NWZ Shareholder Q&A 30/12/2015

NWZ Shareholder Q&A 30/12/2015
Answers by: Alexander Hartman, Executive Chairman
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Newzulu has established a Company Representative account on Hotcopper and will respond to the extent permissible by ASX and ASIC, to any questions on this thread. If a response cannot be provided due to market sensitivity it will be denoted *MS*, if a response will be addressed in a future ASX release it will be denoted *FR*. Each question will be enumerated and referenced. Questions may be edited or paraphrased for clarity. The origin of each question will be acknowledged <<@HCUSERNAME>>.  Each question will be answered only once, with replica questions referenced to the original answer <>. Each Newzulu Shareholder Q&A will also be posted on the Company’s corporate website at: http://newzululimited.com/investors/
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Q1. <<@Fishinnick>> You have said you will now focus on cost containment in order to become cashflow positive.  How long do you think it will take NWZ to become cashflow positive are you looking at the 1st qtr of 2016 or further down the road?

A1. <<@Newzuluchief>> Newzulu does not provide specific forecasts which would be *MS*. Newzulu maintains its stated target to achieve a monthly cash positive position in the second half of 2016, i.e. the first half of FY17. There is a misconception that because there is a significant fixed cost in pursuing the business model of a global crowd-sourced media company, that Newzulu “burns” cash but in fact we are in a globally competitive landscape among Silicone Valley VC funded companies with no pressure to show immediate revenues and shareholder’s cash is necessarily being invested to great effect with our software and broadcast video engineers building world leading technology assets and our editorial team building an archive of high-quality content as an asset that will be monetized for the benefit of shareholders in future months and years. While fixed costs are substantial, so is the market opportunity at hand and there is little variable cost associated with additional content and technology sales, such that our business model promises highly attractive margins in the near future. There are several factors that can affect timing of cash flow positive trading including the rate at which Content revenues increase through partnerships such as Associated Press and Getty Images, the rate at which we sign clients to our Technology platform and the timing of their payments, in addition to pursuit of cost savings measures and the timing on which Newzulu sees a cash benefit from those initiatives. Further investment in our assets is required for some months but the Newzulu business model shows strong promise to deliver substantial revenues, that along with cost reductions, positions us close to our target, after two years of significant investment in our product offering, global operations and the integration of Newzulu with Citizenside, Filemobile and Octiplex.

Q2. <<@Fishinnick>> You said in the youtube video  - www.youtube.com/watch?v=eTQ8NF5KcCI  that you have some ideas to get exposure of your App out into the world,  How is that going and could you explain more about that please.

A2. <<@Newzuluchief>> Newzulu’s strategy for the deployment of its Technology on every smart-phone involves segmentation of its contributor base such that it can achieve that aim with minimal marketing expenditure – broadly that segmentation is between Professional and Citizen Journalists. Newzulu attracts professional and semi-professional contributors to download and contribute content through its app by direct outreach initiatives such as through promotion through its news wire partnerships, sponsoring industry initiatives such as the Walkley Award for Freelance Journalism, affiliation with schools of journalism and journalism unions such as the MEAA in Australia. When a freelance journalist seeks to file content to any of our news wire partners such as Associated Press, Getty Images, Canadian Press, The Press Association or Australian Associated Press, those partners will typically advise them to file through the Newzulu app. While tens of thousands of Citizen Journalists have themselves discovered the Newzulu app, our corporate strategy to achieve distribution of our technology to every smartphone, is not to market Newzulu as a brand, which would involve significant marketing expense but instead to achieve universal distribution through the licensing and deployment of our technology by our clients such as USA Today, Fox News, The Wall Street Journal, The Weather Network, ITV, CBC, with over 8 million app installs, and most recently ABC in Australia with around 3.5 million app installs. Newzulu has also announced agreements with two other major media companies in Australia and between these three media organizations we will be able to reach almost every Australian smartphone. When a Newzulu technology client updates their own app to include Newzulu, we are able to achieve widespread deployment of Newzulu’s technology. It is not required that Citizen Journalists have heard of Newzulu, so long as they have the app of a Newzulu client on their smartphone. Newzulu’s acquisition of Octiplex, now Newzulu Mobile has positioned us as a strong partner for any media outlet wishing to incorporate crowd-sourcing within their mobile applications for iOS or Android.

Q3. <<@Fishinnick>> Do you have many more acquistions or partnerships in sight that would require more CR in the near future and/or are you concentrating on acquiring positive cashflow opportunities?

A3. <<@Newzuluchief>> Newzulu is currently focused on delivering organic revenue growth from the Content, Technology and Creative Services aspects of its current business plan however we keep a constant watch on the industry landscape for opportunities which by way of partnership or acquisition may accelerate or enhance those plans. With our recent signing of Associated Press our Content business is able to reach some 3 billion people, or half the world’s population, every day and we have announced partnerships with over half of the world’s news wires, in addition to Getty Images, so that business is now reaching a more mature stage of monetization and consolidation, while the last few years have been represented by significant investment in developing our products and editorial operations on a global basis. In our Technology business and particularly in relation to the booming interest around Newzulu Live’s market position in mobile live video, we frequently come across startup technologies, apps and businesses, which we analyze on a case by case basis. We also look at more mature and profitable companies that may be synergistic with Newzulu or that may be completely transformative in some way or another. As the industry leader and consolidator, see it as essential that we are positioned to consider a broad range of such deal flow and look at each of these on their merits. Certainly to the extent of any consolidation in Newzulu’s space, we would ensure that we are positioned as the consolidator. However there are no acquisitions currently in an advanced stage of discussion and any such news would be *MS*. Newzulu’s current focus is on the organic revenue opportunity flowing from its own existing businesses but we keep a watching brief to safeguard our industry leadership position.

Q4. <<@Fishinnick>> I like your name Newzulu it was what first drew my attention to your company, this question may seem irrelevant but how did you come up with the name?

A4. <<@Newzuluchief>> The name “Newzulu” is a rallying cry and source of unified identity for our contributors and for our staff globally that see the major disruption in the media landscape that presents Newzulu with its market opportunity and I am pleased you find it compelling. The name was inspired by a number of thoughts that we were discussing as founders of a business seeking to disrupt the media industry by harnessing for the first time the perspective of the audience. First, it refers to our ambition that Newzulu contributors act as a group of warriors of the news and truth in the media, being a play on the words News and Zulu. Second, in the context of the Zulu nation, the word “zulu” means “strength in numbers”, which again supports our view that crowd-sourced news offers unique perspectives of world events. Third, the name is a response to the need for breaking news to be reported on time, around the clock as British Army refers to “Zulu Time” as being Greenwich Mean Time or central time.

Q5. <<@BabyTurtles>> Why have subsequent raisings only been offered to the institutions and not retail / existing investors?

A5. <<@Newzuluchief>> Newzulu’s business plan always presented the need for a very small company to access quite significant amounts of capital, so our strategy in approaching this requirement was guided in consultation with various advisory groups. We were advised that small ASX listed companies should seek as a priority to build a register of institutional shareholders that tend to have a more significant capacity to support the company and generally have a longer term investment horizon than retail investors. We were advised that institutional investors are typically holders rather than traders of placement stock and that they tend provide support to a company in the aftermarket, which is of benefit to both the company and to retail investors that are holders of the stock. Our flexibility with an approach other than a placement is somewhat limited by circumstance: Newzulu’s top 20 shareholders represent some 63% of the Company register, so while a rights issue is available and an attractive means for the participation of existing shareholders, it would not have allowed institutional investment. The company is currently unable to pursue a Share Purchase Plan post recompliance. Numerous shareholders have now raised their desire to participate should there be an opportunity in the future and this has been noted. We are also considering our options to further engage with the interest that US retail and institutional investors have expressed in Newzulu.

Q6. <<@BabyTurtles>> Why the constant flip floping between broking houses. This causes no end of pain - as you would have seen from the Fosters sell down.

A6. <<@Newzuluchief>> Historically this had been a significant issue for us but moving forward I am pleased to advise that Newzulu has addressed this in a way that has already created a positive outcome for the company in our recent placement, where various brokers have collaborated together in the best interests of the Company. In the 24 December placement, Newzulu engaged Patersons Securities as Lead Manager, while previous brokers Fosters Stockbroking and Wentworth Global Capital both collaborated with Patersons and themselves promoted the placement to their clients and invested in the placement themselves. The improvement of our approach is evidenced by the engagement of several significant institutional investors through that placement, including Thorney Investment Group.

Q7. <> Appreciate you are cutting costs but this is only 50% of the equation - when will we get some information on when the partnerships with ABC and the like will actually start delivering revenue?

A7. <<@Newzuluchief>> As you mention we have identified significant cost savings which currently amount to over $2 million from our previous cost basis over the forward 12 months, primarily from streamlining our editorial operations by consolidating them in New York and Paris, reducing the number of overseas bureaus, and trimming other areas with limited negative impact on our operations or revenue generating capabilities. We provided revenue estimates for client contracts in previous ASX releases that you could correlate with specific clients such as the ABC and in *FR*. However, our clients almost always demand commercial confidentiality in relation to their contracts with suppliers so it is unlikely any *FR* on a client or partner would provide specific revenue information. From Newzulu’s commercial perspective it would be contrary to provisions of those client contracts, contrary to shareholder’s interests and compromising to Newzulu’s operating position for us to reveal the detailed terms of client contracts, which would reveal pricing to our clients’ competitors and our potential competitors. One party claiming to be a competitor of Newzulu has already posted on this forum and I have to assume that every competitor is reading this post, which highlights the concern about revealing information that could be used to undercut or compromise Newzulu’s position of industry leadership, such as specific client pricing. Between signing a client, entering a trial agreement or content partnership there is typically a 3 – 6 month period of provisioning and deployment, depending on the client size, their existing technical infrastructure and the scope of the project, of business requirements definition, integration and technical deployment, after which the content or licensing revenue associated with that contract starts to flow. This revenue will begin to show in our Appendix 4C cashflow statements on a forward basis, following a 3-6 month period from each client, trial agreement or content partner signing. For example, we are only this month (December sales report) seeing revenue start to flow from our partnership with Getty Images, following our coverage of the Paris terror attacks, which comprised around 90% of video sold by Getty Images related to this event (the other news partners of Getty Images are BBC and Sky News, who did not provide any crowd-sourced materials). Newzulu is expecting to deliver very significant growth across its Content, Technology and Creative Services business units through calendar 2016.

Q8. <> Good to see you have started to go to the US to promote the product. When do you anticipate further newsflow from that region? are they seeing the benefits of your offering? At what point do you envisage getting the funds to support the story. The latter is interesting for mine given what happened to the company value of 1PG once they got on board.

A8. <<@Newzuluchief>> The US market is the primary focus of Newzulu’s business development initiatives and the primary driver of our revenue forecasts for our Content, Technology and Creative Services business units. I have personally relocated this month from Paris, where I was working to support our partnership with Agence France Presse, to New York where Associated Press and Getty Images are based. Most significantly, Newzulu has recently announced our partnership with Associated Press, the US based global news wire, which in combination with our arrangement with Getty Images provides distribution of Newzulu Content to every single publisher and broadcaster in the US and around the world. These developments are of great significance to Newzulu and to the revenue growth we anticipate in 2016, while specific newsflow is *MS* and will be announced in *FR*. Working with AP, Getty and leveraging our own New York based sales team, we are making very encouraging progress and are highly confident that we will sign numerous major media groups and brands in the USA as clients. We are also making very promising advances in the UK and Europe but it is in the US, where there are thousands of publishers and broadcasters positioned as potential Newzulu Technology clients, all seeking to reduce their costs in gathering content and engage with their audiences, that we expect the most new clients to sign. In terms of investor interest, there is a strong understanding of the market opportunity for Newzulu among US investors, there were several New York based funds that participated in our recent placement and there is significant further interest that we are hopeful to crystallize in the New Year. Newzulu is currently assessing options to increase the appeal and accessibility of its securities to US investors.

Q9. <<@mightypirate>> One result we have seen is that Newzulu signed an agreement with ABC News to collaborate on various projects starting in January. This does not sound like something that would give Newzulu a constant stream of cash yet. a.1) As the collaboration is project based, what is the assumed/expected monetary value per such project, and how many projects per year are expected?

A9. <<@Newzuluchief>> Major broadcast clients such as ABC News typically seek to evaluate and trial new platforms and in particular broadcast technologies prior to full deployment. Unlike social media applications, where a few seconds of delay or buffering are acceptable, Newzulu is deploying broadcast video technology, where audiences are not tolerant of their television screen or live video stream cutting out or the quality being impacted even for a moment. Newzulu’s deal with ABC News was originally struck around July, 2016 at which time there were some details of the revenue model and expectations of Newzulu provided by way of ASX announcement at that time, while we were not able to disclose the specific name of each client. As per Q&A30122015@Q7, above, there is typically a delay of 3 – 6 months from the date of a client, trial or content partner agreement and revenue flowing for Newzulu. Please refer to the previous ASX release for our revenue expectations around each major media client. We expect there will be dozens of such clients signed in the next 12 months and this sales effort is my main focus now I am based in our New York bureau.

Q10. <<@mightypirate>> a.2) The announcement says that ABC are "exploring" how to integrate the platform with their business. Is the collaboration to be seen as an extended trial or an agreement that provides long-term value to Newzulu?

A10. <<@Newzuluchief>> We expect the Australia Day project will be a successful flagship for our collaboration with ABC News, given the almost universal reach of the ABC News in Australia and the impressive innovation of ABC News in pioneering other crowd-sourced formats such as its Q&A program.  We believe the Australia Day project will signify the launch of a hugely significant, long term collaboration that will deliver long term value to Newzulu. Please see Q&A30122015@Q9 and the ASX referred to therein regarding previously announced revenue estimates and Q&A30122015@Q7 regarding our insistence that specific commercial terms remain confidential.

Q11. <<@mightypirate>> What happened to the other two major broadcasters? Have the trials ended without a result?

A11. <<@Newzuluchief>> The agreements reached with the other two major media groups remain to be launched in the near future and the *MS* details of such deployments would be detailes in a *FR*. The trials and technical integration with these media groups have advanced with great success and have been expanded beyond their initial scope, in one case to a number of other business divisions within that media group. We have also expanded the geographic scope of the client engagement with the global news agency we also referred to in a previous ASX release. Please see Q&A30122015@Q9 regarding typical timeframes and the process for on-boarding clients and revenue flowing from those clients.

Q12. <<@Live.to.boogie>> In the remuneration section Hartman is seeking a pay rise.

A12. <<@Newzuluchief>> The remuneration section does not in fact say that I am seeking a pay rise but provides an estimate of proposed remuneration which could have been better clarified for you to understand as such. I am not seeking nor have ever sought a pay rise – the section reflects an estimate of proposed remuneration that includes an increase arrived at by our accounting team which may not eventuate and arise due to factors in which I have had no involvement whatsoever. The disclosure is a proposal estimated on extraneous factors such as $USD/$AUD exchange rate movements, one-off expenses related to relocation of my family to New York, travel benefits and accounting adjustments related to changes in policy or previously approved incentives. The agreement between Newzulu and myself that was entered in June, 2014 has not been altered in any way at any time, nor have I ever sought to alter it at any time. At Newzulu’s AGM one month ago on 25 November, all shareholders had an opportunity to express their view on the Remuneration Report, which clearly set out these facts for all to consider, by voting on Resolution 1 (I was ineligible to vote) – the result was 59,700,929 shares in favour, with 1,666 shares against. The concern expressed is noted and will be clarified in a *FR*. At the time my agreement with Newzulu was signed, the terms of the agreement were determined independently based on a survey of ASX listed companies comparable in size and nature. I note that for several years up until the past 18 months I received no salary whatsoever from Newzulu. Further, I have on several occasions deferred entitlements to preserve cash and will happily do so again as necessary, always acting in the best interests of the company and its shareholders. I note that in relation to travel, Newzulu is a company operating in five countries with many bureau locations and significant travel is required, including today with my third trans-Atlantic flight between New York and Paris this month flying economy class. The travel is neither enjoyable, personally desired or wasteful - in the past 30 days I will have spent just 6 nights at home in the course visiting clients, partners, our operations in different locations and investors - its required to build this business. Shareholders are encouraged to express concerns in relation to the Remuneration Report at Shareholder meetings by raising questions and by voting. My complete passion and my entire personal savings are vested in Newzulu, with an unequivocal commitment to pursuing the best interests of all shareholders in my engagement.

Q13. <<@revitup>>, <<@Rod_Valens>> Produce and get results; keep your investors informed, engage with them and be open, you are leading a media company so you must to have understanding that communication works both ways.

A14. <<@Newzulchief>>  I have provided an updated Executive Summary of our current position below based on previous ASX announcements:

Newzulu is an ASX-listed crowd-sourced media company that allows anybody, anywhere, with a mobile device and a story, to share news, get published and get paid. Headquartered in New York, Newzulu operates bureaus in Paris, London, Los Angeles, Toronto and Sydney. In February 2015 Newzulu completed the acquisition of leading Toronto based user-generated content marketing software company Filemobile Inc. In October 2015 Newzulu completed the acquisition of leading Lyon based mobile applications developer, Octiplex. Newzulu was initially founded through the acquisition of Citizenside, the crowd-sourced news initiative founded by Agence France Presse, which had developed sophisticated proprietary software for rapidly gathering large volumes of crowd-sourced content from contributors and social media networks with capabilities for validating the integrity of such materials and for instantaneous distribution of that content to media outlets. Newzulu’s business now includes the sale of crowd-sourced Content, Technology and Creative Services to many of the world’s largest news wires, media companies and brands, including the likes of Associated Press, Getty Images, The Wall Street Journal, Fox News, ITV, BFMTV, CBC, The Weather Network, USA Today, the Australian Broadcasting Corporation, Microsoft and Cisco.

Technology platform

Newzulu has invested significantly through its software and broadcast engineering teams based in Paris, London and Toronto in the integration of the Citizenside, Filemobile and Octiplex, technology platforms as a unified broadcast solution. Newzulu’s Platform is positioned as a world leading technology and broadcast video solution for media companies and brands wishing to crowd-source images and videos at scale on a validated basis. Newzulu Platform is licensed by clients on a Software as a Service (SAAS) basis, with fees for bespoke client developments and includes software widgets for uploading, a mobile app software development kit for integration with existing apps and the Media Factor back office that provides validation tools and media workflow to integrate with existing systems. In January 2015, Newzulu launched its Social Media Reporter tool, developed in partnership with Google Innovation Fund. In March 2015, Newzulu launched the Newzulu Live product, an enterprise platform for live mobile video streaming similar to Twitter’s Periscope but customizable by any broadcaster, allowing any smartphone to deliver live video streams of breaking news events, on a moderated basis to eliminate any profanity or copyrighted materials from the video stream prior to broadcast. Newzulu Live, developed in partnership with Israeli live video pioneer LiveU, offers publishers, broadcasters and brands the capability to replace traditional live broadcast infrastructure such as satellite trucks with a simple mobile app that can be provided to the clients own staff reporters or journalists, as well as offered to any person with the client’s existing mobile app installed. A broadcaster is able to geo-locate their app users in real time and source a live, broadcast quality video stream from their smartphone.

Editorial & Content operations

Newzulu has invested significantly to develop its editorial and content teams operating 24x7 in English and French, based on Newzulu Platform, Newzulu Live and the editorial processes originally acquired from Agence France Presse, in support of its vision to establish the world’s fourth global news wire on a crowd-sourced basis. Newzulu has developed a network of long term, exclusive global news agency partnerships that allow it to fulfil a commitment to contributors of crowd-sourced photography, videos and live video streams that they can send materials to Newzulu, get published to an audience up to half the world’s population and get paid for doing so. Newzulu’s global news agency partnerships, along with its commitment to pay for crowd-sourced content, represent a unique capability and a long term competitive advantage for Newzulu in attracting the world’s top freelance photographers and videographers. Newzulu’s unique technological and editorial capabilities, devised by AFP, for rapid validation of crowd-sourced materials position it as a trusted source for global and national news wires in an environment where social media frequently perpetuates the distribution of manipulated, untrustworthy or hoax materials. When a photo, video or live video stream is submitted to Newzulu, or sourced from a social media network such as YouTube, Twitter, Instagram or Facebook, that content is first automatically parsed by Newzulu’s technology platform to determine whether the material has been Photoshopped, edited or manipulated in any way. Newzulu’s technology is able to determine broad aspects of the content and recognize common objects, features and faces within the materials. Newzulu’s technology develops a trust profile around each contributor and provides recognition to each contributor of their role within the platform such that when contributions are not sold, contributors are still rewarded by way of recognition and credit on Newzulu’s own community websites. When contributions are sold the Newzulu Pay platform disburses payments in a timely manner to the contributors preferred account. Newzulu’s editorial operations leverage technology to minimize the human editorial workload for the validation of each contribution and the unique integration of technological tools and editorial processes developed by AFP, provide Newzulu its capability to scale with limited variable cost, as a global crowd-sourced news wire.

Newzulu Business Model

Newzulu’s Content business operates as a global crowd-sourced news wire serving over 250,000 contributors as a freelance micro-job platform and content monetization network. The Newzulu Content community including freelance photographers, videographers, film producers, video editors, graphic artists and citizen journalists. Newzulu is able to monetize contributions of crowd-sourced materials by working through its established long-term exclusive partnerships with the world’s leading global and national news agencies that collectively reach over 3 billion people, around half of the world’s population every day. These partnerships include the world’s oldest and largest news wire, Associated Press (AP), Getty Images, Tribune Content Agency, Alamy, Agence France-Presse (AFP) in France, Press Association (PA) in the UK & Ireland, ddp images in Germany, Belga News Agency in Belgium, Canadian Press (CP) in Canada, Australian Associated Press (AAP) in Australia, Czech News Agency (CTK) in the Czech Republic, ITAR TASS in Russia, Mahatta Multimedia in India and Aflo Co., Ltd in Japan. Newzulu’s partnerships include over half of the world’s news agency and Newzulu actively seeks to engage additional partners who can offer new distribution or monetization opportunities for its contributors.

When a contributor submits editorial photographs, videos or live video streams that are sold for publication or broadcaster through Newzulu’s global news agency partnership network, Newzulu shares the revenue generated with the contributor on a 50/50 basis after paying a commission to the sales partner. Newzulu also sells crowd-sourced content services to brands through its Newzulu Prime initiative which sources creative ideas and creative production services from major brands as an alternative to the traditional model of creative production through advertising agencies. Brands such as Microsoft, Cisco and Nokia promote the opportunity for Newzulu’s community to contribute to their advertising campaigns through the Newzulu platform and when a campaign is crowd-sourced, whether through ideation or actual production services, Newzulu shares the campaign fees 50/50 with those content creatives. Newzulu actively seeks to develop its community of contributors through engagement with journalism students, through industry partnerships such as the Walkley Awards in Australia or Atlantic Journalism Awards in Canada and through partnerships with journalism unions such as the MEAA in Australia.

Newzulu’s Technology business licenses the Newzulu Platform and Newzulu Live products to media outlets for them to build their own contributor communities and crowd-source photographs, video and live video streams from their own audience. Newzulu offers Newzulu Technology clients the capability to network their own contributor communities to take advantage of content syndication and sales opportunity through the Newzulu Content sales network. Traditional and digital publishers, broadcasters and brands are able to license Newzulu’s Platform technology products for a monthly fee ranging from $5,000 - $50,000 per month depending on the nature of the project, rather than needing to themselves develop the challenging technology required for rapid content crowd-sourcing and validation at scale. The extent of Newzulu’s Technology implementations varies greatly depending on the objectives, business requirements and existing technical infrastructure of the client. Some implementations focus on a particular event or campaign, for example the ABC Australia Day initiative, involving Newzulu Platform upload widgets and the Media Factory back-office for validation. Other client implementations, such as the USA Today Your Take initiative, extend the opportunity to the audience of that publication to be deeply involved in editorial contributions around each published story, whether on the web or on any mobile device, leveraging Newzulu’s Technology. Newzulu prices the license for each media or brand client depending on the nature and scale of the deployment and the business requirements of the client. Hosting and storage fees are passed on to the client on a cost recovery basis. Customization or integration fees are levied for any bespoke development. Newzulu also offers Technology clients access to Newzulu Editorial services, such as content validation over weekends, holidays or peak periods, as well as Newzulu Live real-time moderation where clients do not have their own broadcast delay capabilities.

In addition to the licensing and implementation of Newzulu Platform, facilitating uploads of images and “post-live” videos, Newzulu’s clients are now also seeking to license Newzulu’s Live technology, which is offered both as a solution for crowd-sourcing live mobile video streams and distinctly as a solution for sourcing live mobile video streams from staff reporters or journalists in the field, as a replacement for existing news gathering infrastructure. Newzulu Live Crowd is licensed on the basis of a monthly fee from $10,000 - $50,000 per month depending on the number of installed users, while Newzulu Live Reporter Kits are licensed on a monthly fee per reporter basis ranging from $100 per reporter per month to $250 per reporter per month depending on volume. Given the novelty of mobile live video capabilities, media outlets typically wish to trial Newzulu Live for a period to prove its capabilities in a broadcast environment. Newzulu Live represents a very significant revenue opportunity for Newzulu, particularly in the USA where there are over 900 local broadcast stations owned by several large media groups, that are under significant pressure to reduce their fixed costs in news gathering. A $250/month Newzulu Reporter Kit compared with the $15,000 per truck roll cost of deploying satellite trucks to breaking news stories offers a very compelling cost saving opportunity. In addition to offering cost savings, Newzulu Live offers the opportunity to capture live, broadcast quality, moderated video streams from breaking news events wherever there is a member of a broadcaster’s audience with their app, while that even continues to transpire, rather than after the event is over and the news crew arrives at the scene.
  
Newzulu Strategic Position

Newzulu has positioned itself successfully in a leadership position, with the potential to derive very significant revenues across its Content and Technology businesses from a very large and disrupted global market where its product offering is in demand and the company enjoys several key areas of defensible competitive advantage but also finds itself facing significant challenges to execute on its highly ambitious business plan. The company is well insulated from aspiring competitors in its technology business, having invested heavily by way of acquisition and organic development across Newzulu Platform and Newzulu Live, with client case studies including some of the largest publishers, broadcasters and brands in the world. The company can boast a position of global leadership in its editorial operations, having built on its original provenance in AFP’s newsroom, with photos and videos sold daily to the world’s leading media outlets through the world’s most impressive news wire partnership network. After several years of software and broadcast engineering and expansion of editorial operations, Newzulu must now accelerate its sales activities in key markets such as the USA, UK and Europe to deliver cash-flow positive operations within 12 months, with its budget forecasts dependent on the success of its sales strategy.

In terms of sales, Newzulu is currently undertaking a major internal initiative to support the delivery of its sales forecasts in the form of the Newzulu Self Service Interface, which will enable automated online prospecting, sales ordering and technical fulfilment. Newzulu’s media and brand clients, representing high dollar value sales, can require long sales cycles with significant investment required to prospect and close such opportunities. The Newzulu Self Service Interface is an effort to move the company away from its dependence on in-person business development and toward a model as pioneered by SAAS companies such as Atlassian that enables clients to sign up, fulfil and service themselves on an entirely online basis. The first phase of the Newzulu Self Service Interface is scheduled for delivery by the end of January 2016. While it is anticipated that major clients will continue to require in-person engagement, it is expected the Newzulu Self Service Interface may be able to drive up to 50% of the sales forecast from February 2016 and on a forward basis. The initiative had not been undertaken earlier as integration of the Citizenside, Filemobile and Octiplex technologies had not previously been completed to the extent required for online ordering and self-fulfilment of the product offering.

Newzulu Financial Outlook

The Newzulu financial outlook includes three distinct scenarios being: baseline; expansion; and acquisitive, with the strategy to be implemented dependent on the support of existing shareholders and new investors in the company’s business plan. All three models anticipate the Company achieving cash flow positive operations in FY17 through the pursuit of an aggressive sales strategy particularly in the USA, supported by the Newzulu Self Service Interface from February, 2016. All three models reflect significant reductions in various operating costs, with such initiatives already undertaken to reduce costs by over $2 million in the next 12 months. All three models reflect significant revenue growth from each of the key territories in which Newzulu operates, particularly the USA, UK and Europe, with such revenues being contributed by each of Newzulu’s key products being Content, Platform, Live and Prime. All scenarios under the forecast model are sensitive to the timing of major client signings and to the conversion of existing clients who are trialling Newzulu Live to successfully completing those trials.