Investee Company Update - Little Green Pharma

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

19 May 2022

SEED Innovations Limited ("SEED" or the "Company")

Investee Company Update: Little Green Pharma

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') of a 2.5 year, large volume take-or-pay contract with Four 20 Pharma for the exclusive supply of a new high-THC strain into Germany.

SEED owns a holding of 7,324,796 ordinary shares in LGP representing 3.1% of LGP's issued share capital.

Ed McDermott, CEO of SEED, commented: "LGP's agreement with Four 20 Pharma, one of the largest medicinal cannabis operators in Germany, is LGP's largest single-strain offtake agreement to date and again demonstrates LGP's continuingly successful European distribution strategy.

"The LGP management team are continuing to deliver against the expectations and the company remains a market leader in the international medical cannabis market. We will update SEED shareholders with LGP's developments, and with cannabis stock prices remaining depressed across the board, we look forward to a time when we see better sentiment across small caps."

The announcement by LGP is set out below without material changes or adjustments:

Exclusive high-volume take-or-pay contract with Four 20 Pharma in Germany

Highlights:

· LGP signs large-volume, take-or-pay contract with Four 20 Pharma for the exclusive supply of a new high-THC strain into Germany

· Agreement is LGP's largest single-strain offtake quantity contract to date, with a minimum take or pay commitment of $7.5 million over 30 months1

· The transaction represents a significant evolutionary step in LGP's supply processes and contract portfolio as LGP continues to successfully deliver on its distribution strategy in Europe

· First product deliveries expected late next Quarter or early in the following Quarter

Little Green Pharma Ltd (ASX: LGP, "LGP" or the "Company") is pleased to announce its entry into a 2.5 year take-or-pay contract ("Agreement") with new distribution partner, Four 20 Pharma GmbH ("Four 20 Pharma"), for the exclusive supply of LGP's recently-developed, high-THC (25% THC) SMS strain into Germany.

The Agreement represents a minimum take-or-payment commitment of at least $7.5 million1over 30 months, including payment of a development fee to help defray strain development costs.

The transaction resulted from a recent, tightly-executed bidding process for the 25% THC strain which successfully positioned LGP in front of a range of potential new distribution partners. The Company proposes to engage in similar tender processes for other new strains, as well as rolling out SMS into other jurisdictions.

The transaction represents a significant evolutionary step in LGP's supply processes and contract portfolio, with the Agreement joining LGP's minimum exclusivity commitment purchase agreements with Demecan in Germany for the potential supply of up to 1.3 tonne per year (representing an annual revenue opportunity of ~$9 million1) of white-label flower from its Danish Facility (see ASX announcement dated 19 April 2022), and with Sana Life Sciences in the UK for the supply of LGP-branded oils (representing an annual revenue opportunity of $1.44m2) from its Western Australian Facility (see ASX announcement dated 2 May 2022).

Four 20 Pharma is a GMP licensed German manufacturer, wholesaler and importer of medicinal cannabis. Since its establishment in 2018, the company has positioned itself as one of the biggest players in the German medicinal cannabis market, with its growth underpinned by the success of its "420 NATURAL" brand, one of the highest selling medicinal cannabis brands in Germany.

Little Green Pharma's Chief Executive Officer, Fleta Solomon, said:

"We are very excited by our new SMS strain as well as the opportunity to be partnering with Four 20 Pharma, one of the largest medicinal cannabis operators in Germany and with a highly successful track record of supplying its 420 Natural brand cannabis products into the German market.

The Agreement represents another significant milestone in LGP's continued growth of its Danish Facility, as well as an exciting development in LGP's supply processes that promises to dramatically shorten LGP's supply timelines for future key strains.

We look forward to working closely with Four 20 Pharma to bring this highly-prospective new strain to market as quickly as possible."

Thomas Schatton, Four 20 Pharma's Chief Executive Officer, said:

"We were very impressed by the quality and character of the SMS strain and look forward to bringing this top-line strain into the German market for our customers and patients as soon as possible."

Material Terms of Agreement

· Term is 2.5 years, with a minimum annual purchase commitment of $3.5 million1 per year following a 6-month ramp-up

· Fixed price indexed to Danish CPI

· Take-or-pay commitment requires Four 20 Pharma to purchase minimum quarterly quantities each quarter of white-label bulk SMS strain or pay liquidated damages equal to the purchase price if make-up quantities are not purchased in the subsequent quarter

· Agreement subject to the following conditions precedent: sufficient data to support a shelf life of at least 6 months, entry into GMP Quality Agreement, and the grant of approvals to supply the strain into Germany, which conditions precedent must be satisfied within 6 months of Agreement execution

· Supply of the product is exclusive to Four 20 Pharma in Germany

· Agreement includes payment of development fee to help defray cost of strain development, in equal tranches after completion of stability testing and first product supply

· Delivery is on an ex-works basis from LGP's Danish Facility with first supply expected late next Quarter or early in the following Quarter

The announcement can be viewed in full including the relevant appendices on LGP's website via the following link: https://investor.littlegreenpharma.com/site/investor-centre/asx-announcements

***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.