Analysis and thoughts on the 2nd year quarterly

Interesting that the SP closed 9% higher today before this quarterly was released.

First the bad news

NOR has declining revenue. I am pretty sure that in a startup company its best to have increasing revenue. A loyal supporter of startup may be OK with decreasing profit or net operating cash flow providing revenue is increasing but this is an issue of concern given the lack of other concrete cash cows.

Lets compare the 2nd quarters figures to the first

Q2   Q1
Receipts from Customers    106,000 258,000

Marketing spend 957,000    1,800,000

Net operating cash flow   (2,316,000)    ( 3,447,000 )   

So in the period of  April, May, June NOR took 1/3 less in world phone receipts than Jan, feb, March.  

let's assume that the only revenue NOR has received from receipts from customers is world phone sales.

This would imply that world phone has not been successful as a consumer app  over this quarter without a very large marketing to budget of previous quarters to prop it up. The critics of NOR will rightly claim it highlights world phones inability to demonstrate a self sustaining business business with it's consumer arm of WP. On the upside people that do use the APP seem to like it with 4.2 rating and they have now had nearly 5 million downloads so it's not all over for WP, its just not going to be able to to support NOR unless they can secure other revenue angles.

World message seems to have stalled. Earlier in the year it was being called the Whats app killer and now we have

" World Message will initially support mid-size to large financial services companies in jurisdictions that require text message archival due to local financial services regulations. "

Does not have quite the same ring to it. Again on the upside does this imply that they have some corona contracts in final stages in the financial services industry ? Seems odd to be using world messaging without Corona or WP.


My read on this is that they have made the strategic direction to put all available efforts into corona, OTT's and then later in the year roll out world wifi which I think is actually a good move.


Now the good news.

This release shows a company transitioning from and end consumer user focus to a teleco and corporate focus.

NOR's cash burn has been significantly reduced and the figures are actually well inline with the predicted amounts from their balance sheets and statements up to this point. Those wishing to undermine NOR's credibility and honesty with it's releases will not find much joy here. They cut their cash burn by 1.1 million dollars per quarter and reduced marketing spend by $843,000 dollars.

There are actually some juicy pieces of information here.


1. Corona

From page 2 of the April 29th release.

Sales have now been made across retail, account and consulting sectors. That means they have sold GTS to at least 3 clients and perhaps more if you read that sentence as possibly multiple clients per sector with savings up to 50%. that's going to get people talking.

There is the hint that 4 of the companies they are in negotiations with have annual teleco revenues of over 200,000 each which would trigger one of the performance milestones.

The bit they did not tell you is that there are 78,000,000 million Class A performance shares that are released to the directors upon NOR nailing this target so I hope that nobody is tempted to dump on any of these for a quick buck. No director has yet sold a share yet so hoping they are still confident. It they don't dump any that would be a bullish sign I think. Agree Billy ?

2. Teleco white label and Europa discussion

NOR now lists 9 teleco operators in discussion for its Europa federated network to counter the emerging teleco threat. The last release listed 5-7 so the number has grown. Sadly the number of secured deals has not yet as well correlated with the number in discussion but these are complex deals in uncharted waters. NOR gives an average figure of each of these as 1 million dollars revenue. How this remains to be seen but let's say they can nail 3. That has to be pretty tasty.

3. World wifi

"World Wi-Fi will allow users to connect to the world’s largest federated Wi-Fi network, utilising a simple-to use Wi-Fi access App with integrated security features. The agreement with Devicescape fills out a substantial portion of the initially planned federated Wi-Fi network, bringing over 20 million locations to the expected network of over 40 million+ hotspots. World Wi-Fi addresses the three key Wi-Fi usage issues of network discovery, network fragmentation and network security through innovative patented and patent-pending technologies developed by Norwood and its partners "

NOR is still thinking big here trying to build the worlds largest wifi network. They could be onto something massive or they could be under-resourced to pull it off by themselves. Understandably they can't release much info to market given the commercial sensitivity. I would not be investing in NOR for wwfi at this point. You would have to believe corona and OTT's have a reasonable shot.

I still wonder how they can possibly build the worlds largest wifi network with a marketing budget now slashed to 900,000 a quarter that has to support corona, OTT as well as Wwfi. I still wonder if they are positioning themselves as some type of buyout target with this play.


In a nutshell version:

WP has failed in it's goal of becoming a viral consumer APP. Corona's potential has not been fully appreciated by the market caught up with the failure of WP and should have some promising market penetration upon release. OTT's discussions are growing in the number but are complex and may take another quarter to nail down.

It's going to come right down to the wire cash flow wise. They must secure some big contracts or certainty of by the end of the quarter or it's goodbye NOR. No room for tech hold ups or changes in strategic direction.

Good luck PO and the crew. You got this.