Seed Innov Regulatory News (SEED)

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018.

Seed Innovations Ltd / AIM: SEED / Sector: Closed End Investments

6 April 2022

SEED Innovations Limited

("SEED" or the "Company")

Investee Company Update: Eurox Group raises €4.4M at a significant premium

SEED participates in the fundraise

SEED Innovations Ltd, the AIM quoted company investing in fast growing and industry leading businesses with a focus on the medical cannabis, health and wellness space, is pleased to provide an update on its portfolio company Eurox Group ("EUROX"), a German-based, European vertically integrated medical cannabis company, which has raised a total of €4.4 million (c.£3.67 million at today's exchange rate) from new and existing investors at an approximate 62% premium to its July 2021 fundraise (the 'Fundraise') in which SEED invested approximately €3 million (£2.58 million).

As part of the Fundraise, €2 million has been subscribed for by a new institutional investor, Iberis Bluetech Fund, a fund managed by Iberis Capital ("Iberis"), a leading private equity manager in Portugal with over €230 million of assets under management. Iberis' investment is by way of a secured convertible loan note ('CLN') and marks its first investment into the medical cannabis sector.

Highlights:

o €4.4 million in new capital raised by EUROX

o Inferred increase in the carrying value of SEED's holding in EUROX from €3 million to €5 million

o EUROX well capitalised for development of Portuguese facility & further acceleration of product development

o €2 million of new monies raised from new institutional investor (Iberis)

o €2.4 million of new money from existing shareholders, including SEED, demonstrating their belief in EUROX and its future

Existing investors (including SEED) have invested a further €2.4 million by subscription to a new class of Preferred Shares in EUROX, which enjoy a liquidation preference ("Preferred Shares") and into which Iberis' CLN will convert in the future. SEED's investment of a further €176,474 (c.£147,500) will result in a slightly diluted shareholding of c.8.49% of the fully diluted share capital of EUROX following the raise.

 SEED currently holds 8.85% of EUROX.

Assuming the entire share capital of EUROX is valued based upon the share price of the Fundraise, SEED's increased holding in EUROX would be valued at €5,039,000 (£4,207,000) at today's exchange rate), inferring an increase in valuation on a like for like basis of £1,484,000 compared to the carrying value in the Company's Interim Financial Statements as at 30 September 2021.

The CLN is non-interest bearing, is secured against the assets of EUROX and will convert to Preference Shares immediately at the option of Iberis; on the fifth anniversary of the CLN; or upon a further fundraise of €10 million or more.

The Preference Shares enjoy a €1:€1 liquidation preference and certain other rights in relation to anti-dilution, drag & tag-along rights and options of first refusal in the event of a sale of EUROX. SEEDs rights from its initial investment (including the appointment of a EUROX supervisory board member, currently Alfredo Pascual) are unaffected by the new issuance.

EUROX commenced supply of the first of its own branded products in Germany in August 2021 (see SEED RNS of 17 August 2021), which has seen revenues gradually increasing as multiple supply agreements were signed (as reported in SEED RNS announcements of 2 November 2021, 12 and 13 January 2022). Whilst still early in the revenue generation phase, EUROX has made, in SEEDs opinion, significant progress in both developing sales channels and consequent revenues, and in prudently controlling costs and maintaining a sharp focus on innovation and product development. Revenues are therefore expected to continue to build through 2022. While in this significant development phase, EUROX has reported an operating loss in the region of €3.44 Million (£2.87 Million) for the year to 31 December 2021.

Ed McDermott, CEO of SEED, commented: "EUROX have made considerable progress since our initial investment during last year, generating sales by broadening its medical cannabis range and crucially its distribution channels while remaining focussed on innovation and product development.

"The support seen for this fundraise, completed at a 62 % premium to our initial investment, is testament to the brand and its growth potential and I am particularly encouraged to see a new institutional cornerstone the Fundraise.

"EUROX is fully in line with our investment strategy in the European wellness and medical cannabis space and with this funding providing EUROX with a very stable platform for growth and with the strong 'Made in Germany' value proposition and capacity for pharmaceutical innovation, we expect to see significant developments over the year ahead."

Bernhard Babel, co-Managing Director of EUROX, commented:  "We are very pleased to announce our latest successful fundraise and in particular our new relationship with Iberis Capital. Being well funded will enable us to intensify our investment in pharmaceutical development while we continue to maintain the highest European pharmaceutical quality standards to expand our EUROX-branded products across our range. EUROX will continue to focus on key projects such as its fully-owned Portuguese subsidiary, and will continue to grow its commercial business throughout Europe and channel market insights it gathers into its development program."

About EUROX Group

EUROX is a German-based, European vertically integrated medical cannabis company with:

· Fully owned German subsidiaries responsible for product development, holding IP and commercial relationships.

· An exclusive, long-term contract and manufacturing agreement for cannabis products with Dr. Reckeweg & Co. GmbH ("Dr Reckeweg"), a EU GMP certified German pharmaceutical company with 75+ years of experience manufacturing plant-based medicinal products.

· In August 2021, Eurox successfully launched its own unique brand of "made in Germany" full-spectrum medical cannabis extracts, representing a milestone for the company with products available for German pharmacies to order, and revenues generated. EUROX is yet to reach profitability.

· A fully-owned Portuguese subsidiary with a provisional license (often called "pre-license") granted by INFARMED, the Portuguese National Authority of Medicines and Health Products. Eurox Portugal is currently building its cultivation facility to secure vertical integration and long-term supply independence.

· A significant minority ownership of Integro Medical Clinics, a London Care Quality Commission (CQC) registered medical cannabis clinic.

For more information on EUROX, visit https://www.eurox-pharma.com

***ENDS***

For further information on the Company please visit www.seedinnovations.co or contact:

Notes

SEED Innovations is an AIM quoted investment company focused primarily on disruptive high growth life sciences and technology businesses particularly within the medical cannabis arena. The Company's strategy is to identify early-stage opportunities that have an upcoming investment catalyst and grow its portfolio in terms of value whilst limiting the number of investee companies to a level where relevant time can be devoted to each.