Sold for $450k: Norwood's $23m of Bluetooth R&D

Stuart Corner
Tuesday, 07 November 2006 08:31

IT Industry - Deals

Cash-strapped bluetooth technology developer, Norwood Systems (ASX: NSA), has sold its EnterpriseMobility wireless telephony technology - in which it claims to have invested $23m in R&D - to Jtech Australia, subsidiary of a US company, for $450,000.

In our report on the company last month, iTWire predicted such an outcome noting that Norwood had just submitted its August cashflow statement to the ASX, showing it with just $130,000 in the bank and negative cashflows of around $174,000 per month.

Jtech already uses the EnterpriseMobility technology in its Genesis Blue paging product. It has global aspirations for the product, and has already secured significant sales.

The deal will, however do little to ease Norwood's current cash crisis. In a statement to the ASX, Norwood said: "the $450,000 is payable in three equal instalments. The first instalment is payable on settlement, the second within six months of settlement and the final instalment within 12 months of settlement. Jtech can elect to terminate at the second or final instalment without penalty. Source code for Norwood’s Enterprise Mobility software will be held in escrow until the final payment is received."

The sale is subject to approval by shareholders. Norwood CEO, Mike O'Donnell, said: "In the interests of all shareholders the board considers that the offer should be accepted. It will allow the company to refocus attention on other potential opportunities that may represent a better return to shareholders."

He declined to indicate what these might be. However in its half year report to 30 June the company listed no other significant assets so with very little cash would seem to have very few options. O'Donnell told iTWire that a rights issue to raise $700,000 had secured commitments of only $130,000 and he re-iterated comments made earlier about the difficulties of funding hi tech in the. Otherwise booming West Australian market pointing out that a highly speculative exploratory mining venture would have no trouble raising several million dollars.