Digislide stiffed by Austrade
Downhill slide halted for now
South Australia tech start-up darling Digislide is embroiled in a wrangle with Austrade over denial of funding.
The ASX listed company, which builds miniature projectors, has been lauded overseas with “hot technology” awards and has been part of numerous Austrade showcases such as Communicasia. In recent months it has also secured international commercialisation deals and more recently $5m in funding.
However, the Australian government has withdrawn support for the company under its Export Marketing Development Grant program. The company revealed in its half-year financial statements that Austrade had denied grants relating to $500,000 of overseas marketing expenses, a decision that company is appealing. The Australian Taxation Office is also auditing the company's GST account.
"Austrade denied the company's (2008-09 export grant) claim based on the 'size of the commercial return received or receivable in the grant year', 'the company's financial position' at the time, its 'resources to maintain its international business' and the 'net economic benefits for Australia',” the company said.
Under the EMDG, companies must spend the export marketing money up front over a year and then claim it back from Austrade.
"Digislide is rigorously appealing this decision arguing that Austrade must take into accounts the effects of the global financial crisis (on companies and countries) and the considerable funds injected since June 2008 and additional commitments received since that time for international marketing," the company added.
Last month Digislide company secretary Jeff King confirmed that the Australian Government owed the company about $800,000 in tax and export marketing grants, an amount that would help the company survive while it worked toward breakeven.
It also recently announced that it had secured a standby equity deal with investment group Fortrend Securities, giving the company access to an equity raising facility with a limit of $5m. The facility will operate for three years as the company moves toward breaking even.
The company reported a loss of $1.6m for the December half, down from December 2009's $3.9m loss.
During the half Digislide signed joint venture agreements with marketing and distribution entities in the United States and India. The company said last year these marketing deals will deliver the company a volume of sales that lead to breakeven by the end of the March quarter.
Last August Digislide also announced that had secured a deal to commercialise a new IP video delivery platform. The licencing agreement would see its virtual streaming delivery network technologies (VSDN) used within Asia with broadcast cable operators and video delivery partners including China Telecom and China Unicom.
Digislide’s auditors, Hayes Knight, however warned of the inherent uncertainty of the company as a going concern, noting it remained dependent on raising further funds from shareholders to remain solvent. ®