There seems to be a lot of doom and gloom from posters on this...

There seems to be a lot of doom and gloom from posters on this thread, in relation to the Annual Report. And I bet that most here have not spent the time to read the report properly and understand all aspects of it.
I am no accountant, but I gave it a go.
Here are my points that stood out for me, and my perspective too...KPMGIndependent Audit Report
KPMG's Independent Audit Report concludes that the Company is not in accordance with the Corporations Act 2001.

According to KPMG, this is because:
1. KPMG has assumed that the Company will not be successful in raising the15.8M.
2. Based on the assumption that 15.8M is not raised, the Company will not have funds to operate in the next 12 months.
3. The Company will be subject to penalties under the existing supplier contracts(in particular with GOMSpace and Virgin Orbit), because the Company will NOT be able to meet its contractual obligations.

However, KPMG has NOT taken into account the following 3 points:
1. The (possibly likely) successful conclusion of the $15.8M raising
Unlike the last failed CR, this CR is likely to succeed because:

·The terms are exceptionally good for professional investors, with a softbook of investors ready to take up any short-fall.

·Professional investors do not have to be existing holders to participatein the Placement or Short-Fall offer, so this broadens the pool of investors.

·Investors from overseas may enter via the Placement and Short-Falloffers.

2. Further funding may come from government grants, R&D, pre-sales.

I wouldn't be surprised to see grants from ESA in the coming weeks/months, which can be significant if successful.

3.Re-negotiation (in good faith) of existing supplier contracts
More specifically:

• GOM: We now have a new 6U agreement, and it is likely that the existing Pearls contract will be replaced with a new 8U agreement - this would mean that the terms of the contract could be negotiated in good faith between both parties that may see SAS not have to pay any penalties under the existing Pearls contract.
• VO: Remember that Virgin is not yet ready for commercial launches, so it would be unreasonable for them to expect that SAS would not look at other launch providers in order to progress its business goals - so again, unlikely that VO would seek penalties from SAS.

Directors Report
On Page 5, it states the following:

"The Company expects that the stop order will be lifted post lodgement of this report and resolution of the concerns raised by ASIC."

Despite KPMG's report of "not ongoing concern" (i.e., company not surviving), the director expects that ASICs queries will be resolved.
Supplementary Prospectus is currently under review with ASIC. If they are satisfied, then expect the ASIC stop order to be lifted.

On Pages 8The Company outlines the remuneration policy in black and white, foreveryone to see.

Thispromotes transparency, which is a very good thing.
Note that the policy mentions remuneration in-line with "market rates", which is fair.

On Pages 10-11

This outlines the previous remuneration for the executives, which I have to admit was generous for a start-up company.
However, look at the details and you will see that this has been over-hauled, with all executives taking a 50% cut in their remuneration package.
This means that Meir (for example) has a package of approx. 250K which is appropriate for a CEO.
The previous year, there were significant non-cash payments (i.e., performance rights) however there is no non-cash payments, at least not until revenue is being generated.Notes to the Financial Statements

Page 21, Section 2c) of KPMG’s notes:

It states the following:

The ability to return to the going concern basis (i.e., company remaining alive) is particularly dependent on:
• The ability of the Company to raise A$15.8m through an entitlement offer and placement offer, as
announced by the Company after the year-end. There is insufficient certainty that the full $15.8m
will be raised, especially given that the entitlement issue is not underwritten and the recent history
of unsuccessful capital raising;
• The receipt of R&D tax claims and government grants;
• The successful launch of a constellation of 8 6U satellites and receipt of prepayments from
customers related to ground terminals; and
• The ability of the Company to negotiate successfully with key supplier

This exactly highlights the point I made above. If funding is successful, grants come in, and order for the 1^st batch hits GOM, then its game on.

Page 22, Section 2c) of KPMG's notes:

It states the following:

Given the circumstances detailed above, the Directors have concluded that the other than going concern basis is appropriate for the preparation of the financial statements.

In other words, this says that the Directors accept (and most likely are not surprised) by KPMG’s assessment of the Company.

Page 36, Note 20 of KPMG’s notes:
KPMG's notes 157M in penalties should we not fulfill our contractual obligations (ouch!!!).

However, as I have mentioned above, this is based on the assumption that CR is unsuccessful, no grants are received, and no consideration has been taken that existing contracts can be re-negotiated.

My Conclusion
So, I have taken the time to digest this report unlike many here who make conclusions without extracting the facts.

KPMG'sassessment of the Company is expected, and even the Directors agree with it.

ASIC shouldlift the stop order once they are satisfied with their queries.
My take is that this CR will be successful (I have done my research to suggest that it will be).