30 October 2018
ELIXINOL GLOBAL LIMITED (ASX: EXL; OTCQX: ELLXF)
Elixinol Global Limited (EXL or the Company), a global company operating in the industrial hemp and emerging medicinal cannabis sectors, is pleased to release its business review and Appendix 4C cash flow statement for the quarter ending 30 September 2018 (3Q FY2018).
Sustained revenue growth reported in 3Q FY2018Â²
During the September quarter, EXL group revenue was reported at $10.4mÂ¹ representing 159% growth on the prior corresponding period and 27% growth vs 2Q FY2018.
Elixinol USA (hemp-derived CBD dietary supplements)
The Companyâ€™s strong revenue growth was primarily driven by Elixinol USA where demand for hemp-derived cannabidiol (CBD) dietary supplements and skincare products continues to grow strongly.
The first harvest of high-CBD premium hemp has been completed by the NCHPP Joint Venture (post quarter end). The harvest by the Colorado based joint venture with Kersey Ag follows planting of the first crop in Q2 FY2018. The NCHPP joint venture will provide ongoing supply of raw material for Elixinol USAâ€™s products.
During the quarter, a new US National Account Manager was hired to be responsible for the growth of regional and national sales. Their primary goal will be to enhance brand value and relationships with national health food and chain stores.
Hemp Foods Australia (hemp-derived foods and skin care)
Hemp Foods Australia also continues to report strong revenue growth. Hemp Seed Oil and Hemp Protein products delivered strong sales during the quarter through Hemp Foods Australiaâ€™s distributors. Bulk sales also continued to grow across all product ranges.
Immediately following 3Q FY2018, the first range of finished products was launched under the brand Essential HempTM. The range of health bars, which was developed with a holistic nutritionist, is available in three flavours: Salted Caramel Crunch, Ginger Macadamia Turmeric and Choc Banana Coconut. The Essential Hemp health bars are available through health food stores nationwide and via www.hempfoods.com.au.
Elixinol Australia (pharmaceutical medical cannabis)
Elixinol Australiaâ€™s licence submissions for the cultivation and manufacturing of medicinal cannabis are under review by the Office of Drug Control (ODC). During the quarter an information request (s14J) was received from the ODC. There is no update on potential timing of receiving licences however the Company will update investors accordingly once further information is obtained.
Late in the quarter, EXL announced an equity capital raising of $40m to accelerate international growth. The capital raising was conducted via a placement to new and existing domestic and international institutional and sophisticated investors. Proceeds from the placement were received on 3 October 2018 and the placement shares issued 4 October 2018.
Proceeds from the placement will be used to:
On 24 September 2018, the Company announced that it planned to increase its ownership in Elixinol Japan to 50.5% for $2.2m. The funds provided by the Company will be applied to working capital to scale Elixinol Japan for anticipated growth in the Japanese market for hemp-derived CBD, food products and skincare. The transaction is expected to complete 4Q FY2018.
OTCQX trading in the USA
During the quarter, EXL commenced trading on the OTCQX exchange. This is expected to bring awareness of EXL to the US market and broaden the investor base.
Capital expenditure during 3Q FY2018 totalled $1.5m which included:
A capital contribution of $1.0m to the NCHPP joint venture that was anticipated to occur during 3Q FY2018 was deferred to 4Q FY2018. Instalment payments for equipment and fit out of the Colorado stage 2 production facility, totaling $1.3m were also deferred to 4Q FY2018.
Gross cash outflows for the 4Q FY2018 are estimated at $19.9m (excluding cash inflows). These gross outflows include $13.8m for ongoing operating costs and inventory purchases including funding an expansion of sales and marketing activities to support further significant top line growth. Capital expenditure of $5.9m is estimated for 4Q FY2018 predominantly relating to equipment and fit out of the new Colorado stage 2 production facility (includes payments deferred from 3Q FY2018).
At the end of the September quarter, EXL held $10.7m cash at bank and $0.25m in debt. The Company has a pro forma cash balance of $48.6m which includes cash at the end of 3Q FY2018 and net proceeds of $37.9m received from the capital raising on 3 October 2018.
About Elixinol Global
Elixinol Global Limited (ASX: EXL; OTCQX: ELLXF) through its businesses has a global presence in the cannabis industry including hemp-derived CBD dietary supplements, hemp food and wellness products, as well as cultivation and manufacture of medicinal cannabis products. Elixinol Globalâ€™s businesses include:
See more at www.elixinolglobal.com
Â¹All dollar amounts are in AUD unless otherwise stated; Average AUD/USD = 0.73.
Â²Revenues are unaudited and reflect a change in accounting method to include recovery of shipping costs from customers (impact is immaterial). FY2017 is reported on a pro forma basis.
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