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Summary of Draft Financial Statements as at 3 1 December 2 0 2 3 ( full year ) Statement of Profit and Loss Sales $

Summary of Draft Financial Statements as at 31 December 2023(full year)
Statement of Profit and Loss
Sales $19,543,000
Cost of sales ($8,779,000)
Operating costs ($13,048,000)
Net operating loss ($2,284,000)
Statement of Financial position
Current assets $9,879,000
Non-current assets $18,000,000
Total assets $27,879,000
Current liabilities $10,627,000
Non-current liabilities $8,676,000
Total Liabilities $19,303,000
Net assets $8,576,000
Represented by:
Equity:
Shareholders funds $2,343,476
Retained earnings* $6,232,524
Total Equity $8,576,000
* After deducting the current year loss of $2,284,000.
The company has adopted the model constitution in the regulations as its own constitution.
Given the above financial position of WT as at 31December 2023 it is clear to the Board and senior management that the company needs an injection of funds urgently.
Thomas has indicated that WT only has sufficient cash at bank to fund 3 months of operations. The amount of funds needed is approximately $8,000,000 to $12,000,000. If the funds do not arise then there is a risk the company could be insolvent.
The Board has spoken to all the shareholders and they are reluctant to provide additional investment, given that their initial investment was at a price higher than the current market share price.
Issues they seek advice on:
1. Can the company go to the public and ask for additional investors?
2. Are there alternative forms of equity or debt investment options that the company could consider which would raise the funds needed.
3. One large financial institution (introduced by Carlo) has indicated they are prepared to provide some of the funds as debt in exchange for personal guarantee as well as the assets of the company as security. What is the impact on the directors if they provide the personal guarantee and the company cannot pay their debt back. Are all the directors liable or only the executive directors?
4. If the company can not pay the loan back to the Bank, what are the options for the Bank to try and recover their money?
Answer all the questions raised identifying the issues raised from your understanding of the facts, apply the relevant law (legislation, case law and if relevant ACRA and other Government Department guidelines) to the issues and come to a justifiable conclusion.
Your response must be supported by case law or legislation.
Your conclusion in respect of each query raised by the client.

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