Hey thefourthRe Nasdaq, I said my piece, now sitting back to see it happen.
You have raised a few issues re the investment tax credits (ITC's), I will do my best to address them.
First off, yes, the credits are fully refundable (cash in jeans) after first reducing taxes payable on the Fed and Provincial side for those Corps that do have taxable income and taxable payable. Exro of course does not fall into that category so any ITC's will be fully refunded.
Exro does in fact have 26M of Property, Plant and Equipment represent the Net book value of various assets after deducting depreciation and amortization. The actual cost of these assets in total is 29M and change.
Two things to note with respect to these assets and whether or not they would qualify for ITC's:
Per note 7 in the financial statements the assets consist of the following:
Right of Use Assets = 7.8M. These are essentially leased assets (see offset liabilty on balance sheet). This is very interesting to me. I am not sure what these leased assets are but I did note that this amount includes "the exercise price under a purchase option" i.e. a buy-out amount at the end of the lease term. I thought it might be the dyno's but the notes indicate they are included in the R&D equipment below.
Could this in be related to the Calgary facility (land portion)? Is the intent to buy the property at the end of lease? Or maybe addtional dyno's.
Not sure. - possibly would qualify to ITC's
Research and development equipment = 3.4M. Dyno's and other equipment Could be anything having to do with testing equipment etc. - possibly would qualify for ITC's
Furniture and office equipment - 5.4M. Likely would not qualify for ITC's
Assets under construction - 12.7M. Probably the cost of the building, clean room etc. - possibly would qualify for ITC's
The second thing to consider is, will the proposed tax credit program be applied on a retrospective basis i.e. will the expenditures incurred prior to the announcement be eligble for ITC's. This is not clear to me at this point.
I mentioned that I met with a buddy who is a partner in a large accounting firm. He is passed on the following comments to me after we met.
"As for the cleantech stuff, MNP is doing a deeper dive on it now for our own material but below are the CRA links I am sure you’ve seen. Second link has more details, really depends on what clean energy sector you are in. For Hydrogen there is a requirement for a FEED study and an assessment on certain metrics. Others appear to just be a self assessment with a tax credit on eligible expenditures, no form has been issued yet but I’ll forward you info as we get it.
The odd thing we don’t have much info is the labour requirements to access a higher credit which looks to be some form of collective agreed upon rate. Anyways I am dialed into our clean energy group nationally so if you want a specific situation looked at high level just send me the details."
As you would conclude from the above comments, there is a lag from when these programs are announced versus when the accountants get the actual details on exactly what qualified and how you go about applying for the credits. On the positive side, applying for the credits seems to be less onerous that say the SR&ED program. Also, my buddy mentioned there is "cheap" financing available as well which would be welcome if Exro qualified.
In any event, I am in touch with him on a regular basis and he will pass on more details to me as they are released. In turn, I will pass them on the to you and the others who are interested.
A little long I know. Sorry about that. It's the government/CRA after all.
Beaner