Seed Innov Regulatory News (SEED)

27 April 2023

SEED Innovations Limited

("SEED" or the "Company")

Investee Company Update: Little Green Pharma Ltd

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 note an announcement released on the ASX by its portfolio company, Little Green Pharma Ltd ('LGP') regarding its quarterly activities for the period ending 31 March 2023.

The Company owns 7,324,796 ordinary shares in LGP representing 2.45% of LGP's issued share capital.

Alfredo Pascual, VP of Investment Analysis at SEED, commented:

"These latest quarterly results from Little Green Pharma showing quarterly cash receipts of A$6.7 million and ~A$20.0 million (unaudited) revenue for the financial year ended 31 March 2023 are worth highlighting, especially when compared to other non-North American cannabis operators. Moreover, having A$12.4 million cash in the bank (prior to post quarter Canopy loan repayment) and a now unencumbered Danish facility positions the company in a unique opportunity to capitalize on the growth of medical cannabis markets in Europe and Australia."

The following extract from the announcement is set out without material changes or adjustments and the announcement in full can be accessed from the following link: https://investor.littlegreenpharma.com/site/content/

Quarterly Activities Report and Appendix 4c

Highlights:

• Quarterly cash receipts of $6.7 million

• Revenue of ~$20 million (unaudited) for financial year

• Increase in flower sales in Australia by nearly 50% from previous quarter

• Successful $5.0 million placement

• World-first Australian re-classification of psilocybin and MDMA as prescription medicines for certain conditions

• Strategic psychedelics partnership with Australian health insurance fund, HIF

• Achievement of second milestone in obesity trial

• Two new Danish facility supply agreements into the UK and Sweden

• First shipments from Danish facility to two leading distributors in Germany

• Full repayment of Canopy loan post quarter end

• Cash in bank at quarter end of $12.4 million (prior to Canopy loan repayment)

Revenue, cash receipts and cash costs

During the quarter the Company achieved $6.7 million in customer cash receipts, up from $6.0 million in the previous quarter and up from $3.0 million in the prior March quarter. In addition, the Company achieved revenue of ~$20 million (unaudited) for the financial year ended 31 March 2023, up from $10.3 million for the prior 9-month financial year ended 31 March 2022.

Successful $5.0 million placement

In March 2023, the Company closed a $5.0 million placement via institutional and professional investors, including a cornerstone investment from TIGA Trading Pty Ltd (Thorney) who, after including its acquisition of 5.0 million shares from Elixxer Ltd, became the Company's largest shareholder at ~11.2%.

Full repayment of Canopy debt

During the quarter, LGP repaid Canopy $0.6 million of the deferred consideration associated with the purchase of LGP's Danish facility in June 2021 and post quarter end, made the final $4.1 million payment to fully discharge the debt. This now frees up the Danish facility for potential long term debt financing if required.

Sales update

The LGP group saw strong growth in flower sales in Australia during the quarter with a nearly 50%increase quarter on quarter, while oil sales maintained their level. Denmark also saw a 25% increase in its flower sales into Europe and hit the milestones of delivering its first products to Demecan and Illios Santé (post quarter end) in Germany.

In March, LGP Denmark entered into two further non-exclusive EXW supply agreements for its flower into the UK and Europe, with the first being a two-year agreement with UK distributor Hilltop Leaf Ltd and the second a 12-month agreement with Swedish distributor Nordic Range AB.

The Company also continued executing on its international supply commitments, with its current sales and deal pipeline into Europe set out on page 4.

Research and innovation update

LGP continued to progress its research & innovation strategy over the quarter. The Company's R&I strategy comprises two aims, being the initiation of clinical studies to enhance prescriber confidence in LGP medicines and the development of new products for supply into the Australian market (e.g. QUEST, Schedule 3 CBD medicines, new strain development), while developing longer term, protectable formulations for a more mature Australian market (including its novel drug obesity trial, Reset Mind Sciences, and drug formulation development projects).

During the quarter the Company and Curtin University achieved the second milestone of LGP's novel drug obesity trial. This trial examines the ability of selected phyto-and endo- cannabinoids to induce secretion of a powerful hormonal mediator known to induce satiety, slow down digestion, lower blood sugar and ultimately promote weight loss. During the quarter the selected cannabinoid molecules were tested (in vivo) and found to be safe and tolerable in healthy mice, generating a preliminary finding that the formulations retarded body weight-gain but did not alter feed intake. These outcomes supported progression to the chronic phase involving longer- term investigation in diet-induced obese mice, with these final formulations to be tested to confirm reversal of obesity in these murine models.

The results obtained so far have materially exceeded the Company's expectations with the selection of the final formulation to be based on biological activity, protectability, and the potential to progress to human clinical trials. The chronic phase of the trial is expected to be completed by end of July 2023.

Quarterly financial highlights

During the quarter, the Company generated cash receipts of $6.7 million and for the financial year it generated ~$20.0 million (unaudited) in revenue. The key cash flows during the quarter included:

· Customer receipts of $6.7 million

· Draw-down on Australian R&D rebate financing of $1.95 million based on expected rebate of ~$3.0 million for Australian R&D expenditure

· Share placements of $5.0 million to institutional and professional investors and$1.1 million to existing shareholders predominately through the Share Purchase Plan with total corresponding costs of $0.4 million

· Payment of $0.6 million relating to the Canopy debt incurred from the purchase of LGP's Danish facility in June 2021

In addition to the above, after consideration of the expected time and costs associated with contesting the TGA fines, the Company conceded and paid $0.1 million during the quarter. The Company expects to pay the remaining $0.275 million in instalments over the coming months.

Related party transactions during the quarter comprised $0.2 million in remuneration and allowances paid to the directors of the Company.

The Company finished the quarter with cash in bank of $12.4 million and fully discharged its remaining $4.1 million debt to Canopy post quarter end. The Company also expects to receive an R&D Rebate relating to historic expenditure in Denmark of $1.8 million in the coming quarter and a further ~$3.0 million for R&D expenditure in Australia during the 31 March 2023 financial year in the next or following quarter.

End of Little Green Pharma Ltd announcement:

- Ends -

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

Notes

Seed Innovations Ltd

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.

About Little Green Pharma

Little Green Pharma is a global, vertically integrated and geographically diverse medicinal cannabis business with operations from cultivation and production through to manufacturing and distribution.

The Company has two global production sites for the manufacture of its own-branded and white-label ranges of GMP-grade medicinal cannabis products, being a 21,500m2 cultivation and 4,000m2 GMP manufacturing facility capable of producing over 30 tonnes of medicinal cannabis biomass per annum located in Denmark (EU) and an indoor cultivation and manufacturing facility located in Western Australia capable of producing ~3 tonnes of medicinal cannabis biomass per annum.

Little Green Pharma products comply with all required Danish Medicines Agency and Therapeutic Goods Administration regulations and testing requirements. With a growing range of products containing differing ratios of active ingredients, Little Green Pharma supplies medical-grade cannabis products to Australian, European and overseas markets.

The Company has a strong focus on patient access in the emerging global medicinal cannabis market and is actively engaged in promoting education and outreach programs, as well as participating in clinical investigations and research projects to develop innovative new delivery systems.