Cann Group posted revenue of just over A$4 million in the first quarter of FY24, doubling its year-prior result, yet the company's cash position has drawn renewed scrutiny after the ASX again asked it to outline how it plans to keep the business funded beyond the near term.
Cash receipts from operating activities rose 87% compared to the same quarter last year, reaching $4.5m. The company noted that demand for flower products is "surging ahead of oil products".
The oil segment "continues to be challenged" after being flooded with "low-cost imported products prior to the TGO93 amendments on July 1", the company said.
Cann Group recorded a net cash operating deficit of $5.16m for the quarter, broadly consistent with Q4 FY23. Product and manufacturing costs came to $3.47m, while staff costs totalled $3m.
With only $687,000 in cash at bank and under $4m remaining on its debt facility with National Australia Bank (NAB), the company holds sufficient financing to cover less than three months of operations. It drew $1.2m from the NAB facility during the quarter.
Despite those constraints, Cann Group pointed to several expected sources of funding, among them a $1.9m payment from Sativite "in the very near future" tied to the sale of its southern facility, along with a $2m government research and development grant.
The company also said it was in "advanced negotiations… with a number of parties" regarding "non-dilutive capital opportunities".
"The company is scaling up its Mildura facility and expects the current level of operating cashflows to continue in the short term," Cann Group said in its response to the ASX. "Cash outflows are expected to stabilise in FY24 as the facility reaches capacity.
"Revenue and cash receipts have increased significantly in the last 12 months as the production from the Mildura facility ramps up, allowing the company to supply more of its products to the growing medicinal cannabis market."
On the product side, flower deliveries grew six-fold compared to Q1 FY23, while the volume of oil products declined 18% against the same period. Cann Group said it is exploring ways to "further reduce the cost of the active pharmaceutical ingredient (API) to remain competitive in this space".
On the research and development front, the company said seven unique high-THC cultivars have been identified and transferred to Mildura, with new genetics currently being assessed through flowering trials.
The Mildura facility also achieved its "best results" during the quarter, with yields surpassing the previous record by 9.7%.
"These results highlight the good work being put into crop yields and flower quality… with 88.1% of the flower yield being inhalable-grade quality," the company added.
