Not sure how you come up with that conclusion. The language does not say, as you suggest, that their expenses are deducted from this prepayment made through the funding agreement.

Rather, the cited language seems to clearly state that the "prepayment" is "NON-ACCOUNTABLE" and "NON-RECOUPABLE" and is completely separate from reimburseable direct expenses.

The only thing the "prepayment" amount offsets is the 15% flat fee that TPL is entitled to at the end of each quarter per the section 6.1 that is referenced but that you didn't include in your post.

In essence, as I understand the agreement, TPL gets a percentage of the working capital fund of betweent $500K and $1M no later than 3 days prior to the start of each quarter. In addition that money, they get reimbursed for any direct costs, ie 3rd party legal fees, travel costs, limo costs, meals and entertainment, copies, etc. etc. expended in pursuit of MMP licensing, as well as direct reimbursable expenses that are NOT necessarily part of MMP licensing efforts, but that the up til now 2-1 TPL controlled management committee approved. Then after PDS has paid its costs, and funded the working capital fund, it then takes the remaining gross cash proceeds for the quarter and gives TPL 15% of of that minus any "prepaid amounts" from that $500K to $1M advance.

After that, TPL then gets 50% of the remaining profit.

If there were no license sales in the quarter, then they STILL get their $500K to $1M "advance" regardless of the level of their "efforts" for the quarter (provided of courese I suppose they can say they're performing per the contract) and they also get reimbursed for any direct reimbursable expenses.

Please correct me if you think that's incorrect, but I disagree completely with the way you're characterizing the agreement language and the disposition of the funding.