Pseudo, a financier will only lend the expected R&D rebate on up...

Pseudo, a financier will only lend the expected R&D rebate on up to 80% of qualifying R&D expenditure.

Qualifying expenditure is expenditure that's directly attributable to new R&D that must be backed up with time sheets and documentary evidence which is subject to scrutiny by Innovation Australia. Admin costs, Directors Fees, MM and PN's wages can't be attributed to R&D unless those costs can be directly attributed to R&D research. At best they can attribute some of those costs to R&D.

In order to get a loan they'll need to finalise their annual accounts, tax returns and R&D calculations with the supporting evidence that will be reviewed by the financier. The financier will then decide how much they will lend against the R&D rebate which will be subject to the quality of the claim, proof that the evidence furthered their knowledge which is a bit hard to do without the final results.

The Federal Government has directed the ATO and Innovation Australia to crack down on R&D rebates in the last year or two with most claims being delayed and some being rejected.

Like I said yesterday this is a high risk strategy to finance a business, especially when their auditor is going to demanding evidence that the company can remain solvent for the new 12 months. If the auditor is not satisfied with the BOD's answers then they must report the company to ASIC. ASIC is then obliged to act. That can lead to suspension and administration.

The BOD may quickly come to the conclusion that a CR is the only option.

My recollection is that MM said it's their preference that SH convert their options to fund (save) the company but wanting and hoping is not a strategy.

Stellar Covid results or some kind of deal remain a possibility but in the abscence of that I can't see an underwriter or investors investing further based on the average results "that don't hit it out of the park". We are none the wiser as to how long it will take to reach commercialisation, or even whether that's possible with the data we have.

We are out of time. MM and the BOD now have some difficult decsions to make which may include selling our IP in a fire sale. That's a legitimate option if they can't get a deal and can't fund another trial.

IMHO DYOR