IMHO Note 11 provides some interesting insight into the contract with EV. With Spookfish retaining the title to all of the camera systems provided to EV.
The way I interpret Note 11 is that the contract puts SFI is in a financially precarious position if EV is decides to hand back some of the camera systems on the basis that SFI will not have the funds to cover any returns of the camera systems given they have been delivered at cost. Seems to me its more like a lease arrangement, with EV providing the upfront capital which once again is questionable from a revenue perspective.
Note 11 – Contingent Liabilities
Under the terms of the Development, License and Royalty Agreement with EagleView Technologies Inc. (‘EVT’
, the Group supplies spatial imagery capture systems to EVT and EVT pays the Group amounts equal to the cost of those systems, in progress instalments. If for any reason the Group elects not to renew this agreement on the due date, EVT may elect to return capture systems in use.
In this event, EVT are entitled to a refund equal to their book value, based on a straight-line, five-year depreciation schedule. At the reporting date, the gross value of systems manufactured or in progress, for which payments have been received, is $18,343,331 (31 December 2017: $9,705,222). After depreciation the notional contingent liability at reporting date would be $16,983,416 (31 December 2017: $9,451,343).
