Ecofibre Faces Cash Flow Pressure Despite Property Sales and Restructuring Efforts

Ecofibre’s Financial Position and Debt Reduction

Ecofibre Limited (ASX: EOF) has released its Appendix 4C Quarterly Report for the three months ended 31 December 2024, revealing a mixed operational performance alongside significant strides in debt reduction and balance sheet de-risking. The company closed the quarter with total cash of $3.9 million, including $0.8 million held by its separately funded biotech subsidiary, EOF-Bio.

Key to Ecofibre’s recent financial manoeuvres was the sale and leaseback of three US properties, two in Greensboro, North Carolina, and one in Georgetown, Kentucky, yielding USD 9.7 million. This transaction enabled the repayment of USD 9 million to secured lender Nubridge Commercial Lending LLC, with the remaining USD 1 million converted into an unsecured loan repayable in 2027 at 12% interest.

Operational Highlights and Business Unit Performance

Ecofibre’s business units showed divergent results in the first half of 2025. Ecofibre Advanced Technologies (EAT) reported revenue growth to $4.2 million in Q2, driven by increased sales of its NEOLAST™ yarn, including expanding commercial relationships with Under Armour. However, the company has paused further capital expenditure on a second turf yarn production line pending sustainable demand growth.

Conversely, Ananda Health faced a challenging quarter, with revenues declining to $1.8 million and negative EBITDA for the first time in 2025. Difficult trading conditions in both the US and Australian CBD markets, particularly within the independent pharmacy channel, contributed to this downturn. The company is responding with new product launches, including the Ananda Wellness GLP-1 supplement range, and has initiated social media advertising campaigns to stimulate sales.

Ecofibre Genetics completed its fibre seed crop harvest in North Queensland but anticipates lower seed sales in the near term. The company has appointed Apex Genetics LLC as a broker to facilitate sales in the US and Australia.

Corporate Restructuring and Strategic Initiatives

Corporate overheads remain a significant drag on Ecofibre’s cash flow, with litigation and restructuring costs amounting to $1.7 million in Q2. The company is actively pursuing a corporate restructure aimed at right-sizing costs and recentering operations in the United States. This includes prioritising the sale of the Genetics business and seed inventory, alongside a strategic review of Ananda Health to explore options for scaling and better utilising manufacturing capacity.

Ecofibre’s management has also secured new working capital facilities, including a USD 3 million equipment loan from Loeb Term Solutions LLC and a USD 0.5 million facility from nFusion Capital Finance LLC, collateralised by machinery, accounts receivable, and inventory. Negotiations continue to extend loan terms with existing lenders, including the Thiele Trust and Lambert Superannuation Fund.

Outlook and Cash Flow Considerations

The company’s operating cash outflow for the quarter was $4.6 million, excluding EOF-Bio’s $0.7 million outflow. Despite these outflows, Ecofibre’s directors express confidence in the company’s ability to continue operations, contingent on successful execution of its Cash Positive Plan. This plan focuses on improving underlying cash flows, completing the sale of non-core assets, and managing costs effectively.

EOF-Bio remains focused on advancing patient-centred botanical drugs, particularly targeting endometriosis-associated pain, with plans to secure external funding for a Phase 2 clinical trial.