting in Chicago as a strategic step toward global expansion. Despite near-term challenges, Zimi is positioning itself to capitalise on the expanding smart home market and to scale its operations sustainably.