Seems like a promising industry but are my concerns valid?

Iwas looking at buying additional shares in the company when the price was downto 1.9c. I thought it might be worth a punt to average down. I am no expert inthis area but many speak of the potential medicinal benefits of cannabis.One of my friends who's fairly knowledgeable about many different topicsclaimed that the large pharmaceuticals actually held the rights to many of themedical potential of cannabis and this is why we are now seeing this sector in its infancy. Not sure if this is true or not. Others here may be able to clarify. But Ithink there was also very tight government control around the use of cannabisand that Canada and Australia are the main innovators?

Positives:

Lots of good announcements about brands and distribution, including CostCo.
Appears to be a good collection of former companies and now a vertically integratedcompany.
Increasing publicity, including the recently completed Medipharm Labs(Canadian company) facility in Victoria which I saw on Channel 7 News.
Accumulated losses $29.9m - so no tax for a while provided they meet thechange of ownership and same business tests.

Negatives

No financial forecasts regarding potential earnings - I couldn't find anyanalyst reports on the company's website
South Johnston Bauxite - I would prefer a pure medical cannabis play - CannGlobal Mining should be separated or sold off - core business needs thecash and mining is hugely capital intensive
The amount of debt - seed capital loans alone is $3.6m and can either beconverted to shares at 20% discount or repaid in cash with a 20% premium - Icouldn't find any details in the annual report about the terms

And this last point is my major concern...

Note 5 r "Going concern basis of accounting.

Notwithstanding the loss for the year of $9,234,372, negative cash flows from operations of $3,871,089 and historical financial performance, and net current liabilities of $1,554,711, the financial report has been prepared on a going concern basis. This assessment is based on acash at bank balance at balance date of $5,183,769, additional cash of $5,950,000 from a capital raising subsequent to year-end, conversion to shares of convertible securities and seed capital loans of $3,634,102 also subsequent to year-end, and the directors’understanding of expected net cash outflows in the coming financial year."

Although I think some of the seed capital loans have been converted to equity in July 2019, but not sure if this is part of the $3.6m mentioned above or separate.

2018

Receipts from Customers ~$85k
Payments to suppliers and staff ~$4.4m

2019

Receipts from Customers ~$292k
Payments to suppliers and staff ~$4.3m

The executive services agreements for 3 senior executives is $1.7m and $1.8m, for 2018 and 2019, respectively. This accounts for approximately 42% of the payment total to suppliers and staff. The services covered include rent (for where and whatpurpose?), looks like the three received around $312k to $360k (geological fees) which appears very generous for a company at the infancy stage. In addition are administration fees increasing from $240k to $360k. Management and secretarial $180k, plus more which can be found on page 15 of the annual report.

This is a significant amount of money that the company needs to generate on top of running operations and any capital needed by the business to expand.

My question is are we going to continually see capital raisings like the convertible notes issue to cover a negative cashflow and whether the current group of directors with their qualifications and experience is what are needed to take this companyforward. Is this now a manufacturer and marketer of medicinal cannabis by-products? Management of a company like Blackmores are vastly different to OZ Minerals.

Unfortunately this information is not available, but from a cashflow basis when do we expect this company to break even - without the mining operations.

Do people think that the mining operations should be separated turning this into a pure medicinal cannabis play.

I'm interested in people's views as it concerns me that the price is now 1.3c. Or are there better medicinal cannabis plays out there?