Acquisition & Capital Raising Presentation 12 February 2024 1 Important Notice and Disclaimer The following material is for general information purposes only and should not be relied on for the making of any investment decision. Any investment in Elixinol Wellness Limited ACN 621 479 794 (Elixinol Wellness) is subject to a number of investment risks including the possibility of loss of capital invested and no return of income or payment of dividends. Neither Elixinol Wellness nor any other entity or person in or associated with the Elixinol Wellness group of companies guarantees any return (whether capital or income) or generally the performance of Elixinol Wellness or the price at which its securities may trade. In particular, this presentation is not a recommendation, offer or invitation to subscribe for or purchase Elixinol Wellness securities. This presentation is not exhaustive of all of the information a potential investor, or their professional advisers would require. This presentation does NOT constitute a “Prospectus" or a "Disclosure Document” (as defined in the Corporations Act 2001 (Cth) (Corporations Act)) and has not been, and will not be, lodged with the Australian Securities and Investments Commission or any other regulatory authority. Accordingly, it is not required to contain, and may not necessarily contain, all of the information that a Prospectus or like Disclosure Document would be required to contain pursuant to the Corporations Act. This presentation does not take into account any specific objectives, financial situation or needs of investors. For these and other reasons, you are strongly recommended to obtain your own up to date independent legal, financial and investment advice – those acting without such advice do so at their own risk. This presentation may contain "forward-looking statements" which are not historical facts. Words such as “expect(s)”, “feel(s)”, “believe(s)”, “will”, “may”, “anticipate(s)” and similar expressions are intended to identify forward-looking statements. Any forward-looking statements in this presentation should be considered “at-risk statements” - not to be relied upon as they are subject to known and unknown risks, uncertainties and other factors that may lead to actual results differing from any forward-looking statement. You are cautioned not to place undue reliance on these forwardlooking statements that speak only as of the date hereof and Elixinol Wellness does not undertake any obligation to revise and disseminate forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of or non-occurrence of any events. In addition, the past performance of Elixinol Wellness cannot be assumed as indicative of the future performance. There is NO guarantee of future performance - actual results and future outcomes will in all likelihood differ from those outlined in this Presentation. Neither Elixinol Wellness nor any of its advisers, agents or employees make or give any express or implied representation, warranty or guarantee that the information contained in this presentation or otherwise supplied by or on behalf of Elixinol Wellness is complete or accurate or that it has been or will be audited or independently verified, or that reasonable care has been or will be taken in compiling, preparing or furnishing the relevant information. Elixinol does not take any responsibility for any inference, interpretation, opinion or conclusion that any person may draw or form from this presentation. To the maximum extent permitted at law, Elixinol Wellness and all of its representatives, directors, partners, employees or professional advisers exclude all direct and indirect liability arising out of or in connection with any use or reliance of the information contained or described within this presentation. Other than to the extent required by law (and only to that extent), they do not make any representation or give any assurance, guarantee or warranty (express or implied) as to, nor assume any responsibility or liability for, the authenticity, origin, validity, accuracy, suitability or completeness of, or any errors in or omissions from, any information, statement or opinion contained in this Presentation or any accompanying, previous or subsequent material or presentation. This Presentation is current as at 12 February 2024. 2 Vision To create healthier everyday lives through the power of plant-based products. Quality & Efficacy True Heritage Natural & Sustainable Strategic Objective: Enhanced Scale and Profitability The acquisition of Ananda Food provides Elixinol Wellness with enhanced scale and profitability. This cements Elixinol Wellness’ as one of the leaders in hemp and plant-based nutrition within Australia. The Company’s profitability across its house of brands and B2B ingredients businesses will accelerate from H2 CY2024 onwards as a result of new revenue opportunities, enhanced scale, operational efficiencies, and improved margins. 3 Table of Contents 1. Executive Summary 2. Ananda Food Overview 3. Strategic Rationale 4. Revenue Breakdown & Guidance 5. Equity Raising Overview 6. Next Steps & Growth Strategies Appendix 4 44 1. Executive Summary 5 Elixinol Wellness Overview Well positioned in global consumer wellness trend Pioneer and early leader in for natural and plant-based food and nutraceuticals. hemp and other plant-based superfoods and developing a robust native ingredients supply model. New product development pipeline will drive entry into $13.0m revenue opportunity pipeline being new product categories and drive incremental growth. targeted to expand distribution. Ongoing business transformation TSN acquisition to a leaner cost structure, further strengthening fundamentals. now complete, increasing the size and scale of Elixinol Wellness. Sales and synergies drive trajectory to profitability and a sustainable business model. 6 6 1. Executive Summary – Corporate Overview Elixinol Wellness Limited (ASX: EXL) is a pioneer in the global hemp, plant-based food, skincare, and nutraceutical product industries operating a vertically integrated business which produces, manufactures, and distributes a range of highly complementary products delivered across four verticals, human nutrition, human wellness, pet wellness and superfood ingredients. • In Australia, EXL is one of the leaders in hemp and plant-based foods selling products under brands such as Hemp Foods Australia, Mt Elephant and Field Day, which are sold through grocery, wholesale, and e-commerce channels such as Coles, Woolworths, Pet Stock and Costco. • Elixinol Wellness has entered into a binding agreement to acquire 100% of Ecofibre Limited’s wholly owned subsidiary, Ananda Food Pty Ltd1, which will be funded by the proposed equity raise2 • Elixinol Wellness has forecasted revenue guidance of $16-20m for CY2024, with EBITDA breakeven from mid-CY2024 Volume (M) Current Capital Structure Share Price (9 February 2024) A$0.01 Shares on Issue 632,871,613 Options on Issue 134,819,446 Performance Rights 69,670,181 Market Capitalisation A$6.3m Cash (31 December 2023) ~A$0.7m Total Debt (31 December 2023)3 ~A$0.7m Implied Enterprise Value A$6.3m 1. 2. 3. See slide 9 for more details See slide 10 & 24 for more details Includes Short-term and long-term borrowings, excludes lease liabilities MarketVolume Share Price ($) Close Price 7.0 $0.03 6.0 $0.03 5.0 $0.02 4.0 $0.02 3.0 $0.01 2.0 $0.01 1.0 Feb-23 May-23 Aug-23 Nov-23 Feb-24 7 1. Executive Summary – Board and Management David Fenlon Independent Chair and NonExecutive Director 30+ years experience in the FMCG and consumer sectors ● Currently: Non-Executive Chair for Nutritional Growth Solutions; Non-Executive Director of Quest for Life Foundation ● Previously: CEO of The Platform Alliance Group; Group CEO and MD of BWX Limited; MD for Blackmores Limited (ANZ); Key positions in Tesco in Europe and Safeway in the UK ● Ron Dufficy Group CEO and Managing Director Previously held the role of Elixinol Wellness’ Global Chief Financial Officer; General Manager, Global Shared Services, at Aristocrat (ASX: ALL); Chief Financial Officer, Aristocrat America, Aristocrat’s largest and most profitable division. ● Extensive senior leadership and strategy experience ● Pauline Gately Non-Executive Director Led Elixinol Wellness’ merger process, and was subsequently appointed as a non-executive director ● Currently: Non- Exec Chair of Kalgoorlie Gold Mining Ltd (ASX:KAL), and Non-Exec Director of Pioneer Credit Ltd (ASX: PNC) ● Previously: Senior roles in investment banking across the Asia Pacific region. ● Josephine Lorenz Group CFO and Joint Company Secretary 20+ years of global finance experience ● Previously Group Financial Controller for Network Ten and Nine Entertainment Co. (ASX: NEC) ● Head of Finance at Independent Television News Limited in London ● Various roles at Deloitte in both London and Melbourne, Australia ● 8 1. Executive Summary – Acquisition Overview Acquisition Overview Overview of Ananda Food • Elixinol Wellness has entered into a binding agreement to acquire 100% of Ecofibre Limited’s wholly owned subsidiary (“Acquisition”), Ananda Food Pty Ltd (“Ananda Food”). • Ananda Food is a prominent hemp producer in Australia, whose operations encompass growing and processing hemp. The company is focused on low-cost production of hemp for bulk and private label customers with a strong focus on quality. • Consideration: o an upfront cash payment of $2,000,000; and Ananda Acquisition Terms Ananda Strategic Rationale Funding o deferred cash consideration up to maximum value of $1,000,000 subject to hurdle requirements based on the performance of the Ananda Food business for the period ending 30 June 2025. • • The upfront cash payment represents a 0.95x CY23 Revenue and 0.78x CY24 Revenue assuming Earn Out metrics are achieved Completion of the acquisition expected to occur by late March 2024 • The acquisition of Ananda Food adds further scale to enhance profitability for the combined business. This proposed transaction will enable EXL to realise the following benefits: o Further strengthen EXL’s leadership position in the Australian hemp market which can be leveraged across the supply chain o Combine highly complementary product ranges to accelerate sales through cross-selling o Significantly improve unit economics by improving yields, asset utilisation and sale of by-products o Create immediate potential cost synergies of $1.0m per annum and near-term opportunities for revenue synergies Funding of the Acquisition will consist of: • a fully underwritten non-renounceable entitlement offer to raise approximately $3.1 million, refer to slide 24 for further details • Canaccord Genuity is acting as Lead Manager and Underwriter to the Equity Raising Timing • The share purchase agreement was signed on 12 February 2024 • Completion expected to occur by late March 2024 9 2. Ananda Food Overview 10 2. Ananda Food – Business Snapshot Major Scale Producer Low-Cost Production & Commercial Focus Globally Recognised Standards Expansion Initiatives • Ananda Food is a large-scale producer of Australian grown hemp seeds, protein and hemp seed oil. • Operating as one of Australia’s eminent hemp producers. Ananda Food is focused on low-cost, high-quality production of hemp ingredients and products for bulk, branded and private label customers. • Ananda Food’s site achieves BRCGS AA grade, making it the only source of Australian hemp available under this globally recognised food safety standard. • Developed and launched a home branded cat litter product for Woolworths expected to generate revenue growth utilising hemp production by-products. 11 2. Ananda Food – Product Overview Woolworths Ananda Food Coles Retailer Product • BRC registered facility in Newcastle, NSW XX • Seed, oil and protein manufacturing capabilities • Sells bulk seed, protein and XXoil to Woolworths, sold under “Macro” home brand • Product developed following proactive engagement with Woolworths • Owned retail brand acquired in Apr’22 • National distribution with Coles Description • Pelletising line to produce cat litter and animal feed products • • Strong relationship established • Utilises hemp production by-product Launched Sep’23 12 2. Ananda Food – Financial Summary CY2022 FY CY2023 FY Revenue​ 2.5 2.1 Cost of goods sold​ (2.3) (1.8) Gross profit​ 0.2 0.3 GP%​ 8% 16% Operating expenses​ (1.4) (1.4) Non-operating income​ - - Adjusted EBITDA​ (1.2) (1.1) Depreciation and amortisation​ (0.8) (0.7) Impairment of assets​ - - Share-based payments​ - - Interest income​ (0.0) (0.0) Profit/(loss) before tax​ (2.0) (1.8) - - (2.0) (1.8) $m1 Tax expense Profit/(loss) after tax​ Balance Sheet as at 31 December 2023: Net Tangible Assets of $2.3m comprising: - Inventory $2.1m, Fixed Assets $0.6m, other net current assets/(liabilities) ($0.4m) 1 Unaudited management accounts for year ending 31 December. 13 3. Strategic Rationale 14 3. Strategic Rationale Building a leading plant-based food, health and wellness company • Strengthens and broadens the EXL hemp ingredients portfolio. EXL will become one of the largest suppliers of hemp ingredients in Australia across both branded and private label products New production facility & intellectual property • Capability to produce all hemp products in-house (oil, protein, flour, meal & cat litter), adding efficiency to the process Ananda Food brings new hemp seed IP which adds significantly to farming yields Expands distribution network Enhanced profitability • • • Ability to expand existing relationships with partners and distributors EXL enters new plant-based segment (cat litter) with private label supply arrangement in place with Woolworths • • • Elixinol Wellness has identified $1.0m per annum in potential cost synergies Improved unit economics through increased production yields and asset utilisation Combined group expects to be EBITDA breakeven from mid-CY2024 15 3. Expanded Complimentary Product Range Products delivered across four verticals Human Nutrition Human Wellness Pet Wellness Superfood Ingredients New! New! 16 3. Combined Distribution Network and Customer Base Immediately broadens the distribution network Retail E-commerce Wholesale 17 3. House of Brands We help our customers feel better Positioning: delicious, nutritious and convenient health products that improve & enrich our customers' lives Consumers: have a lifestyle focused on living well and prioritise health & wellness Retail Channels: grocery, independents, health, pharmacy, pet retailers, online LTM revenue: ~A$4.0m LTM revenue: ~A$1.0m LTM revenue: ~A$0.1m LTM revenue: ~A$2.6m Channel - health / grocery / pharmacy / online Channel - grocery Channel - online & pet retail Channel - online Functional nutrition products & TGA approved supplements Healthy baking mixes Functional meal replacement & beverages (coming soon) Total market size - VDS A$3.1b1 Sports A$1.4b1 Hemp A$15m2 Wholefood meal supplements / dogs CBD and vitamins Nutraceuticals for dogs (coming soon) Total market size - A$0.6b3 AUSTRALIA Total market size - A$4b4 Total potential market size US$16b by 20265 USA 18 18 3. B2B Ingredients Business Australian natives and Units superfoods Positioning: plant-based, clean, nutritious, Australian grown (preferred) Customers: B2B (trade) XXXX Beverage Beauty Pet Food Manufacturers & Hospitality Drink Manufacturers & Hospitality Beauty Manufacturers & Brands Animal Food Manufacturers & Brands Dried natives - powder, flaked & leaf Native & Australian extracts - fruits & herbs Botanical extracts – Kakadu Plum Horses – hemp hulls Bulk & private label hemp ingredients Hemp protein powders Hemp seed oil Food New! Cat litter New! Other pet 19 4. Revenue Breakdown & Guidance 20 4. Revenue Breakdown & Guidance CY2023 Pro-forma Revenue: Cost Synergies: • EXL: $10.7m¹ • $1.0m immediate cost synergies • Ananda Food: $2.1m² • Improved production yields driving gross margin Combined CY2023 Pro-forma Revenue: $12.8m Forecast EBITDA breakeven from mid-CY2024 CY2024 Revenue Guidance: • EXL organic growth expectation (20 - 50%): $13.0m - $16.0m³ • Ananda Food, CY2023 revenue assumed (conservative): $2.1m⁴ • Revenue Synergies expected across the group: $1.0m-2.0m CY2024 Revenue Guidance: $16m - $20m 1. 2. 3. 4. Includes full calendar year pro-forma contribution from TSN Assumes Q4 annualised revenue for Ananda Food Excludes any contribution from Ananda Food Assumes no growth on Q4 annualised revenue for Ananda Food 21 Key Outcomes from the Equity Raise and Acquisition Implied Outcomes from the Equity Raise and Acquisition • Increase in revenue streams through the new product range from the Acquisition of Ananda Food, with consolidated revenue guidance of $16-20m, representing a circa 50 - 87% increase from EXL’s CY2023 revenue of $10.7m • Attractive pro-forma EV/CY2024 Revenue multiple of 0.39 - 0.32x (from EV / CY2023 Revenue multiple of 0.76x) • Cements EXL as a leader in the Australian hemp market which can be leveraged across the supply chain • Combine highly complementary product ranges to accelerate sales through cross-selling opportunities • Significantly improve unit economic by improving yields, asset utilization and sale of by-products • Creates immediate potential cost synergies of $1.0m p.a. and near-term opportunities for revenue synergies 22 5. Equity Raising Overview 23 5. Equity Raising Summary Offer Size and Structure • Elixinol is undertaking a fully underwritten non-renounceable entitlement offer to raise approximately $3.16 million via the issue of approximately 632 million shares (“New Shares”) on the basis of one (1) New Share for every one (1) existing share held at $0.005 per New Share (“Offer Price”) (“Entitlement Offer” or “Equity Raising”) • Participants in the Entitlement Offer will receive one (1) attaching option for every two (2) shares allocated in the Entitlement Offer exercisable at $0.0075 expiring three (3) years from issue (“Attaching Options”)1 • An Offer Price of $0.005 per New Share, which represents a: Offer Price • 50.0% discount to the Company’s last traded price on 9 February 2024 ($0.01) • 51.1% discount to the 10-day VWAP ($0.0102) • 37.5% discount to the Theoretical Ex-Rights Price (“TERP”) ($0.008) Use of Proceeds • Proceeds from the Entitlement Offer will be used to fund the Acquisition, in addition to providing general working capital and accommodating the associated costs of the offer Ranking • New Shares issued under the Entitlement Offer will rank pari passu with existing shares Lead Manager & Underwriter • The Entitlement Offer is fully underwritten by Canaccord Genuity on the terms and conditions of an Underwriting Agreement dated Monday 12 February 2024 between the Lead Managers and the Company¹ 1. Canaccord is fully underwriting the Entitlement Offer and will be issued approximately [316] million underwriting options to be distributed to sub-underwriters of the Entitlement Offer on the same basis as the Attaching Options (“Sub-Underwriting Options”) 24 5. Indicative Capital Structure and Use of Funds • • The Equity Raise provides existing shareholders with the opportunity provide continued support for the Company, whilst inviting new shareholders to join the Elixinol Wellness register (via sub-underwriting) which will aid in increasing market liquidity Potential for additional cash from the exercise of options issued under the Equity Raising Indicative Pro-Forma Capital Structure Shares Options Existing Securities 632,871,613 134,819,446 New Securities issued under Entitlement Offer 632,871,613 316,435,807 - 316,435,807 1,265,743,226 767,691,060 Sub-Underwriting Options Pro-Forma Securities on Issue Indicative Market Capitalisation @ $0.005 $6,328,716 Implied Enterprise Value $6,323,716 Sources of funds A$m Uses of funds A$m Equity Raise $3.1m Acquisition $2.2m Existing Cash $0.7m Transaction & Integration Expense $0.6m Working Capital $1.0m Total $3.8m Total $3.8m 25 5. Indicative Timetable Indicative Timetable Trading Halt Resume Trading on the ASX Date Pre-Market Monday, 12 February 2024 Wednesday, 14 February 2024 Lodgement of Prospectus with ASIC Monday 19 February 2024 Record Date Thursday, 22 February 2024 Entitlement Issue Open Monday, 26 February 2024 Entitlement Issue Closes Friday, 15 March 2024 Expected date of Shortfall Announcement Wednesday, 20 March 2024 Settlement of Entitlement Offer and Shortfall Shares Monday, 25 March 2024 Expected date of ASX Quotation of Entitlement Offer Shares Tuesday, 26 March 2024 26 6. Next Steps and Growth Strategies 27 6. Growth Strategies 9- Key Growth Drivers: 1. Capitalising on the transition of hemp-based consumer products moving from the health Focus on core brands in the Australian market channel into mainstream channels, with a particular focus on the high-margin sports nutrition and vitamin sectors. 2. Significantly increase sales volumes of Mt Elephant’s products via aggressive retail expansion driven by ambassador relationships and retail lead promotions. 3. Take advantage of rapid growth in Pet Nutrition Market with key retail partnerships and Streamline, rationalise and innovate product range new e-commerce focus for Field Day Pet. 4. Strengthen Hemp Foods Australia’s growth through focus on innovative functional nutrition. 5. Increase in ranging with Tier-1 Australian and global grocery chains with pipeline Maximise conversion of revenue opportunity pipeline to expand distribution opportunities identified to grow revenue by up to $13.0m, with ranging increasing from 25 core SKUs to 37 (6 range extensions plus 6 NPD). 6. Unlock new brands and new retail channels through its cat litter and equine products and grow B2B sales of hemp and botanical ingredients into the cosmetic industry. 7. Realise revenue and cost synergies from the TSN and Ananda Food acquisitions. 8. Divest minority equity interest in Altmed Pets LLC (Pet Releaf) (net book value A$2.2m). 9. Explore additional M&A opportunities to build scale and extract further synergies. Increase size and scale 28 Appendix 29 Key Risks Risk Summary Acquisition Risk Completion of the Acquisition is conditional on the Equity Capital Raising and the satisfaction of a number of customary conditions. Sufficiency of funding Risk The Company has limited financial resources and will need to raise additional funds from time to time to finance the continued development, sale and distribution of its products. The directors of EXL regularly monitor the EXL Group’s cash position on an ongoing basis and continue to explore debt and capital markets funding to support the going concern and working capital requirements associated with EXL’s revenue base. Integration Risk Assuming the Acquisition completes, substantial effort and cost will be required to integrate the two businesses. The anticipated benefits arising from the acquisition could either not being achieved or achievement being delayed. Anticipated benefits include the cost and revenue synergies outlined on slide 22 Supplier & Customer arrangement EXL has arrangements with a number of key suppliers and customers. To the extent that EXL Group entities cannot secure and retain key suppliers, their respective abilities to maintain consistent production levels may be compromised, which in turn may have an adverse impact on the financial performance and position of EXL. Likewise, the retention and growth in demand from EXL's key customers also underpins EXL's future performance. Loss of Key Relationships The hemp-derived CBD industry is undergoing rapid growth and change, which has resulted in increasing consolidation and formation of strategic relationships. It is expected that this consolidation and strategic partnering will continue. Acquisitions or other consolidating transactions could harm EXL in a number of ways. EXL may lose strategic relationships if third parties with whom EXL has arrangements with are acquired by or enter into relationships with a competitor (which could cause EXL to lose access to necessary resources). EXL’s current competitors could become stronger, or new competitors could form from consolidations. This could cause EXL to lose access to markets or expend greater resources in order to stay competitive. Agricultural risk and climate change risk EXL is exposed to agricultural risk as the business is reliant on agricultural products. As such, the business is subject to the risks inherent in the agriculture industry. These risks include insects, plant diseases, storm, fire, frost, flood, water availability, water salinity, pests, bird damage and force majeure events. These risks may impact the financial performance through increased costs (from low yields or increased prices from low supply) or lack of supply to address customer demands. Value of new options under the equity raising The options that are being issued as part of the Equity raising are issued for no additional consideration but require the exercise price for each option to be paid at the time of exercise. If the prevailing trading price of the Company's shares during the option's exercise period is lower that the exercise price for the new options, then it is likely that the new options will not be exercised. In this case, for investors, the unexercised new options will not have a value and will lapse on the respective expiry dates of the New Options. If the new options are not exercised, or only some are exercised, then the Company may not receive the proceeds that would otherwise be generated if option holders pay the option exercise price. Forward looking statements There can be no guarantee that the assumptions and contingencies on which any forward-looking statements, opinions and estimates contained in materials published by the Company are based will ultimately prove to be valid or accurate. The forward-looking statements, opinions and estimates depend on various factors, including known and unknown risks, many of which are outside the control of the Company. Actual performance of the Company may materially differ from forecast performance General risks Other general risks include: • Stock market volatility • Changes to law and regulation • Loss of key personnel • Competition risks • General economic risks • Government action and other events including war or acts of terrorism 30 EXL Income Statement1 $m CY2022 CY2023 Revenue​ 7.1 8.3 Cost of goods sold​ (3.8) (4.9) Gross profit​ 3.3 3.4 GP%​ 46% 41% Operating expenses​ (12.3) (8.5) Non-operating income​ 0.5 0.6 Adjusted EBITDA​ (8.5) (4.6) Depreciation (0.7) (0.6) Impairment of assets​ (1.0) (1.7) Share-based payments​ (0.2) (0.7) - 0.1 (10.6) (7.4) - - (10.6) (7.4) Interest income Profit/(loss) before tax​ Tax expense Profit/(loss) after tax​ 1. CY2022 audited for year ending 31 December 2022; CY2023 unaudited management accounts for year ending 31 December 2023. 31 Thank you for more information, please contact: Ron Dufficy Group CEO & Managing Director Email: ron.dufficy@elixinolwellness.com Mobile: +61 428881718 Website: www.elixinolwellness.com 32 References Business Units 1. CMA "Australia's Complimentary Medicines Industry Audit " 2021. 2. Australian Industrial Hemp Alliance (Agrifutures RD&E plan 2022). 3. Global Data Report - "Australia Baking Mixes (Bakery and Cereals) Market Size, Growth and Forecast Analytics, 2021-2026" (published: September 28, 2022). 4. SMH "Humanisation of pets’: Inside the $4b-a-year pet vitamins boom" Emma Koeh (April 2, 2022). 5. Statista "CBD retail in the United States - Statistics and Facts" Jan Conway (August 14, 2023). XXXX 33