Botanic Wellness Limited

Pre-IPO (Capital Raise)

This investment is only suitable for s708 investors under the Corporations Act 2001.

Wholesale

Offer type

Pre-IPO

Funding Round

Key Offer Details

Discount to IPO Price

25%

Security Type

Ordinary Shares

Price per share

$0.20 cents

Pre-money valuation

$41.5m

Letter from the Chairman

Dear Prospective Investor,

On behalf of the Directors, it is my pleasure to invite you to become a shareholder in an Australian and USA based CBD hemp company, Botanic Wellness Limited.

The CBD hemp industry has grown rapidly in the United States, Europe and many other countries around the world in recent years with the increasing acceptance of CBD and hemp for a wide range of uses. This growth is expected to accelerate in the next few years.

Consumers are becoming increasingly aware of the many benefits of CBD and various governments around the world have responded by making CBD hemp products more accessible. In 2018 the USA Farm Act legalised CBD that is derived from hemp that contains no more than 0.3% THC (the psychoactive component of the plant). CBD is now federally legal in the USA and is widely expected to become legal in Australia in 2021.

Botanic Wellness intends to become a leading provider of a range of CBD hemp based products, initially in the USA and Europe and in the future in Australia as laws here in relation to the importing, growing and consumption of CBD based products are relaxed.

In the USA, the Company produces a variety of strains of CBD hemp seeds which are grown in greenhouses and in open fields in Arizona, Colorado and Texas and then planted on various farms (totalling over 2.1 million square metres), in Arizona and Texas, with which the Company has a range of joint venture and other farming arrangements.

The hemp crops when harvested, are processed by third party processors into CBD distillate and then sold wholesale by the Company to producers of a range of CBD products, or further manufactured by the Company into its own final products for retail sale.

The Company has also recently entered into a similar farming joint venture agreement in Australia, has obtained the required seed importing and growing licences and commenced planting its first 1 million square metre crop in New South Wales in early September 2020.

The Company has Directors, executives and consultants with a wide range of international experience in the cultivation of CBD hemp seeds and hemp crops, the extraction and processing of the CBD content from the plant and the marketing and sales of its wholesale and retail CBD products. The Board also has experience in developing early stage businesses and successfully arranging for the listing of those companies on the ASX.

Botanic Wellness is undertaking this equity crowdfunding raising to accelerate the growth of its USA and Australian businesses and to provide additional working capital to further develop its marketing and sales operations internationally. This initial crowdfunding offering provides an opportunity for Australian investors to participate in the rapidly growing and developing CBD hemp industry.

I encourage you to read the Offer Document carefully in its entirety and consult your professional adviser before deciding whether to invest in the Company. You should particularly consider the Risk Sections in this Offer Document. I look forward to welcoming you as a shareholder of Botanic Wellness Limited.

Cary P Stynes LLB. (Melb) MAICD

Executive Chairman
Botanic Wellness Limited

www.botanicwellness.com.au

 

Investment Highlights

1. Vertically integrated business model

The Company has experience and expertise in seed breeding and growing as well as hemp
crop cultivation and harvesting. The Company arranges for the processing of the hemp
plants for the extraction of the CBD from the plant to create CBD distillate. It then markets
and sells its CBD distillate product to third party producers of CBD hemp products and
manufactures, markets and sells its own CBD products for online and traditional retail sale
under its “Opulent” brand in the USA and Europe. The Company intends to import, market and
sell its range of CBD products in Australia when laws here permit.

2. Commercially focused and adaptive business model

Botanic Wellness has entered into a range of commercial agreements in the USA, Europe and
Australia and intends to continue to invest and develop its capabilities in the CBD hemp and
related sectors in areas that it considers will be most immediately valuable and strategic in
the future. The Company had revenues of AUD $2.3m in the 2020 Financial Year (unaudited).

3. Global asset footprint

The Company currently has CBD hemp seed growing operations in 3 states in the USA and
over 2.1 million square metres of CBD hemp crops growing in Arizona and Texas and is
replicating its USA operations in Australia. It also proposes to expand its marketing and sales
operations in the USA and Europe, and Australia when laws here permit, to give it greater
exposure to the rapidly increasing demand from consumers for CBD hemp products.
The Company also commenced the planting its first 1 million square metre Australian hemp
crop in NSW in early September 2020. It also has a licence to import and supply Schedule
4 and 8 drug products into Australia which can be prescribed to patients under the Special
Access Scheme.

4. Strategic relationships

The Company has developed a wide range of commercial relationships with large commercial
farmers, processors, product manufacturers and distributors and retailers of CBD hemp
products in the USA and Europe and intends to continue to make this a priority in the future.

5. Rapidly growing markets

The CBD hemp market is growing rapidly worldwide, driven by a relaxation of regulations
relating to a range of CBD products, increasing global awareness of the perceived health and
wellness benefits of CBD, and the increasing availability of CBD products at an affordable price.

5. Experienced Board, Management and Executive team

The Company has extensive international experience in all aspects of the CBD hemp industry
as well as considerable experience in developing early stage companies in new and rapidly
growing industries and in listing and operating companies on the ASX.

Business Overview

Overview of Botanic Wellness

Botanic Wellness intends to become a leading provider of CBD hemp based products, initially in the USA and Europe and, in the future, in Australia as laws here in relation to importing, growing and consumption of CBD hemp based products are relaxed.

The Company has existing indoor and outdoor CBD hemp seed growing operations in Colorado, Arizona and Texas and over 2.1 million square metres of CBD hemp crops currently growing in Arizona and Texas in the USA.

Botanic Wellness arranges for the processing of the harvested hemp crops into CBD distillate and sells that distillate to wholesale customers or uses it for the production of its own retail CBD products.

The Company is also licenced to import seeds and grow hemp in Australia and commenced the planting of its first 1 million square metre Australian CBD hemp crop in New South Wales in early September 2020. It also has a licence to import and supply Schedule 4 and 8 drug products into Australia which can be supplied under the Special Access Scheme.

Botanic Wellness plans to expand its existing USA and Australian CBD seed and hemp growing operations and further develop its USA and European marketing and sales operations. The Company also intends to commence importing various CBD hemp products for the Australian market when that becomes commercially viable.

Key Achievements to Date

IP and Regulatory Licences

Intellectual Property

The Company may, if it considers it commercially appropriate, register some of its CBD seed strains to protect them from use by competitors. Botanic Wellness intends to apply for registration of trademarks in Australia, the USA and Europe relating to its brands as they are developed.

The Company proposes to operate two distinct product ranges under the more exclusive “Opulent” brand and the value for money “Botanic Wellness” brand.

Regulatory Licences

Hemp is still strictly regulated in Australia. However, subject to compliance with state and territory licensing and Federal government requirements, including prescribed maximum THC levels and good character requirements, the Australian regulatory landscape allows the cultivation and supply of hemp seed and hemp-based food products.

Botanic Wellness and its wholly owned subsidiaries Live Opulent Inc in the USA and Medical Marijuana Investment Fund  Pty Ltd in Australia, have applied for or obtained and maintain the following key statutory licences, which permit the operation of its business in the USA and Australia:

Industry Overview

Current Market

In the USA, Botanic Wellness operates in the hemp sector growing seeds, cultivating hemp, extracting oils from that hemp, processing the oils to distillate and selling that distillate to a range of business customers and retail customers.

In Australia, Botanic Wellness is also intending to operate in the hemp sector supplying various Australian hemp products to the Australian and to international markets.

The Opportunity

Legislation Change

In December 2018, the USA passed the 2018 Farm Bill which removed hemp and its extracts from restrictions under the Controlled Substances Act. This has had the effect of making hemp a federally legal agricultural commodity that can be commercially cultivated and used in the USA. Various individual state laws and regulations also apply across the USA.

In late 2017 foods containing hemp became legal for human consumption in Australia. The laws in relation to the use and consumption of hemp are developing rapidly throughout the world with a general move to greater liberalisation globally. The use of hemp in a wide variety of applications is now readily accepted internationally.

Consumer Trends

Growth in demand for CBD hemp products is expected to be driven by a variety of factors:

  • Consumer demand
    There is growing awareness of the perceived benefits of CBD. In addition, there is a developing understanding of the various uses of different parts of the hemp plant.

  • Environment and sustainability
    Hemp is considered a sustainable crop by producers and consumers who are seeking more environmentally friendly and sustainable products to grow.

  • Industry growth drivers
    CBD products are being increasingly sought after for their perceived therapeutic benefits and an increasing number of products containing CBD are being developed.

  • Increased research and development and range of products
    The passing of the 2018 USA Farm Bill and similar legislation in other countries and increasing consumer demand has led to an increase in research and development into the potential benefits of CBD. This is expected to result in a significant increase in the range of CBD products available and their use as nutraceuticals in health and wellness applications.

  • Expansion of retail channels
    The increased availability of CBD hemp products in traditional retail channels, beyond dispensaries and smoking shops, is also normalising the product and assisting acceptance and growth in understanding and demand.

What does this mean for Botanic Wellness?

The global cannabidiol market was valued at USD 4.6 billion in 2018 and is expected to grow at a compound annual growth rate (CAGR) of 22.2% from 2019 to 2025 to reach USD 23.6 billion by 2025. The demand for cannabidiol (CBD) for medical and wellness purposes is high due to its perceived healing properties, which is the key factor driving the growth of the market. Moreover, growing product adoption and utilization owing to government approvals is a major factor anticipated to drive the demand for cannabidiol infused products.

Source: Grandview Research – December 2019

The Global CBD Hemp Oil Market is expected to grow at a CAGR of roughly 30.7% over the next
five years and will reach 760 million USD in 2024, from 150 million USD in 2020.

Source: 360 Research Reports – August 2020

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Company Directors

Cary Stynes LLB. (Melb.) MAICD

Co-Founder and Executive Chairman

Cary Stynes is the Executive Chairman of the Company. He oversees the operations and investment strategy of the Company. He holds a current legal practicing certificate and is admitted to practice in the Supreme Court of Victoria and High Court of Australia. He is the principal of Stynes Consulting a legal and consulting practice specialising in early stage companies. He was previously a lawyer with international law firm Minter Ellison before establishing his own law firm which he has operated for over 25 years.

In 1994 he co-founded media and advertising company, Media and Entertainment Group Limited which listed on the ASX in 1995 and expanded throughout Australia as well as into Hong Kong, Singapore, New Zealand and South America. That company was ultimately acquired by CPH Limited.

Since 2000 he has arranged the ASX listing and been the Managing Director or Chief Executive Officer of ASX listed Software Communication Group Limited, CBD Online, subsequently CBD Energy Limited and The Swish Group Limited. He is also a former Non-Executive Director of Traffic Technologies Limited, MCM Entertainment Limited, Teys Limited (now Oakdale Resources Limited), and arranged the ASX listing and was General Legal and Commercial Counsel for USA (Hollywood) based digital media and advertising company engage: BDR Limited. He also sat on the Board of children’s cancer charity The Koala Foundation.

He has in various capacities arranged the restructuring, re-capitalisation, IPOs and RTOs of a number of Australian and international companies on the ASX in the media and technology, infrastructure, mining, retail, agriculture and and related sectors and sat on a number of private and public company boards as, Managing Director, Executive Director, Non Executive Director, General Legal Counsel and Company Secretary for over 25 years.

Donald Gritten Jr.

President and Chief Executive Officer

Donald (Don) Gritten Jr. is a business strategy consultant and is President and CEO of the Company’s USA operations. He was a formerly a sergeant in the US Army and on active duty for two years and served for nine years in the US Army Reserves. In early 2000, Don began his business career in the accounting and tax area. Since then Don has owned a number of medical related practices, a management-consulting firm, as well as business accounting firm and an insurance brokerage. In the last 15 years he has purchased and sold a number of private companies.

Over the past 15 years Don has also given a large number of speeches and consulted to numerous business owners and CEOs. Don presents seminars based on his experiences and based on what’s worked for him in the past, and what’s working now. Don is an experienced consultant and M&A specialist.

Don began researching and working in the hemp industry in 2015. He has developed the Company’s seed growing operations in Colorado. In Arizona, he has overseen the operation of the Company’s multiple farming operations and production and manufacturing operations focusing on the vertical integration of the business from seed production to wholesale and retail sales. Don has worked with some of the the most experienced operators in the hemp business and brings that experience to the Company.

Joe Wicker Jr.

Executive Director and Chief Operating Officer

Joe has a background in finance and economics and has been a business owner and entrepreneur for over 25 years. He understands markets and develops and implements strategies to maximise efficiency and profitability.

He recently became involved in the rapidly growing hemp industry and has used his extensive experience in business development, real estate and mortgage banking to acquire property, create partnerships with large agricultural farmers and developing a vertical integration strategy for the hemp industry.

Prior to his involvement in the hemp industry he was the owner of various property investment companies from 2004 to 2018. These companies bought and sold investment real estate in various parts of the USA during this time.

Joe was responsible for identifying and acquiring key asset purchases and maintaining a consistent flow of real estate inventory as wells a sales pipeline. He designed and implemented processes to support the businesses growth and build and maintain contacts and relationships, He implement marketing systems and processes, that identified new customer markets and developed various sales approaches for those markets.

Jeffrey Tang JP B.ECO M.ACC (NSW)

Non-Executive Director, Head of Asia

Jeffrey has been a cannabis/hemp entrepreneur since 2013 and is the founder and CEO of Hemp Australia Pty Ltd.

He holds a Bachelor of Economics, Master of Professional Accounting from the University of New South Wales, has
a Diploma of Financial Planning and is a Justice of the Peace in NSW.

He has 10 years of diverse experience in property development, investor relations and international trade, in particular in relation to trade with China. He is skilled in business development planning, negotiation, international business and global sourcing of a wide range of products for the Chinese market in particular.

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