Ecofibre : Appendix 4C

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	ASX ANNOUNCEMENT	ASX: EOF
____________________________
	31 January 2022
use	Ecofibre Limited - 2Q22 Update and 4C Report
HIGHLIGHTS
	• 2Q22 revenue $7.6m, same as 2Q21 and down 4% on prior quarter
personal	• Operating cash outflows $2.2m in 2Q22, improving from $3.1m in prior quarter
• Balance sheet remains strong: $5.9m cash + $6.6m US government grants
• Strong client pipeline for Hemp Black and continued growth in Ananda Food
		o record fibre seed export to US
		o strong underlying growth in the food business
	• Ananda Health US CBD market remains challenging due to COVID-related priorities
	• Australian Phase IIb clinical trial for sleep disturbance progressing well at multiple
		locations across Australia. Study underpins Ecofibre's strategy to be the first mover in the
		highly attractive Schedule 3 over-the-counter market
	• Promising early results from clinical research program on gynecological diseases with
		multiple patents applications filed

Ecofibre Limited (Ecofibre, Company) (ASX:EOF, ADR: EOFBY) provides its Appendix 4C Quarterly Report for the three months ended 31 December 2021 (2Q22) together with an

Forupdate on the Company's trading performance.

2Q22 Trading Update

Unaudited revenue for 2Q22 was $7.6m, in line with the prior corresponding period ($7.6m) and down 4% from the prior quarter ($7.9m)

Ecofibre CEO Eric Wang said, "The US recovery for Ananda Health revenues remains slow due to a range of pandemic-related challenges. We see a very strong pipeline for revenue growth for our Hemp Black business and continue to see pleasing growth in Ananda Food."

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ASX ANNOUNCEMENT

onlyHemp Black - 2Q22 revenue $3.3m ($3.5m in 1Q22)

Delivery of production capability in Hemp Black remains on track and ongoing progress was

made in the pipeline of new customers during the quarter. The Company continues to see increased demand in its core production capabilities, namely high-performance turf yarns and medical yarns.

During the quarter, the business fulfilled an initial order from 4Ocean, a supplier of products made from recycled ocean plastics. Hemp Black worked with 4Ocean for almost 12 months to

usedevelop this sustainable product and expects a strong pipeline of business with this client.

Hemp Black also expects to fulfill initial product orders in 2H22 from a premiere US department store following completion of a six-month design and development program. Ecofibre CEO Eric Wang said, "We are very pleased to see our R&D efforts in 3D knitting come to fruition and look forward to a long-term relationship as a core design and manufacturing partner for high-performance athletic wear with this very important client."

personalAnanda Health - 2Q22 revenue $3.1m ($3.5m in 1Q22) US trading conditions

US Ananda Health sales were down compared with the prior quarter because of continuing difficult trading conditions for independent pharmacies and the broader US CBD market. Industry rationalisation in the CBD market is continuing, with competitors leaving the industry and market inventory being absorbed, and a handful of high-quality brands such as Ananda Professional expected to emerge over time.

Ananda Health continues to focus on delivering on its strategy as the #1 CBD brand for the US

rofessional market which includes pharmacists and doctors and a 'shared care' digital strategy

with independent pharmacies to support patient education and engagement.

For
Australia S3 OTC product registration
Ecofibre's sleep study, "Phase IIb Double Blind, Randomised Placebo Controlled Clinical Trial
for CBD for sleep disturbances in a	healthy population" has now enrolled approximately 25%
	-	-

of planned study participants across four locations in Australia. Patient enrolment is expected to continue at an accelerated pace as COVID restrictions begin to lift in Australia.

This clinical study supports Ananda Health's priority to have first mover advantage and be the leading provider of CBD for over-the-counter distribution in Australia as part of the TGA S3 product registration program.

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ASX ANNOUNCEMENT

Clinical R&D program

onlyDuring the quarter, Ecofibre announced strong results from its clinical set-up study with the University of Newcastle on gynecological diseases, which led to four patent filings with the United States Patent and Trademark Office. The business will continue to invest in the development of IP for this program to address a very large unmet need in the women's health segment and specifically around pelvic pain.

useAnanda Food - revenue $1.2m ($0.9m in the previous quarter)

Ananda Food had a strong sales quarter, including exports of fibre planting seed for US customers. The Company expects demand for fibre planting seed to continue to grow in both the US and Australia.

The food business is experiencing continued steady growth from its core clients, and we expect this trend to continue as Ananda Food is increasingly well positioned as the leading provider of 100% Australian grown hemp food.

During the quarter the business completed targeted investments to double the capacity of its de-hulling production line. In 2H22 there will be further, relatively small investments to improve the automation and efficiency of the bottling and packaging lines to meet growing demand and support our focus on being the lowest cost manufacturer in Australia.

Appendix 4C Cash Flow Discussion

The Company's cash position as at 31 December 2021 was $5.9m (30 September 2021: $5.0m).

• Cash outflow from operating activities in the quarter was $2.2m, including:

personal	- Receipts from customers +$8.8m
- R&D (-$1.1m) included the cost of external clinical trials and research and development
For
work carried out internally by the Company, both of which are typically eligible for tax
credits in Australia and the United States depending on the location of the work.
- Product manufacturing and growing costs (-$4.2m) included grower payments for
Ananda Food (-$0.4m) and Ananda Health (-$0.2m). No further crop payments will be
required for Ananda Health for the foreseeable future as the business can draw down
on existing inventory of dried flower and CBD extracts to meet sales orders.
	- Government Grants (+$0.6m) relate to receipt of prior period Employee Retention
	Credits (ERC) in the United States. The ERC program ceased on 30 September 2021.

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ASX ANNOUNCEMENT

• Cashflows used in investing activities totaled -$1.0m, mainly related to the ongoing development of new Hemp Black yarn extrusion lines.

• Cashflows from financing activities include +$4.3m received following the exercise of an option held by Thomas Jefferson University to purchase 7,964,581 shares in the Company.

At current exchange rates, 2H22 operating cashflows are expected to include:
only	• +$3.1m receivable for the balance of ERC accrued to 30 September 2021; and
	• +$3.5m refund of taxes paid in prior financial years due to a one-off measure in the US
	that permits FY21 tax losses to be carried-back against prior period taxable income.
In accordance with Listing Rule 4.7C.3, and as noted in Item 6 of the Appendix 4C Cashflow
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Statement, payments to related parties and their associates totaled $173,000 during the quarter for directors' salaries and fees.

personalInvestor Relations and Media please contact: Jonathan Brown, Company Secretary, Ecofibre Limited

Level 12, 680 George Street, Sydney NSW 2000 [e-mail]

About Ecofibre

Ecofibre is a provider of hemp products in the United States and Australia.

In the United States, the Company produces nutraceutical products for human and pet consumption, as well as topical creams and salves. See www.anandahemp.comand www.anandaprofessional.com. The Company also supplies its leading Ananda Hemp CBD products to Australians via the SAS B program. See www.anandahemp.com.au.

In Australia, the Company grows and produces hemp food products including protein powders, de-hulled hemp seed and hemp oil. See www.anandafood.com.

The Company also develops and sells innovative hemp-based textile and other products in the United States. See www.hempblack.com.

ForThe Company owns or controls key parts of the value chain in each business, from breeding, growing and production to sales and marketing. Our value proposition to customers is built on strong brands and quality products.

Authorisation

This document is authorised to be given to the Australian Securities Exchange (ASX) by the Board of the Company.

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Rule 4.7B

Appendix 4C

For personal use only

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity
Ecofibre Limited
ABN	Quarter ended ("current quarter")
27 140 245 263	31 December 2021
Consolidated statement of cash flows	Current quarter	Year to date (6
	$A'000	months)
		$A'000

1. Cash flows from operating activities

1.1

Receipts from customers

8,778

16,676

1.2 Payments for

	(a)	research and development	(1,079)	(2,545)
	(b)	product manufacturing and operating	(4,164)	(7,871)
		costs
		Grower payments, Ananda Health	(201)	(841)
		Grower payments, Ananda Food	(350)	(708)
		Production costs	(3,613)	(6,322)
	(c)	advertising and marketing	(285)	(1,080)
	(d)	leased assets	(67)	(130)
	(e)	staff costs	(3,322)	(6,549)
	(f)	administration and corporate costs	(2,362)	(4,065)
1.3	Dividends received (see note 3)	-	-
1.4	Interest received	-	4
1.5	Interest and other costs of finance paid	(215)	(434)
1.6	Income taxes paid	(29)	(93)
1.7	Government grants and tax incentives	553	768
1.8	Other (provide details if material)	-	-

1.9 Net cash from / (used in) operating

activities

(2,192)

(5,319)

2. Cash flows from investing activities

2.1 Payments to acquire or for:

(a)	entities	-	-
(b)	businesses	-	-
(c)	property, plant and equipment	(1,143)	(1,541)
(d)	investments	-	-

ASX Listing Rules Appendix 4C (17/07/20)	Page 1
+ See chapter 19 of the ASX Listing Rules for defined terms.