NEW HEXO PROSPECTUS - INTERESTING INSIGHTS AS OF 29 APR 22 The Company has generated negative operating cash flow to date, including for the year ended July 31, 2021 and the six months ended January 31, 2022. For the fiscal year ended July 31, 2021, the Company reported an operating loss of $85.5 million, cash outflows from operating activities of $43.1 million and an accumulated deficit of $774.0 million. As discussed in Note 2 to the Company’s audited consolidated financial statements for the fiscal year ended July 31, 2021, these circumstances create material uncertainties that lend substantial doubt as to the ability of the Company to meet its obligations as they come due and, accordingly, the appropriateness of the use of accounting principles applicable to a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to secure additional financing, fund the repayment of existing borrowings and to generate positive cash flows from operations. The Company’s existing cash and working capital do not provide sufficient liquidity to meet necessary cash outflow requirements for at least the next twelve months.
The Company requires substantially all of the net proceeds from the Offering, if any, for working capital and funding its operating activities, and we intend to use any net proceeds from the Offering for this purpose. To date, the Company has had negative cash flow from operating activities. As at January 31, 2022, the Company had approximately $37.7 million in non-restricted cash and a working capital deficiency of approximately $15.5 million. As at April 29, 2022, the Company had a non-restricted cash balance of approximately $14.1 million. Any proceeds received by the Company that are in excess of US$30,000,000 will be applied to fund the Company’s obligation under the Note Transaction Agreement to pay the fees of Tilray’s financial advisor and other direct or indirect costs and expenses.