"Norwood Systems Limited (‘NOR’): Your Report of Misconduct ASX...

"Norwood Systems Limited (‘NOR’): Your Report of Misconduct

ASX refers to your email of 12 February 2019 raising concerns about NOR’s cash position and forecast expenditure and commenting on wording in announcements, specifically NOR’s 1 February 2019 announcement, being ambiguous with respect to the minimum payments receivable by NOR.

ASX would like to thank you for making the time and effort to bring these matters to its attention. These types of communications are an important source of intelligence for ASX in performing its role of monitoring and enforcing compliance with the ASX listing rules. Please see NOR’s response of 26 February to the ASX Appendix 4C Query letter dated 21 February 2019: https://www.asx.com.au/asxpdf/20190226/pdf/442zyx8vbr85f6.pdf.

With respect to its stated expectations as to its ability to raise sufficient capital, ASX cannot rush to substitute its judgement for that of management. NOR’s statements to ASX are subject to its legal obligations to avoid the making of false, misleading or deceptive statements to ASX and the market more generally. These obligations arise under the Corporations Act and so are enforced by the Australian Securities and Investments Commission (“ASIC”).

Nevertheless, ASX is continuing to monitor NOR’s disclosure and circumstances in accordance with its policies around the enforcement of listing rule 12.2, which requires a listed entity to be of sufficient financial condition to warrant the continued quotation of its securities. Should there be any further developments that are not confidential then they will be the subject of an appropriate market announcement.

Please note that, as a licensed market operator, the extent of ASX’s jurisdiction over listed entities is limited to an entity’s compliance with its listing rules. ASX enforces its listing rules against listed entities by controlling the entity’s access to its market, whether by way of the imposition of trading halts, suspending quotation of their securities, or in extreme cases, delisting the entity at ASX’s own motion. ASX cannot force a listed entity to comply with its listing rules by any other means, recover funds on behalf of investors, or investigate a company’s affairs.

With respect to the accuracy of NOR’s 1 February announcement and its use of the phrases “[NOR] anticipates committed upfront payments…” and “estimated committed revenue to Norwood of approximately….”, NOR have acknowledged the ambiguity in this language, and confirm their position that the term “committed” refers to revenue arising from contractual commitments / promises. NOR are to receive upfront payments and the minimum estimated committed revenue is a minimum approximate estimate based on purchase orders. NOR are aware of their obligations in relation to providing clear announcements to market and have undertaken to endeavour to express themselves with more clarity in future.

Once again, we would like to thank you for taking the time and effort to bring these matters to our attention."