Ann: Validation of the SPL of the Gen-II MEMS transducer, page-111

I think the order with EM was for 40,000 chips (for US$400,000) presumably as an opener to prove that EM could do it - and they have spent a LOT of their own cash in equipping themselves to be able to say that they can do that - and now have done so. The R&D that has gone into the process development ought to indicate the scale of that. The balance of the order (presumably for 960,000 chips) was for US$9,600,000. This comes from the HYReport of 31/8/23. This together indicates that this first development-level order of 1M chips cost AKP US$10M (as quoted a number of times by EM as being their first order). So AKP have to pay for the first order part when the goods are received, and with progress payments for the balance as they get delivered. Clearly both sides of this were well organised and prepared for the full set of transactions. The failures have slowed this all down presumably, but the deadlines presumably just get extended. This is all from their own report so is public knowledge.

HYReport of 31/8/23
"... Working Capital

The Company will need to obtain further funding via an equity raise or additional debt funding by November 2023 to fund anticipated cash outflows for the 12 months post the signing of this financial report. The directors plan to obtain short term funding from further convertible notes, placement of shares and further drawdowns and deferral of the Company’s existing loan facility with 4F Investments Pty Ltd.

In the opinion of the directors, the ability of the consolidated entity to continue as a going concern and pay its debts as and when they fall due and payable is dependent upon:

• The receipt of the 40,000 pre-production chips to specification from Earth Mountain in September 2023 to enable testing and subsequent demonstration of the product;
• The successful completion of the current testing phase of the technology, enabling the consolidated entity to successfully demonstrate the technology’s capabilities andnegotiate commercial contracts with interested parties;
• Shareholder approval at an EGM in October 2023 of additional convertible notes tobe issued by the Company to a director-related entity, 4F Investments Pty Ltd, to raise $500,000 on the same terms and conditions as the May 2023 convertible notes;
• Drawdown the remaining $250,000 of the current unsecured loan facility with 4F Investments Pty Ltd by November 2023;
• The receipt of the Earth Mountain proceeds from the August 2022 placement in November 2023;
• The ability of the Company to secure additional capital by November 2023 to fund working capital requirements and fund the production ramp up, including payment of the USD$9,600,000 purchase order for Earth Mountain, with payment to be made on a progressive basis commencing in December 2023; and
• The ability of the Company to defer repayment of the abovementioned original unsecured finance facility with 4F Investments Pty Ltd or to raise additional funding to repay the expiring convertible notes in January 2024 should they not be converted to equity. ..."