Can the ASX explain the net operating cash position of this company?

From the last 4C:

8.5 Estimated quarters of funding available (item 8.4 divided by item 8.1) 1.2

8.6 If item 8.5 is less than 2 quarters, please provide answers to the following questions:

8.6.1 Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?

Answer:

No, the Company does not expect to have the current level of net operating cash flows for the time being.The Company refers to its ASX Announcement dated 9 September 2021 disclosing that it has signed a Binding Heads of Agreement with The Valens Company (TSX:VLNS) (Valens) for an exclusive strategic partnership over its manufacturing facility (the Southport Facility). The definitive agreements pursuant to the Binding Heads of Agreement are expected to be executed on or before 30 November 2021.

Subject to the execution of the definitive agreements, Valens will cover all operating and capital expenditure at the Southport Facility from the date of those agreements. Accordingly, the Company expects that by around 1 December 2021, the Company’s net operating cash flows should materially increase given the Company will continue to receive receipts from customers from sales from the Southport Facility as well as full reimbursement of the operating and capital expenses of the Southport Facility.

8.6.2 Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?

Answer:

Given the Company’s responses to Items 7.1 and 8.6.1 above, the Company is of the view that it does not need to raise further cash to fund its operations at this time. However, should the Company look to raise further cash in the near term, the Company would prefer to explore further debt or hybrid securities rather than equity capital raising given current market and economic conditions. The Company expects any such capital raising to be highly likely to be successful should it be commenced.

8.6.3 Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?

Answer:

The Company is highly confident that it will be able to continue its operations to meet its business objectives on an ongoing basis having regard to the responses to Items 7.1, 8.6.1, and 8.6.2.