Norwood Systems Limited (ASX: NOR), a provider of voice, messaging and data services to consumers, enterprises as well as carriers globally, provided an overview of the company activities in the March 2019 quarter along with the cash flow report.
Sales and Commercialization Activities:
The company provided its investors with additional details related to its existing contract with New Zealand’s leading digital services provider, Spark to supply smartphone apps along with the related software components. The contract between NOR and Spark is of four years, and the group expects committed staged upfront payments including initial development, installation along with the commissioning works that will be supplied by Norwood for smartphone app software licenses and linked core network software component licenses. It will also include committed recurring fees for a baseline minimum number of user licenses over the tenure of the contract.
As part of the four-year business plan of Norwood, the company is targeting a revenue of NZ$2.0 million, and the minimum committed contractual revenue of NZ$1.1 million remains unchanged.
The Telco Voicemail Market Opportunity:
The development of the World Voicemail telco platform, which will support highly scalable hosted and on-premises environments is under progress.
The company recently conducted a detailed primary survey on 471 mobile network operators around the world who offers voicemail to their end-users. It was found that out of 471 mobile network operators, 386 of these telcos did not offer visual voicemail. These 386 telcos continue to offer the old-style dial-up voicemail and pay maintenance along with the support to their old voicemail vendors. There is no method present, where the telcos can monetise their existing voicemail service. Thus, these telcos have been reluctant to invest in upgrading their voicemail platforms, which resulted in a large legacy installed base with a slowly increasing maintenance cost.
The company underwent an in-depth study of the legacy telco voicemail situation and believes that it has a breakthrough solution that can dissolve this bottleneck, unlock value and also at the same time, get the telcos to re-invest in their voicemail platforms once again.
The strategy of the company to unlock the telco voicemail market includes the two-tier service offerings to the telcos, which is comprised of a low-cost Basic Visual Voicemail Service clubbed with Premium Transcribed Visual Voicemail Service, the latter sold on an opt-in effective revenue share basis with the company.
Product Development Activities:
During the quarter, the product development activities of the company were focused entirely on the World Voicemail related activities. Other than that, work related to the app localisation and Android feature parity has been completed after the March 2019 quarter.
During the quarter, the company received a commitment from APSEC Funds Management Pty Ltd, its second-largest shareholder, for $200,000 placement.
Towards the end of March 2019 quarter, the company completed an AU$300,000 convertible note as well as launched a partially underwritten, pro rata non-renounceable entitlement issue of 1 share for every 4 shares held by the eligible shareholders at an issue price of A$0.003 per share to raise A$1,133,391 approximately.
During the period, the company used A$0.848 million for operating activities. The primary source of cash outflow was in the form of research and development, staff and sales consultants costs and the administration and corporate costs.
The company reported net cash inflow of A$0.604 million through financing activities. The primary source of cash inflow was through the issue of shares, convertible notes and borrowings. By the end of the quarter, the net cash and cash equivalent were A$0.174 million.
At market close on 1st May 2019, the stock of NOR was trading at A$0.003, with a market capitalisation of A$4.8 million and approximately 1.6 billion outstanding shares.
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