Ann: Quarterly Activities/Appendix 4C Cash Flow Report, page-23

Thanks, Chris. (Sorry for long post- probably just FYI)

Yes, I am aware of your sentiment. I was just interested in understanding how you were thinking about the sector as a whole and then looking, as a finance guy, I understand, CGB's attempted management of current expenditure during these downtimes and suspension. But all good, your post is clear in its intent.

I do have a discussion point to raise with you if you are willing to explore it.

"I unfortunately remember too clearly when we were told of a 500 tonne expectation, that yielded so poorly we were never informed of the final amount."

Now I have noticed that you still raise this from time to time. I do know that Andrew K. tried to explain it as clearly as possible and in language, the ASX would accept, and permit to be put to market over about 18 month period. See more information below about determining outcomes for agricultural land.

So may I put it to you some questions from someone who knows agriculture and as I believe you understand numbers well.

Some background information first: The 500 tonnes of seed, we know, was first mentioned in 2017, was an expectation based on data in 2017 for agricultural yields. As it was a business activity that had material value to the company, it was announced to the market.

7 Dec 2017. "This is in addition to the 20 tonnes of seeds being planted by MCL’s contracted farmers that has been imported this week that should yield in excess of a further 500 tonnes of seed for Vitahemp’s further planned ramped up bulk production in March 2018."

So 20 tonnes in addition to 60 tonnes planted not 500 tonnes planted.

It goes onto say..."Right now the seed cleared by quarantine is being shipped to large broad-acre growing power-houses and to the expert carefully selected farmers who will grow the seeds for MCL with non-propagation agreements. This is “first-in best-dressed” step one in MCL having the ability to lead in the mass production of all-Australian hemp-seed food. Quite some time has already been spent visiting farmers and organising enough suitable ground to grow large quantities of hemp."

1st question: If Andrew was advised that 500 tonnes would be a good yield result, and considering that all results so far in the trials, and in discussions with farmers at that time had given a positive indication of expected yields, should the market have been made aware of that...keeping in my mind that it had not yet been fully planted?

So here is further information from a summary by an investment magazine. I cant mention the name due to advertiser rules but they reported on this.

"About 20t of the stored hemp seed was transported to the Waltanna Farms processing facility to develop oil, protein and flour. Joint venture company Waltanna Hemp Group will be carrying out the processing.An additional 10t is planned for delivery to Hemp Hulling Co for seed processing, which combined with the Waltanna products, will form the majority of the upcoming Vitahemp launch.With mass hemp food production underway, in Australian first, Medical Cannabis imported 20 tonnes of seed, which the company’s contract farmers will plant.The Australian Quarantine and Inspection Service cleared the country’s largest hemp food sowing seed shipment which, once planted, is expected to yield an extra 500t of seed." 7 Dec 2017.

So we know that seed was going out. These were broadacre crops, exposed to nature, not in greenhouses, and no-one expected the extreme heatwaves and continuing low rainfalls that hit Australian growing lands in 2018 and into 2019. Is that fair to say?

Australia in 2018 experienced the 3rd worst drought in history through to January 2019.
"Last year was a time of exceptional weather and record-breaking heat according to our annual climate statement, which was released last night. During 2018 we issued four Special Climate Statements relating to 'extreme' and 'abnormal' heat, and reported a number of broken climate records."
https://media.bom.gov.au/social/blog/1997/australias-2018-in-weather-drought-heat-and-fire/#:~:text=The%20below%2Daverage%20rainfall%20has,temperatures%2C%20and%20record%20high%20evaporation.

2nd question: If extreme heatwaves hit in January continuing through to December 2018 period and the company wasn't aware of the crystal ball future and they attempted to plant in different 3-month seasonal plantings during 2018, was it Andrew's lack of knowledge, as a recognised hemp farmer pioneer, that stopped the expectant yield outcomes, or was it the climactic conditions at the time that caused the poor yield results?

March 2018: "The Company currently has over 50 tonnes of seed in storage ready for processing, with significant further tonnages expected from the current harvests underway."
Now this was March 2018, and droughts were starting to bite but farmers indicated to QBL that seeds could be planted. QBL was selling to Coles (Red Tractor) from those harvests, Waltanna was producing oil for the new capsules, so income was being made. $34K March Qtr and $62K Aug Qtr and $163K Oct Qtr and Jan 2019 $220K. Total $479,000. That was a fairly good result at the time looking at other company results in hemp production in Australia, next to EXL.

3rd question: With increased Quarterly results from first crops would that indicate, even during difficult conditions that the company was harvesting seed?

4th Question: Did A.K.'s farm management practices to manage the plantings during the tough 2018 (12 months), returning almost $500K in sales actually show that these guys were doing something with growing crops from those harvests?

5th Question: Curious only: Are you aware of how long it takes for the Agricultural industry to assess a full year's production in Australia to return quantifiable data for the industry and farmers?
A good read, Chris. Agricultural yields are assessed for the industry on 6 monthly initial and 12 monthly general outcomes.
https://www.agriculture.gov.au/abares/research-topics/productivity/agricultural-productivity-estimates

6th Question: If it takes 6 months for the govt. expert and 12 months as an industry to assess crop and yield outcomes, could AK have reported accurately to market, without understanding what was going on with the climate, soil conditions, and research of the whole hemp stalk health at thgat time, with a previously unknown planted broadacre prohibited crop?

I am aware from discussions with AK, and as reported in the media,that all the Hemp guys learned a lot more about hemp plants that produce male or female (Dioecious) or both (hermaphrodite) male and female (inflorescences) which can be stimulated and affected by soil conditions and climates in the 8 different temperate climatic zones in the Eastern seaboard of Australia, which by the way, is different to the soil groupings of the US and Canada.
https://www.fao.org/soils-portal/data-hub/soil-classification/national-systems/ru/

Cheers...