# EDGAR Filing Document

**Accession Number:** 0001401395
**File Stem:** 0001193125-23-019152
**Filing Date:** 2023-1
**Character Count:** 873450
**Document Hash:** 9001064361b44d4a6f09eb2f111e66cb
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-23-019152.hdr.sgml**: 20230130

**ACCESSION NUMBER**: 0001193125-23-019152

**CONFORMED SUBMISSION TYPE**: S-1/A

**PUBLIC DOCUMENT COUNT**: 155

**FILED AS OF DATE**: 20230130

**DATE AS OF CHANGE**: 20230130

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Neptune Wellness Solutions Inc.
- **CENTRAL INDEX KEY:** 0001401395
- **STANDARD INDUSTRIAL CLASSIFICATION:** PHARMACEUTICAL PREPARATIONS [2834]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** A8
- **FISCAL YEAR END:** 0331

**FILING VALUES:**
- **FORM TYPE:** S-1/A
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-268196
- **FILM NUMBER:** 23568507

**BUSINESS ADDRESS:**
- **STREET 1:** 545 PROMENADE DU CENTROPOLIS
- **STREET 2:** SUITE 100
- **CITY:** LAVAL
- **STATE:** A8
- **ZIP:** H7T 0A3
- **BUSINESS PHONE:** (450) 687-2262

**MAIL ADDRESS:**
- **STREET 1:** 545 PROMENADE DU CENTROPOLIS
- **STREET 2:** SUITE 100
- **CITY:** LAVAL
- **STATE:** A8
- **ZIP:** H7T 0A3

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Neptune Technologies & Bioressources Inc.
- **DATE OF NAME CHANGE:** 20070530

?xml version='1.0' encoding='ASCII'? S-1/A

As filed with the Securities and Exchange Commission on January 30, 2023

Registration No. 333-268196

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

**Amendment No. 2** 

to

FORM **S-1** 

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

NEPTUNE WELLNESS SOLUTIONS INC.

(Exact name of registrant as specified in its charter)

Quebec 2836 Not Applicable <br> (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.)

545 Promenade du Centropolis

Suite 100

Laval, Quebec, Canada H7T 0A3

(450) 687-2262

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

CT Corporation System

28 Liberty Street

New York, NY 10005

(212) 894-8800

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of all communications, including communication sent to agent for service, should be sent to

---

| | | |
|:---|:---|:---|
| François Paradis | John S. Wirt | Thomas M. Rose |
| Osler, Hoskin & Harcourt LLP | Christopher | Nicole Edmonds |
| 1000 De La Gauchetiére Street West | c/o Neptune Wellness Solutions Inc. | Troutman Pepper Hamilton Sanders LLP |
| Suite 2100 | 545 Promenade du Centropolis, Suite 100 | 401 9th Street, NW, Suite 1000 |
| Montréal, Québec, H3B 4W5 | Laval, Quebec, H7T 0A3 | Washington, DC 20004 |
| Canada | Canada | United States |
| (514) 904-8100 | (450) 687-2262 | (757) 687-7715 |

---

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
|  |  | Emerging Growth Company | ☐ |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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The information in this preliminary prospectus is not complete and may be changed. The securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion. Dated January 30, 2023.

#### PRELIMINARY PROSPECTUS
![LOGO](g338720g66r98.jpg)

## Neptune Wellness Solutions Inc.

### Up to 7,267,114 Common Shares Underlying Warrants

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This prospectus relates to the issuance by us and the resale by the selling security holders named in this prospectus (the "Selling Shareholders") of up to an aggregate of 7,267,114 of our common shares, no par value ("Common Shares"), upon the exercise of warrants to purchase our common shares of which (i) 6,417,114 Warrants (the "October 2022 Warrants") were issued to Selling Shareholders in a private placement that closed pursuant to that certain Securities Purchase Agreement dated October 6, 2022 (the "Purchase Agreement") with certain institutional investors, pursuant to which Neptune Wellness Solutions Inc. (the "Company") agreed to issue and sell, in a registered direct offering, 3,208,557 of its Common Shares and the Warrants in a concurrent private placement (the "Private Placement") and (ii) 850,000 Warrants (the "January 2023 Warrants" and together with the "Series E Warrants," the "Warrants") were issued to Selling Shareholders in a private placement that closed pursuant to that certain Note Purchase Agreement, dated as of January 12, 2023 (the "Loan").

Our registration of the securities covered by this prospectus does not mean that either we or the Selling Shareholders will issue, offer or sell, as applicable, any of the securities hereby registered. The Selling Shareholders may offer, sell, or distribute all or a portion of the securities hereby registered publicly or through private transactions at prevailing market prices or at negotiated prices. We will not receive any of the proceeds from such sales of our Common Shares by the Selling Shareholders pursuant to this prospectus. We will, however, receive the net proceeds of any Warrants exercised for cash. We will bear all costs, expenses and fees in connection with the registration of these securities, including with regard to compliance with state securities or "blue sky" laws. The Selling Shareholders will bear all commissions and discounts, if any, attributable to their sale of our common shares. See "*Plan of Distribution*" beginning on page 105 of this prospectus.

You should read this prospectus and any prospectus supplement or amendment carefully before you invest in our securities.

Our Common Shares are listed on The Nasdaq Capital Market ("Nasdaq") under the symbol "NEPT". On January 27, 2023, the last reported sale price of our Common Shares was $0.77 per share on the Nasdaq.

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**Our business and investing in our securities involve a high degree of risk. See "[Risk Factors](#tx338720_8)" beginning on page 15 of this prospectus and in the other documents that are incorporated by reference in this prospectus.** 

**Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.** 

#### The date of this prospectus is January 30, 2023.

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#### **TABLE OF CONTENTS**

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| | |
|:---|:---|
|  [MARKET AND OTHER INDUSTRY DATA](#tx338720_1a) | 1 |
|  [TRADEMARKS AND COPYRIGHTS](#tx338720_1) | 1 |
|  [ABOUT THIS PROSPECTUS](#tx338720_2) | 2 |
|  [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](#tx338720_3) | 4 |
|  [RISK FACTOR SUMMARY](#tx338720_4) | 7 |
|  [PROSPECTUS SUMMARY](#tx338720_5) | 9 |
|  [THE OFFERING](#tx338720_6) | 13 |
|  [MARKET AND INDUSTRY DATA AND FORECASTS](#tx338720_7) | 14 |
|  [RISK FACTORS](#tx338720_8) | 15 |
|  [USE OF PROCEEDS](#tx338720_9) | 37 |
|  [DETERMINATION OF OFFERING PRICE](#tx338720_10) | 38 |
|  [MARKET INFORMATION FOR SECURITIES AND DIVIDEND POLICY](#tx338720_11) | 39 |
|  [BUSINESS](#tx338720_12) | 41 |
|  [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#tx338720_13) | 55 |
|  [CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS, AND DIRECTOR INDEPENDENCE](#tx338720_14) | 86 |
|  [MANAGEMENT](#tx338720_15) | 88 |
|  [EXECUTIVE COMPENSATION](#tx338720_16) | 92 |
|  [DESCRIPTION OF THE REGISTRANT'S SECURITIES TO BE REGISTERED](#tx338720_17) | 98 |
|  [SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT](#tx338720_19) | 100 |
|  [SELLING SHAREHOLDERS](#tx338720_20) | 102 |
|  [PLAN OF DISTRIBUTION](#tx338720_21) | 105 |
|  [LEGAL MATTERS](#tx338720_22) | 107 |
|  [EXPERTS](#tx338720_23) | 107 |
|  [WHERE YOU CAN FIND MORE INFORMATION](#tx338720_24) | 107 |
|  [INDEX TO FINANCIAL STATEMENTS AND EXHIBITS](#tx338720_25) | F-1 |

---

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#### MARKET AND OTHER INDUSTRY DATA
Certain market and industry data included in this prospectus, including the size of certain markets and our size or position within these markets, including our products, are based on estimates of our management and third-party reports. Management estimates have been derived from our management's knowledge and experience in the markets in which we operate, as well as information obtained from surveys, reports by market research firms, our customers, distributors, suppliers, trade and business organizations and other contacts in the markets in which we operate, which, in each case, we believe are reliable.

We are responsible for all of the disclosure in this prospectus and while we believe the data from these sources to be accurate and complete, we have not independently verified data from these sources or obtained third-party verification of market share data and this information may not be reliable. In addition, these sources may use different definitions of the relevant markets. Data regarding our industry is intended to provide general guidance but is inherently imprecise.

Assumptions and estimates of our future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "Risk Factors-Risks Relating to our Business and Industry." These and other factors could cause our future performance to differ materially from our assumptions and estimates. See "*Cautionary Note Regarding Forward-Looking Statements*."

#### TRADEMARKS AND COPYRIGHTS
We own or have rights to trademarks or trade names that we use in connection with the operation of our business, including our corporate names, logos and website names. In addition, we own or have the rights to copyrights, trade secrets and other proprietary rights that protect the services that we offer. This prospectus may also contain trademarks, service marks and trade names of other companies, which are the property of their respective owners. Our use or display of third parties' trademarks, service marks, trade names or products in this prospectus is not intended to, and should not be read to, imply a relationship with or endorsement or sponsorship of us. Solely for convenience, some of the copyrights, trade names and trademarks referred to in this prospectus are listed without their <sup>©</sup>, <sup>®</sup> and <sup>™</sup> symbols, but we will assert, to the fullest extent under applicable law, our rights to our copyrights, trade names and trademarks. All other trademarks, service marks and trade names are the property of their respective owners.

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#### ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-1 that we filed with the Securities and Exchange Commission (the "Commission" or the "SEC") using the "shelf" registration process. Under this shelf registration process, the Selling Shareholders may, from time to time, sell the securities offered by them described in this prospectus. We will not receive any proceeds from the sale by such Selling Shareholders of the securities offered by them described in this prospectus. We will not receive any proceeds from the sale of Common Shares underlying the Warrants pursuant to this prospectus, except with respect to amounts received by us upon the exercise of the Warrants.

We may also file a prospectus supplement or post-effective amendment to the registration statement of which this prospectus forms a part that may contain material information relating to these offerings. The prospectus supplement or post-effective amendment may also add, update or change information contained in this prospectus with respect to that offering. If there is any inconsistency between the information in this prospectus and the applicable prospectus supplement or post-effective amendment, you should rely on the prospectus supplement or post-effective amendment, as applicable. Before purchasing any securities, you should carefully read this prospectus, any post-effective amendment, and any applicable prospectus supplement, together with the additional information described under the heading "*Where You Can Find More Information.*"

Neither we, nor the Selling Shareholders, have authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus, any post-effective amendment, or any applicable prospectus supplement prepared by or on behalf of us or to which we have referred you. We and the Selling Shareholders take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the Selling Shareholders will not make an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus, any post-effective amendment and any applicable prospectus supplement to this prospectus is accurate only as of the date on its respective cover. Our business, financial condition, results of operations and prospects may have changed since those dates. This prospectus contains, and any post-effective amendment or any prospectus supplement may contain, market data and industry statistics and forecasts that are based on independent industry publications and other publicly available information. Although we believe these sources are reliable, we do not guarantee the accuracy or completeness of this information and we have not independently verified this information. In addition, the market and industry data and forecasts that may be included in this prospectus, any post-effective amendment or any prospectus supplement may involve estimates, assumptions and other risks and uncertainties and are subject to change based on various factors, including those discussed under the heading "*Risk Factors*" contained in this prospectus, any post-effective amendment and the applicable prospectus supplement. Accordingly, investors should not place undue reliance on this information.

This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under "*Where You Can Find More Information*."

Unless otherwise indicated, all references to "$" or "US$" in this registration statement refer to U.S. dollars, and all references to "C$" refer to Canadian dollars.

We own or have rights to trademarks, trade names and service marks that we use in connection with the operation of our business. In addition, our name, logos and website name and address are our trademarks or service marks. Solely for convenience, in some cases, the trademarks, trade names and service marks referred to in this prospectus are listed without the applicable <sup>®</sup>, <sup>™</sup> and <sup>SM</sup> symbols, but we will assert, to the fullest extent under applicable law, our rights to these trademarks, trade names and service marks. Other trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners.

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Unless the context indicates otherwise, references in this prospectus to the "Company," the "Corporation," "Neptune," "we," "us," "our," and similar terms refer to Neptune Wellness Solutions Inc. and its consolidated subsidiaries.

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#### CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains or incorporates by reference certain information and statements that may constitute forward-looking information within the meaning of Canadian securities laws and forward-looking statements within the meaning of U.S. federal securities laws, both of which we refer to as forward-looking statements, including, without limitation, statements relating to certain expectations, projections, new or improved product introductions, market expansion efforts, and other information related to our business strategy and future plans. Forward-looking statements can, but may not always, be identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "would", "should", "believe", "objective", "ongoing", "assumes", "goal", "likely" and similar references to future periods or the negatives of these words and expressions and by the fact that these statements do not relate strictly to historical or current matters. The statements we make regarding the following matters are forward-looking by their nature and are based on certain of the assumptions noted below. Forward-looking statements in this prospectus may include, but are not limited to, statements about expectations regarding being subject to taxation in both Canada and the United States; our ability to obtain additional financing in the future and continue as a going concern; uncertainties related to general economic, political, business, industry, and market conditions, including the ongoing COVID-19 pandemic, inflationary pressures, and geopolitical conflicts, the anticipated benefits from the divestiture of our cannabis business, our estimates regarding expenses, future revenues, capital requirements and needs for additional financing; our expectations regarding potential pursuit of strategic acquisitions, joint venture or partnerships, our ability to retain members of our management team and our employees; competition existing today or that will likely arise in the future; and our ability to satisfy the continued listing requirements of the NASDAQ Capital Market or any other exchange on which our securities may trade on.

These forward-looking statements are based on management's current expectations and are subject to a number of risks, uncertainties, and assumptions, including market and economic conditions, the effect of the COVID-19 pandemic, business prospects or opportunities, future plans and strategies, projections, technological developments, anticipated events and trends and regulatory changes that affect us, our customers and our industries. Although the Company and management believe that the expectations reflected in such forward-looking statements are reasonable and based on reasonable assumptions and estimates, there can be no assurance that these assumptions or estimates are accurate or that any of these expectations will prove accurate. Forward-looking statements are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies that could cause actual events to differ materially from those expressed or implied in such statement.

Undue reliance should not be placed on forward-looking statements. Actual results and developments are likely to differ, and may differ materially, from those anticipated by the Company and expressed or implied by the forward-looking statements contained or incorporated by reference in this prospectus. Such statements are based on a number of assumptions and risks that may prove to be incorrect, including, without limitation, assumptions about:

• our ability to successfully manage our liquidity and expenses, and continue as a going concern;

• the anticipated benefits of the divestiture of our cannabis business;

• our ability to maintain customer relationships and demand for our products;

• the impact of current and future substantial litigation, investigations and proceedings;

• the overall business and economic conditions;

• the potential financial opportunity of our addressable markets;

• the competitive environment;

• the protection of our current and future intellectual property rights;

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• our ability to recruit and retain the services of our key personnel;

• our ability to develop commercially viable products;

• our ability to pursue new business opportunities;

• our ability to obtain financing on reasonable terms or at all;

• our ability to integrate our acquisitions and generate synergies; and

• the impact of new laws and regulations in Canada, the United States or any other jurisdiction in which we currently do or intend to do business.

Certain forward-looking statements contained herein and incorporated by reference concerning the cannabis industry and the general expectations of the Company concerning the cannabis industry and the Company's business and operations are based on estimates prepared by the Company using data from publicly available governmental sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which the Company believes to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. While the Company is not aware of any misstatement regarding any industry or government data presented herein, the cannabis industry involves risks and uncertainties and is subject to change based on various factors.

Many factors could cause our actual results, level of activity, performance, achievements, future events or developments to differ materially from those expressed or implied by forward-looking statements, including, without limitation, the factors discussed under "Risk Factors" beginning on page 15 and in our Annual Report on Form 10-K for the year ended March 31, 2022, as amended, and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022. In particular, you should consider the following risks that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements:

• our inability to achieve the anticipated benefits of the divestiture of our cannabis business;

• our inability to continue as a going concern;

• geopolitical events, such as terrorism, war or other military conflict, including increased uncertainty regarding the ongoing hostility between Russia and the Ukraine and the related impact on macroeconomic conditions as a result of such conflict;

• changes in our industry;

• increased competition within the industries that we operate, particularly the nutraceutical, beauty & personal care and organic foods and beverages industries;

• changes in laws and/or government regulations affecting our business;

• the political environments in the U.S. and Canada;

• systems failures or cybersecurity incidents;

• exposure to current and future claims and litigation, including product liability claims;

• exposure to currency fluctuations and restrictions as well as credit risks;

• potential significant increases in tax liabilities;

• product liability claims;

• our inability to attract or retain key personnel or additional employees required for the development and future success of our business;

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• our inability to protect our intellectual property rights;

• changes in intellectual property laws;

• our inability to obtain adequate insurance coverage;

• significant sales to a limited number of customers;

• our failure to maintain any regulatory approvals, licenses and/or permits required for operating our business;

• adverse actions by governmental bodies that regulate our products, business or operations;

• our inability to maintain our liquidity position and manage expenses; and

• our failure to comply with, or remedy deficiencies with, the listing standards of The Nasdaq Capital Market or other securities exchanges on which our Common Shares are listed and trade.

There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those expressly or impliedly expected or estimated in such statements. Shareholders and investors should not place undue reliance on forward-looking statements as the plans, intentions or expectations upon which they are based might not occur. Although the Company cautions that the foregoing list of risk factors, as well as those risk factors presented under the heading "Risk Factors" and elsewhere in this prospectus, are not exhaustive, shareholders and investors should carefully consider them and the uncertainties they represent and the risks they entail. The forward-looking statements contained in this prospectus are expressly qualified in their entirety by this cautionary statement. Unless otherwise indicated, forward-looking statements in this prospectus describe our expectations as of the date of this prospectus and, accordingly, are subject to change after such date. We do not undertake to update or revise any forward-looking statements for any reason, except as required by applicable securities laws.

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#### RISK FACTORS SUMMARY
Investing in our securities involves risks. You should carefully consider the risks described under the heading "*Risk Factors*" beginning on page 15 before deciding to invest in our securities. If any of these risks actually occurs, our business, financial condition and results of operations would likely be materially adversely affected. In such case, the trading price of our securities would likely decline, and you may lose all or part of your investment. Set forth below is a summary of the principal risks we face:

#### Risks Relating to our Business and Industry
• The success of our business depends, in part, on maintaining a strong sourcing and manufacturing platform and efficient distribution channels.

• Inflation in the cost of commodities and inputs into our products have, and may continue, to directly affect our business.

• COVID-19 has and will continue to impact our operations and could have a material adverse effect on our business, results of operations and financial condition.

• Increasing awareness of health and wellness are driving changes in the consumer products industry, and if we are unable to react in a timely and cost-effective manner, our results of operations and future growth may be adversely affected.

• Markets for our products and services are highly competitive, and we may be unable to compete effectively.

• We may be unable to manage our growth effectively.

• We depend on significant customers for a substantial portion of our revenue. If we fail to retain or expand our customer relationships or significant customers reduce their purchases, our revenue could decline significantly.

• Significant interruptions in our access to certain supply chains, for key inputs such as raw materials, electricity, water, and other utilities may impair our operations.

• Our future success depends on the sales of our consumer products and turnkey solutions products.

• Our activities rely on certain third-party suppliers, contract manufacturers and distributors, and such reliance may adversely affect us if the third parties are unable or unwilling to fulfill their obligations.

• Our products may be subject to recalls for a variety of reasons, which could require us to expend significant management and capital resources.

• We may not meet timelines for project development.

• Product contamination or tampering or issues or concerns with respect to product quality, safety and integrity could adversely affect our business, reputation, financial condition or results of operations.

• The Company may have difficulty obtaining insurance to cover its operational risks and, even where available, may not be sufficient to cover losses we may incur.

#### Risks Relating to Our Accounting and Financial Policies
• Although our consolidated financial statements have been prepared on a going concern basis, our management believe that our recurring losses and negative cash flows from operations and other factors have raised substantial doubt about our ability to continue as a going concern for the twelve-month period ended March 31, 2022 and three- and six-month period ended September 30, 2022.

• We have recorded long-lived asset impairment charges and may be required to record additional charges to future earnings if our long-lived assets become impaired.

#### Risks Relating to Our Liquidity
• We are actively managing our liquidity and expenses, including by extending payables due and reducing investment in our businesses, and it is not certain that we will be ultimately successful in developing our business and remaining a going concern.

• We are actively managing our liquidity and expenses, including by extending payables due and reducing investment in our businesses, and it is not certain that we will be ultimately successful in developing our business and remaining a going concern.

• The Company may have difficulty accessing public and private capital and banking services, which could negatively impact its ability to finance its operations.

#### Legal and Regulatory Risks Relating to Our Business
• We identified material weaknesses in our internal control over financial reporting. This may adversely affect the accuracy and reliability of our financial statements and, if we fail to maintain effective internal control over financial reporting, it could impact our reputation, business, and the price of our common shares, as well as lead to a loss of investor confidence in us.

• As a non-accelerated filer, we are not required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act.

• Sources of hemp-derived CBD depend upon legality of cultivation, processing, marketing and sales of products derived from those plants under state law.

• We must comply with requirements for licenses and permits in Canada and the failure to maintain these could adversely affect our operations.

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• We expect to be subject to taxation in both Canada and the United States, which could have a material adverse effect on our financial condition and results of operations.

• We are subject to laws and regulations and guidelines, changes in which could increase our costs and individually or in the aggregate adversely affect our business.

• We are subject to risks inherent to the nutraceutical industry.

• We are subject to anti-money laundering laws and regulations in multiple jurisdictions.

• Potential regulation by the FDA could have a material adverse effect on our business, financial condition and results of operations.

• We could be materially adversely impacted due to restrictions under U.S. border entry laws.

• There is doubt regarding our ability to enforce contracts.

• Our inability to maintain our regulatory approvals and permits could adversely affect our business and financial results.

• We are currently, and may in the future be, subject to substantial litigation, investigations and proceedings that could cause us to incur significant legal expenses and result in harm to our business.

#### Risks Relating to Our Human Resources
• We may be unable to attract or retain key personnel, and we may be unable to attract, develop and retain additional employees required for our development and future success.

• We face exposure to fraudulent or illegal activity by employees, contractors, consultants and agents, which may subject us to investigations and actions.

#### Risks Relating to Our Information Technology
• We must successfully maintain and/or upgrade our information technology systems, and our failure to do so could have a material adverse effect on our business, financial condition or results of operations.

• We may be exposed to risks and costs associated with security breaches, data loss, credit card fraud and identity theft that could cause us to incur unexpected expenses and loss of revenue as well as other risks.

#### Risks Relating to Our Intellectual Property
• Our commercial success depends, in part, on our intellectual property rights and a failure by us to protect our intellectual property may have a material adverse effect on our ability to develop and commercialize our products.

• We have limited trademark protection.

#### Risks Relating to This Offering and Ownership of Our Common Shares
• We do not currently intend to pay any cash dividends on our Common Shares in the foreseeable future.

• If there is insufficient liquidity in our Common Shares, it could adversely affect your ability to sell your shares.

• U.S. investors may be unable to enforce certain judgments against us in Canada.

• Certain Canadian laws could delay or deter a change of control.

• Our shareholders may be subject to dilution resulting from future offerings of Common Shares by us.

• Our failure to meet the continued listing requirements of Nasdaq could result in a de-listing of our Common Shares.

• Our constating documents permit us to issue an unlimited amount of additional Common Shares or Preferred Shares, which may prevent a third-party takeover or cause our shareholders to experience dilution in the future.

• Because the Company is a "smaller reporting company," we may take advantage of certain scaled disclosures available to us, resulting in holders of our securities receiving less Company information than they would receive from a public company that is not a smaller reporting company

• Any acquisitions, strategic investments, divestures, mergers, or joint ventures we make may require the issuance of a significant amount of equity or debt securities and may not be successful.

• We have reported negative cash flows from operating activities and may do so in future periods.

• We may not be able to maintain our operations without additional funding.

• We are subject to foreign currency fluctuations, which could adversely affect our financial results.

#### General Risk Factors
• Catastrophic events outside of our control, including pandemics, may harm our results of operations or damage our facilities.

• The market price of the Company's Common Shares may be highly volatile.

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#### PROSPECTUS SUMMARY
*The following summary highlights selected information included in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider or that may be important to you in making an investment decision. You should carefully read the entire prospectus before making an investment in our common shares. You should carefully read this entire prospectus, including the information under, "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements included elsewhere in this prospectus.* 

#### Overview
We are a modern consumer packaged goods ("CPG") company driven by a singular purpose: to transform the everyday for a healthier tomorrow. Neptune is a diversified health and wellness company with multiple brand units. With a mission to redefine health and wellness, Neptune is focused on building a broad portfolio of high quality, affordable consumer products in response to long-term secular trends and market demand for natural, plant-based, sustainable and purpose-driven lifestyle brands. The Company utilizes a highly flexible, cost efficient manufacturing and supply chain infrastructure that can be scaled up and down or into adjacent product categories to identify new innovation opportunities, quickly adapt to consumer preferences and demand, and bring new products to market through its mass retail partners and e-commerce channels. Leveraging decades of expertise in extraction and product formulation, Neptune is a provider of turnkey product development and supply chain solutions to business customers across several health and wellness verticals, including nutraceuticals and white label consumer packaged goods. Neptune has expanded its operations since June 2020 into several brand units in order to better address its markets. The main brand units are the following: Nutraceuticals, Beauty & Personal Care, and Organic Foods & Beverages. All amounts in this prospectus are in US dollars, unless otherwise noted.

#### Our Business Strategy
Neptune's vision is to change consumer habits through the creation and distribution of environmentally friendly, ethical and innovative consumer product goods. Our mission is to redefine health and wellness and help humanity thrive by providing sustainable consumer focused solutions. Despite the decline in global economic activity since the outbreak of the COVID-19 virus, Neptune has taken transformative, and successful, actions to increase its sales, distribution and reach in both the business-to-business ("B2B") and business-to-consumer ("B2C") model in the consumer-packaged goods ("CPG") market. Neptune has a dual go-to market B2B and B2C strategy focused on expanding its global distribution reach. The strategy sets Neptune apart from its competition and has started to yield consistent, long-term revenue opportunities for the Company.

The Company's long-term strategy is focused on the health and wellness sector with an emphasis on select CPG verticals, including Nutraceuticals, Beauty & Personal Care, and Organic Foods & Beverages. Neptune's current brand portfolio across these verticals include Sprout®, Neptune Wellness<sup>™</sup>, Forest Remedies®, and MaxSimil®.

#### Our Products and Markets
Our Nutraceutical, Beauty and Personal Care products and Organic Foods and Beverages are manufactured by third party manufacturers. In order to meet demand for our products, we have developed relationships with selected contract manufacturers. We believe that we are not dependent on any single contract manufacturer and that, if necessary, our current selected contract manufacturers could be replaced with minimal disruption to our operations.

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#### Nutraceuticals
Neptune offers a variety of specialty ingredients, including our licensed specialty ingredient MaxSimil<sup>®</sup>, a technology that helps increase digestion and absorption of fat-soluble and nutritional ingredients. Additionally, the Company sources a variety of other marine oils, seed oils and specialty ingredients that are available for sale as raw material or transformed into finished products. The Company has recently launched a new line of Vitamin Sprays and Pumps for both children and adults. Neptune is focused on expanding its exclusive Omega-3 delivery technology MaxSimil<sup>®</sup> while improving growth and profitability in its Nutraceuticals vertical through its brand Biodroga.

Neptune's core strength is product innovation with a focus on specialty ingredients offered in bulk soft gels and liquid delivery systems. The Company continues to expand its delivery system capabilities with projects for pumps, sprays, roll-ons and CBD enhancements. All of Neptune's Nutraceutical products are available under distributors' private labels, primarily sold in the Canadian and U.S. nutraceutical markets. Neptune, through its nutraceuticals products business, also formulates, develops and provides customers with turnkey nutrition solutions.

#### Beauty & Personal Care
The Company sells wellness products to the Beauty & Personal Care market through its Forest Remedies brand. Forest Remedies offers plant-based supplements, including first-of-its kind multi-omega gummies and soft gels with packaging that is 100% plastic-free.

#### Organic Foods and Beverages
In February 2021, Neptune acquired a controlling interest in Sprout Foods, Inc., an organic plant-based baby food and toddler snack company. Sprout is an integral piece of Neptune's health and wellness portfolio and represents a key brand within the Organic Foods and Beverages vertical.

#### Competition
The nutraceutical, beauty & personal care and organic foods and beverages industries are highly competitive. There are many companies, public and private universities, and research organizations actively engaged in the research and development of products that may be similar to our products. It is probable that the number of companies seeking to develop products similar to our products will increase. Many of these and other existing or potential competitors have substantially greater financial, technical and human resources than we do and may be better equipped to develop, manufacture and market products.

#### Recent Developments
*Liquidity and Going Concern*—We are actively managing our liquidity and expenses, including by extending payables due and reducing investment in our businesses. There is substantial doubt about our ability to continue as a going concern. As of January 22, 2023, we had approximately $6.3 million in cash and cash equivalents. We believe our current cash position will be sufficient to operate our business for three to six months under our current business plan. In addition, we are pursuing several cash generating transactions as well as planning for further expense reductions. There can be no assurance that any cash generating transaction will be completed or that our expense reductions measures will be sufficient to allow as to continue operating our business. We need substantial additional funding to continue operating our business. If we are unable to continue as a going concern, we may have to liquidate our assets, and the values we receive for our assets in liquidation or dissolution could be significantly lower than the values reflected in our financial statements. We may have to liquidate our assets in the very near term if additional funding is not received in the upcoming months.

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On July 13, 2022, Sprout Foods, Inc., a Delaware corporation ("Sprout"), a subsidiary of the Company, issued an amended and restated secured promissory note (the "Amended Note") in favor of NH Expansion Credit Fund Holdings LP, an investment fund managed by Morgan Stanley Expansion Capital ("MSEC"), in the principal amount of $13,000,000. The Amended Note amended and restated the prior promissory note in the principal amount of $10,000,00 in connection with a loan of an additional $3,000,000 to Sprout from MSEC. The $13,000,000 Notes will bear interest at 10% per annum, increasing by 1.00% every three months during the term of the Notes.

On October 16, 2022, Neptune entered into an asset sale and purchase agreement (the "ASPA") with a third-party, for its Canadian cannabis business including the Sherbrooke facility, following the planned divestiture of this business announced on June 8, 2022. The aggregate purchase price of the assets sold, net of liabilities assumed, amounted to $3.7 million ($5,15 million CAD). The ASPA closed on November 9, 2022. Some assets were excluded from the ASPA and were written down accordingly. The Company recorded an impairment loss on assets held for sale of $14.5 million in the second quarter interim financial statements for the three and six-months ended September 30, 2022. On November 10, 2022, the Company filed a notice of cessation of cannabis activities with Health Canada and requested that its cannabis processing and research licenses be revoked. As of November 11, 2022, all cannabis was removed from the Sherbrooke facility and the Company no longer possesses or conducts any activities with cannabis, other than certain products produced for third party customers containing CBD in our nutraceutical business. The Company remains liable for the pre-closing activities of the divested cannabis business.

On October 11, 2022, the Company announced the closing of a registered direct offering of 3,208,557 of its Common Shares and the Warrants in the concurrent Private Placement. The Company received gross proceeds of approximately $6.0 million in connection with the offering, before deducting placement agent fees and related offering expenses. The net proceeds to the Company from the offering, after deducting the placement agent fees and expenses, and the Company's estimated offering expenses, were approximately $5.15 million.

On October 21, 2022, the Company announced that it had agreed to settle and resolve a putative shareholder class action lawsuit filed against Neptune and certain of its current and former officers and directors, captioned Gong v. Neptune Wellness Solutions, Inc. (Case No. 2:21-cv-01386-ENV-ARL) pending in the United States District Court for the Eastern District of New York, for a gross payment to the class of between $4 and $4.25 million, with the exact amount being within the Company's control and dependent on the type of consideration used. The settlement is subject to court approval and certification by the court of the class. The Company recorded a litigation settlement expense of $4,000,000 in the second quarter interim financial statements for the three and six-months ended September 30, 2022.

On January 12, 2023, the Company entered into a Note Purchase Agreement among the purchasers named therein and the Company, pursuant to which the Company issued and sold $4 million in aggregate principal amount of senior secured promissory notes. The Company may also issue and sell, and the purchasers have agreed to purchase, up to an additional $1 million in aggregate principal amount of senior secured promissory notes to occur not later than February 28, 2023. The second closing will occur only in the event that the Company completes an incremental equity issuance by February 28, 2023, and the aggregate principal amount of the second closing will not exceed the lesser of $1 million or 25% of the proceeds actually received from any such incremental equity issuance. The notes may be prepaid or redeemed in whole or in part by the Company, subject to the payment of a premium in an amount equal to ten percent (10%) of the principal amount of notes being repaid (other than principal in respect of PIK interest), less the aggregate amount of cash interest paid on the Notes being repaid on or before the date of such prepayment.

The notes are due and payable no later than January 12, 2024, unless earlier accelerated in accordance with the terms of the Note Purchase Agreement, with interest accruing at a rate of 16.5% per annum from the date of issuance and payable on the last business day of each calendar month in which the notes are outstanding. For the first six interest payment dates following the initial closing, interest will be paid in kind and thereafter payments shall be made in cash on the interest payment date in arrears. Under the terms of the Note Purchase Agreement,

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the Company issued to the purchasers of the initial notes warrants to purchase a total of 850,000 common shares of the Company exercisable at an exercise price of $0.53 per share at any time until January 12, 2028.

On January 23, 2023, Sprout entered into an accounts receivable factoring facility with Alterna Capital Solutions, LLC ("Alterna"), pursuant to which Sprout agreed to sell certain of its accounts receivable to Alterna. The maximum amount available to Sprout under the facility is $5 million, and funds deployed to Sprout incur a usage fee of the primate rate plus 1%, with a minimum interest rate of 8% per annum. The facility has a one-year term and renews automatically. The Company provided a commercial guaranty in connection with this agreement.

#### History of the Company
Neptune was incorporated under Part IA of the Companies Act (Québec) on October 9, 1998 under the name Neptune Technologies & Bioressources Inc. Since its incorporation, Neptune has amended its articles of incorporation on numerous occasions. The Company first amended its articles on May 30, 2000 to convert its then issued and outstanding shares into newly-created classes of shares. The Company's articles were also amended on May 31, 2000 to create Series A Preferred Shares. On August 29, 2000, the Company converted all its issued and outstanding Class A shares into Class B subordinate shares. On September 25, 2000, the Company further amended its share capital to eliminate its Class A shares and converted its Class B subordinate shares into Common Shares. On November 1, 2013, the Company amended its articles of incorporation to reflect certain changes to items relating to board matters. On June 9, 2022, we effected a one for thirty-five (1-for-35) reverse split of our common shares, which we refer to as the "Share Consolidation," as approved by our Board of Directors. Trading of our common shares on both the Toronto Stock Exchange ("TSX") and Nasdaq on a post-consolidated basis commenced as of the open of markets on June 13, 2022. On August 15, 2022, the Company voluntarily delisted its Common Shares from the TSX.

#### Corporate Information
Our principal executive offices are located at 545 Promenade du Centropolis, Suite 100, Laval, Québec, Canada, H7T 0A3 and the telephone number to our offices is (450) 687-2262.

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#### THE OFFERING
Issuer: Neptune Wellness Solutions Inc.

Common shares offered by the Selling Shareholders: 7,267,114 common shares that are issuable or potentially issuable upon the exercise of all the Warrants (after giving effect to certain potential anti-dilution adjustments)

Shares of common shares outstanding prior to this offering: 11,850,057 shares (as of January 27, 2023)

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| Exercise price of Warrants:  | $1.62 per share (Series E Warrants) $0.53 per share (January 2023 Warrants)  |

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Terms of the offering The Selling Shareholders will determine when and how they will dispose of the Common Shares registered under this prospectus for resale.

Use of proceeds The Selling Shareholders will receive the proceeds from the sale of shares of common shares offered hereby. We will not receive any proceeds from the sale of Common Shares by the Selling Shareholders.

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| Risk factors  | See "*[Risk Factors](#tx338720_8)*" on page 15 and other information included in this prospectus for a discussion of factors you should consider before investing in our securities.  |

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Ticker symbols Our Common Shares are listed on the Nasdaq under the symbol "NEPT".

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#### MARKET AND INDUSTRY DATA AND FORECASTS
We obtained the industry and market data used throughout this prospectus from our own internal estimates and research, as well as from independent market research, industry and general publications and surveys, governmental agencies, publicly available information and research, surveys and studies conducted by third parties. Internal estimates are derived from publicly available information released by industry analysts and third-party sources, our internal research and our industry experience, and are based on assumptions made by us based on such data and our knowledge of our industry and market, which we believe to be reasonable. In some cases, we do not expressly refer to the sources from which this data is derived. In addition, while we believe the industry and market data included in this prospectus is reliable and based on reasonable assumptions, such data involve material risks and other uncertainties and are subject to change based on various factors, including those discussed in the section entitled "*Risk Factors*." These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties or by us.

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#### RISK FACTORS
*Investing in our securities involves a high degree of risk. Investors should carefully consider the risks described below and all of the other information set forth in this registration statement, including our financial statements and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations," before deciding to invest in our Common Shares. If any of the events or developments described below occur, our business, financial condition, or results of operations could be materially or adversely affected. As a result, the market price of our Common Shares could decline, and investors could lose all or part of their investment. The risks and uncertainties described below are not the only risks and uncertainties that we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements. See "Cautionary Notes Regarding Forward-Looking Statements."* 

#### Risks Relating to our Business and Industry
**We are exposed to risks associated with the divestiture of our cannabis business.** 

On October 16, 2022, we entered into an Asset Purchase Agreement with PurCann Pharma, Inc. ("Purchaser"), pursuant to which Purchaser agreed to purchase substantially all of the assets relating to our Canadian cannabis business, including our processing plant and property located in Sherbrooke, Quebec. The sale of our cannabis business closed on November 9, 2022. We may not fully realize the anticipated benefits of this disposition. Further, we face continued liability for the pre-closing activities of the divested cannabis business, which we agreed to assume as part of the transaction. Additionally, we may be unable to collect any accounts receivable retained from our cannabis business.

***If we do not manage our supply chain effectively or if there are disruptions in our supply chain, our business and results of operations may be adversely affected.***

The success of our business depends, in part, on maintaining a strong sourcing and manufacturing platform and efficient distribution channels. The inability of any supplier of raw materials, independent contract manufacturer or third-party distributor to deliver or perform for us in a timely or cost-effective manner could cause our operating costs to increase and our profit margins to decrease, especially as it relates to our products that have a short shelf life. We must continuously monitor our inventory and product mix against forecasted demand or risk having inadequate supplies to meet consumer demand as well as having too much inventory on hand that may reach its expiration date and become unsaleable.

We must also manage our third-party distribution, warehouse and transportation providers to ensure they are able to support the efficient distribution of our products to retailers. A disruption in transportation services could result in an inability to supply materials to our or our co-manufacturers' facilities or finished products to our distribution centers or customers. Activity at third-party distribution centers could be disrupted by a number of factors, including labor issues, failure to meet customer standards, natural disasters or financial issues affecting the third-party providers. In particular, the Russia-Ukraine war and recent labor market shortages impacting our industry have created operating challenges in making our products available to customers and consumers, and such challenges may persist.

#### Our future results of operations may be adversely affected by input cost inflation.
Many aspects of our business have been, and may continue to be, directly affected by volatile commodity costs and other inflationary pressures. Agricultural commodities and ingredients are subject to price volatility which can be caused by commodity market fluctuations, crop yields, seasonal cycles, weather conditions, temperature extremes and natural disasters (including due to the effects of climate change), pest and disease problems,

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changes in currency exchange rates, imbalances between supply and demand, and government programs and policies among other factors. Volatile fuel costs translate into unpredictable costs for the products and services we receive from our third-party providers including, but not limited to, distribution costs for our products and packaging costs.

#### Our future results of operations may be adversely affected by the availability of natural and organic ingredients.
Our ability to ensure a continuing supply of natural and organic ingredients at competitive prices depends on many factors beyond our control, such as the number and size of farms that grow natural and organic crops, climate conditions, increased demand for natural and organic ingredients by our competitors, changes in national and world economic conditions, currency fluctuations and forecasting adequate need of seasonal ingredients.

The natural and organic ingredients that we use in the production of our products (including, among others, vegetables, fruits, nuts and grains) are vulnerable to adverse weather conditions and natural disasters, such as floods, droughts, water scarcity, temperature extremes, wildfires, frosts, earthquakes and pestilences. Natural disasters and adverse weather conditions can lower crop yields and reduce crop size and crop quality, which in turn could reduce our supplies of natural and organic ingredients or increase the prices of those ingredients. Such natural disasters and adverse weather conditions can be caused or exacerbated by climate change, and the spate of recent extreme weather events, including historic droughts, heatwaves, extreme cold and flooding, presents an alarming trend. If our supplies of natural and organic ingredients are reduced, we may not be able to find enough supplemental supply sources on favorable terms, if at all, which could impact our ability to supply products to our customers and adversely affect our business, financial condition and results of operations.

We also compete with other manufacturers in the procurement of natural and organic product ingredients, which may be less plentiful in the open market than conventional product ingredients. This competition may increase in the future if consumer demand for natural and organic products increases. This could cause our expenses to increase or could limit the amount of products that we can manufacture and sell.

#### We may not be successful in achieving savings and efficiencies from cost reduction initiatives and related strategic initiatives.
Our strategy includes identifying areas of cost savings and operating efficiencies to expand profit margins and cash flow. As part of our identification of operating efficiencies, we may continue to seek to dispose of businesses and brands that are less profitable or are otherwise less of a strategic fit within our core portfolio.

We may not be successful in fully implementing our productivity plans or realizing our anticipated savings and efficiencies, including potentially as a result of factors outside our control. Additionally, we may not be able to identify or negotiate divestiture opportunities on terms acceptable to us. If we are unable to fully realize the anticipated savings and efficiencies of our cost reduction initiatives and related strategic initiatives, our profitability may be materially and adversely impacted.

#### COVID-19 has and will continue to impact our operations and could have a material adverse effect on our business, results of operations and financial condition.
The global outbreak of the novel strain of the coronavirus known as COVID-19 has resulted in governments worldwide enacting emergency measures to combat the spread of the virus, including public health directives and orders in the United States, or the U.S., Canada and the European Union that, among other things and for various periods of time, directed individuals to shelter at their places of residence, directed businesses and governmental agencies to cease non-essential operations at physical locations, prohibited certain non-essential gatherings and events and ordered cessation of non-essential travel. The public health crisis caused by COVID-19 and the measures taken and continuing to be taken by governments, businesses and the public have, and we expect will

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continue to have, certain negative impacts on our business operations, and could have a material adverse effect on our business, results of operations and financial condition. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions.

The full extent to which COVID-19 may impact our business, including our operations and the market for our securities and our financial condition, will depend on future developments, which are highly uncertain and cannot be predicted at this time. These include the duration, severity and scope of the outbreak, and further action taken by the government and other third parties in response to COVID-19 or new variants thereof. In particular, COVID-19 and government efforts to curtail COVID-19 could impede our production facilities, increase operating expenses, result in loss of sales, affect our supply chains, impact performance of contractual obligations or could require additional expenditures to be incurred. While most of these restrictions have since been lifted or eased, increases in new COVID-19 cases, including as a result of new COVID-19 variants, may lead to restrictions being reinstated, or new restrictions imposed.

Future remote work policies and similar government orders or other restrictions on the conduct of business operations related to the COVID-19 pandemic may negatively impact productivity and may disrupt our ongoing research and development activities and our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course. We have and continue to update our operational procedures and safety protocols at our facilities to comply with mandates and guidance from governmental authorities. If such measures are not effective or governmental authorities implement further restrictions, we may be required to take more extreme action, which could include short or long-term closures of our facilities or reductions in workforce. These measures may impair our production levels or cause us to close or severely limit production at one or more facilities. Further, our operations could be adversely impacted if suppliers, contractors, customers and/or transportation carriers are restricted or prevented from conducting business activities.

Consumer demand for our products may also be impacted by COVID-19 as a result of reductions in consumers' disposable income associated with layoffs, and work or pay limitations due to mandatory social distancing and lockdown measures implemented by government authorities. As demand for our products decreases, we may be required to record additional asset impairments, including an impairment of the carrying value of our goodwill, along with other accounting charges.

Given the ongoing and dynamic nature and significance of COVID-19 and its impact globally, we are not able to enumerate all potential risks and uncertainties to our business or financial condition. Any of the negative impacts of COVID-19, including those described above, alone or in combination with others, may have a material adverse effects on our business, results of operations or financial condition. Further, any of these negative impacts, alone or in combination with others, could exacerbate many of the other risk factors outlined in this prospectus, our annual report on Form 10-K filed with the Commission on July 8, 2022 and in other reports that we file with the Commission from time to time.

***Increasing awareness of health and wellness are driving changes in the consumer products industry, and if we are unable to react in a timely and cost-effective manner, our results of operations and future growth may be adversely affected.***

We must continually anticipate and react, in a timely and cost-effective manner, to changes in consumer preferences and demands, including changes in demand driven by increasing awareness of health and wellness and demands for transparency or cleaner labels with respect to product ingredients by consumers and regulators. Consumers, especially in developed economies such as the U.S. and Canada, are rapidly shifting away from products containing artificial ingredients to all-natural, healthier alternatives. In addition, there has been a growing demand by consumers, non-governmental organizations and, to a lesser extent, governmental agencies to provide more transparency in product labeling and our customers have been taking steps to address this demand, including by voluntarily providing product-specific ingredients disclosure. These two trends could

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affect the types and volumes of our ingredients and compounds that our customers include in their consumer product offerings and, therefore, affect the demand for our products. If we are unable to react to or anticipate these trends in a timely and cost-effective manner, our results of operations and future growth may be materially adversely affected.

#### Markets for our products and services are highly competitive, and we may be unable to compete effectively.
Our products and services, including our consumer products, are offered in highly competitive markets that may be characterized by aggressive price competition and resulting downward pressure on gross margins, frequent introduction of new products and services, short product life cycles, evolving industry standards, continual improvement in product price and performance characteristics, rapid adoption of technological advancements by competitors and price sensitivity on the part of consumers and businesses.

Additionally, our consumer products may compete on the basis of product performance, brand recognition and price. Advertising, promotion, merchandising and packaging also have significant impacts on consumer purchasing decisions. A newly introduced consumer product (whether improved or newly developed) usually encounters intense competition requiring substantial expenditures for advertising, sales promotion and trade merchandising. If a product gains consumer acceptance, it typically requires continued advertising, promotional support and product innovations to maintain its relative market position. If our advertising, marketing and promotional programs are not effective or adequate, our net sales may be negatively impacted.

Some of our competitors are larger than us and have greater financial resources. These competitors may be able to spend more aggressively on advertising and promotional activities, introduce competing products more quickly and respond more effectively to changing business and economic conditions than we can. Competitive activity may require the Company to increase its spending on advertising and promotions and/or reduce prices, which could lead to reduced sales, margins and net earnings.

#### We may be unable to manage our growth effectively.
Our future financial performance and our ability to commercialize our products and to compete effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we must be able to continue to improve our operational and financial systems, managerial controls and procedures and we will need to continue to expand, train and manage our technology and workforce. We must also maintain close coordination among our technology, compliance, accounting, finance, marketing and sales functions. We cannot assure you that we will manage our growth effectively. If we fail to do so, our business could be materially harmed.

To support our growth, we may have to further increase our investment in technology, facilities, personnel and financial and management systems and controls. We may also have to further expand our procedures for monitoring and assuring our compliance with applicable regulations, and may need to integrate, train and manage a growing employee base. The expansion of our existing businesses, and expansion into new businesses and the resulting growth of our employee base will increase our need for internal audit and monitoring processes that are more extensive and broader in scope than those we have historically required. We may not be successful in identifying or implementing all of the processes that are necessary. Further, unless our growth results in an increase in our revenues that is proportionate to the increase in our costs associated with this growth, our operating margins and profitability will be adversely affected.

***We depend on significant customers for a substantial portion of our revenue. If we fail to retain or expand our customer relationships or significant customers reduce their purchases, our revenue could decline significantly.***

For the twelve-month period ended March 31, 2022 and three-month period ended September 30, 2022, one customer accounted for 10.26% and 8.67% of revenue, respectively, and one customer accounted for 14.86% and 9.9% of revenue for the twelve-month period ended March 31, 2021 and three-month period ended September 30, 2021, respectively.

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We believe that our operating results for the foreseeable future will continue to depend on sales to a small number of customers. These customers have no purchase commitments and may cancel, change or delay purchases with little or no notice or penalty. As a result of this customer concentration, our revenue could fluctuate materially and could be materially and disproportionately impacted by purchasing decisions of these customers or any other significant customer. In the future, these customers may decide to purchase less product from us than they have in the past, may alter purchasing patterns at any time with limited notice, or may decide not to continue to purchase our products at all, any of which could cause our revenue to decline materially and materially harm our financial condition and results of operations. If we are unable to diversify our customer base, we will continue to be susceptible to risks associated with customer concentration.

In addition, the Company is subject to credit risk of its customers, and its profitability and cash flow are dependent on receipt of timely payments from clients. Any delay in payment by the Company's customers may have an adverse effect on the Company's profitability, working capital and cash flow. There is no assurance that the Company will be able to collect all or any of its trade receivables in a timely matter. If any of the Company's clients face unexpected situations such as financial difficulties, the Company may not be able to receive full or any payment of the uncollected sums or enforce any judgment debts against such clients, and the Company's business, results of operations and financial condition could be materially and adversely affected.

***Significant interruptions in our access to certain supply chains, for key inputs such as raw materials, electricity, water, and other utilities may impair our operations.***

Our business is dependent on a number of key inputs and their related costs (certain of which are sourced in other countries and on different continents), including raw materials, supplies and equipment related to our operations, as well as electricity, water and other utilities. Governments may regulate or restrict the flow of our labor or our products, and the Company's operations, suppliers, customers, and distribution channels could be severely impacted. Any significant future government-mandated or market-related interruption, price increase or negative change in the availability or economics of the supply chain for key inputs and, in particular, rising or volatile energy costs could curtail or preclude our ability to continue production. In addition, our operations would be significantly affected by a prolonged power outage.

No assurances can be given that we will be successful in maintaining our required supply of materials, labor, equipment, parts, and components. See also "*COVID-19 has and will continue to impact our operations and could have a material adverse effect on our business, results of operations and financial condition*".

#### Our future success depends on the sales of our consumer products and turnkey solutions products.
We derive a large portion of our revenues from the sale of our turnkey solutions products and expect to derive an increasing portion of our revenues from the sale of consumer products. Our investments in and strategies used for our brand marketing are critical to achieve brand awareness with current customers, educate potential new customers and convert potential new customers into customers. However, there can be no assurance that our principal products will continue to receive, maintain or increase market acceptance. The inability to successfully commercialize our turnkey solutions and specialty ingredient products, in the future, for any reason, would have a material adverse effect on our financial condition, prospects and ability to continue operations. The overall commercialization success of our products depends on several factors, including:

• continued market acceptance of our products by the nutraceutical market;

• the amount of resources devoted by our distribution partners to continue the commercialization efforts of our products in our core geographic markets;

• maintaining supply of our products to meet the purchase orders of our distribution partners;

• receipt of regulatory approvals for our products from regulatory agencies in certain territories in which we wish to expand our commercialization efforts;

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• the number of competitors in our market; and

• protecting and enforcing our intellectual property and avoiding patent infringement claims.

***Our activities rely on certain third-party suppliers, contract manufacturers and distributors, and such reliance may adversely affect us if the third parties are unable or unwilling to fulfill their obligations.***

For our consumer product and nutraceutical activities, we purchase certain important ingredients and raw materials from third-party suppliers and, in certain cases, we engage contract manufacturers to supply us with finished products. Part of our strategy is to enter into and maintain arrangements with third parties related to the development, testing, production, packaging, and commercialization of our products to our customers which are then responsible for the marketing and distribution of the products. Our revenues are dependent to a great extent on the successful efforts of these third parties. Entering into strategic relationships can be a complex process and our interests and the interests of our partners may not be or remain aligned with our interests.

Real or perceived quality control problems with raw materials outsourced from certain regions or finished products manufactured by contract manufacturers could negatively impact consumer confidence in our products or expose us to liability. In addition, disruption in the operations of any such supplier or manufacturer or material increases in the price of raw materials, for any reason, such as changes in economic and political conditions, tariffs, trade disputes, regulatory requirements, import restrictions, loss of certifications, power interruptions, fires, hurricanes, drought or other climate-related events, war, or other events, could have a material adverse effect on our business, results of operations, financial condition and cash flows. Also, currency fluctuations could result in higher costs for raw materials purchased abroad.

The Company's third-party manufacturers are subject to laws and regulations, including current Good Manufacturing Practices regulations ("**cGMP**"), which are enforced by the U.S. Food and Drug Administration, or the FDA, and other regulatory authorities. The Company's third-party manufacturers may be unable to comply with cGMP or other regulatory requirements. A failure to comply with these requirements may result in fines, product recalls or seizures and related publicity requirements, injunctions, total or partial suspension of production, civil penalties, warning or untitled letters, import or export bans or restrictions and criminal prosecution and penalties. Any of these penalties could delay or prevent the promotion, marketing, or sale of the Company's products. If the safety of any products supplied to the Company is compromised due to a third-party manufacturer's failure to adhere to applicable laws or for other reasons, the Company may not be able to successfully sell its products and our business, financial condition and operations may be materially adversely affected.

Some of our current and future partners may decide to compete with us, refuse or be unable to fulfill or honor their contractual obligations to us, or change their plans to reduce their commitment to, or even abandon, their relationships with us. There can be no assurance that our partners will market our products successfully or that any such third-party collaboration will be on favorable terms. We may not be able to control the amount and timing of resources our partners devote to our potential products. In addition, we may incur liabilities relating to the distribution and commercialization of our products. While the agreements with such customers generally include customary indemnification provisions indemnifying us for liabilities relating to third-party manufacturing or packaging of our potential products, there can be no assurance that these indemnification rights will be sufficient in amount, scope or duration to fully offset the potential liabilities associated with our potential products. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business, financial condition or results of operations.

#### Our products may be subject to recalls for a variety of reasons, which could require us to expend significant management and capital resources.
Manufacturers and distributors of products are sometimes subject to the recall or return of their products for a variety of reasons, including product defects, such as contamination, adulteration, unintended harmful side

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effects, or interactions with other substances, packaging safety, and inadequate or inaccurate labeling disclosure. If any of the products produced by or for us are recalled due to an alleged product defect or for any other reason, we could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall. As a result of any such recall, our sales may be significantly affected and may not be able to replace those sales at an acceptable margin or at all. In addition, a product recall may require significant management attention or damage our reputation and goodwill or that of our products or brands.

Additionally, product recalls may lead to increased scrutiny of our operations by regulatory agencies and authorities, requiring further management attention, increased compliance costs and potential legal fees, fines, penalties and other expenses. Any product recall affecting the hemp industry, whether or not involving us, could also lead consumers to lose confidence in the safety and security of the products sold by us generally.

#### We may not meet timelines for project development.
The Company's business is dependent on a number of key inputs and their related costs including raw materials and supplies related to its operations, as well as electricity, water and other utilities. Any significant interruption or negative change in the availability or economics of the supply chain for key inputs could materially impact the business, financial condition operating results, and timelines for project development of the Company. Any inability to secure required supplies and services or to do so on appropriate terms could have a materially adverse impact on the business, financial condition, operating results, and timelines for project development of the Company.

***Product contamination or tampering or issues or concerns with respect to product quality, safety and integrity could adversely affect our business, reputation, financial condition or results of operations.***

Product contamination or tampering, or allegations of product contamination or tampering or product quality issues (whether or not valid) with respect to products in our portfolio may reduce demand for such products, and cause production and delivery disruptions or increase costs, which could adversely affect our business, reputation, financial condition or results of operations. Moreover, even if allegations of product contamination or tampering or suggestions that our products were not fit for consumption or use are meritless, the negative publicity surrounding assertions against us or products in our portfolio or processes could adversely affect our reputation or brands. Our business could also be adversely affected if consumers lose confidence in product quality, safety and integrity generally, even if such loss of confidence is unrelated to products in our portfolio.

Any of the foregoing could adversely affect our business, reputation, financial condition or results of operations. In addition, if we do not have adequate insurance, if we do not have enforceable indemnification from suppliers, manufacturers, distributors, joint venture partners or other third parties or if indemnification is not available, the liability relating to such product claims or disruption as a result of recall efforts could materially adversely affect our business, financial condition or results of operations.

***The Company may have difficulty obtaining insurance to cover its operational risks and, even where available, may not be sufficient to cover losses we may incur.***

Due to the Company's involvement in the hemp industry, it may have difficulty obtaining the various insurances that are desired to operate its business, which may expose the Company to additional risk and financial liability. Insurance that is otherwise readily available, such as general liability, and directors' and officers' insurance, may be more difficult to find, and more expensive, because of the regulatory regime applicable to our industry. There are no guarantees that the Company will be able to find such insurance coverage in the future, or that the cost will be affordable. If the Company is unable to obtain insurance coverage on acceptable terms, it may prevent it from entering into certain business sectors, may inhibit growth, and may expose the Company to additional risks and financial liabilities.

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Moreover, our current and expected business activities expose us to the risk of liabilities arising from our operations. For example, we may be liable for claims brought by users of our products or by employees, customers or other third parties for personal injury or property damage occurring in the course of our operations. We seek to minimize these risks through various insurance contracts from third-party insurance carriers. However, our insurance coverage is subject to large individual claim deductibles, individual claim and aggregate policy limits, and other terms and conditions. We retain an insurance risk for the deductible portion of each claim and for any gaps in insurance coverage. We do not view insurance, by itself, as a material mitigant to these business risks.

We cannot assure that our insurance will be sufficient to cover our losses. Any losses that insurance does not substantially cover could have a material adverse effect on our business, results of operations, financial condition and cash flows. The insurance industry has become more selective in offering some types of insurance, such as product liability, product recall, property and directors' and officers' liability insurance. Our current insurance program is consistent with both our past level of coverage and our risk management policies. However, we cannot assure that we will be able to obtain comparable insurance coverage on favorable terms, or at all, in the future.

#### Risks Relating to Our Accounting and Financial Policies
***Although our consolidated financial statements have been prepared on a going concern basis, our management believe that our recurring losses and negative cash flows from operations and other factors have raised substantial doubt about our ability to continue as a going concern.***

Our consolidated financial statements for the twelve-month period ended March 31, 2022 and three and six-month periods ended September 30, 2022 were prepared on a going concern basis, which presumes that the Company will continue realizing its assets and discharging its liabilities in the normal course of business for the foreseeable future. Thus, our consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Our recurring losses, negative cash flow, need for additional financing and the uncertainties surrounding our ability to raise such financing, raise substantial doubt about our ability to continue as a going concern. For the twelve-month period ended March 31, 2022 and six-month period ended September 30, 2022, the Company incurred a net loss of $84.4 million and $43.8 million, respectively, negative cash flows from operations of $54.3 million and $14.1 million, respectively, and had an accumulated deficit of $323.2 million and $358.4 million as at March 31, 2022 and September 30, 2022, respectively. Our lack of cash resources and our potential inability to continue as a going concern may materially adversely affect our share price and our ability to raise new capital, enter into critical contractual relations with third parties, meet our obligations as they become due and otherwise execute our business strategy. The Company currently has no committed sources of financing available. If we are unable to raise additional financing, increase sales or reduce expenses we will be unable to continue to fund our operations, develop our products, realize value from our assets, or discharge our liabilities in the normal course of business. If we become unable to continue as a going concern, we could have to liquidate our assets, and potentially realize significantly less than the values at which they are carried on our financial statements, and shareholders could lose all or part of their investment in our Common Shares.

***We have recorded significant long-lived asset impairment charges and may be required to record additional charges to future earnings if our long-lived assets become impaired.***

As of September 30, 2022, our goodwill balance was $14.4 million and our intangible asset balance was $17.8 million, which represented 22.1% and 27.4% respectively of total consolidated assets. The Company recorded an impairment loss of $7.6 million for goodwill and $2.6 million for intangibles in the six months ended September 30, 2022. We are required to review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually. Factors that may be considered a change in circumstances indicating that the carrying value of our intangible assets and/or goodwill may not be recoverable include a decline in share price

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and market capitalization, slower growth rates in our industry or our own operations, and/or other materially adverse events that have implications on the profitability of our business or business verticals.

In addition, the Company announced that it had entered into a binding agreement for the sale of its Canadian cannabis business, including the Sherbrooke building, for C$5.15 million to be paid to the Company in cash, which transaction closed on November 9, 2022. The Company recorded a loss on remeasurement of the assets to fair value less cost of sale in the amount of $15.3 million in six-months ended September 30, 2022.

We may be required to record additional charges during the period in which any impairment of our goodwill, intangible assets or other long-lived assets is determined which could have a material adverse impact on our results of operations. Even though these charges may be non-cash items and may not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities.

In some cases, we cannot determine with any certainty whether we have priority of invention in relation to any new product or new process covered by a patent application or if we were the first to file a patent application for any such new invention. Furthermore, in the event of patent litigation there can be no assurance that our patents would be held valid or enforceable by a court of competent jurisdiction or that a court would rule that the competitor's products or technologies constitute patent infringement.

Moreover, part of our technological know-how constitutes trade secrets. We require that our employees, consultants, advisers and collaborators sign confidentiality agreements. However, these agreements may not provide adequate protection in the event of unauthorized use or disclosure of our trade secrets, know-how or other proprietary information.

Claims that our technology or products infringe on intellectual property rights of others could be costly to defend or settle, could cause reputational injury and would divert the attention of our management and key personnel, which in turn could have a material adverse effect on our business, results of operations, financial condition and cash flows. Any adverse outcome of such litigation or settlement of such a dispute could subject us to significant liabilities, could put one or more of our patents at risk of being invalidated or interpreted narrowly, could put one or more of our pending patent applications at risk of not issuing, or could facilitate the entry of generic products. Any such litigation could also divert our research, technical and management personnel from their normal responsibilities.

#### Risks Relating to Our Liquidity
***We are actively managing our liquidity and expenses, including by extending payables due and reducing investment in our businesses, and it is not certain that we will be ultimately successful in developing our business and remaining a going concern.***

As of the date of this prospectus, we are actively managing our liquidity and expenses, and there is substantial doubt that our current cash position will be sufficient to continue as a going concern. The Company currently has minimal available cash balances, and we are also continuing to incur expenses that will cause us to expend cash in the short term. Payables are now in excess of available cash balances and payments of payables are not being made as the amounts become due for certain suppliers. As of the date of this prospectus, we have approximately $6.3 million in cash and cash equivalents, which is expected to be sufficient to operate the business for the next three to six months under the current business plan. We have no arranged sources of financing available to us. Our failure to obtain any required additional financing on favorable terms, or at all, would have a material adverse effect on our business, financial condition and results of operations. We are pursuing several cash generating transactions, including the strategic plan described herein, as well as further expense reduction measures, but there can be no assurance that any transaction will be completed or that our expense reduction measures will be sufficient to continue as a going concern.

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***As a result of our failure to timely file our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, we are currently ineligible to file new short form registration statements on Form S-3, which may impair our ability to raise capital on terms favorable to us, in a timely manner or at all.***

Form S-3 permits eligible issuers to conduct registered offerings using a short form registration statement that allows the issuer to incorporate by reference its past and future filings and reports made under the Securities Exchange Act of 1934, as amended (the "**Exchange Act**"). In addition, Form S-3 enables eligible issuers to conduct primary offerings "off the shelf" under Rule 415 of the Securities Act of 1933, as amended (the "Securities Act"). The shelf registration process, combined with the ability to forward incorporate information, allows issuers to avoid delays and interruptions in the offering process and to access the capital markets in a more expeditious and efficient manner than raising capital in a standard registered offering pursuant to a Registration Statement on Form S-1. The ability to register securities for resale may also be limited as a result of the loss of Form S-3 eligibility.

As a result of our failure to timely file our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, we are currently ineligible to file new short form registration statements on Form S-3 and, absent a waiver of the Form S-3 eligibility requirements, we will no longer be permitted to use our existing registration statement on Form S-3. As a consequence, we might not be permitted to sell all of the amount of securities we could otherwise sell prior to such time, subject to the limits of General Instruction I.B.6. of Form S-3, which could adversely affect our operations and financial results.

Our inability to use Form S-3 may significantly impair our ability to raise necessary capital to run our operations and execute on our strategy. If we seek to access the capital markets through a registered offering during the period of time that we are unable to use Form S-3, we may be required to publicly disclose the proposed offering and the material terms thereof before the offering commences, we may experience delays in the offering process due to SEC review of a Form S-1 registration statement and we may incur increased offering and transaction costs and other considerations. Disclosing a public offering prior to the formal commencement of an offering may result in downward pressure on our share price. If we are unable to raise capital through a registered offering, we would be required to conduct our equity financing transactions on a private placement basis, which may be subject to pricing, size and other limitations imposed under Nasdaq rules, or seek other sources of capital.

#### The Company may have difficulty accessing public and private capital and banking services, which could negatively impact its ability to finance its operations.
The Company anticipates that funding sources may be available pursuant to private and public offerings of equity and/or debt and bank lending. However, if equity and/or debt financing was not available in the public capital markets, then the Company expects that it would have access to raise equity and/or debt financing privately. There can be no assurance that additional financing, if raised privately or publicly, will be available to the Company when needed or on terms which are acceptable. The Company's inability to raise financing to fund capital expenditures or acquisitions could limit its growth and may have a material adverse effect upon future profitability. If the Company cannot achieve profitability, it may be forced to cease operations and you may suffer a total loss of your investment.

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#### Legal and Regulatory Risks Relating to Our Business
***We identified material weaknesses in our internal control over financial reporting. This may adversely affect the accuracy and reliability of our financial statements and, if we fail to maintain effective internal control over financial reporting, it could impact our reputation, business, and the price of our common shares, as well as lead to a loss of investor confidence in us.***

The Company has and may continue to fail to maintain the adequacy of its internal controls over financial reporting as such standards are modified, supplemented or amended from time to time, and the Company cannot ensure that it will conclude on an ongoing basis that it has effective internal controls over financial reporting. The Company's failure to satisfy the requirements of Canadian and United States legislation on an ongoing, timely basis could result in the loss of investor confidence in the reliability of its financial statements or in a cease trade order, which in turn could harm the Company's business and negatively impact the trading price and market value of its shares or other securities. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm the Company's operating results or cause it to fail to meet its reporting obligations.

The Company also has and may continue to fail to maintain the adequacy of its disclosure controls. Disclosure controls and procedures are designed to ensure that the information required to be disclosed by the Company in reports filed with securities regulatory agencies is recorded, processed, summarized and reported on a timely basis and is accumulated and communicated to the Company's management, as appropriate, to allow timely decisions regarding required disclosure.

No evaluation can provide complete assurance that the Company's financial and disclosure controls will detect or uncover all failures of persons within the Company to disclose material information otherwise required to be reported. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance with respect to the reliability of financial reporting and financial statement preparation. The effectiveness of the Company's controls and procedures could also be limited by simple errors or faulty judgements.

Material weaknesses in the Company's internal control over financial reporting were determined to exist at March 31, 2022 and these material weaknesses have not been remediated to date. The Company's management, including the Chief Executive Officer and Chief Financial Officer, concluded that our internal control over financial reporting was not effective as of March 31, 2022 due to the presence of these material weaknesses. While we intend to adopt new and revised controls to remediate these weaknesses, if these and other controls fail to adequately remediate these material weaknesses, it could result loss of investor confidence, which could lead to a decline in our share price. In addition, if we do not maintain adequate financial and management personnel, processes, and controls, we may not be able to accurately report our financial performance on a timely basis, which could cause a decline in our share price and harm our ability to raise capital. Failure to accurately report our financial performance on a timely basis could also jeopardize our continued listing on Nasdaq or any other exchange on which our common shares may be listed.

#### As a non-accelerated filer, we are not required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act.
We are a non-accelerated filer under the Exchange Act and we are not required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. Therefore, our internal controls over financial reporting will not receive the level of review provided by the process relating to the auditor attestation included in annual reports of issuers that are subject to the auditor attestation requirements. In addition, we cannot predict if investors will find our common shares less attractive because we are not required to comply with the auditor attestation requirements. If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and trading price for our common shares may be negatively affected.

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#### Sources of hemp-derived CBD depend upon legality of cultivation, processing, marketing and sales of products derived from those plants under state law.
Hemp-derived cannabidiol, or CBD, can only be legally produced in states that have laws and regulations that allow for such production and that comply with the Agricultural Improvement Act of 2018 (the "2018 Farm Act"), apart from state laws legalizing and regulating medical and recreational cannabis or marijuana, which remains illegal under federal law and regulations. We purchase all of our hemp-derived CBD from licensed growers and processors in states where such production is legal. In the event of repeal or amendment of laws and regulations which are now favorable to the cannabis/hemp industry in such states, we would be required to locate new suppliers in states with laws and regulations that qualify under the 2018 Farm Act. If we were to be unsuccessful in arranging new sources of supply of our raw ingredients, or if our raw ingredients were to become legally unavailable, our intended business plan with respect to such products could be adversely impacted.

***We expect to be subject to taxation in both Canada and the United States, which could have a material adverse effect on our financial condition and results of operations.***

We are a Canadian corporation, and as a result generally would be classified as a non-United States corporation under the general rules of U.S. federal income taxation. Section 7874 of the Code, however, contains rules that can cause a non-United States corporation to be taxed as a United States corporation for U.S. federal income tax purposes. Under Section 7874 of the Code, a corporation created or organized outside of the United States will nevertheless be treated as a United States corporation for U.S. federal income tax purposes, which is referred to as an inversion, if each of the following three conditions are met: (i) the non-United States corporation acquires, directly or indirectly, or is treated as acquiring under applicable U.S. Treasury regulations, substantially all of the assets held, directly or indirectly, by a United States corporation, (ii) after the acquisition, the former shareholders of the acquired United States corporation hold at least 80% (by vote or value) of the shares of the non-United States corporation by reason of holding shares of the acquired United States corporation, and (iii) after the acquisition, the non-United States corporation's expanded affiliated group does not have substantial business activities in the non-United States corporation's country of organization or incorporation when compared to the expanded affiliated group's total business activities.

Pursuant to Section 7874 of the Code, we are classified as a U.S. corporation for U.S. federal income tax purposes and are subject to U.S. federal income tax on our worldwide income. Regardless of any application of Section 7874, however, we expect to be treated as a Canadian resident company for purposes of the Canadian Income Tax Act, as amended. As a result, we are subject to taxation both in Canada and the U.S., which could have a material adverse effect on our financial condition and results of operations.

***We are subject to laws and regulations and guidelines, changes in which could increase our costs and individually or in the aggregate adversely affect our business.***

We are subject to laws and regulations affecting our operations in a number of areas. These laws and regulations affect the Company's activities in areas including, but not limited to, the hemp, organic food and beverage products, consumer protection, labor, intellectual property ownership and infringement, import and export requirements, and environmental, health and safety.

The successful execution of our business objectives is contingent upon compliance with all applicable laws and regulatory requirements and obtaining all other required regulatory approvals, which may be onerous and expensive. Any such costs, which may rise in the future as a result of changes in these laws and regulations or in their interpretation and the expansion of the Company's business, could individually or in the aggregate make the Company's products and services less attractive to our customers, delay the introduction of new products, or cause the Company to implement policies and procedures designed to ensure compliance with applicable laws and regulations. There can be no assurance that the Company's employees, contractors, or agents will not violate such laws and regulations or our policies and procedures.

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#### We are subject to risks inherent to the nutraceutical industry.
We are heavily dependent on the export of products to the United States. The FDA is able to block the import entry of any product that "appears" to violate U.S. law, which represents a low evidentiary standard for the FDA. Future changes in U.S. requirements and interpretations of those requirements, coupled with the "appears" to violate the law standard for refusing entry of imported products, increases the possibility that our products may not have full access to the U.S. market and poses additional risks to our business.

#### We are subject to anti-money laundering laws and regulations in multiple jurisdictions.
The Company will be subject to a variety of laws and regulations in Canada and in the United States that involve money laundering, financial recordkeeping and proceeds of crime, including the U.S. Currency and Foreign Transactions Reporting Act of 1970 (commonly known as the Bank Secrecy Act), as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), the Criminal Code (Canada), as amended and the rules and regulations thereunder, and any related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the United States and Canada.

If any of the Company's investments, or any proceeds thereof, any dividends or distributions therefrom, or any profits or revenues accruing from such investments in the United States or Canada were found to be in violation of money laundering legislation or otherwise, such transactions may be viewed as proceeds of crime under one or more of the statutes noted above or any other applicable legislation. This could restrict or otherwise jeopardize the ability of the Company to declare or pay dividends, effect other distributions or subsequently repatriate such funds back to Canada. Furthermore, while the Company has no current intention to declare or pay dividends on its Common Shares in the foreseeable future, the Company may decide or be required to suspend declaring or paying dividends without advance notice and for an indefinite period of time.

#### Our inability to maintain our regulatory approvals and permits could adversely affect our business and financial results.
The Company is required to obtain and maintain certain federal and state permits, licenses and approvals in the jurisdictions where its products are manufactured and/or sold. There can be no assurance that the Company will be able to obtain or maintain necessary licenses, permits or approvals. Any material delay or inability to receive these items is likely to delay and/or inhibit the Company's ability to conduct its business, and would have an adverse effect on its business, financial condition and results of operations.

***We are currently, and may in the future be, subject to substantial litigation, investigations and proceedings that could cause us to incur significant legal expenses and result in harm to our business.***

We and our subsidiaries are subject to federal, state, local, foreign and provincial health, safety, and labeling laws and regulations, including but not limited to the federal Food, Drug, and Cosmetic Act and regulations promulgated by the federal Food and Drug Administration; laws and regulations promulgated by the United States Department of Agriculture; the National Organic Program; and state, local, foreign, and provincial law equivalents. In addition, the California Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65) and implementing regulations impose testing and warning requirements for products containing any chemical known to the State of California to cause cancer and/or reproductive toxicity. Product recall laws and regulations also apply to our products.

The failure by us to comply with applicable health, safety, and labeling requirements could result in fines, penalties, injunctions, product recalls, enforcement actions, third-party claims for property damage and personal injury, regulatory or judicial orders requiring corrective measures, and attorneys' fees associated with prosecuting such actions, which could have a material adverse effect on our business, financial condition, or results of operations.

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We rely on contract manufacturers to produce products in compliance with applicable health, safety, and labeling requirements. Further, as with any consumer-facing company selling food or nutraceutical products, there is always a chance of microbial contamination even under the most stringent manufacturing practices; thus, the risk of fines, penalties, injunctions, product recalls, enforcement actions, third-party claims for property damage and personal injury, regulatory or judicial orders requiring corrective measures, and attorneys' fees associated with prosecuting such actions is heightened where the company is not actively involved in the manufacturing practices.

On February 4, 2021, the United States House of Representatives Subcommittee on Economic and Consumer Policy, Committee on Oversight and Reform ("Subcommittee"), published a report, "Baby Foods Are Tainted with Dangerous Levels of Arsenic, Lead, Cadmium, and Mercury" (the "Report"), which stated that, with respect to Sprout, a company in which Neptune acquired a 50.1% stake, "Independent testing of Sprout Organic Foods" has confirmed that their baby foods contain concerning levels of toxic heavy metals." The Report further stated that after receiving reports alleging high levels of toxic metals in baby foods, the Subcommittee requested information from Sprout but did not receive a response. On February 11, 2021, the Subcommittee contacted Sprout, reiterating its requests for documents and information about toxic heavy metals in Sprout's baby foods. Sprout provided an initial response to the Subcommittee on February 25, 2021. The pending inquiries and potential findings could have a material adverse effect on our business, financial condition, or results of operations.

On March 16, 2021, a purported class action, captioned Marvin Gong v. Neptune Wellness Solutions, et al., was filed in the United States District Court for the Eastern District of New York against the Company and certain of its current and former officers. On October 21, 2022, the Company announced that it had agreed to settle and resolve the lawsuit for a gross payment to the class of between $4 and $4.25 million, with the exact amount being within the Company's control and dependent on the type of consideration used. The settlement is subject to court approval and certification by the court of the class, and the Company has a right to terminate the agreement within 30 days under certain circumstances.

We also are subject to federal, state, local, foreign and provincial laws, rules and regulations concerning advertising and marketing, including but not limited to those prohibiting unfair, deceptive, and/or abusive trade practices. Violations of advertising and marketing requirements can result in fines, penalties, injunctions, disgorgement of profits, full restitution for injury suffered by consumers, rescission of contracts, enforcement actions, regulatory or judicial orders requiring corrective measures, and attorneys' fees associated with prosecuting such actions.

Accordingly, we are exposed to potential liabilities and reputational risk associated with litigation, regulatory proceedings and government investigations and enforcement actions for the failure of us to comply with applicable health, safety, and labeling requirements and advertising and marketing requirements. Any adverse judgment in or settlement of any pending or any future litigation or investigation could result in payments, fines and penalties that could adversely affect our business, results of operations and financial condition and which may not be covered by insurance. Regardless of the merits of the claims and the outcome, legal proceedings have resulted in, and may continue to result in, significant legal fees and expenses as well as diversion of management's and employee time and other resources, and adverse publicity. Such proceedings could also adversely affect our business, results of operations and financial condition. If the Company is unsuccessful in its defense of material litigation claims or is unable to settle the claims, the Company may be faced with significant monetary damage awards or other remedies against it including injunctive relief that could have a material adverse effect on the Company's business, financial condition and results of operations. Administrative or regulatory actions against the Company or its employees could also have a material adverse effect on the Company's business, financial condition and results of operations. For more information on our pending legal proceedings, see "*Legal Proceedings*."

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#### Risks Relating to Our Human Resources
***We may be unable to attract or retain key personnel, and we may be unable to attract, develop and retain additional employees required for our development and future success.***

Our success is largely dependent on the performance of our management team and certain employees and our continuing ability to attract, develop, motivate and retain highly qualified and skilled employees. Qualified individuals are in high demand, and we may incur significant costs to attract and retain them. The loss of the services of any key personnel, or an inability to attract other suitably qualified persons when needed, could prevent us from executing on our business plan and strategy, and we may be unable to find adequate replacements on a timely basis, or at all. We do not currently maintain key-person insurance on the lives of any of our key personnel.

or may in the future require a security clearance will be able to obtain or renew such clearances or that new personnel who require a security clearance will be able to obtain one. A failure by an individual in a key operational position to maintain or renew his or her security clearance could result in a reduction or complete suspension of our operations. In addition, if an individual in a key operational position leaves us, and we are unable to find a suitable replacement who is able to obtain a security clearance in a timely manner, or at all, we may not be able to conduct our operations at planned production volume levels or at all.

#### We face exposure to fraudulent or illegal activity by employees, contractors, consultants and agents, which may subject us to investigations and actions.
We are exposed to the risk that any of our employees, independent contractors and consultants and our subsidiaries may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violate (i) government regulations, (ii) manufacturing standards, (iii) federal and local healthcare fraud and abuse laws and regulations, or (iv) laws that require the true, complete and accurate reporting of financial information or data. It may not always be possible for us to identify and deter misconduct by our employees and other third parties, and the precautions taken by us to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. We cannot provide assurance that our internal controls and compliance systems will protect us from acts committed by our employees, agents or business partners in violation of U.S. or Canadian federal, provincial or state or local laws. If any such actions are instituted against us, and we are not successful in defending or asserting our rights, those actions could have a material impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could have a material adverse effect on our business, financial condition, results of operations or prospects.

#### Risks Relating to Our Information Technology
***We must successfully maintain and/or upgrade our information technology systems, and our failure to do so could have a material adverse effect on our business, financial condition or results of operations.***

We rely on various information technology systems to manage our operations. Over the last several years, we have implemented, and we continue to implement, modifications and upgrades to such systems, including changes to legacy systems, replacing legacy systems with successor systems with new functionality, and acquiring new systems with new functionality. These types of activities subject us to inherent costs and risks associated with replacing and changing these systems, including impairment of our ability to fulfill customer orders, potential disruption of our internal control structure, substantial capital expenditures, additional administration and operating expenses, retention of sufficiently skilled personnel to implement and operate the new systems, demands on management time and other risks and costs of delays or difficulties in transitioning to

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or integrating new systems into our current systems. These implementations, modifications, and upgrades may not result in productivity improvements at a level that outweighs the costs of implementation, or at all. In addition, the difficulties with implementing new technology systems may cause disruptions in our business operations and have a material adverse effect on our business, financial condition, or results of operations.

***We may be exposed to risks and costs associated with security breaches, data loss, credit card fraud and identity theft that could cause us to incur unexpected expenses and loss of revenue as well as other risks.***

The Company's operations are increasingly dependent on IT systems and the management of information; thus, the protection of customers, employees, suppliers and other business data is critical. A portion of our sales require the collection of certain customer data, such as credit card information. In order for our sales channel to function, we and other parties involved in processing customer transactions must be able to transmit confidential information, including credit card information, securely over public networks. The use of credit payment systems makes us more susceptible to a risk of loss, particularly with respect to an external security breach of customer information controlled by us, or by third parties under arrangements with us (including those with whom we have strategic alliances). Despite of all efforts, the Company experienced a cyber-attack in July 2021 as a consequence of increased digital interactions with customers, suppliers and consumers, and changes in ways of working of our employees and these external stakeholders due to the COVID-19 outbreak. Also, we are particularly reliant on service providers and thus the impact of COVID-19 on their operations also imposed a risk for us. Cyber-attacks will continue to impose threats to our operations.

In addition, federal, state, provincial and international laws and regulations govern the collection, retention, sharing, and security of data that we manage. The regulatory environment surrounding information security and privacy has been increasingly demanding in recent years and may see the imposition of new and additional requirements by provincial, state, and federal governments as well as foreign jurisdictions in which we do business. Compliance with these requirements may result in cost increases due to necessary systems changes and the development of new processes to meet these requirements by us.

In the event of a security breach, theft, leakage, accidental release or other illegal activity with respect to employees, customers, suppliers or other company data, we could become subject to various claims, including those arising out of thefts and fraudulent transactions, and may also result in the suspension of credit card services. This could cause consumers to lose confidence in our security measures, harm our reputation as well as divert management attention, and expose us to potentially unreserved claims and litigation. Any loss in connection with these types of claims could be substantial. If our electronic payment systems are damaged or cease to function properly, we may have to make significant investments to fix or replace them, and we may suffer interruptions in our operations in the interim. In addition, we are reliant on these systems, not only to protect the security of the information stored, but also to appropriately track and record data. Any failures or inadequacies in these systems could expose us to significant unreserved losses, which could materially and adversely affect our earnings and the market price of securities. Our brand reputation would likely be damaged as well.

#### Risks Relating to Our Intellectual Property
***Our commercial success depends, in part, on our intellectual property rights and a failure by us to protect our intellectual property may have a material adverse effect on our ability to develop and commercialize our products.***

Our success depends in part on our ability to develop products, obtain patents, protect our trade secrets and operate without infringing third-party exclusive rights or without others infringing our exclusive rights or those granted to us under license. The patent position of a corporation is generally uncertain and involves complex legal, factual and scientific issues, several of which remain unresolved. We do not know whether we will be able to develop other patentable proprietary technology and/or products. Furthermore, we cannot be completely certain that our future patents, if any, will provide a definitive and competitive advantage or afford protection

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against competitors with similar technology. Furthermore, we cannot give any assurance that such patents will not be challenged or circumvented by others using alternative technology or whether existing third-party patents will prevent us from marketing our products. In addition, competitors or potential competitors may independently develop, or have independently developed products as effective as ours or invent or have invented other products based on our patented products.

If third-party licenses are required, we may not be able to obtain them, or if obtainable, they may not be available on reasonable terms. Furthermore, we could develop or obtain alternative technologies related to third-party patents that may inadvertently cover their products. Inability to obtain such licenses or alternative technologies could delay the market launch of certain of our products, or even prevent us from developing, manufacturing or selling certain products. In addition, we could incur significant costs in defending ourselves in patent infringement proceedings initiated against us or in bringing infringement proceedings against others.

#### Risks Relating to This Offering and Ownership of Our Common Shares

#### We do not currently intend to pay any cash dividends on our Common Shares in the foreseeable future.
We have never paid any cash dividends on our Common Shares. We do not anticipate paying any cash dividends on our Common Shares in the foreseeable future because, among other reasons, we currently intend to retain any future earnings to finance our business. The future payment of cash dividends will be dependent on factors such as cash on hand and achieving profitability, the financial requirements to fund growth, our general financial condition and other factors our board of directors may consider appropriate in the circumstances. Until we pay cash dividends, which we may never do, our shareholders will not be able to receive a return on their Common Shares unless they sell them.

#### If there is insufficient liquidity in our Common Shares, it could adversely affect your ability to sell your shares.
Shareholders of the Company may be unable to sell significant quantities of Common Shares into the public trading markets without a significant reduction in the price of their Common Shares, or at all. There can be no assurance that there will be sufficient liquidity of the Common Shares on the trading market, and that the Company will continue to meet the listing requirements of the NASDAQ or achieve listing on any other public stock exchange. There can be no assurance that an active and liquid market for the Common Shares will be maintained and an investor may find it difficult to resell Common Shares.

#### U.S. investors may be unable to enforce certain judgments against us in Canada.
Neptune is a corporation existing under the Business Corporations Act (Québec). A number of our directors and officers are residents of Canada or other jurisdictions outside of the United States, and substantially all of our assets are located outside the United States. As a result, it may be difficult to effect service within the United States upon the Company or upon its directors and officers. Execution by United States courts of any judgment obtained against the Company or any of the Company's directors or officers in United States courts may be limited to the assets of such companies or such persons, as the case may be, located in the United States. It may also be difficult for holders of securities who reside in the United States to realize in the United States upon judgments of courts of the United States predicated upon civil liability and the civil liability of the Company's directors and executive officers under the United States federal securities laws. The Company has been advised that a judgment of a U.S. court predicated solely upon civil liability under U.S. federal securities laws or the securities or "blue sky" laws of any state within the United States, would likely be enforceable in Canada if the United States court in which the judgment was obtained has a basis for jurisdiction in the matter that would be recognized by a Canadian court for the same purposes. However, there may be doubt as to the enforceability in Canada against these non-U.S. entities or their controlling persons, directors and officers who are not residents of the United States, in original actions or in actions for enforcement of judgments of courts of the United States, of liabilities predicated solely upon U.S. federal or state securities laws.

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#### Certain Canadian laws could delay or deter a change of control.
The Investment Canada Act (Canada) subjects an acquisition of control of a corporation by a non-Canadian to government review if the value of the assets as calculated pursuant to the legislation exceeds a threshold amount. A reviewable acquisition may not proceed unless the relevant minister is satisfied that the investment is likely to be a net benefit to Canada. Any of the foregoing could prevent or delay a change of control and may deprive or limit strategic opportunities for our shareholders to sell their shares.

#### Our failure to meet the continued listing requirements of Nasdaq could result in a de-listing of our Common Shares.
If we fail to continue to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq will take steps to de-list our Common Shares. The per share price of our Common Shares has declined below the minimum bid price threshold required for continued listing. Such a de-listing would likely have a negative effect on the price of our Common Shares and would impair your ability to sell or purchase our Common Shares when you wish to do so, as well as adversely affect our ability to issue additional securities and obtain additional financing in the future.

On December 29, 2022, we received a deficiency notice from Nasdaq (the "Deficiency Notice") informing us that our Common Shares have failed to comply with the $1.00 minimum bid price required for continued listing under Nasdaq Listing Rule 5550(a)(2) ("Rule 5550(a)(2)") based upon the closing bid price of our Common Shares for the 30 consecutive business days prior to the date of the Deficiency Notice. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were given 180 calendar days from December 29, 2022, or until June 27, 2023, to regain compliance with Rule 5550(a)(2). If at any time before June 27, 2023, the bid price of our Common Shares closes at $1.00 per share or more for a minimum of 10 consecutive business days, the Nasdaq will provide written confirmation that we have regained compliance.

Our common shares may be de-listed if we do not regain compliance with Rule 5550(a)(2) by June 27, 2023 and our shareholders could face significant material adverse consequences, including:

• Limited availability or market quotations for our common shares;

• Reduced liquidity of our common shares;

• Determination that our common shared are "penny stock", which would require brokers trading in our common shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our common shares;

• Limited amount of news an analysts' coverage of us; and

• Decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future.

In the event of a de-listing, however, we would take actions to restore our compliance with Nasdaq Marketplace Rules, but we can provide no assurances that the listing of our Common Shares would be restored, that our Common Shares will remain above the Nasdaq minimum bid price requirement or that we otherwise will remain in compliance with the Nasdaq Marketplace Rules.

#### Our shareholders may be subject to dilution resulting from future offerings of Common Shares by us.
We may raise additional funds in the future by issuing Common Shares or equity-linked securities. Holders of our securities have no pre-emptive rights in connection with such further issuances. Our board of directors has the discretion to determine if an issuance of our capital stock is warranted, the price at which such issuance is to be affected and the other terms of any future issuance of capital stock. In addition, additional common shares will be issued by us in connection with the exercise of warrants, options or grant of other equity awards granted by us.

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Such additional equity issuances could, depending on the price at which such securities are issued, substantially dilute the interests of the holders of our existing securities.

#### Our failure to meet the continued listing requirements of Nasdaq could result in a de-listing of our Common Shares.
If we fail to continue to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq will take steps to de-list our Common Shares. Such a de-listing would likely have a negative effect on the price of our Common Shares and would impair your ability to sell or purchase our Common Shares when you wish to do so, as well as adversely affect our ability to issue additional securities and obtain additional financing in the future.

In the event of a de-listing, however, we would take actions to restore our compliance with Nasdaq Marketplace Rules, but we can provide no assurances that the listing of our Common Shares would be restored, that our Common Shares will remain above the Nasdaq minimum bid price requirement or that we otherwise will remain in compliance with the Nasdaq Marketplace Rules.

On November 15, 2022, the Company filed a Notification of Late Filing on Form 12b-25 (the "Form 12b-25") with the SEC, which stated that it was unable to file its Form 10-Q for the quarter ended September 30, 2022 by the prescribed due date without unreasonable effort or expense because it required additional time to finalize its financial statements to be included in the Form 10-Q. The Company did not file its Form 10-Q by the fifth calendar day delay after the prescribed due date. On November 22, 2022, the Company received another deficiency notice (the "Second Deficiency Notice") from Nasdaq indicating that, as a result of not having timely filed the Form 10-Q with the SEC, the Company is not in compliance with Nasdaq Listing Rule 5250(c)(1) ("Rule 5250(c)(1)"), which requires timely filing of all required periodic financial reports with the SEC. The Second Deficiency Notice had no immediate effect on the listing or trading of the Company's common shares on Nasdaq. The Second Deficiency Notice indicated that the Company could regain compliance with Rule 5250(c)(1) at any time prior to January 23, 2023 by filing the Form 10-Q. If the Company failed to file the Form 10-Q by such date, the Company could have submitted a plan to regain compliance with Rule 5250(c)(1) prior to such date and, following receipt of such plan, Nasdaq could have determined to grant an extension of 180 calendar days from the Form 10-Q due date, or until May 15, 2023, for the Company to regain compliance. On December 19, 2022, the Company filed its Form 10-Q for the quarter ended September 30, 2022 and, thereby, regained compliance with Rule 5250(c)(1).

***Our constating documents permit us to issue an unlimited amount of additional Common Shares or Preferred Shares, which may prevent a third-party takeover or cause our shareholders to experience dilution in the future.***

Our constating documents authorize us to issue an unlimited number of Common Shares and an unlimited number of preferred shares ("Preferred Shares"). Our board of directors has the authority to cause us to issue additional Common Shares and Preferred Shares and to determine the special rights and restrictions of the shares of one or more series of our Preferred Shares, each without consent of our shareholders. The issuance of any such securities may result in a reduction of the book value or market price of our Common Shares. Given the fact that we operate in a capital-intensive industry with significant working capital requirements, we may be required to issue additional Common Shares or other securities that are dilutive to existing shareholders in the future in order to continue our operations, which may result in dilution to existing shareholders. Further, any such issuances could result in a change of control or a reduction in the market price for our Common Shares. Additionally, the rights of the holders of Common Shares will be subject to, and may be adversely affected by, the rights of holders of any Preferred Shares that may be issued in the future. For example, Preferred Shares typically rank senior to Common Shares as to dividend rights, liquidation preference or both and may be convertible into Common Shares. Lastly, our ability to issue Preferred Shares could make it more difficult for a third-party to

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acquire a majority of our outstanding voting shares, particularly in the event we issue Preferred Shares with special voting rights, the effect of which may be to deprive our shareholders of a control premium that might otherwise be realized in connection with an acquisition of us.

***Because the Company is a "smaller reporting company," we may take advantage of certain scaled disclosures available to us, resulting in holders of our securities receiving less Company information than they would receive from a public company that is not a smaller reporting company***

We are a "smaller reporting company" as defined in the Exchange Act. As a smaller reporting company, we may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) our common shares held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter, or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and our common shares held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter. To the extent we take advantage of any reduced disclosure obligations, it may make it harder for investors to analyze the Company's results of operations and financial prospectus in comparison with other public companies.

As a smaller reporting company, we are permitted to comply with scaled-back disclosure obligations in our SEC filings compared to other issuers, including with respect to disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We have elected to adopt the accommodations available to smaller reporting companies. Until we cease to be a smaller reporting company, the scaled-back disclosure in our SEC filings will result in less information about our company being available than for other public companies.

If investors consider our common shares less attractive as a result of our election to use the scaled-back disclosure permitted for smaller reporting companies, there may be a less active trading market for our common shares and our share price may be more volatile.

***Any acquisitions, strategic investments, divestures, mergers, or joint ventures we make may require the issuance of a significant amount of equity or debt securities and may not be successful.***

As part of our business strategy, we expect to selectively pursue strategic acquisitions, as well as additional strategic and other investments such as joint ventures or partnerships, to obtain additional businesses, products and/or technologies, capabilities, and personnel. Acquisitions and other investments present challenges, including geographical coordination, personnel integration and retention of key management personnel, systems integration, the potential disruption of each company's respective ongoing businesses, possible inconsistencies in standards, controls, procedures, and policies, unanticipated costs of terminating or relocating facilities and operations, unanticipated expenses relating to such integration, contingent obligations, and the reconciliation of corporate cultures. Those operations could divert management's attention from the business, cause a temporary interruption of or loss of momentum in the business, and adversely affect our results of operations and financial condition. The inability to consummate and integrate new acquisitions on advantageous terms, or the failure to achieve a favorable return on our strategic and other investments, could adversely affect our ability to grow and compete effectively. Additionally, if we make one or more acquisitions in which the consideration includes the Company's securities, we may be required to issue a substantial amount of equity, debt, warrants, convertible instruments, or other similar securities. Such an issuance could result in dilution to shareholders or increase our interest expense and other expenses.

#### We have reported negative cash flows from operating activities and may do so in future periods.
The Company reported negative cash flow from operating activities of $54.3 million, $56.6 million and $14.1 million for the fiscal years ended March 31, 2022 and March 31, 2021 and the six-month period ended September 30, 2022, respectively. The Company has historically and may also continue to have negative cash

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flow from operating activities until sufficient levels of sales are achieved. The Company cannot guarantee that future positive cash flow from operating activities will be obtained. In addition, negative cash flows may continue longer than the Company has planned for which could cause liquidity issues.

The Company may also be unable to obtain borrowings in an amount sufficient to enable them to pay debt or to fund other liquidity needs. If sufficient liquidity is not obtained, the Company may need to refinance or restructure all or a portion of its debt on or before maturity, sell assets or borrow money or issue equity, which may not be possible on terms satisfactory to the Company, or at all. If the Company continues to report negative cash flows from operating activities, or any failure to obtain any required additional financing on favorable terms, or at all, such events could have a material adverse effect on the business, financial condition, and results of operation of the Company.

#### We may not be able to maintain our operations without additional funding.
As of January 22, 2023, Neptune had $6.3 million of cash and cash equivalents. We had negative cash flows from operating activities of $54.3 million during the twelve-month period ended March 31, 2022 and $14.1 million during the six-month period ended September 30, 2022. We may be unable to generate sufficient cash flow from operations or to obtain future borrowings in an amount sufficient to enable us to pay our debt or to fund our other liquidity needs. If we do not have sufficient liquidity, we may need to refinance or restructure all or a portion of our debt on or before maturity, sell assets or borrow more money or issue equity, which we may not be able to do on terms satisfactory to us or at all. In addition, any refinancing could be at higher interest rates and may require us to comply with more onerous covenants which could further restrict our business operations. We may also try to raise the necessary capital through securities offerings. Such offerings are subject to market conditions and are beyond our control.

#### We are subject to foreign currency fluctuations, which could adversely affect our financial results.
We are exposed to the financial risk related to the fluctuation of foreign exchange rates and the degrees of volatility of those rates. Currency risk relates to the portion of our business transactions denominated in currencies other than the Canadian dollar.

For the twelve-month period ended March 31, 2022, approximately 70% of our revenues were in U.S. dollars, and most of our expenses, including the purchase of raw materials, were in U.S. dollars. If the value of the United States dollar fluctuates significantly more than expected in the foreign exchange markets, our operating results and financial condition may be adversely affected.

#### General Risk Factors

#### Catastrophic events outside of our control, including pandemics, may harm our results of operations or damage our facilities.
A catastrophic events, or the perception of such events, such as earthquakes, tsunamis, floods, typhoons, fires, power disruptions or other natural or manmade disasters, computer viruses, cyber-attacks, terrorist attacks, wars (such as the ongoing military conflict between Russia and Ukraine), riots, civil unrest or other conflicts, or an outbreak of a public health crisis including epidemics, pandemics (such as the COVID-19 pandemic), outbreaks of new infectious diseases or viruses, or related events that can result in volatility and disruption to global supply chains, operations, mobility of people, patterns of consumption and service, and the financial markets could disrupt the Company's operations, or those of its material contractors. Such disruptions could impair production or distribution of the Company's potential products, damage inventory or our facilities, interrupt critical functions or otherwise materially adversely affect its business, which could materially harm the Company's financial condition or results of operations.

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#### The market price of the Company's Common Shares may be highly volatile.
The stock market, from time-to-time, experiences significant price and volume fluctuations unrelated to the operating performance of particular companies. Future announcements concerning the Company, its competitors, including those pertaining to financing arrangements, government regulations, developments concerning regulatory actions affecting the Company, litigation, additions or departures of key personnel, cash flow, and economic conditions and political factors in Canada and the United States may have a significant impact on the market price of the Company's Common Shares. In addition, there can be no assurance that the Company's Common Shares will continue to be listed on Nasdaq.

The market price of the Company's Common Shares could fluctuate significantly for many other reasons, including for reasons unrelated to the Company's specific performance, such as reports by industry analysts, investor perceptions, or negative announcements by its subscribers, competitors or suppliers regarding their own performance, as well as general economic and industry conditions. For example, to the extent that other large companies within its industry experience declines in their stock price, the share price of the Company's Common Shares may decline as well. In addition, when the market price of a company's shares drops significantly, shareholders often institute securities class action lawsuits against the company.

Litigation resulting from these claims could be costly and time-consuming and could divert the attention of management and other key personnel from the Company's business and operations. The complexity of any such claims and the inherent uncertainty of commercial or class action, litigation increases these risks. In recognition of these considerations, the Company could suffer significant litigation expenses in defending any of these claims and enter into settlement agreements. If the Company is unsuccessful in its defense of material litigation claims or is unable to settle the claims, the Company may be faced with significant monetary damage awards or other remedies against it including injunctive relief that could have a material adverse effect on the Company's business, financial condition and results of operations. Administrative or regulatory actions against the Company or its employees could also have a material adverse effect on the Company's business, financial condition and results of operations.

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#### USE OF PROCEEDS
We will not receive any of the proceeds from the sale of our Common Shares in this offering. We will receive proceeds from the exercise of the Warrants but not on the sale of the Common Shares underlying the Warrants. The Selling Shareholders will receive all of the proceeds from this offering. We will, however, receive the net proceeds of any Warrants exercised for cash. Proceeds, if any, received from the exercise of such Warrants will be used for working capital for general corporate purposes. No assurances can be given that any of such Warrants will be exercised. The Selling Shareholders will pay any underwriting discounts and commissions and expenses incurred by them for brokerage, accounting, tax or legal services or any other expenses incurred by the Selling Shareholders in disposing of the Common Shares. We will bear all other costs, fees and expenses incurred in effecting the registration of the Common Shares covered by this prospectus, including all registration and filing fees, and fees and expenses for our counsel and our independent registered public accountants.

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#### DETERMINATION OF OFFERING PRICE
The offering price of the Common Shares underlying the Warrants offered hereby is determined by reference to their exercise price of $1.62 per share for the Series E Warrants and $0.53 per share for the January 2023 Warrants.

We cannot currently determine the price or prices at which shares of Common Shares may be sold by the Selling Shareholders under this prospectus.

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#### MARKET INFORMATION FOR SECURITIES AND DIVIDEND POLICY
Our common shares trade under the symbol "NEPT" on Nasdaq.

The following table sets forth the high and low intraday sales prices per Common Share as reported on Nasdaq beginning on April 1, 2020 and taking into account the Share Consolidation that took effect on June 13, 2022:

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| | | | |
|:---|:---|:---|:---|
| **Period** | **Period** | **Low Trading Price** | **High Trading Price** |
|  |  | **($)** | **($)** |
|  **Year Ending March 31, 2023** | **Year Ending March 31, 2023** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fourth Quarter | (through January 27, 2022) | $0.29 | $0.89 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Third Quarter | (December 31, 2022) | $0.23 | $1.92 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Second Quarter | (September 30, 2022) | $1.00 | $3.74 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; First Quarter | (June 30, 2022) | $1.34 | $1.41 |
|  **Year Ended March 31, 2022** | **Year Ended March 31, 2022** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fourth Quarter | (March 31, 2022) | $7.35 | $19.60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Third Quarter | (December 31, 2021) | $12.25 | $22.40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Second Quarter | (September 30, 2021) | $19.25 | $41.30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; First Quarter | (June 30, 2021) | $37.10 | $55.30 |
|  **Year Ended March 31, 2021** | **Year Ended March 31, 2021** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fourth Quarter | (March 31, 2021) | $45.15 | $110.25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Third Quarter | (December 31, 2020) | $52.15 | $86.80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Second Quarter | (September 30, 2020) | $73.85 | $113.05 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; First Quarter | (June 30, 2020) | $35.70 | $110.25 |

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As of January 27, 2023, we had 39 shareholders of record based on the records of our transfer agent, which does not include beneficial owners of our Common Shares whose shares are held in the names of various securities brokers, dealers and registered clearing agencies.

#### Dividends
We do not anticipate paying any dividend on our Common Shares in the foreseeable future. We presently intend to retain future earnings to finance the expansion and growth of our business. Any future determination to pay dividends will be at the discretion of our Board of Directors and will depend on our financial condition, results of operations, capital requirements and other factors the Board of Directors deems relevant. In addition, the terms of any future debt or credit facility may preclude us from paying dividends.

#### Securities Authorized for Issuance under Equity Compensation Plans
Information about our equity compensation plans, as set forth in this prospectus under the caption "Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters", is incorporated herein by reference.

#### Unregistered Sales of Equity Securities
Except as set forth below, since January 27, 2020, we have not sold any securities that were not registered under the Securities Act.

(1) In January 2023, we issued (i) 71,665 common shares to our financial advisor in connection with our strategic review and (ii) to two accredited investors the January 2023 Warrants, which permit the investors to purchase an aggregate of 850,000 of our common shares at an exercise price of $0.53 per common share.

(2) In October 2022, we issued to accredited investors the Series E Warrants in the Private Placement, which permits the investors to purchase an aggregate of 6,417,114 of our common shares at an exercise price of $1.62 per common share.

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(3) In July and September 2022, we issued to two accredited investors an aggregate of 409,435 common shares in connection with loans to Sprout Foods, Inc.

(4) In June 2022 we issued 7,104 common shares to our financial advisor in connection with our then proposed divestiture of our Canadian cannabis business.

(5) In October 2020, we issued 462,963 common shares and 300,926 warrants to purchase common shares at an offering of $75.60 per share to institutional investors.

#### Repurchases of Equity Securities
We did not repurchase any of our equity securities during the years ended March 31, 2022 and 2021 or the interim period ended September 30, 2022.

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#### BUSINESS

#### OVERVIEW

#### GENERAL
Neptune Wellness Solutions Inc. ("Neptune", the "Company", "we", "us" or "our") is a modern consumer packaged goods ("CPG") company driven by a singular purpose: to transform the everyday for a healthier tomorrow. Neptune is a diversified and fully integrated health and wellness company with multiple brand units. With a mission to redefine health and wellness, Neptune is focused on building a broad portfolio of high quality, affordable consumer products in response to long-term secular trends and market demand for natural, plant-based, sustainable and purpose-driven lifestyle brands. The Company utilizes a highly flexible, cost efficient manufacturing and supply chain infrastructure that can be scaled up and down or into adjacent product categories to identify new innovation opportunities, quickly adapt to consumer preferences and demand, and bring new products to market through its mass retail partners and e-commerce channels. Leveraging decades of expertise in extraction and product formulation, Neptune is a provider of turnkey product development and supply chain solutions to business customers across several health and wellness verticals, including nutraceuticals and white label consumer packaged goods. Neptune has expanded its operations since June 2020 into several brand units in order to better address its markets. The main brand units are the following: Nutraceuticals, Beauty & Personal Care, and Organic Foods & Beverages. All amounts in this prospectus are in US dollars, unless otherwise noted.

#### HISTORY
Neptune was incorporated under Part IA of the Companies Act (Québec) on October 9, 1998 under the name Neptune Technologies & Bioressources Inc. Since its incorporation, Neptune has amended its articles of incorporation on numerous occasions. The Company first amended its articles on May 30, 2000 to convert its then issued and outstanding shares into newly-created classes of shares. The Company's articles were also amended on May 31, 2000 to create Series A Preferred Shares. On August 29, 2000, the Company converted all its issued and outstanding Class A shares into Class B subordinate shares. On September 25, 2000, the Company further amended its share capital to eliminate its Class A shares and converted its Class B subordinate shares into Common Shares. On November 1, 2013, the Company amended its articles of incorporation to reflect certain changes to items relating to board matters. The Company's Common Shares are listed and posted for trading on the NASDAQ Stock Market LLC ("NASDAQ") under the symbol, "NEPT".

On June 9, 2022, we effected a one for thirty five (1-for-35) reverse split of our common shares, which we refer to as the "Share Consolidation," as approved by our Board of Directors. Trading of our common shares on both the Toronto Stock Exchange and NASDAQ on a post-consolidated basis commenced as of the open of markets on June 13, 2022. On August 15, 2022, the Company's common shares were voluntarily delisted from the TSX but are still traded on the NASDAQ.

#### OUR PROPERTIES AND OPERATIONS
Our headquarters is located in leased offices in Laval, Québec, where our general and administrative departments primarily operate. We also lease laboratory space in Laval, Quebec where testing and development of many of our products takes place. We lease offices in Jupiter, Florida which will serve as the U.S. headquarters once leasehold improvements are completed.

We previously owned a production facility in Sherbrooke, Quebec where we conducted our cannabis operations including laboratory testing. On October 17, 2022, we announced that we had entered into a binding agreement for the sale of our cannabis business, which would include the sale of our cannabis brands and the Sherbrooke building in one or more transactions. The disposition of our cannabis operations occurred on November 9, 2022. We believe the divestment of the cannabis assets will allow us to realize significant cost savings and operational streamlining from redirected resources towards our simplified corporate structure.

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We also have leased offices in Vaudreuil, Province of Québec, Canada. The Vaudreuil offices were previously used for the Company's Biodroga business. The Company intends to sub-lease the Vaudreuil offices.

#### BUSINESS STRATEGY
Neptune's vision is to change consumer habits through the creation and distribution of environmentally friendly, ethical and innovative consumer product goods. Our mission is to redefine health and wellness and help humanity thrive by providing sustainable consumer focused solutions. Despite the decline in global economic activity since the outbreak of the COVID-19 virus, Neptune has taken transformative, and successful, actions to increase its sales, distribution and reach in both the business-to-business ("B2B") and business-to-consumer ("B2C") model in the consumer-packaged goods ("CPG") market. Neptune has a dual go-to market B2B and B2C strategy focused on expanding its global distribution reach. The strategy sets Neptune apart from its competition and has started to yield consistent, long-term revenue opportunities for the Company.

The Company's long-term strategy is focused on the health and wellness sector with an emphasis on select CPG verticals, including Nutraceuticals, Beauty & Personal Care, and Organic Foods & Beverages. Neptune's current brand portfolio across these verticals include Sprout®, Neptune Wellness<sup>™</sup>, Forest Remedies®, and MaxSimil®.

On June 9, 2021, Neptune announced a multi-year licensing agreement between Sprout and CoComelon, the world's leading children's entertainment brand, owned and operated by Moonbug Entertainment. In addition, on July 27, 2021, an initial launch was announced for Sprout products into Canada, in Metro grocery stores in the province of Ontario. In September 2022, Sprout launched its up-age meal products.

Neptune's future will be focused on brand creation, accelerating organic growth with emphasis on increased efficiency and margin expansion. This will be complemented by accretive acquisitions with a proven track record of operational excellence. On July 22, 2021, the Company launched Forest Remedies' plant-based Omega 3-6-9 gummies and soft gels. Neptune is focused on expanding its exclusive Omega-3 delivery technology MaxSimil® while improving growth and profitability in its Nutraceuticals vertical. The MaxSimil® product lineup will be expanded with the launch of two new consumer products: MaxSimil® with CoQ10 and MaxSimil® with Curcumin. Additionally, the Company launched a new consumer line of Vitamin Sprays and Pumps for both children and adults with selected retail partners. To support anticipated accelerated growth, the Nutraceuticals U.S. sales force has been expanded to maximize awareness and distribution of the capabilities and expertise in nutraceuticals, including prebiotics and probiotics, and proteins within this important vertical.

#### PRODUCTS, PRINCIPAL MARKETS, METHODS OF DISTRIBUTION AND BRANDS

#### Products
Our Nutraceutical, Beauty and Personal care products and Organic Foods and Beverages are manufactured by third party manufacturers. In order to meet demand for our products, we have developed relationships with selected contract manufacturers. For Biodroga we mainly buy all the raw materials we supply to our third party manufacturers Our largest co-manufacturers for Biodroga makes approximately 35% of our annual production requirements. For Sprout, 90% of raw materials are purchased by the third party manufacturers based on our specifications. The largest Sprout co-manufacturer makes about 40% of our annual requirements. We believe that we are not dependent on any single contract manufacturer and that, if necessary, our current selected contract manufacturers could be replaced with minimal disruption to our operations.

Our quality control staff requires full disclosure on the part of our suppliers and we periodically conduct on-site audits of their facilities. For strategic reasons, certain of our key raw materials are sourced from single suppliers. However, in the event that we were unable to source an ingredient from a current supplier, we believe that we could generally obtain the same ingredient or an equivalent from an alternative supplier, with minimal disruption to our operations.

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#### Canadian Cannabis Products—Extracts and Formulations
We retrofitted our existing production facility located in Sherbrooke, Province of Québec, Canada to comply with Health Canada requirements under the Cannabis Act, in order to produce our cannabis extracts and formulations at our existing site. Our GMP (Good Manufacturing Practices, mandated by the Natural Health Products Directorate of Health Canada) production facility features robust safety measures and equipment, which allows for enhanced manufacturing practices. We also operate a laboratory at our facility, which allows us to conduct research, new product development and quality control analysis in-house.

As a condition for obtaining our license to produce cannabis oil under the Cannabis Act, Health Canada required multiple compliance measures to be taken, including the addition of physical barriers, visual monitoring, recording devices, intrusion detection, as well as other important controls around access to the Company's existing Sherbrooke facility.

On October 17, 2022, we announced that we had entered into a binding agreement for the sale of our cannabis business, including the Sherbrooke facility, following the planned divestiture of this business announced on June 8, 2022. Some assets were excluded from the sale and were written down accordingly. The disposition closed on November 9, 2022. We believe the divestment of the cannabis assets will allow us to realize significant cost savings and operational streamlining from redirected resources towards our simplified corporate structure. On November 10, 2022, the Company filed a notice of cessation of cannabis activities with Health Canada and requested that its cannabis processing and research licenses be revoked. As of November 11, 2022, all cannabis was removed from the Sherbrooke facility and the Company no longer possesses or conducts any activities with cannabis, other than certain products produced for third party customers containing CBD in our nutraceutical business.

#### MARKETS

#### Nutraceuticals
Neptune offers a variety of specialty ingredients, including our licensed specialty ingredient MaxSimil<sup>®</sup>, a technology that helps increase digestion and absorption of fat-soluble and nutritional ingredients. Additionally, the Company sources a variety of other marine oils, seed oils and specialty ingredients that are available for sale as raw material or transformed into finished products. The Company has recently launched a new line of Vitamin Sprays and Pumps for both children and adults. Neptune is focused on expanding its exclusive Omega-3 delivery technology MaxSimil<sup>®</sup> while improving growth and profitability in its Nutraceuticals vertical through its brand Biodroga.

Neptune's core strength is product innovation with a focus on specialty ingredients offered in bulk soft gels and liquid delivery systems. The Company continues to expand its delivery system capabilities with projects for pumps, sprays, roll-ons and CBD enhancements. All of Neptune's Nutraceutical products are available under distributors' private labels, primarily sold in the Canadian and U.S. nutraceutical markets. Neptune, through its nutraceuticals products business, also formulates, develops and provides customers with turnkey nutrition solutions.

#### Beauty & Personal Care
The Company sells wellness products to the Beauty & Personal Care market through its Forest Remedies brand. Forest Remedies offers plant-based supplements, including first-of-its kind multi-omega gummies and soft gels with packaging that is 100% plastic-free. Neptune announced, on March 10, 2022, the launch of its Forest Remedies Multi Omega 3-6-9 line of supplements into more than 340 Sprouts Farmers Market stores across the U.S. This distribution agreement marks another important milestone in our efforts to transform Neptune into a high-growth branded CPG company.

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#### Organic Foods and Beverages
In February 2021, Neptune acquired a controlling interest in Sprout Foods, Inc., an organic plant-based baby food and toddler snack company. Sprout is an integral piece of Neptune's health and wellness portfolio and represents a key brand within the Organic Foods and Beverages vertical. Since completing the Sprout acquisition, the Company has begun expansion efforts in Sprout's distribution across substantially all of Target's U.S. retail stores. The Company also announced, on July 27, 2021, the initial launch of Sprout products into Canada, in Metro grocery stores in the province of Ontario. Neptune further expects to launch Sprout products in North America throughout the remainder of the fiscal year. The Company expects the Neptune/Sprout combination to result in significant incremental revenue growth, with several near and long-term revenue synergy opportunities identified within Neptune's existing relationships and current sales channels. As described above, Neptune also announced on June 9, 2021, an exclusive multi-year licensing agreement between Sprout and CoComelon, the #1 children's entertainment and educational show in the world with more than 110 million subscribers worldwide. This co-branded product line is now available on Walmart.com and in 900 Walmart stores and has been very well-received. With this launch, Sprout Organics now sells into the top organic baby food retailers in the U.S., accounting for approximately 90 percent of the overall market.

#### SALES AND DISTRIBUTION

#### Nutraceutical Products
The Company sells its nutraceutical products mainly in bulk softgels or liquids to multiple distributors and customers, who commercialize these products under their private label. While the Company may have orders in place with approximately 100 different distributors and customers at any one time, the majority of the Company's sales are concentrated with a small group of distributors and customers. Agreements with these distribution partners may be terminated or altered by them unilaterally in certain circumstances.

#### Beauty & Personal Care
The Company sells its Beauty and Personal Care products through distributors and directly to retail outlets in the United States. It also sells its products online through its own website forestremedies.com as well as e-commerce sites.

#### Organic Foods and Beverages
The Company, though its Sprout subsidiary, sells its products to mass retailers, grocery stores and other retail outlets, as well as online through e-commerce sites and its own website sproutorganics.com.

#### OUR B2C BRAND PORTFOLIO STRATEGY
We are currently working on accelerating brand equity for our brand portfolio:

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| ![LOGO](g338720g43g01.jpg) | **Biodroga<sup>™</sup>**. Neptune, through its Biodroga subsidiary, provides product development and turnkey solutions (4PL) to its customers throughout North America. Biodroga offers a full range of services, whether it is leveraging our global network of suppliers to find the best ingredients or developing unique formulations that set our customer apart from their competition. Biodroga's core products are MaxSimil, various Omega-3 fish oils and other nutritional products, as well as softgel solutions. |
|  | **MaxSimil.** Neptune's patented MaxSimil is an omega-3 fatty acid delivery technology that uses enzymes that mimic the natural human digestive system to predigest omega-3 fatty acids. The Journal of Nutrition by the |

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| Oxford University Press, recently released the results of a clinical study that evidences MaxSimil's superior absorption as compared with standard fish oil supplements. MaxSimil was first introduced to the market in 2018, and is sold as a straight omega-3 supplement with standard and unique concentration of EPA/DHA. MaxSimil is also starting to be presented in combination with specialty ingredients such as Curcumin, Vitamin K2. |
| **Forest Remedies<sup>®</sup>.** Under our Forest Remedies**<sup>®</sup>** brand, we offer first-of-their kind vegan multi-omega gummies and soft gels with packaging that is 100% plastic-free. Launched on March 10, 2022, our Forest Remedies Multi Omega 3-6-9 line of supplements is available into more than 340 Sprouts Farmers Market stores across the U.S. This distribution agreement marks another important milestone in our efforts to transform Neptune into a high-growth branded CPG company. |
| **Sprout<sup>®</sup>**. Neptune entered a new market with the Neptune/Sprout combination. Sprout has created a trusted organic baby food brand with a comprehensive range of products that are always USDA certified organic, non-GMO and contain nothing artificial. Sprout's products target four segments: Stage 2 (children 6 months and up), Stage 3 (children 8 months and up), Toddler (children aged 12 months and up) and Snacks (children 8 months and up). Since our acquisition of a controlling interest in Sprout, the Company has begun expansion efforts in Sprouts' distribution substantially in all of Target's U.S. retail stores. The Company also announced on July 27, 2021, its initial launch into the Canadian market through its partnership with food retailer Metro Inc. Certain toddler snacks under this brand label are now available in Metro grocery stores in the province of Ontario. |

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#### COMPETITION
The nutraceutical, beauty & personal care and organic foods and beverages industries are highly competitive. There are many companies, public and private universities, and research organizations actively engaged in the research and development of products that may be similar to our products. It is probable that the number of companies seeking to develop products similar to our products will increase. Many of these and other existing or potential competitors have substantially greater financial, technical and human resources than we do and may be better equipped to develop, manufacture and market products.

We seek to differentiate our products and marketing from our competitors based on product quality, customer service, marketing support, pricing and innovation, and believe that our strategy enables us to effectively compete in the marketplace. For additional information regarding the competitive nature of our businesses, see "Risks Related to Our Business" under the heading "Risk Factors" of this prospectus.

#### REGULATORY
Our Nutraceutical, Beauty, Personal Care and Organic Food and Beverage businesses are subject to varying degrees of regulation by a number of government authorities in Canada and the U.S., including Health Canada, the FDA, the Federal Trade Commission (FTC), the Consumer Product Safety Commission, the U.S. Department of Agriculture, and the Environmental Protection Agency. Various provincial, state and local agencies in areas where we operate and in which our products are sold also regulate our business. The areas of our business regulated by both these and other authorities include, among others:

• product claims and advertising;

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• product labels;

• product ingredients;

• how we manufacture, package, distribute, import, export, sell and store our products; and

• our classification as an essential business and our right to continue operations during government shutdowns.

Health Canada and the FDA, in particular, regulate the formulation, manufacturing, packaging, storage, labeling, promotion, distribution and sale of vitamins and other nutritional supplements in Canada and the U.S., while other agencies regulate marketing and advertising claims. Under Health Canada and FDA rules, companies that manufacture, package, label, distribute or hold nutritional supplements are required to meet certain GMP's to ensure such products are of the quality specified and are properly packaged and labeled. We are committed to meeting or exceeding the standards set by Health Canada and the FDA and believe we are currently operating within the mandated GMP.

Health Canada and he FDA also regulate the labeling and marketing of dietary supplements and nutritional products, including the following:

• the identification of dietary supplements or nutritional products and their nutrition and ingredient labeling;

• requirements related to the wording used for claims about nutrients, health claims, and statements of nutritional support;

• labeling requirements for dietary supplements or nutritional products for which "high potency" and "antioxidant" claims are made;

• notification procedures for statements on dietary supplements or nutritional products; and

• premarket notification procedures for new dietary ingredients in nutritional supplements.

We are also subject to a variety of other regulations in Canada and the U.S., including those relating to health, safety, bioterrorism, taxes, labor, employment, import and export, the environment and intellectual property. All of these regulations require significant financial and operational resources to ensure compliance, and we cannot assure you we will always be in compliance despite our best efforts to do so or that being in compliance will not become prohibitively costly to our business.

#### INTELLECTUAL PROPERTY
We constantly evaluate the importance of obtaining intellectual property protection for our technology brands, products, applications and processes and maintaining trade secrets. When applicable to our business and products, we seek to obtain, license and enforce patents, protect our proprietary information and maintain trade secret protection without infringing the proprietary rights of third parties. We also make use of trade secrets, proprietary unpatented information and trademarks to protect our technology and enhance our competitive position.

#### Brand Names and Trademarks
Sprout<sup>®</sup>, NurturMe<sup>®</sup>, Nosh!<sup>®</sup>, Neptune Wellness<sup>™</sup>, MaxSimil<sup>®</sup>, Forest Remedies<sup>®</sup>, and Ocean Remedies<sup>®</sup> are trademarks of the Company. On June 8, 2022 we announced the planned accelerated divestiture of our cannabis business including the sale of our cannabis brands, Mood Ring<sup>™</sup> and PanHash<sup>™</sup>, as well as the Sherbrooke building in one or more transactions, and on October 17, 2022 we announced that we had entered into a binding agreement for the sale of our cannabis business. The sale closed on November 9, 2022.

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#### Patent Applications
On August 9, 2018, Neptune filed two applications with the United States Patent and Trademark Office (USPTO) for patents related to the extraction of cannabis material. The extraction processes provide highly-efficient methods to obtain cannabinoids and other desired compounds from the cannabis plant at a greater purity than conventional methods. Both processes are applicable to marijuana and hemp and have been incorporated into the Company's GMP-certified extraction facility in Sherbrooke. The first patent application outlines a method of extracting and isolating compounds from plants of the Cannabis genus at low temperature by using a cold organic solvent. The second patent application similarly provides for a method for extracting compounds from cannabis at low temperature, but without the use of organic solvents. Specifically, this patent relates to a process for high recovery of cannabinoids and terpenes by using natural solvents. The patent applications were sold in connection with the sale of the Company's cannabis business, which closed on November 9, 2022.

#### Licenses
On November 27, 2017, Neptune entered into an exclusive, worldwide, and royalty-bearing licensing agreement for the use of the MaxSimil<sup>®</sup> technology, in combination with cannabis-derived products. This new agreement allows Neptune to research, manufacture, formulate, distribute, and sell monoglyceride omega-3-rich ingredients in combination with cannabis and/or cannabinoid-rich or hemp derived ingredients for medical and adult use applications. The Company believes the MaxSimil<sup>®</sup> technology has the ability to enhance absorption of lipidbased and lipid soluble ingredients such as cannabinoids, essential fatty acids including EPA and DHA omega-3s, vitamins A, D, K and E, CoQ10 and others. This could be especially beneficial in increasing the absorption of ingredients which are not easily absorbed, such as CBD.

On June 9, 2021, Sprout Foods entered into a multi-year licensing agreement with Moonbug, providing Sprout with an exclusive license to utilize certain properties relating to CoComelon<sup>®</sup>, the world's leading children's entertainment brand, owned and operated by Moonbug, with Sprout products.

#### EMPLOYEES
As of September 30, 2022, we had 71 employees working at our business offices in Laval, at our facility in Sherbrooke or remotely down from 155 employees at June 30, 2022. Our employees possess specialized skills and knowledge, which we believe are valuable assets of the Company. As of September 30, 2022, 37 of our employees were in Canada while 34 were in the United States. We also had 8 temporary personnel. One of our employees was represented by a union. We consider our relations with our employees to be good and our operations have never been interrupted as the result of a labor dispute.

#### SEASONALITY
In addition to general economic factors, we are impacted by seasonal factors and trends such as major cultural events and other unpredictable matters. Although we believe the impact or seasonality on our consolidated results of operations is minimal, our quarterly results may vary significantly in the future due to the timing of nutraceutical contract manufacturing orders as well promotions and ordering patterns of our other customers. We cannot provide assurance future revenues will follow historical patterns. The market price of our common shares may be adversely affected by these factors.

#### BUSINESS UPDATE

#### Financial Positioning
We are taking the steps necessary to shore up cash reserves in the immediate term and position our balance sheet properly to fund our growth initiatives as we push towards profitability. To this end, we have explored multiple options to balance the need for providing near-term financial stability while ensuring we continue to build

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long-term shareholder value. As a result, we have entered into three agreements for the purchase and sale of shares of our common stock and pre-funded warrants in October 2022, June 2022 and March 2022. Taking into account all considerations, we believe these actions are in the best interest of the company and will benefit shareholders in the long-term. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Going Concern. Unless otherwise specified, all dollar amounts are in US dollars ("USD").

#### Growth Drivers
We remain enthusiastic about the growth prospects of our business, with opportunity across all three of our core verticals. We have successfully made the transition to a fully-integrated consumer packaged goods company with a diverse suite of better-for-you brands, available in some of the country's largest retail chains. At the same time, we are driving consumer relevance by pursuing the right strategic partnerships for co-branded product lines and expanding our product offerings in key wellness categories.

#### Major Distribution Gains
Since acquiring a majority stake in Sprout Organics in February 2021, we have expanded Sprout baby foods and toddler snacks substantially, both online and in store at major retailers like Target and Wal-Mart. Earlier in March 2022, we announced the launch of our Forest Remedies Multi Omega 3-6-9 line of supplements into more than 340 Sprouts Farmers Market stores across the U.S. This distribution agreement marks another important milestone in our efforts to transform Neptune into a high-growth branded CPG company.

#### Strategic Partnerships
In February 2022, we brought Walmart a first-of-its-kind collaboration between Sprout Organics and popular kids' entertainment platform CoComelon. This co-branded product line is now available on Walmart.com and in 900 Walmart stores, and has been very well-received. With this launch, Sprout Organics now sells into the top organic baby food retailers in the U.S., accounting for approximately 90 percent of the overall market.

#### Investing in Our Prospects
On November 15, 2021 we initiated a strategic review and made some big changes to get on track to becoming a profitable diversified CPG company. These actions have taken effect, and we are starting to see the results. The third quarter of fiscal year 2022 was the first quarter where we posted a positive gross margins since transitioning to a CPG-focused model. We also had a positive gross margin in the second quarter of fiscal 2023. We also delivered four consecutive quarters of sequential revenue growth before a decrease in the fourth quarter of the year ended March 31, 2022 as well as a decrease in the second quarter of 2023. However, there can be no assurances that revenue growth will continue.

While the global market can be unstable during turbulent times, we are taking steps to ensure we remain well-positioned to execute against our stated plan: controlling our costs while pursuing high-growth opportunities. To that effect, Neptune announced on June 8, 2022 the launch of a new Consumer Packaged Goods ("CPG") focused strategic plan to reduce costs, improve the Company's path to profitability and enhance current shareholder value. This plan focuses on two primary actions: (1) the divestiture of the Canadian cannabis business and (2) a realignment of focus and operational resources toward increasing the value of Neptune's consumer products business. With the divestiture of its cannabis business, Neptune is renewing its focus on the core brands – Sprout Organics and Biodroga Solutions – that align closely with future consumer trends and show a greater potential for future growth and profitability.

On October 16, 2022, Neptune entered into an asset sale and purchase agreement (the "ASPA") with a third-party, for its Canadian cannabis business including the Sherbrooke facility, following the divestiture of this

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business announced on June 8, 2022. The aggregate purchase price of the assets sold, net of liabilities assumed, amounted to approximately $3.7 million ($5.15 million CAD). The ASPA closed on November 9, 2022. Some assets were excluded from the ASPA and were written down accordingly. The completion of the divestiture of our cannabis business is a critical milestone in executing upon our strategy to become a leading CPG company. The sale of the cannabis assets will allow us to realize significant cost savings and operational streamlining from redirected resources towards our simplified corporate structure, as we focus on Sprout as the key growth driver for Neptune going forward.

#### RECENT CORPORATE DEVELOPMENTS

#### Neptune's Presence in Canada's Cannabis Market
During the year ended on March 31, 2022, Neptune supplied the market with premium cannabis extracts and dried flower, under its Mood Ring<sup>™</sup> and PanHash<sup>™</sup> brands, and completed its launch of all significant regulated product categories. All cannabis products were manufactured and packaged at the Company's purpose-built facility in Sherbrooke, Quebec. On June 8, 2022, the Company announced a planned accelerated divestiture of the Canadian cannabis business and that the Company would focus on winding up its cannabis operations pending one or more sales transactions. Following this announcement, all assets and liabilities related to the Canadian cannabis business were respectively shown under assets held for sale and liabilities directly associated with assets held for sale on Neptune's balance sheet. Further information on those assets and liabilities can be found in note 2(d) of the condensed consolidated interim financial statements for the six-month period ended September 30, 2022. On October 16, 2022, Neptune entered into an asset sale and purchase agreement (the "ASPA") with a third-party, for its Canadian cannabis business including the Sherbrooke facility, following the planned divestiture of this business announced on June 8, 2022. The aggregate purchase price of the assets sold, net of liabilities assumed, amounted to approximately $3.7 million ($5.15 million CAD). The ASPA closed on November 9, 2022. Some assets were excluded from the ASPA, and were written-down accordingly, on October 17, 2022 we announced that we had entered into a binding agreement for the sale of our cannabis business and the sale closed on November 9, 2022.

#### Launch of a New CPG Focused Strategic Plan
On June 8, 2022, Neptune announced the launch of a new Consumer Packaged Goods ("CPG") focused strategic plan to reduce costs, improve the Company's path to profitability and enhance current shareholder value. This plan builds on the Company's initial strategic review that took place in fall of 2021 and focuses on two primary actions: (1) divestiture of the Canadian cannabis business and (2) a realignment of focus and operational resources toward increasing the value of Neptune's consumer products business. With the divestiture of its cannabis business, Neptune has renewed its focus on its core brands – Sprout Organics and Biodroga Solutions –that align closely with future consumer trends and show a greater potential for future growth and profitability. The strategic plan is expected to lower costs and reduce global headcount by approximately 50%.

#### Neptune Announces New Line of CoComelon® Co-Branded Products
Neptune announced on May 26, 2022 a new line up of CoComelon co-branded organic snack bars for toddlers. The snack bars are the latest innovation in the Sprout Organics x CoComelon product line launched earlier this year, which features a range of organic baby and toddler food pouches and toddler snacks. New snack bars will be available online and at select retailers nationwide. Sprout Organics CoComelon Snack Bars are available in two flavor combinations: Banana and Banana with Peas and Carrots. Each snack bar contains a blend of unsweetened fruits, veggies and gluten-free oats and packs an impressive 4g of plant-based protein and 2g of dietary fiber to help fuel growing bodies.

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#### Changes to Management
As part of the Company's renewed focus on its CPG brands and Sprout Organics in particular, Neptune announced on June 8, 2022 that Sarah Tynan, Sprout's Chief Customer Officer, was promoted to CEO of Sprout. Ms. Tynan has been instrumental in garnering big distribution gains for Sprout, including Walmart and Target, and leading the highly successful CoComelon partnership. She brings deep sales experience and business acumen, including previous roles at Newell Brands and Unilever, and will continue to drive the Sprout business forward.

On June 14, 2022, Neptune announced the appointment of Raymond Silcock as Chief Financial Officer, effective July 25, 2022. Mr. Silcock, who is based out of Neptune's Jupiter, Florida office, previously served as Executive Vice President and Chief Financial Officer at Perrigo Plc, as well as CFO at Diamond Foods, The Great Atlantic and Pacific Tea Company, UST Inc., and Cott Corporation. In addition, he has previously served as Chair of both Audit and Strategy Committees on several Boards including Pinnacle Foods Inc, American Italian Pasta Company, Prestige Brands and Bacardi Limited. Mr. Silcock replaces Randy Weaver who was Interim CFO up to July 22, 2022

#### Receipt of Nasdaq Notification
On November 15, 2022, the Company filed a Notification of Late Filing on Form 12b-25 (the "Form 12b-25") with the SEC, which stated that it was unable to file its Form 10-Q for the quarter ended September 30, 2022 by the prescribed due date without unreasonable effort or expense because it required additional time to finalize its financial statements to be included in the Form 10-Q. The Company did not file its Form 10-Q by the fifth calendar day delay after the prescribed due date. On November 22, 2022, the Company received a notice (the "Deficiency Notice") from Nasdaq indicating that, as a result of not having timely filed the Form 10-Q with the SEC, the Company is not in compliance with Nasdaq Listing Rule 5250(c)(1) (the "Listing Rule"), which requires timely filing of all required periodic financial reports with the SEC. The Deficiency Notice had no immediate effect on the listing or trading of the Company's common shares on the Nasdaq Capital Market. The Deficiency Notice indicated that the Company could regain compliance with the Listing Rule at any time prior to January 23, 2023 by filing the Form 10-Q. If the Company failed to file the Form 10-Q by such date, the Company may submit a plan to regain compliance with the Listing Rule prior to such date and, following receipt of such plan, Nasdaq may grant an extension of 180 calendar days from the Form 10-Q due date, or until May 15, 2023, for the Company to regain compliance. On December 20, 2022, the Company filed its Form 10-Q for the quarter ended September 30, 2022 and, thereby, regained compliance with the Listing Rule.

Previously, on August 31, 2021, Neptune announced that that the Company had received a written notification (the "Notification Letter") from Nasdaq on August 30, 2021, notifying the Company that it is not in compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2), which requires that the closing bid price for the Company's common shares listed on Nasdaq be maintained at a minimum of US$1.00.

Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. Based on the closing bid price of the Company's common shares for the 30 consecutive business days from July 16, 2021, to August 27, 2021, the Company no longer met the minimum bid price requirement.

The Notification Letter had no immediate effect on the listing of the Company's common shares on Nasdaq.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided 180 calendar days, or until February 28, 2022, to regain compliance with the minimum bid price requirement, during which time the Company's common shares continued to trade on the Nasdaq Capital Market. To regain compliance, the Company's common shares must have had a closing bid price of at least US$1.00 for a minimum of 10 consecutive trading days. The Company requested and received an additional 180-day period to regain compliance, and had until August 27, 2022 to comply.

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On June 9, 2022, Neptune announced the completion of the Company's proposed consolidation of its common shares (the "Common Shares") on the basis of one (1) post-consolidation Common Share for every thirty-five (35) pre-consolidation Common Shares (the "Share Consolidation"). The post-Share Consolidation Common Shares commenced trading on the NASDAQ and the TSX at the market open on June 13, 2022. The Share Consolidation reduced the number of Common Shares issued and outstanding from approximately 198 million Common Shares to approximately 5.7 million Common Shares as at June 13, 2022.

As of the date of this prospectus, the Company has regained compliance with the Nasdaq minimum bid price requirement.

#### Change in Auditor
On November 4, 2021, the Company announced the appointment of KPMG LLP ("KPMG") as its independent registered public accounting firm, effective October 22, 2021, following the resignation of Ernst & Young LLP ("EY") on September 23, 2021. The appointment of KPMG was made after a thorough evaluation process and has been approved by Neptune's Board of Directors and its Audit Committee. KPMG replaces EY as Neptune's independent registered public accounting firm for the fiscal year ending March 31, 2022. Previously, on July 10, 2020, the Company dismissed KPMG and proposed EY as its independent registered public accounting firm, which was effective following the Company's annual and special meeting of shareholders held on August 12, 2020.

#### Loss of Foreign Private Issuer Status
As of September 30, 2021, the Company was no longer considered a foreign private issuer and accordingly, such change in status required the Company to file as a U.S. domestic filer, effective April 1, 2022, and comply with all periodic disclosures and reporting requirements of the Exchange Act applicable to U.S. domestic issuers including the requirement to transition from IFRS to US GAAP for the year ended March 31, 2022. The Company was also required to modify certain of its policies to comply with governance practices associated with U.S. domestic issuers. As a result, the loss of foreign private issuer status increases the Company's legal and financial compliance costs and make some activities more time consuming and costly.

#### Closing of a $5,000,000 Registered Direct Offering Priced At-The-Market Under Nasdaq Rules
On June 22, 2022, Neptune announced that it entered into definitive agreements with several institutional investors for the purchase and sale of an aggregate of 1,945,526 common shares (including common share equivalents) of the Company, and accompanying two series of warrants to purchase up to an aggregate of 3,891,052 common shares per series of warrants, at an offering price of $2.57 per share and accompanying warrants in a registered direct offering priced at-the-market under Nasdaq rules. Each series of warrants have an exercise price of $2.32 per share and are immediately exercisable upon issuance. One series of warrants will expire two years following the date of issuance and one series of warrants will expire five years following the date of issuance. The gross proceeds from the offering are $5 million, prior to deducting placement agent's fees and other offering expenses payable by Neptune and assuming none of the warrants issued in the offering are exercised for cash. Neptune intends to use the net proceeds from the offering for working capital and other general corporate purposes. The offering closed on June 23, 2022. The pre-funded warrants issued in the offering were fully exercised on June 24, 2022 for $64.55. Additionally, on October 6, 2022, 972,763 Series C common share purchase warrants were amended to provide for an extended expiration date of June 23, 2029.

#### Expansion of the Existing Secured Promissory Notes
On July 13, 2022, Neptune announced that Sprout Foods Inc. ("Sprout"), the Company's organic plant-based baby food and toddler snack company, has entered into an amendment of each of its existing Secured Promissory Notes to expand from $22.5 million to a maximum of $37.5 million, allowing for up to $13 million of future

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lending. In connection with this amendment, investment funds managed by Morgan Stanley Expansion Capital ("Morgan Stanley" or "MSEC") have agreed to immediately commit an additional $3 million under the expanded Secured Promissory Notes to Sprout. This amount was received July 13, 2022. The maturity date of the note facility of February 1, 2024, is consistent with the maturity date of the existing Secured Promissory Notes with MSEC and Neptune. The funds from the expanded facility are intended to be used for the general working capital needs of Sprout and the repayment of certain existing Sprout debt payable to Neptune. The existing and new Notes will bear interest at 10% per annum, increasing by 1.00% every three months during the term of the Secured Promissory Notes. MSEC was issued 372,670 common shares of Neptune, of an approximate value of $0.6 million in connection with this expansion. On November 8, 2022, Sprout entered into an agreement to issue an additional $525,000 of Secured Promissory Notes, on the same terms as the Secured Promissory Note discussed. In connection with this financing, Neptune will issue common shares to the holders of these Secured Promissory Notes for a value of $105,000.

#### Closing of a $6,000,000 Registered Direct Offering Priced At-The-Market Under Nasdaq Rules and Concurrent Private Placement
On October 6, 2022, Neptune announced that it entered into definitive agreements with institutional investors for the purchase and sale of 3,208,557 common shares of the Company (the "Common Shares") pursuant to a registered direct offering priced at-the-market under Nasdaq rules (the "Offering") and warrants to purchase up to 6,417,114 Common Shares (the "Warrants") in a concurrent private placement (the "Private Placement"). The combined purchase price for one Common Share and one Warrant is $1.87. The Warrants will have an exercise price of $1.62 per Common Share, will be exercisable immediately following the date of issuance and will expire five years from the date of issuance. The aggregate gross proceeds from the Offering and the concurrent Private Placement were approximately $6.0 million, before deducting fees and other estimated expenses, for net proceeds of approximately $5.7 million. The Offering and concurrent Private Placement closed on October 11, 2022

#### ADDITIONAL INFORMATION
The Company's head office and registered office is located at 545 Promenade du Centropolis, Suite 100, Laval, Québec, Canada, H7T 0A3. The Company's website address is www.neptunecorp.com. The information provided on the Neptune website is not part of this or any other report we file with or furnish to the SEC. The Exchange Act requires us to file reports, proxy statements, and other information with the SEC. These materials may be obtained electronically by accessing the SEC's home page at www.sec.gov.

Our Code of Conduct is available on our website, www.neptunewellness.com. We will post on our website amendments to the Code of Conduct or waivers from its provisions, if any, which are applicable to any of our directors or executive officers in accordance with the requirements of the SEC or Nasdaq.

The information on our website is not a part of, nor is it incorporated by reference, into this prospectus. Further, our references to the URLs for these websites are intended to be inactive textual references only.

#### Properties
The following table sets forth the Company's principal physical properties:

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| | | |
|:---|:---|:---|
| **Type** | **Material Properties Location** | **Leased / Owned** |
| Office | Laval, Québec | Leased |
| Office | Vaudreuil, Québec | Leased |
| Office / Laboratory | Laval, Québec | Leased |
| Office | Jupiter, Florida | Leased |

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Our headquarters is located in leased offices in Laval, Québec, where our general and administrative departments primarily operate. We also own a production facility in Sherbrooke, Québec, where we also conduct laboratory activities, and lease laboratory offices in Laval, Québec. We also have leased offices in Vaudreuil, Province of Québec, Canada, which was previously used for the Company's Biodroga business. The Company intends to sub-lease the Vaudreuil offices. In addition, Neptune has leased office space in Jupiter, Florida. On June 8, 2022, we announced the planned accelerated divestiture of our cannabis business which would include the sale of our cannabis brands and the Sherbrooke building in one or more transactions.

#### Legal Proceedings
The Company is engaged from time-to-time in various legal proceedings and claims that have arisen in the ordinary course of business. The outcome of such proceedings and claims against the Company is subject to future resolution, including the uncertainties of litigation. Based on information currently known to the Company, the most significant outstanding proceedings and claims are as follows:

(i) In September 2020, Neptune submitted a claim and demand for arbitration against Peter M. Galloway and PMGSL Holdings, LLC (collectively "PMGSL") in accordance with the SugarLeaf Asset Purchase Agreement ("APA") dated May 9, 2019 between Neptune, PMGSL, Peter M. Galloway and Neptune Holding USA, Inc. Separately, PMGSL submitted a claim and demand for arbitration against Neptune. The Neptune claims and PMGSL claims have been consolidated into a single arbitration and each are related to the purchase by Neptune of substantially all of the assets of the predecessor entities of PMGSL Holdings, LLC. Neptune is claiming, among other things, breach of contract and negligent misrepresentation by PMGSL in connection with the APA and is seeking, among other things, equitable restitution and any and all damages recoverable under law. PMGSL is claiming, among other things, breach of contract by Neptune and is seeking, among other things, payment of certain compensation contemplated by the APA. A merit hearing in the arbitration took place in April 2022 and August 1, 2022. While Neptune believes there is no merit to the claims brought by PMGSL, a judgment in favor of PMGSL may have a material adverse effect on our business and Neptune intends to continue vigorously defending itself. Based on currently available information, a provision of $0.6 million has been recognized for this case as at March 31, 2022 ($0.6 million as at March 31, 2021).

(ii) On February 4, 2021, the United States House of Representatives Subcommittee on Economic and Consumer Policy, Committee on Oversight and Reform (the "Subcommittee"), published a report, "Baby Foods Are Tainted with Dangerous Levels of Arsenic, Lead, Cadmium, and Mercury" (the "Report"), which stated that, with respect to Sprout, "Independent testing of Sprout Organic Foods" has confirmed that their baby foods contain concerning levels of toxic heavy metals." The Report further stated that after receiving reports alleging high levels of toxic metals in baby foods, the Subcommittee requested information from Sprout but did not receive a response.

On February 11, 2021, following the acquisition of a 50.1% stake in Sprout by Neptune, the Subcommittee contacted Sprout, reiterating its requests for documents and information about toxic heavy metals in Sprout's baby foods. Sprout provided an initial response to the Subcommittee on February 25, 2021 and is cooperating with the Subcommittee requests. Further, on February 24, 2021, the Office of the Attorney General of the State of New Mexico ("NMAG") delivered to Sprout a civil investigative demand requesting similar documents and information with regards to the Report and the NMAG's investigation into possible violations of the False Advertising Act of New Mexico. Sprout has responded to the requests of the NMAG.

Since February 2021, several putative consumer class action lawsuits have been brought against Sprout alleging that its products (the "Products") contain unsafe and undisclosed levels of various naturally-occurring heavy metals, namely lead, arsenic, cadmium and mercury. Sprout has denied the allegations in these lawsuits and contends that its baby foods are safe and properly labeled. The claims raised in these lawsuits were brought in the wake of the highly publicized Report. All such putative class actions have since been dismissed.

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In addition to the consumer class actions discussed above, Sprout is currently named in other cases, including one lawsuit filed on June 16, 2021 in California state court alleging some form of personal injury from the ingestion of Sprout's Products, purportedly due to unsafe and undisclosed levels of various naturally occurring heavy metals. This lawsuit generally alleges injuries related to neurological development disorders such as autism spectrum disorder and attention deficit hyperactivity disorder. Sprout denies that its Products contributed to any of these injuries and will defend the cases vigorously. In addition, the Office of the Attorney General for the District of Columbia ("OAG") recently sent a letter to Sprout, similar to letters sent to other baby food manufacturers, alleging potential labeling and marketing misrepresentations and omissions regarding the health and safety of its baby food products, constituting an unlawful trade practice. Sprout has agreed to meet with the OAG and will vigorously defend against the allegations. No provision has been recorded in the financial statements for this matter. This matter may have a material adverse effect on our business, financial results or results of operations.

(iii) On March 16, 2021, a purported shareholder class action was filed in United States District Court for the Eastern District of New York against the Company and certain of its current and former officers alleging violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, with respect to the Company's acquisition of SugarLeaf Labs, Inc. On October 21, 2022, the Company announced that it had agreed to settle and resolve the lawsuit for a gross payment to the class of between $4 and $4.25 million, with the exact amount being within the Company's control and dependent on the type of consideration used. The settlement is subject to court approval and certification by the court of the class.

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#### MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
*All references in this management's discussion and analysis of financial condition and results of operations, or MD&A, to the "Company", "Neptune", "we", "us", or "our" refer to Neptune Wellness Solutions Inc., unless otherwise indicated or the context requires otherwise. The following MD&A is for the year ended March 31, 2022 and for the three and six months ended September 30, 2022 and should be read in conjunction with the audited consolidated financial statements for the year ended March 31, 2022 and 2021 and the unaudited condensed consolidated interim financial statements for the three and six months ended September 30, 2022 and 2021 included in this Registration Statement/prospectus (collectively, the "***Financial Statements***"), which have been prepared by management in accordance with GAAP as issued by the FASB. All dollar amounts refer to U.S. dollars, except as stated otherwise. Unless otherwise stated herein, all share and per share numbers relating to the Company's Common Shares prior to the effectiveness of the Reverse Share Split have been adjusted to give effect to the Reverse Share Split.* 

*All amounts in the tables contained in this MD&A are in millions of dollars, except for basic and diluted income (loss) per share which are shown in dollars.* 

#### GOING CONCERN
The Company's condensed consolidated interim financial statements have been prepared on a going concern basis, which presumes that the Company will continue realizing its assets and discharging its liabilities in the normal course of business for the foreseeable future. The Company has incurred significant operating losses and negative cash flows from operations since inception. To date, the Company has financed its operations through the public offering and private placement of Common Shares, units consisting of Common Shares and warrants, and convertible debt, the proceeds from research grants and research tax credits, and the exercises of warrants, rights and options. For the six-month period ended September 30, 2022, the Company incurred a net loss of $43.8 million and negative cash flows from operations of $14.1 million, and had an accumulated deficit of $358.4 million as of September 30, 2022. For the year ended March 31, 2022, the Company incurred a net loss of $84.4 million and negative cash flows from operations of $54.3 million. Furthermore, as at September 30, 2022, the Company's current liabilities and expected level of expenses for the next twelve months exceed cash on hand of $1.4 million and its total current liabilities exceed its total current assets. Accordingly, the Company is required to actively manage its liquidity and expenses and payments of payables are not being made as the amounts become due for certain suppliers.

The Company currently has no committed sources of financing available other than from transactions completed after period-end from the sale of its Canadian cannabis business (see note 2(d)) and the registered direct offering (see note 18 to the financial statements for the three and six-months ended September 30, 2022).

As of the date the financial statements for the three and six-months ended September 30, 2022 were authorized for issuance, the cash balance is expected to be sufficient to operate the business for only the next two to three months under the current business plan. The Company requires funding in the very near term in order to continue its operations. If the Company is unable to obtain funding in the near-term, it may have to cease operations and liquidate its assets.

These conditions cast substantial doubt about the Company's ability to continue as a going concern.

Going forward, the Company will seek additional financing in various forms. To achieve the objectives of its business plan, Neptune plans to raise the necessary funds through additional securities offerings and the establishment of strategic alliances. Other than the secured promissory notes issued by Sprout, the Company has limited debt and assets available for financing include accounts receivable and inventories. The ability of the Company to complete the needed financing and ultimately achieve profitable operations is dependent on a number of factors outside of the Company's control. The Company's business plan is dependent upon, among

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other things, its ability to achieve and maintain profitability, continue to obtain adequate ongoing debt and/or equity financing to finance operations within and beyond the next twelve months.

While the Company has been successful in obtaining financing from public issuances and private placements, there is no certainty as to future financings.

The consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the going concern basis not be valid. These adjustments could be material.

#### SUBSEQUENT EVENTS
On July 13, 2022, Sprout Foods, Inc., a Delaware corporation ("Sprout"), a subsidiary of the Company, issued an amended and restated secured promissory note (the "Amended Note") in favor of NH Expansion Credit Fund Holdings LP, an investment fund managed by Morgan Stanley Expansion Capital ("MSEC"), in the principal amount of $13,000,000. The Amended Note amended and restated the prior promissory note in the principal amount of $10,000,00 in connection with a loan of an additional $3,000,000 to Sprout from MSEC. The $13,000,000 Notes will bear interest at 10% per annum, increasing by 1.00% every three months during the term of the Notes.

On October 16, 2022, Neptune entered into an asset sale and purchase agreement (the "ASPA") with a third-party, for its Canadian cannabis business including the Sherbrooke facility, following the planned divestiture of this business announced on June 8, 2022. The aggregate purchase price of the assets sold, net of liabilities assumed, amounted to $3.7 million ($5,15 million CAD). The ASPA closed on November 9, 2022. Some assets were excluded from the ASPA and were written down accordingly. The Company recorded an impairment loss on assets held for sale of $14.5 million in the second quarter interim financial statements for the three and six-months ended September 30, 2022. On November 10, 2022, the Company filed a notice of cessation of cannabis activities with Health Canada and requested that its cannabis processing and research licenses be revoked. As of November 11, 2022, all cannabis was removed from the Sherbrooke facility and the Company no longer possesses or conducts any activities with cannabis, other than certain products produced for third party customers containing CBD in our nutraceutical business. The Company remains liable for the pre-closing activities of the divested cannabis business.

On October 11, 2022, the Company announced the closing of a registered direct offering of 3,208,557 of its Common Shares and the Warrants in the concurrent Private Placement. The Company received gross proceeds of approximately $6.0 million in connection with the offering, before deducting placement agent fees and related offering expenses. The net proceeds to the Company from the offering, after deducting the placement agent fees and expenses, and the Company's estimated offering expenses, were approximately $5.15 million.

On October 21, 2022, the Company announced that it had agreed to settle and resolve a putative shareholder class action lawsuit filed against Neptune and certain of its current and former officers and directors, captioned Gong v. Neptune Wellness Solutions, Inc. (Case No. 2:21-cv-01386-ENV-ARL) pending in the United States District Court for the Eastern District of New York, for a gross payment to the class of between $4 and $4.25 million, with the exact amount being within the Company's control and dependent on the type of consideration used. The settlement is subject to court approval and certification by the court of the class. The Company recorded a litigation settlement expense of $4,000,000 in the second quarter interim financial statements for the three and six-months ended September 30, 2022.

On January 12, 2023, the Company entered into a Note Purchase Agreement among the purchasers named therein and the Company, pursuant to which the Company issued and sold $4 million in aggregate principal amount of senior secured promissory notes. The Company may also issue and sell, and the purchasers have agreed to purchase, up to an additional $1 million in aggregate principal amount of senior secured promissory notes to occur not later than February 28, 2023. The second closing will occur only in the event that the Company completes an incremental equity issuance by February 28, 2023, and the aggregate principal amount of the second closing will not exceed the lesser of $1 million or 25% of the proceeds actually received from any

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such incremental equity issuance. The notes may be prepaid or redeemed in whole or in part by the Company, subject to the payment of a premium in an amount equal to ten percent (10%) of the principal amount of notes being repaid (other than principal in respect of PIK interest), less the aggregate amount of cash interest paid on the Notes being repaid on or before the date of such prepayment.

The notes are due and payable no later than January 12, 2024, unless earlier accelerated in accordance with the terms of the Note Purchase Agreement, with interest accruing at a rate of 16.5% per annum from the date of issuance and payable on the last business day of each calendar month in which the notes are outstanding. For the first six interest payment dates following the initial closing, interest will be paid in kind and thereafter payments shall be made in cash on the interest payment date in arrears. Under the terms of the Note Purchase Agreement, the Company issued to the purchasers of the initial notes warrants to purchase a total of 850,000 common shares of the Company exercisable at an exercise price of $0.53 per share at any time until January 12, 2028.

On January 23, 2023, Sprout entered into an accounts receivable factoring facility with Alterna Capital Solutions, LLC ("Alterna"), pursuant to which Sprout agreed to sell certain of its accounts receivable to Alterna. The maximum amount available to Sprout under the facility is $5 million, and funds deployed to Sprout incur a usage fee of the primate rate plus 1%, with a minimum interest rate of 8% per annum. The facility has a one-year term and renews automatically. The Company provided a commercial guaranty in connection with this agreement.

#### SELECTED CONSOLIDATED ANNUAL AND QUARTERLY INFORMATION

#### SELECTED CONSOLIDATED FINANCIAL INFORMATION (in thousands)
The following tables set out selected consolidated financial information and are prepared in accordance with US GAAP.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Three-month periods<br>ended | Three-month periods<br>ended | Twelve-month periods<br>ended | Twelve-month periods<br>ended |
|  | **March 31,<br>2022<br>$** | **March 31,<br>2021<br>$** | **March 31,<br>2022<br>$** | **March 31,<br>2021<br>$** |
|  Total revenues | 11.532 | 4.669 | 48.797 | 35.400 |
|  Adjusted EBITDA (recasted)<sup>1</sup> | (17.302) | (32.523) | (42.162) | (59.542) |
|  Net loss | (36.237) | (43.540) | (84.425) | (124.264) |
|  Net loss attributable to equity holders of the Corporation | (31.536) | (42.445) | (74.972) | (123.170) |
|  Net loss attributable to non-controlling interest | (4.701) | (1.094) | (9.453) | (1.094) |
|  Basic and diluted loss per share | (7.25) | (0.29) | (17.50) | (35.86) |
|  Basic and diluted loss per share attributable to equity holders of the Corporation | (6.31) | (0.29) | (15.54) | (35.55) |
|  Basic and diluted loss per share attributable to non-controlling interest | (0.94) | (0.01) | (1.96) | (0.32) |

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| | | | |
|:---|:---|:---|:---|
|  | **As at<br>March 31, 2022<br>$** | **As at<br>March 31, 2021<br>$** | **As at<br>March 31, 2020<br>$** |
|  Total assets | 104.955 | 186.948 | 120.060 |
|  Working capital<sup>2</sup> | 7.071 | 54.718 | 15.346 |
|  Non-current financial liabilities | 13.800 | 14.593 | 4.854 |
|  Equity attributable to equity holders of the Corporation | 48.116 | 115.368 | 102.962 |
|  Equity attributable to non-controlling interest | 12.722 | 22.178 |  |

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<sup>1</sup> The Adjusted EBITDA is a non-GAAP measure. It is not a standard measure endorsed by US GAAP requirements. A reconciliation to the Company's net loss is presented below. In the quarter ended September 30, 2022, the Company recast comparative Adjusted EBITDA to conform to its current

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definition. As a result, the following adjustments were removed in the current and comparative quarters: litigation provisions, business acquisition and integration costs, signing bonus, severance and related costs, D&O insurance and write-down of inventories and deposits.

<sup>2</sup> Working capital is calculated by subtracting current liabilities from current assets. Because there is no standard method endorsed by US GAAP, the results may not be comparable to similar measurements presented by other public companies. Current assets as at March 31, 2022, 2021 and 2020 were $37.388, $89.528 and $27.589 respectively, and current liabilities as at March 31, 2022, 2021 and 2020 were $30.317, $34.809 and $12.243 respectively. 

The following table sets out selected consolidated financial information.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Three-month periods ended | Three-month periods ended | Six-month periods ended | Six-month periods ended |
|  | September 30,<br>2022<br>$ | September 30,<br>2021<br>$ | September 30,<br>2022<br>$ | September 30,<br>2021<br>$ |
|  Total revenues | 11.987 | 12.519 | 28.259 | 22.597 |
|  Adjusted EBITDA (recasted)<sup>1</sup> | (13.677) | (12.215) | (25.029) | (26.296) |
|  Net loss | (37.288) | (12.102) | (43.792) | (30.958) |
|  Net loss attributable to equity holders of the Company | (30.897) | (11.113) | (35.182) | (28.020) |
|  Net loss attributable to non-controlling interest | (6.390) | (0.989) | (8.610) | (2.937) |
|  Basic and diluted loss per share | (4.75) | (2.54) | (6.26) | (6.51) |
|  Basic and diluted loss per share attributable to equity holders of the Company | (3.94) | (2.33) | (5.03) | (5.89) |
|  Basic and diluted loss per share attributable to non-controlling interest | (0.81) | (0.21) | (1.23) | (0.62) |

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| | | | |
|:---|:---|:---|:---|
|  | As at<br>September 30, 2022<br>$ | As at<br>March 31, 2022<br>$ | As at<br>March 31, 2021<br>$ |
|  Total assets | 65.013 | 104.955 | 186.948 |
|  Working capital<sup>2</sup> | (4.110) | 7.071 | 54.718 |
|  Non-current financial liabilities | 17.059 | 13.800 | 14.593 |
|  Equity attributable to equity holders of the Company | 11.485 | 48.116 | 115.368 |
|  Equity attributable to non-controlling interest | 4.112 | 12.722 | 22.178 |

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<sup>1</sup> The Adjusted EBITDA is a non-GAAP measure. It is not a standard measure endorsed by US GAAP requirements. A reconciliation to the Company's net loss is presented below. In the quarter ended September 30, 2022, the Company recast comparative Adjusted EBITDA to conform to its current definition. As a result, the following adjustments were removed in the current and comparative quarters: litigation provisions, business acquisition and integration costs, signing bonus, severance and related costs, D&O insurance and write-down of inventories and deposits. 

<sup>2</sup> Working capital is calculated by subtracting current liabilities from current assets. Because there is no standard method endorsed by US GAAP, the results may not be comparable to similar measurements presented by other public companies. Current assets as at September 30, 2022, March 31, 2022 and March 31, 2021 were $28.247, $37.388 and $89.528 respectively, and current liabilities as at September 30, 2022, March 31, 2022 and March 31, 2021 were $32.357, $30.317 and $34.809 respectively. 

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#### CONSOLIDATED FINANCIAL ANALYSIS

#### NON-GAAP FINANCIAL PERFORMANCE MEASURES
The Company uses one adjusted financial measure, Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") to assess its operating performance. This non-GAAP financial measure is presented in a consistent manner, unless otherwise disclosed. The Company uses this measure for the purposes of evaluating its historical and prospective financial performance, as well as its performance relative to competitors. The measure also helps the Company to plan and forecast for future periods as well as to make operational and strategic decisions. The Company believes that providing this information to investors, in addition to GAAP measures, allows them to see the Company's results through the eyes of Management, and to better understand its historical and future financial performance. Neptune's method for calculating Adjusted EBITDA may differ from that used by other corporations.

A reconciliation of net loss to Adjusted EBITDA is presented below.

#### ADJUSTED EBITDA
Although the concept of Adjusted EBITDA is not a financial or accounting measure defined under US GAAP and it may not be comparable to other issuers, it is widely used by companies. Neptune obtains its Adjusted EBITDA measurement by excluding from its net loss the following items: net finance costs (income), depreciation and amortization, and income tax expense (recovery). Other items such as equity classified stock-based compensation, non-employee compensation related to warrants, impairment losses on non-financial assets, revaluations of derivatives, costs related to conversion from IFRS to US GAAP and other changes in fair values are also added back to Neptune's net loss. The exclusion of net finance costs (income) eliminates the impact on earnings derived from non-operational activities. The exclusion of depreciation and amortization, stock-based compensation, non-employee compensation related to warrants, impairment losses, revaluations of derivatives and other changes in fair values eliminates the non-cash impact of such items, and the exclusion of costs related to conversion from IFRS to US GAAP, together with the other exclusions discussed above, present the results of the on-going business. From time to time, the Company may exclude additional items if it believes doing so would result in a more effective analysis of underlying operating performance. Adjusting for these items does not imply they are non-recurring. For purposes of this analysis, the Net finance costs (income) caption in the reconciliation below includes the impact of the revaluation of foreign exchange rates.

In Q4 2022, the Company added the costs related to the conversion from IFRS to US GAAP as an adjustment to the definition of Adjusted EBITDA.

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In the quarter ended September 30, 2022, the Company recast comparative Adjusted EBITDA to conform to the current definition. As a result, the following adjustments were removed in the current and comparative quarters: litigation provisions, business acquisition and integration costs, signing bonus, severance and related costs, D&O insurance and write-down of inventories and deposits.

#### Adjusted EBITDA<sup>1</sup> reconciliation, in millions of dollars

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Three-month periods ended | Three-month periods ended | Twelve-month periods<br>ended | Twelve-month periods<br>ended |
|  | **Recast -<br>March 31,<br>2022** | **Recast -<br>March 31,<br>2021** | **Recast -<br>March 31,<br>2022** | **Recast -<br>March 31,<br>2021** |
|  Net loss for the period | $(36.237) | $(43.540) | $(84.425) | $(124.264) |
|  Add (deduct): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 1.656 | 2.425 | 6.791 | 8.830 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acceleration of amortization of long-lived non-financial assets |  | (0.156) |  | 10.552 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Revaluation of derivatives | 1.247 | (3.856) | (7.035) | (7.975) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net finance costs | 1.266 | 1.119 | 2.823 | 5.012 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity classified stock-based compensation | 1.565 | 2.505 | 7.817 | 9.885 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-employee compensation related to warrants |  | 0.244 | 0.179 | 1.904 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; System migration, conversion, implementation | (0.001) |  | 0.327 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Costs related to cybersecurity incident |  | (0.022) |  | 1.500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment loss on long-lived assets | 17.177 | 8.814 | 19.581 | 37.753 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Costs related to conversion from IFRS to US GAAP | 0.577 |  | 0.577 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in revaluation of marketable securities |  | (0.178) | 0.107 | (0.169) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax expense (recovery) | (0.012) | 0.122 |  | (3.478) |
|  Adjusted EBITDA<sup>1</sup> | $(12.762) | $(32.523) | $(53.258) | $(60.450) |

---

<sup>1</sup> The Adjusted EBITDA is not a standard measure endorsed by US GAAP requirements.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three-month periods ended | Three-month periods ended | Six-month periods ended | Six-month periods ended |
|  | September 30,<br>2022 | Recast -<br>September 30,<br>2021 | September 30,<br>2022 | Recast -<br>September 30,<br>2021 |
|  Net loss for the period | $(37.288) | $(12.102) | $(43.792) | $(30.958) |
|  Add (deduct): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 0.691 | 2.277 | 1.729 | 3.620 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Revaluation of derivatives | 1.808 | (5.529) | (7.716) | (7.462) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net finance costs (income) | (4.235) | (1.043) | (2.600) | 0.595 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity classified stock-based compensation | 0.640 | 2.158 | 1.827 | 5.238 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-employee compensation related to warrants |  | 0.061 |  | 0.154 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment loss on long-lived assets | 24.694 | 1.885 | 25.510 | 2.415 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in revaluation of marketable securities |  | 0.078 |  | 0.090 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax expense | 0.013 |  | 0.013 | 0.012 |
|  Adjusted EBITDA<sup>1</sup> | $(13.677) | $(12.215) | $(25.029) | $(26.296) |

---

<sup>1</sup> The Adjusted EBITDA is not a standard measure endorsed by US GAAP requirements.

------

#### OPERATING SEGMENTS
The Company's management structure and performance is measured based on a single segment, which is the consolidated level, as this is the level of information used in internal management reports that are reviewed by the Company's Chief Operating Decision Maker.

#### Geographical information for the year ended March 31, 2022
Revenue is attributed to geographical locations based on the origin of customers' location.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three-month periods ended | Three-month periods ended | Twelve-month periods ended | Twelve-month periods ended |
|  | **March 31,<br>2022** | **March 31,<br>2021** | **March 31,<br>2022** | **March 31,<br>2021** |
|  | Total<br>Revenues | Total<br>Revenues | Total<br>Revenues | Total<br>Revenues |
|  Canada | $3.527 | $0.512 | $12.447 | $13.434 |
|  United States | 7.686 | 3.982 | 35.330 | 20.856 |
|  Other countries | 0.319 | 0.175 | 1.020 | 1.110 |
|  | $11.532 | $4.669 | $48.797 | $35.400 |

---

The Company's property plant and equipment, intangible assets and goodwill are attributed to geographical locations based on the location of the assets.

---

| | | | |
|:---|:---|:---|:---|
|  | | | As at<br>March 31, 2022 |
|  |<br>Property, plant<br>and equipment |<br>Goodwill | Intangible assets |
|  Canada | $20.725 | $2.626 | $2.353 |
|  United States | 0.723 | 19.542 | 19.302 |
|  Total | $21.448 | $22.168 | $21.655 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | | | As at<br>March 31, 2021 |
|  |<br>Property,<br>plant and<br>equipment |<br>Goodwill | Intangible assets |
|  Canada | $35.645 | $2.614 | $3.793 |
|  United States | 1.701 | 22.839 | 22.164 |
|  Total | $37.346 | $25.453 | $25.957 |

---

#### Geographical information for the quarter ended September 30, 2022
Revenue is attributed to geographical locations based on the origin of customers' location.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three-month periods ended | Three-month periods ended | Six-month periods ended | Six-month periods ended |
|  | September 30,<br>2022 | September 30,<br>2021 | September 30,<br>2022 | September 30,<br>2021 |
|  | Total<br>Revenues | Total<br>Revenues | Total<br>Revenues | Total<br>Revenues |
|  Canada | $0.671 | $2.077 | $5.727 | $4.360 |
|  United States | 11.097 | 10.253 | 22.029 | 17.812 |
|  Other countries | 0.219 | 0.189 | 0.503 | 0.425 |
|  | $11.987 | $12.519 | $28.259 | $22.597 |

---

------

The Company's property plant and equipment, intangible assets, goodwill and assets held for sale are attributed to geographical locations based on the location of the assets.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | | | As at<br>September 30, 2022 |
|  |<br>Property,<br>plant and<br>equipment |<br>Goodwill |<br>Intangible<br>assets | Assets held<br>for sale |
|  Canada | $1.056 | $2.382 | $1.793 | $3.204 |
|  United States | 1.089 | 11.972 | 16.000 |  |
|  Total | $2.145 | $14.354 | $17.793 | $3.204 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | | | As at<br>March 31, 2022 |
|  |<br>Property,<br>plant and<br>equipment |<br>Goodwill |<br>Intangible<br>assets | Assets held<br>for sale |
|  Canada | $20.725 | $2.626 | $2.353 | $— |
|  United States | 0.723 | 19.542 | 19.302 |  |
|  Total | $21.448 | $22.168 | $21.655 | $— |

---

#### RESULTS ANALYSIS FOR THE YEAR ENDED MARCH 31, 2022

#### Adoption of US GAAP—Comparative Period Amounts
The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). Comparative figures, which were previously presented in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board, have been adjusted as required to be compliant with the Company's accounting policies under US GAAP.

#### Revenues
Consolidated revenue summary, in millions of dollars:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | March 31, | March 31, | *Changes* | *Changes* |
|  | 2022 | 2021 | *Changes in $* | *Changes in %* |
|  Three-month periods ended | 11.5 | 4.7 | 6.9 | 147% |
|  Twelve-month periods ended | 48.8 | 35.4 | 13.4 | 38% |

---

Total consolidated revenues for the three-month period ended March 31, 2022 amounted to $11.5 million representing an increase of $6.9 million or 147% compared to $4.7 million for the three-month period ended March 31, 2021.

For the twelve-month period ended March 31, 2022, consolidated revenues totaled $48.8 million representing an increase of $13.4 million or 38% compared to $35.4 million for the twelve-month period ended March 31, 2021.

When compared to the previous quarter, the consolidated revenues decreased by $3.1 million or 21%, which was mainly attributable to timing of shipping of nutraceuticals products (decrease of $1.3 million) as well as decrease of cannabis products sales ($1.5 million) due to the Company's cash restrictions preventing prepayment to its suppliers.

*Three-month period ended March 31, 2022 compared to March 31, 2021* 

Food and beverages revenues represented a $3.8 million increase in comparison to the three-month period ended March 31, 2021, resulting from the sales growth efforts as well as the Cocomelon partnership. Revenues for the

------

cannabis market increased by $1.9 million as Neptune has expanded its product portfolio in its existing markets with new cannabis products in comparison to last year.

*Twelve-month period ended March 31, 2022 compared to March 31, 2021* 

For the twelve-month period ended March 31, 2022, the $13.4 million increase was mainly attributable to decreases of revenues from Health and Wellness products offset by an increase in the Food and Beverages revenues. Health and Wellness revenues decreased by $10.9 million due to a reduction in sales in hand sanitizers and other COVID-19 related products by the Company. This was offset by the addition of $23.2 million of Food and Beverages revenues, representing average quarterly sales for the first three quarters of fiscal 2022 of over $8 million, which were due to the acquisition of Sprout in the last quarter of fiscal 2021 that were not present in full in the comparative fiscal year.

*Geographic Revenues* 

From a geographic point of view, revenues for the current quarter increased by $3.0 million or 589% in Canada, increased by $3.7 million or 93% in the United States and increased by $0.1 million or 82% for other countries (all royalty revenues) compared to the quarter ended March 31, 2021.

Revenues for the year decreased by $1.0 million or 7% in Canada, increased by $14.5 million or 69% in the United States and decreased by $0.1 million or 8% for other countries (all royalty revenues) compared to the twelve-month period ended March 31, 2021.

The increase of revenue in Canada for the quarter variance is mainly due to the repositioning of the Cannabis business from the B2B Cannabis market to the B2C Cannabis market, which is in a growth state. However, the Company announced its planned divestiture of Cannabis business in June 2022. The decrease in revenue in Canada for the year to date variance is mainly due to timing of shipment to customers for nutraceutical products. The increase in revenues for the twelve month period ended March 31, 2022 in the United States is due to an increase in sales in Sprout (acquired on February 10, 2021).

#### Gross Profit (Loss)
Gross profit (loss) is calculated by deducting the cost of sales from total revenues. Cost of sales consists primarily of costs incurred to manufacture products, including sub-contractors, freight expenses and duties on raw materials, storage and handling costs and lab testing on raw materials, and to acquire finished goods.

Consolidated gross profit (loss) summary, in millions of dollars

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | March 31, | March 31, | *Changes* | *Changes* |
|  | 2022 | 2021 | Changes in $ | Changes in % |
|  Three-month periods ended | (5.7) | (18.6) | 12.9 | 69% |
|  Twelve-month periods ended | (7.5) | (27.4) | 19.8 | 72% |

---

The consolidated gross profit (loss) for the three-month period ended March 31, 2022 amounted to $(5.7) million compared to $(18.6) million for the three-month period ended March 31, 2021, an improvement of $12.9 million or 69%.

As for the twelve-month period ended March 31, 2022, the consolidated gross profit (loss) amounted to $(7.5) million compared to $(27.4) million for the twelve-month period ended March 31, 2021, an improvement of $19.8 million or 72%.

------

*Three-month period ended March 31, 2022 compared to March 31, 2021* 

The change for the quarter is mainly attributable to reduction in sales and related cost of sales from the Health and Wellness products, increases in volumes of sales from cannabis products, and an increase in sales from food and beverages resulting from the acquisition of Sprout on February 10, 2021. For Health and Wellness products, there was a $15.0 million reduction in the gross loss of Health and Wellness products in the December 31, 2021 period, resulting from a reduction in sales in hand sanitizers and other COVID-19 related products by the Company as part of its strategic review plan. The gross margin for cannabis products declined by $1.9 million for the March 31, 2022 period which was driven by the repositioning of the business.

*Twelve-month period ended March 31, 2022 compared to March 31, 2021* 

As for the twelve-month period ended March 31, 2022, the improvement is mainly attributable to reduction in sales and related cost of sales from the Health and Wellness products and partially offset by inventory write-downs as well as government wage subsidies. For the March 31, 2022 period, the gross loss improved by $20.2 million for the Health and Wellness products resulting from the reduction in sales in hand sanitizers and other COVID-19 related products, a gross margin improvement of $25.6 million. The gross loss improvement was partially offset by an increased gross loss from cannabis sales of $3.6 million. During the last six months of fiscal 2021, the Company was also ceasing placing order in its SugarLeaf facility in North Carolina for the B2B market in the USA, due to a continuous decline in pricing and demand. This resulted in a decrease of gross margin loss of $1.0 million for the period ended March 31, 2022 in comparison to 2021.

#### Gross Margin Percentage
For the three-month periods ended March 31, 2022 and 2021, the consolidated gross margin went from (398.8)% in 2021 to (49.4)% in 2022, an increase of 349.4%. As for the twelve-month periods ended March 31, 2022 and 2021, the consolidated gross margin went from (28.5)% in 2021 to (15.4%) in 2022, an increase of 61.9%.

All changes in gross margins result from the changes in revenues and gross profit (loss), and are described above.

#### Research and Development ("R&D") Expenses
*Three-month period ended March 31, 2022 compared to March 31, 2021* 

For the quarter ended March 31, 2022, the consolidated R&D expenses net of tax credits and grants amounted to $0.2 million, compared to $0.6 million for the quarter ended March 31, 2021, a decrease of $0.4 million or 61% mainly due to the recognition of the warrants issued to non-employees for co-development recognized over the services rendered.

*Twelve-month period ended March 31, 2022 compared to March 31, 2021* 

Consolidated R&D expenses net of tax credits and grants amounted to $0.9 million in the twelve-month period ended March 31, 2022 compared to $1.9 million for the same period the prior year, a decrease of $1 million or 54% mainly due to the recognition of the warrants issued to non-employees for co-development recognized over the services rendered.

#### Selling, General and Administrative ("SG&A") Expenses
*Three-month period ended March 31, 2022 compared to March 31, 2021* 

Consolidated SG&A expenses net of subsidies for the quarter ended March 31, 2022 amounted to $10.6 million compared to $18.3 million for the same period the prior year, a decrease of $7.7 million or 42% primarily due to the benefits of the strategic review and continued cost controls.

------

*Twelve-month period ended March 31, 2022 compared to March 31, 2021* 

Regarding the twelve-month period ended March 31, 2022 compared to the same period in 2021, consolidated SG&A expenses net of subsidies amounted to $60.5 million compared to $63.8 million, a decrease of $3.3 million or 5% primarily from cost reduction measures related to the previously announced strategic review partially offset by higher legal and other costs.

#### Finance costs
*Three-month period ended March 31, 2022 compared to March 31, 2021* 

Net finance costs, foreign exchange and derivatives revaluations amounted to a loss of $2.5 million for the quarter ended March 31, 2022, compared to a gain of $2.9 million for the three-month period ended March 31, 2021, a change of $5.4 million or 186% for the quarter ended March 31, 2022. The variation for this period is mainly attributable to the revaluation of warrant liabilities as well as foreign exchange impact. The gain on revaluation of the warrants was primarily driven by the decrease in the Company's stock price.

*Twelve-month period ended March 31, 2022 compared to March 31, 2021* 

As for the twelve-month period ended March 31, 2022, the net finance costs, foreign exchange and derivatives revaluations amounted to a gain of $4.1 million, compared to a gain of $3.1 million for the twelve-month period ended March 31, 2021, a change of $1 million or 31% for the twelve-month period ended March 31, 2022. The variation for this period is mainly attributable to an improvement in foreign currency losses partially offset by lower gains on the revaluation of warrants.

#### Income taxes
For the three-month periods ended March 31, 2022 and 2021, income tax expense (recovery) were nil. As the other entities are in carry forward loss positions, there is no impact to income taxes for the twelve-month period ended March 31, 2022.

#### Adjusted EBITDA
*Three-month period ended March 31, 2022 compared to March 31, 2021* 

Recasted Consolidated Adjusted EBITDA loss decreased by $19.8 million or 60.8% for the quarter ended March 31, 2022 to a recasted Adjusted EBITDA loss of $12.8 million compared to $32.5 million for the quarter ended March 31, 2021. The decrease in recasted Adjusted EBITDA loss for the quarter ended March 31, 2022 compared to the quarter ended March 31, 2021 was driven by the quarter's improved performance over the comparative quarter as explained in the net loss section.

*Twelve-month period ended March 31, 2022 compared to March 31, 2021* 

Recasted Consolidated Adjusted EBITDA loss decreased by $7.2 million or 11.9% for the twelve-month period ended March 31, 2022 to a recasted Adjusted EBITDA loss of $53.3 million compared to $59.5 million for the twelve-month period ended March 31, 2021. The decrease in recasted Adjusted EBITDA loss for the twelve-month period ended March 31, 2022 compared to the twelve-month period ended March 31, 2021 was driven by the quarter's improved performance over the comparative quarter as explained in the net loss section.

#### Net loss
*Three-month period ended March 31, 2022 compared to March 31, 2021* 

For the quarter ended March 31, 2022, the net loss amounted to $36.2 million compared to $43.5 million for the quarter ended March 31, 2021, a decrease of $7.3 million or 17%. The Company's execution of its strategic review plan by refocusing on its core businesses is primarily responsible for the lower loss.

------

*Twelve-month period ended March 31, 2022 compared to March 31, 2021* 

The net loss for the twelve-month period ended March 31, 2022 totaled $84.4 million compared to $124.3 million for the twelve-month period ended March 31, 2021, a decrease of $39.8 million or 32%. The Company's execution of its strategic review plan of refocusing over its core products and businesses and lower impairments and asset write-downs have decreased the loss.

#### RESULTS ANALYSIS FOR THE QUARTER ENDED SEPTEMBER 30, 2022
**Adoption of US GAAP—Comparative Period Amounts**

The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). Comparative figures, which were previously presented in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board, have been adjusted as required to be compliant with the Company's accounting policies under US GAAP.

#### Revenues
Consolidated revenue summary, in millions of dollars:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | September 30, | September 30, | *Changes* | *Changes* |
|  | 2022 | 2021 | *Changes in $* | *Changes in %* |
|  Three-month periods ended | 12.0 | 12.5 | (0.5) | -4% |
|  Six-month periods ended | 28.3 | 22.6 | 5.7 | 25% |

---

*Three-month period ended September 30, 2022 compared to September 30, 2021* 

Total consolidated revenues for the three-month period ended September 30, 2022 amounted to $12.0 million, a decrease of $0.5 million or 4% as compared to $12.5 million for the three-month period ended September 30, 2021. This decrease was primarily due to the Corporation having mostly exited the cannabis business ahead of selling all cannabis assets on November 9, 2022 and a decline in Nutraceutical Products. Cannabis sales were down $1.1 million versus prior year to $0.1 million. In addition, Nutraceutical Products sales in the quarter were $3.2 million, a decline of 22%, mainly due to shipment timing. Partially offsetting this decline, Organic Foods and Beverages revenues in Q2 FY 2023 were $8.4 million, a $1.4 million increase in comparison to the quarter ended September 30, 2021. The principal driver of this improvement was displays in 2,500 Walmart stores during the quarter.

*Six-month period ended September 30, 2022 compared to September 30, 2021* 

For the six-month period ended September 30, 2022, consolidated revenues totaled $28.3 million, an increase of $5.7 million or 25% compared to $22.6 million for the six-month period ended September 30, 2021. Cannabis sales of $3.2 million were up $0.8 million or 33%, Nutraceutical Products sales increased $1 million to $8.3 million while Organic Foods and Beverages sales were up $3.9 million to $16.5 million an increase of 30%. This latter increase was mainly attributable to the launch of Organic Foods and Beverages Sprout product at Walmart with displays in 2,500 stores as well as to the CoComelon introduction and distribution gains in all markets.

*Geographic Revenues* 

Revenues for the current quarter decreased by $1.4 million or 68% in Canada, increased by $0.8 million or 8% in the United States and increased by $0.03 million or 16% for other countries (royalty revenues) as compared to the quarter ended September 30, 2021.

------

For the six-month period ended September 30, 2022, revenues increased by $1.4 million or 31% in Canada, increased by $4.2 million or 24% in the United States and increased by $0.08 million or 18% for other countries (royalty revenues) as compared to the six-month period ended September 30, 2021.

The decrease of revenue in Canada for the current quarter is mainly due to exiting our cannabis business as previously discussed although cannabis sales for the year-to-date were up. Increased first half year revenue in the United States is from sales growth of both Nutraceutical Products and Organic Foods and Beverages

#### Gross Profit (Loss)
Gross profit (loss) is calculated by deducting the cost of sales from total revenues. Cost of sales consists primarily of costs incurred to manufacture products, including sub-contractors, freight expenses and duties on raw materials, storage and handling costs and lab testing on raw materials, and to acquire finished goods.

Consolidated gross profit (loss) summary, in millions of dollars

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | September 30, | September 30, | *Changes* | *Changes* |
|  | 2022 | 2021 | *Changes in $* | *Changes in %* |
|  Three-month periods ended | 1.1 | (1.2) | 2.3 | 194% |
|  Six-month periods ended | (1.8) | (3.5) | 1.7 | 49% |

---

*Three-month period ended September 30, 2022 compared to September 30, 2021* 

The gross profit improvement, up from a loss in the same quarter last year, was mainly attributable to an improved product mix as well as continued cost control measures, which were partially offset by an inventory write down.

*Six-month period ended September 30, 2022 compared to September 30, 2021* 

For the six-month period ended September 30, 2022, the consolidated gross profit (loss) amounted to $(1.8) million compared to $(3.5) million for the six-month period ended September 30, 2021, an improvement of $1.7 million or 49% mainly attributable to increased sales and lower costs.

*Gross Margin Percentage* 

For the three-month periods ended September 30, 2022 and 2021, the consolidated gross margin went from (9.4)% in 2021 to 9.2% in 2022. As for the six-month periods ended September 30, 2022 and 2021, the consolidated gross margin went from (15.5)% in 2021 to (6.3%) in 2022.

Changes in gross margins resulted from increased sales volumes in the first half of the fiscal year and price increases together with cost reductions.

#### Research and Development ("R&D") Expenses
*Three-month period ended September 30, 2022 compared to September 30, 2021* 

For the quarter ended September 30, 2022, the consolidated R&D expenses amounted to $0.2 million, compared to $0.1 million for the quarter ended September 30, 2021.

*Six-month period ended September 30, 2022 compared to September 30, 2021* 

Consolidated R&D expenses amounted to $0.4 million in the six-month period ended September 30, 2022, compared to $0.4 million for the same period last year.

------

#### Selling, General and Administrative ("SG&A") Expenses
*Three-month period ended September 30, 2022 compared to September 30, 2021* 

Consolidated SG&A expenses for the quarter ended September 30, 2022, amounted to $15.9 million compared to $15.4 million for the same period the prior year, an increase of $0.5 million or 3%, primarily from severance and other expenses relating to restructuring offset by a reduction in stock-based compensation

*Six-month period ended September 30, 2022, compared to September 30, 2021,* 

Regarding the six-month period ended September 30, 2022, compared to the same period in 2021, consolidated SG&A expenses amounted to $26.4 million compared to $31.5 million, a decrease of $5.1 million or 16%, primarily due to cost reductions from the restructuring and continued cost controls, partly offset by severance and other expenses relating to executing the restructuring.

#### Finance costs
*Three-month period ended September 30, 2022 compared to September 30, 2021* 

Net finance costs, foreign exchange and derivatives revaluations amounted to a gain of $4.2 million for the quarter ended September 30, 2022, compared to a gain of $1.0 million for the three-month period ended September 30, 2021, a reduction of $3.2 million. The variation for this period is mainly attributable to foreign exchange impact.

*Six-month period ended September 30, 2022 compared to September 30, 2021* 

For the six-month period ended September 30, 2022, the net finance costs, foreign exchange and derivatives revaluations amounted to a gain of $2.6 million, compared to a loss of $0.60 million for the six-month period ended September 30, 2021, an increase of $3.2 million for the six-month period ended September 30, 2022. The variation for this period is mainly attributable to foreign exchange impact.

#### Income taxes
For the three-month period ended September 30, 2022, income tax expense (recovery) was nominal. As entities are in carry forward loss positions, there is no impact to income taxes for the six-month period ended September 30, 2022.

#### Net loss
*Three-month period ended September 30, 2022 compared to September 30, 2021* 

For the quarter ended September 30, 2022, the net loss amounted to $37.3 million compared to a $12.1 million loss for the same quarter last year. This $25.2 million increase in net loss is primarily due to asset impairments of $24.7 million (intangible asset impairment $10.2 million and impairment of assets held for sale of $14.5 million) and a reduction in the fair value of derivatives of $7.3 million, partially offset by $3.0 million of inventory impairment and $3.1 million in unrealized foreign currency gains.

*Six-month period ended September 30, 2022 compared to September 30, 2021* 

The net loss for the six-month period ended September 30, 2022 totaled $43.8 million compared to $31.0 million for the six-month period ended September 30, 2021, an increase of $12.8 million or 29%. The increase is primarily due to asset impairments of $25.5 million (including intangible assets and assets held for sale), a loss on issuance of warrants of $2.1 million, partially offset by $6.2 million in favorable foreign currency adjustment, a reduction in SG&A of $5.0 million and a prior year impairment impact of $2.4 million.

------

#### Adjusted EBITDA
*Three-month period ended September 30, 2022 compared to September 30, 2021* 

Consolidated Adjusted EBITDA loss worsened by $1.5 million for the quarter ended September 30, 2022 to an Adjusted EBITDA loss of $13.7 million compared to $12.2 million loss for the same quarter last year. The increase in Adjusted EBITDA loss for the quarter is due to $4.0 million legal provision partially offset by an increase in margins.

*Six-month period ended September 30, 2022 compared to September 30, 2021* 

Consolidated Adjusted EBITDA loss improved by $1.3 million for the six-month period ended September 30, 2022 to an Adjusted EBITDA loss of $25.0 million compared to a $26.3 million loss for the same period last year. The decrease in Adjusted EBITDA loss for the six-month period is due to a reduction in gross loss and a reduction in costs, partially offset by $4.0 million legal provision.

#### FINANCIAL AND CAPITAL MANAGEMENT FOR THE YEAR ENDED MARCH 31, 2022

#### USE OF PROCEEDS
The use of proceeds for the three and twelve-month periods ended March 31, 2022 and 2021, in millions of dollars, was as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three-month periods<br>ended** | **Three-month periods<br>ended** | **Twelve-month periods<br>ended** | **Twelve-month periods<br>ended** |
|  | **March 31,<br>2022** | **March 31,<br>2021** | **March 31,<br>2022** | **March 31,<br>2021** |
|  Sources: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from the issuance of shares through an At-The-Market Offering | $— | $— | $— | $13.737 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from the issuance of shares through a Direct Offering | 8.000 |  | 8.000 | 12.834 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from the issuance of shares and warrants through a Private Placement |  |  |  | 35.301 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from the issuance of shares and warrants through a Direct Offering Priced At-The-Market and Concurrent Private Placement |  | 55.000 |  | 55.000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from exercise of options | 0.001 | 2.653 | 0.001 | 7.479 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sale of property, plant and equipment |  | 0.015 |  | 0.015 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sale of Acasti shares1 |  | (0.236) | 0.044 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Maturity of short-term investment1 |  |  |  | 0.009 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange gain on cash and cash equivalents held in foreign currencies | 0.072 |  | 0.001 | (0.001) |
|  | 8.073 | 57.432 | 8.046 | 124.374 |
|  Uses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of a subsidiary, net of cash acquired |  | 3.137 |  | 3.137 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of property, plant and equipment | 0.904 | 1.937 | 1.939 | 6.618 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of intangible assets | (0.001) | 0.156 | 0.433 | 0.390 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayment of loans and borrowings |  | 2.458 |  | 2.458 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Costs of issuance of shares | 0.637 | 2.705 | 0.637 | 6.174 |

---

------

---

| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Withholding taxes paid pursuant to the settlement of non-treasury RSUs | 0.440 | 0.092 | 1.412 | 0.717 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange loss on cash and cash equivalents held in foreign currencies | (0.001) | 6.232 | 0.390 | 0.187 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash flows used in operating activities | 10.526 | 6.187 | 54.346 | 56.645 |
|  | 12.505 | 22.904 | 59.157 | 76.326 |
|  Net cash (outflows) | $(4.432) | $34.528 | $(51.111) | $48.048 |

---

#### Sources of Funds
For the three-month period ended March 31, 2022, gross proceeds from a direct offering totaling $8.0 million were raised, and the proceeds were used for operating activities resulting in cash outflows of $4.4 million. For the three-month period ended March 31, 2021, gross proceeds from a direct offering of $55.0 million were raised. In the same period, funds were used for the acquisition of a subsidiary, acquisition of equipment, loan repayments and operating activities. During the quarter, there were net cash proceeds of $34.7 million.

For the twelve-month period ended March 31, 2022, gross proceeds of $8.0 million were raised with $53.3 million of cash being used for operating activities and an additional $5.9 million for other purposes bringing net cash outflows in the year to $51.1 million. During the twelve month period ending March 31, 2021, proceeds from financings and other sources totaled $124.4 million with $55.9 million being used to fund operating expenses and an additional $20.4 million for other purposes. Net cash proceeds for the twelve months ended March 31, 2021 were $48.0 million.

*At-The-Market Offering* 

During the three-month period ended June 30, 2020, the Company sold a total of 154,619 shares (5,411,649 pre-consolidation shares) through the At-The-Market offering (the "ATM Offering") over the NASDAQ stock market, for gross proceeds of $19.0 million and net proceeds of $18.2 million. The shares were sold at the prevailing market prices which resulted in an average of approximately $88.55 per share (or $2.53 per pre-consolidation share). Effective February 16, 2021, the ATM Offering was terminated and Neptune will make no further sales under the ATM Offering. As of that date, Neptune had sold 273,450 of its common shares (9,570,735 pre-consolidation shares) under the ATM Offering, raising approximately $18.6 million in gross proceeds.

*Direct Offerings* 

On March 14, 2022, Neptune issued a total of 528,572 (18,500,000 pre-consolidation) common shares of the Company ("Common Shares"), along with 185,715 (6,500,000 pre-consolidation) pre-funded warrants ("Pre-Funded Warrants"), as part of a registered direct offering ("Direct Offering"), with each Pre-Funded Warrant exercisable for one Common Share. The Common Shares and the Pre-Funded Warrants were sold together with 714,286 (25,000,000 pre-consolidation) Series A Warrants (the "Series A Warrants") and 714,286 (25,000,000 pre-consolidation) Series B Warrants (the "Series B Warrants" and collectively with the Series A Warrants, the "Common Warrants") to purchase up to an aggregate of 1,428,572 (50,000,000 pre-consolidation) Common Shares. Each Common Share and Pre-Funded Warrants and the accompanying Common Warrants were sold together at a combined offering price of $11.20 (or $0.32 pre-consolidation), for aggregate gross proceeds of $5.0 million before deducting fees and other estimated offering expenses. The Pre-Funded Warrants a funded in full at closing except for a nominal exercise price of $0.0035 (or $0.0001 pre-consolidation) and are exercisable commencing on the closing date, and will terminate when such Pre-Funded Warrants are exercised in full. The Series A Warrants have an exercise price of $11.20 per share and are exercisable six months after the closing date, and will expire five and one half years from the date of issuance. The Series B Warrants have an exercise price of $11.20 per share and are exercisable six months after the closing date, and expire 18 months from the date of issuance. The net proceeds of the transaction amounted to $3.6 million.

------

On July 13, 2020, Neptune entered into definitive agreements with certain healthcare-focused institutional investors for the sale of 136,389 common shares (4,733,584 pre-consolidation shares) at an offering price of $92.75 per share ($2.65 per pre-consolidation share) for gross proceeds of approximately $12.65 million before deducting fees and other estimated offering expenses, pursuant to a registered direct offering (the "Offering"). The Offering closed on July 15, 2020 with one of its existing institutional investors and two new U.S. institutional investors. The net proceeds of the direct offering were of $12.0 million.

*Private Placement* 

On October 20, 2020, Neptune entered into definitive agreements with certain US healthcare focused institutional investors for a private placement of 462,963 (16,203,700 pre-consolidation) common shares and 300,926 (10,532,401 pre-consolidation) warrants to purchase 300,926 (10,532,401 pre-consolidation) common shares for gross proceeds of approximately $35 million before deducting fees and other estimated offering expenses (the "Private Placement"). Each warrant will entitle the holder thereof to acquire one common share at an exercise price of $78.75 (or $2.25 pre-consolidation) per share for a period beginning on April 22, 2021 through October 22, 2025. The Company used the net proceeds from the Private Placement, which closed on October 22, 2020, for purchase order fulfilment, working capital and other general corporate purposes. The net proceeds of the Private Placement amounted to $32.9 million.

*Registered Direct Offering Priced At-The-Market Under Nasdaq Rules and Concurrent Private Placement* 

On February 17, 2021, Neptune announced it had entered into definitive agreements with institutional investors for the purchase of 785,715 common shares (27,500,000 pre-consolidation shares). The Company also agreed to issue to the investors, in a concurrent private placement, unregistered common share purchase warrants (the "Warrants") to purchase an aggregate of 196,429 common shares (6,875,000 pre-consolidation shares). Each common share and accompanying quarter of a Warrant were sold together at a combined offering price of $70.00 (or $2.00 pre-consolidation), pursuant to a registered direct offering, priced at-the-market under Nasdaq rules, for aggregate gross proceeds of approximately $55.0 million before deducting fees and other estimated offering expenses (the "Offering"). The Warrants will have an exercise price of $78.75 per share (or $2.25 per pre-consolidation share), will be exercisable commencing on the six-month anniversary of the date of issuance, and will expire 5.5 years from the date of issuance. Proceeds were allocated first to the warrants based on their fair value and then the residual to the common shares, resulting in an initial warrant liability of $6.3 million and $48.7 million recorded in the equity of the Corporation. Purchase warrants are recognized as liabilities, as the exercise price of the warrants is in USD, whereas the Corporation's functional currency is the Canadian dollar. The net proceeds of the registered direct offering were of $52.9 million. The Offering closed on February 19, 2021, following the satisfaction of customary closing conditions and the receipt of regulatory approvals, including the approval of the Toronto Stock Exchange.

*Offerings subsequent to the year end* 

On June 23, 2022, Neptune closed agreements with several institutional investors for the purchase and sale of an aggregate of 1,300,000 common shares of the Corporation, 645,526 pre-funded warrants and accompanying series of warrants to purchase up to an aggregate of 2,591,052 common shares warrants, at an offering price of $2.57 per share and accompanying warrants in a registered direct offering priced at-the-market under Nasdaq rules. Each series of warrants have an exercise price of $2.32 per share and are immediately exercisable upon issuance. One series of warrants will expire two years following the date of issuance and one series of warrants will expire five years following the date of issuance. The gross proceeds from the offering are $5 million, prior to deducting placement agent's fees and other offering expenses payable by Neptune. The Prefunded warrants were fully exercised on June 24, 2022 for $64.55.

------

#### FINANCIAL AND CAPITAL MANAGEMENT FOR THE QUARTER ENDED SEPTEMBER 30, 2022

#### USE OF PROCEEDS
The use of proceeds for the three and six-month periods ended September 30, 2022 and 2021, in millions of dollars, was as follows:

---

| | | |
|:---|:---|:---|
|  | Six-month periods ended | Six-month periods ended |
|  | September 30,<br>2022 | September 30,<br>2021 |
|  Sources: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from the issuance of shares through a Direct Offering | $5.000 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sale of property, plant and equipment | 0.085 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in loans and borrowings | 3.250 |  |
|  | 8.335 |  |
|  Uses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of property, plant and equipment | 0.602 | 0.525 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of intangible assets |  | 0.436 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Costs of issuance of shares | 0.465 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Withholding taxes paid pursuant to the settlement of non-treasury RSUs | 0.260 | 0.978 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange loss on cash and cash equivalents held in foreign currencies | 0.256 | 0.013 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash flows used in operating activities | 14.084 | 33.566 |
|  | 15.667 | 35.518 |
|  Net cash (outflows) | $(7.332) | $(35.518) |

---

#### Sources and Uses of Funds
*three-month period ended September 30, 2022 compared to September 30, 2021* 

For the three-month period ended September 30, 2022, increase in loans and borrowings was $3.25 million and were used for operating activities, primarily inventory procurement, salaries and professional fees.

For the three-month period ended September 30, 2021, there were no significant sources of funds. In the same period, funds were used for operating activities, primarily inventory procurement, payments for legacy Health and Wellness COVID-19 related products, salaries and professional fees, as well as acquisition and integration costs.

*six-month period ended September 30, 2022 compared to September 30, 2021* 

For the six-month period ended September 30, 2022, the increase in loans and borrowings was $3.25 million and direct offerings of $5.0 million. The proceeds were used for operating activities, primarily inventory procurement, salaries and professional fees.

For the six-month period ended September 30, 2021, there were no significant sources of funds. In the same period, uses of funds were for operating activities, primarily inventory procurement, payments for legacy Health and Wellness COVID-19 related products, salaries and professional fees, as well as acquisition and integration costs.

------

*Direct Offering* 

On June 23, 2022, Neptune closed agreements with several institutional investors for the purchase and sale of an aggregate of 1,300,000 common shares of the Company, 645,526 pre-funded warrants and accompanying series of warrants to purchase up to an aggregate of 2,591,052 common shares warrants, at an offering price of $2.57 per share and accompanying warrants in a registered direct offering priced at-the-market under Nasdaq rules. Each series of warrants have an exercise price of $2.32 per share and are immediately exercisable upon issuance. One series of warrants will expire two years following the date of issuance and one series of warrants will expire five years following the date of issuance. The gross proceeds from the offering were $5.00 million, prior to deducting placement agent's fees and other offering expenses payable by Neptune. The pre-funded warrants were fully exercised on June 24, 2022 for $65.

*Secured Promissory Notes* 

On July 13, 2022, Neptune announced that Sprout Foods Inc. ("Sprout"), the Company's organic plant-based baby food and toddler snack company, entered into an amendment of each of its existing Secured Promissory Notes. In connection with this amendment, investment funds managed by Morgan Stanley Expansion Capital ("Morgan Stanley" or "MSEC") have agreed to immediately commit an additional $3 million in Secured Promissory Notes to Sprout. The maturity date of the note facility of February 1, 2024 is consistent with the maturity date of the existing Secured Promissory Notes with MSEC and Neptune. The $13.0 million of amended Secured Promissory Notes have a 10% interest rate per annum, increasing by 1% per annum every three months during the term of the Secured Promissory Notes. The interest will be compounded and added to the principal amount on a quarterly basis. The amended Secured Promissory Notes may be converted, in whole or in part, at any time upon the mutual consent of Sprout, the Company and MSEC, into common shares of the Company. MSEC was issued 372,670 common shares of Neptune, having a value of $0.6 million in connection with this commitment, for the payment of borrowing costs.

On September 9, 2022, Neptune's Sprout subsidiary entered in an new $0.25 million Secured Promissory Note agreement. The maturity date of the new note facility is February 1, 2024. The $0.25 million Secured Promissory Note has a 10% interest rate per annum, increasing by 1% per annum every three months during the term of this Secured Promissory Note. The interest will be compounded and added to the principal amount on a quarterly basis. This Secured Promissory Note may be converted, in whole or in part, at any time upon the mutual consent of Sprout, the Company and the holder, into common shares of the Company. Neptune issued 36,765 common shares having a value of $0.1 million in connection with this Secured Promissory Note, for the payment of borrowing costs.

#### CAPITAL RESOURCES FOR THE FISCAL YEAR ENDED MARCH 31, 2022

#### Liquidity position
As at March 31, 2022, the Company's liquidity position, consisting of cash and cash equivalents, was $8.7 million. The Company also has a short-term investment of $0.02 million.

#### Liquidity and Capital Resources
*Cash flows and financial condition between the three-month periods ended March 31, 2022 and 2021* 

<u>Summary</u> 

As at March 31, 2022, cash and cash equivalent totaled $8.7 million, a decrease of $51.1 million or 85% compared to cash and cash equivalents totaling $59.8 million as at March 31, 2021.

------

*Operating activities* 

During the three-month period ended March 31, 2022 our operating activities used cash of $10.5 million compared to $6.2 million in the three-month period ended March 31, 2021. For the twelve months ended March 31, 2022, our operating activities used cash of $54.3 million compared to $56.6 million in the prior year.

*Investing activities* 

The Company's business models require low capital expenditures future investments. For the year ended March 31, 2022, $2.3 million was used for investing activities. In the prior year, $10.1 million was used for investing activities.

*Financing activities* 

The Company has been successful in obtaining financing from public issuances, private placements, and related parties. The Company also previously had a term facility for one of its subsidiaries, which was repaid in its entirety during the last quarter of fiscal year 2021 and since then, it has not incurred financing until the $8.0 million Registered Direct Offering closed on March 14, 2022. The Company has limited debt, all of which is subordinated.

On January 28, 2022, a shelf registration statement on Form F-3 (the "Form F-3") was filed with the SEC, allowing the Company to issue up to $50 million in publicly traded securities within a three-year timeframe. In connection with the Company's loss of foreign private issuer status, the Company intended to withdraw the Form F-3 following the date of its Annual Report. The Company has preferred shares authorized (none issued) as well unlimited class A shares. As part of financing options, we may choose to issue such classes of shares subject to securities laws restrictions.

As of the date the financial statements for the year ended March 31, 2022 were authorized for issuance, the Company's cash position will be sufficient to support its financial needs for two to three months. Should the Company's financing initiatives discussed above not materialize, further actions such as further cost reduction initiatives and Company spinoffs of subsidiaries remain as viable options. These represent short-term and long-term financing options to management. Management believes that, absent any unexpected economic circumstances or other unknown factors, Neptune will be able to obtain sufficient financial resources to fund its current operations to make the investments needed to execute on the Company's strategic plans. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Going Concern.

The financial commitments and obligations of the Company are limited. Furthermore, certain liabilities, such as the warrant liabilities, are dependent on Neptune's share price and would only become payable if they are in the money. The warrants, if exercised, settle in common shares of the Company and therefore do impact on the Company's cash. Indeed, warrant holders are required to pay the cash strike price to exercise the warrant and thus the exercise of warrants would result in a cash infusion to the Company.

#### Loans and borrowings
On February 10, 2021, as part of the Sprout acquisition, Sprout issued a promissory note of $10.0 million guaranteed by the Company and secured by a first-ranking mortgage on all movable assets of Sprout current and future, corporeal and incorporeal, and tangible and intangible. The outstanding principal balance bears interest at the rate of 10.0% per annum. Interest is accrued and added to the principal amount of the loan. The principal is payable on February 1, 2024.

On July 13, 2022, Neptune announced that Sprout Foods Inc. ("Sprout"), the Corporation's organic plant-based baby food and toddler snack company, has entered into an amendment of each of its existing Secured Promissory Notes. In connection with this amendment, investment funds managed by Morgan Stanley Expansion Capital

------

("Morgan Stanley" or "MSEC") invested an additional $3 million in Sprout in exchange for Secured Promissory Notes. The maturity date of the note facility of February 1, 2024 is consistent with the maturity date of the existing Secured Promissory Notes with MSEC and Neptune. The $13.0 million of amended Secured Promissory Notes have a 10% interest rate per annum, increasing by 1% per annum every three months during the term of the Secured Promissory Notes. The interest will be compounded and added to the principal amount on a quarterly basis. The amended Secured Promissory Notes may be converted, in whole or in part, at any time upon the mutual consent of Sprout, the Corporation and MSEC, into common shares of the Corporation. MSEC was issued 372,670 common shares of Neptune, of an approximate value of $500,000, in connection with this commitment.

In September 2022, we issued to one additional accredited investor 36,765 common shares in connection with loans to Sprout Foods, Inc. and the issuance of a Secured Promissory Note.

In June 2022 we issued 7,104 common shares to our financial advisor in connection with our proposed divestiture of our Canadian cannabis business.

#### Equity
Equity consists of the following items:

---

| | | |
|:---|:---|:---|
|  | **March 31,<br>2022** | **March 31,<br>2021** |
|  Share capital | $317.051 | $306.618 |
|  Warrants | 6.080 | 5.901 |
|  Additional paid-in capital | 55.981 | 59.625 |
|  Accumulated other comprehensive loss | (7.814) | (8.567) |
|  Deficit | (323.182) | (248.210) |
|  Total equity attributable to equity holders of the Corporation | $48.116 | $115.367 |
|  Total equity attributable to non-controlling interest | 12.722 | 22.178 |
|  Total equity | $60.838 | $137.545 |

---

#### CAPITAL RESOURCES FOR THE QUARTER ENDED SEPTEMBER 30, 2022

#### Liquidity position
As at September 30, 2022, the Company's liquidity position, consisting of cash and cash equivalents, was $1.4 million.

#### Liquidity and Capital Resources
*Cash flows and financial condition for the three and six-month periods ended September 30, 2022 and 2021* 

<u>Summary</u> 

As of September 30, 2022, cash and cash equivalent totaled $1.4 million, a decrease of $7.3 million or 84% compared to cash and cash equivalents totaling $8.7 million as of September 30, 2021.

*Operating activities* 

For the three-month period ended September 30, 2022, increase in loans and borrowings was $3.25 million and the proceeds were used for operating activities, primarily inventory procurement, salaries and professional fees.

------

For the three-month period ended September 30, 2021, there were no significant sources of funds. In the same period, funds were used for operating activities, primarily inventory procurement, payments for legacy Health and Wellness COVID-19 related products, salaries and professional fees, as well as acquisition and integration costs. For the six-month period ended September 30, 2022, the increase in loans and borrowings was $3 million and direct offerings of $5.0 million. The proceeds were used for operating activities, primarily inventory procurement, salaries and professional fees.

For the six-month period ended September 30, 2022, the increase in loans and borrowings was $3.0 million and direct offerings of $5.0 million. The proceeds were for operating activities, primarily inventory procurement, salaries and professional fees.

For the six-month period ended September 30, 2021, there were no significant sources of funds. In the same period, uses of funds were for operating activities, primarily inventory procurement, payments for legacy Health and Wellness COVID-19 related products, salaries and professional fees, as well as acquisition and integration costs.

*Investing activities* 

The Company's business models require low capital expenditures ("CAPEX") future investments. For the quarter ended September 30, 2022, $0.6 million was used in investing activities. In the same period the prior year, $0.4 million was also used for investing activities. As for the six-month period ended September 30, 2022, $0.6 million was used in investing activities, compared to $1.0 million for the same period the prior year.

*Financing activities* 

The Company has been successful in obtaining financing from public issuances and private placements. The Company also previously had a term facility for one of its subsidiaries, which was repaid in its entirety during the last quarter of fiscal year 2021 and since then, it has not incurred financing until the Registered Direct Offerings closed on March 14, 2022 ($8.0 million), June 23, 2022 ($5.0 million) and October 11, 2022 ($6.0 million). Other than the secured promissory notes issued by Sprout, the Company has limited debt.

The Company's current cash position will be sufficient to support its financial needs for only two to three months. Should the Company's various financing initiatives such as potential public issuances, private placements, preferred shares issuances, or debt financings not materialize, further actions such as further cost reduction initiatives and Company spinoffs of subsidiaries remain as viable options. See the Going Concern section of this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Furthermore, certain liabilities, such as the warrant liabilities, are dependent on Neptune's share price and would only become payable if they are in the money. The warrants, if exercised, settle in common shares of the Company and therefore do impact on the Company's cash. Unless exercised on a cashless basis (where permitted), warrant holders are required to pay the cash strike price to exercise the warrant and thus the exercise of warrants could result in a cash infusion to the Company.

#### Loans and borrowings
On February 10, 2021, as part of the Sprout acquisition, Sprout issued a promissory note of $10.0 million guaranteed by the Company and secured by a first-ranking mortgage on all movable assets of Sprout current and future, corporeal and incorporeal, and tangible and intangible. The outstanding principal balance bears interest at the rate of 10.0% per annum. Interest is accrued and added to the principal amount of the loan. The principal is payable on February 1, 2024.

On July 13, 2022, Neptune announced that Sprout Foods Inc. ("Sprout"), the Company's organic plant-based baby food and toddler snack company, has entered into an amendment of each of its existing Secured Promissory

------

Notes. In connection with this amendment, investment funds managed by Morgan Stanley Expansion Capital ("Morgan Stanley" or "MSEC") agreed to commit an additional $3 million in Secured Promissory Notes to Sprout. The maturity date of the note facility of February 1, 2024 is consistent with the maturity date of the existing Secured Promissory Notes with MSEC and Neptune. The $13.0 million of amended Secured Promissory Notes have a 10% interest rate per annum, increasing by 1% per annum every three months during the term of the Secured Promissory Notes. The interest will be compounded and added to the principal amount on a quarterly basis. The amended Secured Promissory Notes may be converted, in whole or in part, at any time upon the mutual consent of Sprout, the Company and MSEC, into common shares of the Company. MSEC was issued 372,670 common shares of Neptune, of an approximate value of $500,000, in connection with this commitment.

On September 9, 2022, Sprout entered in a new $250,000 Secured Promissory Note agreement. The maturity date of the new note facility is February 1, 2024. The $250,000 Secured Promissory Note has a 10% interest rate per annum, increasing by 1% per annum every three months during the term of this Secured Promissory Note. The interest will be compounded and added to the principal amount on a quarterly basis. This Secured Promissory Note may be converted, in whole or in part, at any time upon the mutual consent of Sprout, the Company and the holder, into common shares of the Company. Neptune issued 36,765 common shares for a value of $75,736 in connection with this Secured Promissory Note, for the payment of borrowing costs.

On November 8, 2022, Sprout entered into an agreement to issue an additional $525,000 of Secured Promissory Notes, on the same terms as the Secured Promissory Note entered into with MSEC. In connection with this financing, Neptune will issue common shares to the holders of these Secured Promissory Notes for a value of $105,000.

#### Form S-3 Limitations
As a result of our inability to timely file this Quarterly Report under the Securities Exchange Act of 1934, as amended, we will not be eligible to use a registration statement on Form S-3 to conduct public offerings of our securities until we have timely filed all periodic reports with the SEC for a period of twelve months. Our inability to use Form S-3 during this time period may have a negative impact on our ability to access the public capital markets in a timely fashion because we would be required to file a long-form registration statement on Form S-1 and have it reviewed and declared effective by the SEC. This may limit our ability to access the public markets to raise debt or equity.

#### Equity
Equity consists of the following items (in millions):

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| | | |
|:---|:---|:---|
|  | **September 30,<br>2022** | **March 31,<br>2022** |
|  Share capital | $321.770 | $317.051 |
|  Warrants | 6.080 | 6.080 |
|  Additional paid-in capital | 56.306 | 55.981 |
|  Accumulated other comprehensive loss | (14.308) | (7.814) |
|  Deficit | (358.364) | (323.182) |
|  Total equity attributable to equity holders of the Company | $11.484 | $48.116 |
|  Total equity attributable to non-controlling interest | 4.112 | 12.722 |
|  Total equity | $15.596 | $60.838 |

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#### CONTRACTUAL OBLIGATIONS FOR THE FISCAL YEAR ENDED MARCH 31, 2022
The following are the contractual maturities of financial liabilities and other contracts as at March 31, 2022:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Required payments per year** | **Carrying<br>amount** | **Contractual<br>Cash flows** | **Less than<br>1 year** | **1 to<br>3 years** | **4 to<br>5 years** | **March 31,<br>2022<br>More<br>than<br>5 years** |
|  Trade and other payables and long-term payables | $22.701 | $22.701 | $22.701 | $— | $— | $— |
|  Lease liabilities<sup>1</sup> | 2.705 | 3.861 | 0.798 | 1.612 | 1.091 | 0.360 |
|  Loans and borrowings<sup>2</sup> | 11.648 | 12.088 | 1.000 | 11.088 |  |  |
|  Other liability<sup>3</sup> | 0.089 | 15.000 |  |  |  | 15.000 |
|  | $37.143 | $53.650 | $24.499 | $12.700 | $1.091 | $15.360 |

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(1) Includes interest payments to be made on lease liabilities corresponding to discounted effect.

(2) Includes interest payments to be made on loans and borrowings.

(3) According to the employment agreement with the CEO, a long-term incentive is payable if the Company reaches a level of market capitalization.

Liabilities related to warrants are excluded from the table above, as they are to settled in shares.

Under the terms of its financing agreements, the Company is not required to meet financial covenants.

On November 14, 2021, the Company and its CEO entered into an agreement pursuant to which the CEO's existing employment agreement was amended to waive the Company's obligation to procure directors and officers insurance coverage of up to $15 million for the period covering July 1, 2021 to July 31, 2022. The parties agreed that if the Company had successfully completed a strategic partnership prior to December 31, 2021, the CEO would have been entitled to approximately $6.9 million in cash and would have been granted fully vested options to purchase 8.5 million shares of the Company's common stock. The parties also agreed that if certain contingencies did not occur by December 31, 2021, the parties would negotiate for a period of 30 days and, in the absence of an agreement, would be entitled to a grant of vested restricted stock units ("RSUs") with a value of approximately $4.7 million (or if the Company is unable to grant such RSUs, then a combination of cash and vested RSUs with equivalent value). On January 31, 2022, the parties agreed to extend the 30-day negotiation period for an additional 30 days. As the strategic partnership was not consummated by December 31, 2021, the CEO will be entitled to the compensation mentioned above. The Company has accrued in trade and other payable the liability to the CEO of $4.7 million as at March 31, 2022. The related charge for the three-month and twelve-month periods ended March 31, 2022 is nil and $4.7 million, respectively, is included in selling general and administrative expenses.

The Company is required to pay royalties of 1% of its revenues in semi-annual instalments, for an unlimited period to the former CEO. A provision of $0.4 million for royalty payments is included in the table above for amounts currently due and is not otherwise included in table above.

Refer also to provisions disclosed in note 11, commitments disclosed in note 22(a) and legal proceedings in note 22(b) of the consolidated financial statements for the years ended March 31, 2022 and 2021.

The Company has no significant off-balance sheet arrangements as at March 31, 2022, other than those mentioned above and the commitments disclosed in note 22 of the consolidated financial statements for the years ended March 31, 2022 and 2021.

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#### CONTRACTUAL OBLIGATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 2022
The following are the contractual obligations as at September 30, 2022:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Required payments per year** | **Carrying<br>amount** | **Contractual<br>Cash flows** | **Less than<br>1 year** | **1 to<br>3 years** | **4 to<br>5 years** | **September 30,<br>2022<br>More than<br>5 years** |
|  Trade and other payables and provisions | $28.821 | $28.821 | $28.821 | $— | $— | $— |
|  Lease liabilities<sup>1</sup> | 2.929 | 2.900 | 0.673 | 1.130 | 0.273 | 0.824 |
|  Loans and borrowings<sup>2</sup> | 14.692 | 14.692 |  | 14.692 |  |  |
|  Other liability<sup>3</sup> | 0.024 | 15.000 |  |  |  | 15.000 |
|  | $46.466 | $61.413 | $29.494 | $15.822 | $0.273 | $15.824 |

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(1) Includes interest payments to be made on lease liabilities corresponding to discounted effect.

(2) Includes interest payments to be made on loans and borrowings.

(3) According to the employment agreement with the CEO, a long-term incentive is payable if the Company reaches a level of market capitalization.

Liabilities related to warrants are excluded from the table above, as they are to settle in shares.

Under the terms of its financing agreements, the Company is not required to meet financial covenants.

On November 14, 2021, the Company and its CEO entered into an agreement pursuant to which the CEO's existing employment agreement was amended to waive the Company's obligation to procure directors and officers insurance coverage of up to $15 million for the period covering July 1, 2021 to July 31, 2022. The parties agreed that if the Company had successfully completed a strategic partnership prior to December 31, 2021, the CEO would have been entitled to approximately $6.9 million in cash and would have been granted fully vested options to purchase 8.5 million shares of the Company's common stock. As the strategic partnership was not consummated by December 31, 2021, the CEO is entitled to a grant of vested RSUs with a value of approximately $0.4 million. The balance of the liability accrual to the CEO is $0.4 million as at September 30, 2022, in trade and other payables. The revaluation of the liability amounted to gain (loss) of $(1,750) and $3.2 million for the three and six-month periods ended September 30, 2022 and were recorded into SG&A (2021 – losses of $1.7 million and $1.7 million, respectively). During the three and six-month periods ended September 30, 2022, settlements in RSUs were of $235,683 and $1.4 million respectively. The compensation is to be settled in RSUs or if the Company is unable to grant such RSUs, then a combination of cash and vested RSUs with equivalent value, is not reflected in the number of RSUs outstanding above.

The Company is required to pay royalties of 1% of its revenues in semi-annual installments, for an unlimited period to the former CEO. A provision of $0.5 million for royalty payments is included in the table above for amounts currently due but such obligation is not otherwise included in table above.

The Company has no significant off-balance sheet arrangements as at September 30, 2022, other than those mentioned above and the commitments disclosed in note 15 of the condensed consolidated interim financial statements for the three and six-month periods ended September 30, 2022 and 2021.

Please refer also to provisions disclosed in note 7, commitments disclosed in note 15(a) and legal proceedings in note 15(b) of the condensed consolidated interim financial statements for the three and six-month periods ended September 30, 2022 and 2021.

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#### ACCOUNTING POLICIES

#### OUR ACCOUNTING POLICIES
Please refer to Note 3 of the annual consolidated financial statements as at March 31, 2022 for more information about significant accounting policies used to prepare the financial statements.

When preparing the financial statements in accordance with US GAAP, the management of Neptune must make estimates and judgements that affect the amounts reported in the financial statements and the notes thereto. Such estimates are based on Management's knowledge of current events and actions that the Company may take in the future.

#### CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The consolidated financial statements are prepared in accordance with US GAAP. In preparing the consolidated financial statements for the years ended March 31, 2022 and 2021 and for the three-month periods ended September 30, 2022 and 2021, Management made estimates in determining transaction amounts and statement of financial position balances. Certain policies have more importance than others. We consider them critical if their application entails a substantial degree of judgment or if they result from a choice between numerous accounting alternatives and the choice has a material impact on reported results of operation or financial position. Please refer to the annual consolidated financial statements as at March 31, 2022 for more information about the Company's most significant accounting policies and the items for which critical estimates were made in the financial statements and should be read in conjunction with the notes to the consolidated financial statements for the years ended March 31, 2022 and 2021.

Estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Critical accounting estimates are:

• Estimating the write down of inventories

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. As necessary, the Corporation records write-downs for excess, slow moving and obsolete inventory. To determine these amounts, the Corporation regularly reviews inventory quantities on hand and compares them to estimates of historical utilization, future product demand, and production requirements. Write-downs of inventories to net realizable value are recorded in cost of sales in the consolidated financial statements.

In the years ended March 31, 2022 and 2021, inventories have been reduced by $3.7 million and $19.0 million respectively, as a result of a write-down to their net realizable value, which is included in cost of sales.

The write-off of inventory in fiscal 2022 was largely related to the completion of inventory write-downs of legacy Health and Wellness products as well as inventory write downs for legacy products related to the SugarLeaf facility. Both write offs of inventories occurred in the first six months of fiscal 2022, resulting in $3.7 million of expense.

The write-off of inventory in fiscal 2021 was largely related to hand sanitizer products.

In the six-months ended September 30, 2022 and 2021, inventories have been reduced by $3.1 million and $3.0 million respectively, as a result of a write-down to their net realizable value, which is included in cost of sales.

The write-off of inventory in the three and six-month periods ended September 30, 2022 was related to cannabis products.

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Net realizable value is subject to measurement uncertainty because it can be difficult to predict market demands and timing of supply due to logistics.

• Estimating the expected credit losses for trade receivables

An allowance for current expected credit losses is maintained to reflect credit risk for trade accounts receivable based on a current expected credit loss model which factors in changes in credit quality since the initial recognition of trade accounts receivable based on customer risk categories. Current expected credit losses also consider collection history and specific risks identified on a customer-by-customer basis. Trade accounts receivable are presented net of allowances for current expected credit losses.

Most of the Company's customers are distributors for a given territory and are privately-held, provincially owned and publicly owned companies. The profile and credit quality of the Corporation's customers vary significantly. Adverse changes in a customer's financial position could cause the Corporation to limit or discontinue conducting business with that customer, require the Corporation to assume more credit risk relating to that customer's future purchases or result in uncollectible accounts receivable from that customer. Such changes could have a material adverse effect on business, consolidated results of operations, financial condition and cash flows.

The Company's extension of credit to customers involves judgment and is based on an evaluation of each customer's financial condition and payment history. From time to time, the Corporation will temporarily transact with customers on a prepayment basis where circumstances warrant. The Corporation's credit controls and processes cannot eliminate credit risk.

During the year ended March 31, 2022, the Corporation transacted with a few new customers for which financial positions deteriorated during the year. The Corporation has recorded specific provisions related to these customers.

The expected credit loss for the year ended March 31, 2022 was $1.7 million and for March 31, 2021 was $7.0 million. As at March 31, 2022, 69% of our trade receivables are past due (March 31, 2021 – 83%). We have provided for 58% of past due receivables as at March 31, 2022 (March 31, 2021—68%). Most of the past due trade receivables are from legacy customers of B2B cannabis services revenues as well as legacy Health and Wellness customers, for which they were provided for in fiscal 2021. Expected credit loss is subject to estimation risk and measurement uncertainty because the financial health of certain customers is difficult to predict.

The expected credit loss for the quarters ended September 30, 2022 and 2021 were $0.02 million and $0.04 million, respectively. Expected credit loss is subject to estimation risk and measurement uncertainty because the financial health of certain customers is difficult to predict.

• Estimating the recoverable amount of non-financial assets, to determine and measure impairment losses on goodwill, intangibles, and property, plant and equipment.

Biodroga – As part of its annual impairment test, Management determined that the fair value of Biodroga was higher than its carrying value and thus no impairment charge was recorded for the reporting unit. The most significant assumptions used to estimate the fair values using discounted cash flow model included the forecasted revenue, gross margins, net working capital investment, terminal value as well as the discount rate. These significant assumptions are classified as Level 3 in the fair value hierarchy, signifying that they are not based on observable market data. A decrease in the projected cash flow or an increase in discount rate could have resulted in an impairment charge. Should these projections not be realized, an impairment loss may be needed in future periods. As at March 31, 2022, the assumptions used in determining the fair value were not subject to a degree of uncertainty that would have caused impairment to be recorded as there was sufficient headroom between the fair value of the reporting unit and its carrying value.

Sprout – In 2022, as part of the annual impairment test of Sprout, Management determined that the fair value of the reporting unit was lower than its carrying amount. As a result, an impairment charge of $1.5 million was allocated to the Sprout tradename and an impairment charge of $3.3 million was allocated

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to the goodwill of Sprout. The most significant assumptions used to estimate the fair values using discounted cash flow model included the forecasted revenue, gross margins, net working capital investment, terminal value as well as the discount rate. These significant assumptions are classified as Level 3 in the fair value hierarchy, signifying that they are not based on observable market data. A decrease in the projected cash flow or an increase in discount rate could have resulted in an impairment charge. Should these projections not be realized, an impairment loss may be needed in future periods. Due to the impairment losses recorded in the fourth quarter of fiscal 2022, there is no headroom between the fair value of the reporting unit and its carrying value and therefore, changes in assumptions in future periods may result in additional impairment charges.

Cannabis – The Corporation identified a trigger of impairment related to its Canadian cannabis asset group. Impairment indicators such as increased operating losses, decline in the share price and negative industry and economic trends were identified in the fourth quarter. The fair value of the asset group was determined to be less than the carrying value, resulting in an impairment loss of $12.3 million allocated between the building and components ($3.1 million) and the laboratory and plant equipment ($9.2 million). Management announced on June 8, 2022 the divestiture of the Canadian cannabis business. As a result, if the Corporation is unable to sell the asset of the Canadian cannabis group at their fair value, additional impairment charges may be required in fiscal 2023.

There were impairment triggers identified in the quarter ended September 30, 2022 which resulted in an impairment of goodwill and intangible assets of $10,164,000. There were no impairment triggers identified in the quarter ended September 30, 2021, and no impairment losses on goodwill, intangibles, and property, plant and equipment were recorded, except as noted in the following paragraph.

• Estimating the fair value less costs to sell of our assets held for sale.

On June 8, 2022, the Company announced a planned divestiture of the Canadian cannabis business and the Corporation will focus on winding up its cannabis operations pending one or more sales transactions. Following this announcement, the Corporation had Canadian disposal group assets that met the criteria to be classified as held for sale. As at September 30, 2022, non-current assets related to the Canadian cannabis business are presented under assets held for sale on Neptune's balance sheet. Comparative balance sheet amounts have not been reclassified. The disposal group has been measured at fair value less cost to sell and impaired to reflect the asset sale and purchase agreement (the "ASPA") signed with a third-party on October 16, 2022 for approximately $3,790,340 ($5,150,000 CAD), with expected cost to sell the Canadian cannabis disposal group asset in the amount of $586,783, for net assets held for sale of $3,203,557, resulting in impairment losses of $14,530,458 and $15,346,119 respectively for the three and six-month periods ended September 30, 2022. The transaction closed on November 9, 2022.

• Estimating the revenue from contracts with customers subject to variable consideration. Refer to note 2(c) of the consolidated financial statements for more details).

The Corporation's revenue-generating activities from the sale of products in the course of ordinary activities are recognized at a point in time when control of the products is transferred to the customer and the Corporation's obligations have been fulfilled. The Corporation transfers control generally on shipment of the goods or in some cases, upon reception by the customer. Revenue is measured as the amount of consideration the Corporation expects to receive in exchange for the Corporation's product as specified in the customer contract. Certain of the Corporation's customer contracts, most notably those with the Canadian provincial and territorial agencies, may provide the customer with a right of return. In certain circumstances, the Corporation may also provide a retrospective price adjustment to a customer. These items give rise to variable consideration, which is recognized as a reduction of the transaction price based upon the expected amounts of the product returns and price adjustments at the time revenue for the corresponding product sale is recognized. The determination of the reduction of the transaction price for variable consideration requires that the Corporation make certain estimates and assumptions that affect the timing and amounts of revenue recognized. The Corporation estimates this variable consideration by taking into account factors such as historical information, current trends, forecasts, provincial and territorial

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inventory levels, availability of actual results and expectations of demand. For fiscal 2022, the Corporation revised its estimated provision for returns of the cannabis sales as a result of new information and experience with sales returns. The impact of the revised estimate for year ended March 31, 2022 is a reduction of the provision of $1.1 million and an increase in revenue from sales and services.

The Corporation recognizes a liability for sales refunds within other current liabilities with a corresponding decrease in revenues. Furthermore, the Corporation recognizes an asset for the value of inventory which is expected to be returned within prepaid expenses and other assets on the consolidated balance sheets with a corresponding reduction of cost of sale.

• Judgment related to revenue recognition in determining whether the Company is the principal or the agent for the arrangements with suppliers of products the Corporation does not manufacture.

The Corporation may be involved with other parties, including suppliers of products, in providing goods or services to a customer when it enters into revenue transactions for the sale of products that it does not manufacture. In these instances, the Corporation must determine whether it is a principal in these transactions by evaluating the nature of its promise to the customer. The Corporation is a principal and records revenue on a gross basis if it controls a promised good before transferring that good to the customer. On the other hand, the Corporation records revenue as the net amount when it does not meet the criteria to be considered a principal.

• Estimating the fair value of bonus based on market conditions (note 16 of the consolidated financial statements)

According to the employment agreement with the CEO, a long-term incentive of $15 million is payable if the Corporation's US market capitalization is at least $1 billion. The Corporation values the long-term incentive with the risk-neutral Monte Carlo simulation method. Based on the model, the Corporation could reach this market capitalization in 6.51 years. The incentive is being recognized over the estimated period to reach the market capitalization. The risk-neutral Monte-Carlo simulation uses level 3 inputs. The assumptions used in the simulation include a risk free-rate of 2.32% and a volatility of 67.35% (respectively 1.74% and 66.46% for the previous year). The assumptions used in the simulation include a risk free-rate of 3.76% and a volatility of 76.49% for the six-month period ended September 30, 2022 (respectively 2.32% and 67.35% for the six-month period ended September 30, 2021). An increase or decrease in the volatility assumption significantly impacts the fair value of the long-term incentive.

• Judgment related to the recognition period to be used in recording stock-based compensation that is based on market and non-market conditions and measurement of warrants issued in securities offerings (notes 14 and 16 of the consolidated financial statements)

On July 8, 2019, the Corporation granted 157,143 market performance options under the Corporation stock option plan at an exercise price of $4.43 per share to the CEO, expiring on July 8, 2029. The options were vest after the attainment of market performance conditions within the following ten years. The market condition was factored into the fair value. Some of these market performance options required the approval of amendments to the stock option plan and therefore the fair value of these options was revaluated up to the date of approval of the amendments (grant date).

On July 8, 2019, the Corporation granted 100,000 non-market performance options under the Corporation stock option plan at an exercise price of $4.43 per share to the CEO, expiring on July 8, 2029. These options vest after the attainment of non-market performance conditions within the following ten years. These non-market performance options required the approval of amendments to the stock option plan and therefore the fair value of these options was revalued up to the date of approval of the amendments (grant date).

On July 8, 2019, the Company granted 100,000 non-market performance options under the Company stock option plan at an exercise price of $4.43 per share to the CEO, expiring on July 8, 2029. These options vest after the attainment of non-market performance conditions within the following ten years. These non-market performance options required the approval of amendments to the stock option plan and therefore the fair

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value of these options was revalued up to the date of approval of the amendments (grant date). These options are valued based on level 3 inputs. During the twelve-month period ended March 31, 2022, changes in estimated probability of achievement of the non-market performance conditions or the expected number of years to achieve the performance conditions resulted in a recovery of stock-based compensation recognized under this plan. None of these non-market performance options have vested as at September 30, 2022. Changes in these assumptions would impact the timing of which the expense is recognized. These options were not exercisable as at September 30, 2022 and March 31, 2022.

On June 23, 2022, Neptune issued a total of 645,526 pre-funded warrants ("Pre-Funded Warrants"), along with 1,300,000 common shares of the Corporation, as part of a registered direct offering ("June 2022 Direct Offering"). Each Pre-Funded Warrant was exercisable for one Common Share. The common shares and the Pre-Funded Warrants were sold together with 1,945,526 Series C Warrants (the "Series C Warrants"), and 1,945,526 Series D Warrants (the "Series D Warrants") and collectively, the "June 2022 Common Warrants". Each common share and Pre-Funded Warrants and the accompanying June 2022 Common Warrants were sold together at a combined offering price of $2.57, for aggregate gross proceeds of $5.0 million before deducting fees and other estimated offering expenses. The Pre-Funded Warrants are funded in full at closing except for a nominal exercise price of $0.0001 and are exercisable commencing on the closing date and will terminate when such Pre-Funded Warrants are exercised in full. The Series C Warrants and the Series D Warrants have an exercise price of $2.32 per share and can be exercised for a period of 5 years and 2 years respectively from the date of issuance.

Proceeds of the June 2022 Direct Offering were allocated between common shares and warrants first by allocating proceeds to the warrants classified as a liability based on their fair value and then allocating the residual to the equity instruments, which includes the Pre-Funded Warrants. The fair value of the liability-classified warrants was determined using the Black-Scholes model, resulting in an initial warrant liability of $4,046,836 for the Series C Warrants and $3,080,121 for the Series D Warrants. Because the fair value of the liability classified warrant exceeds the total proceeds, no consideration was allocated to the Common Shares and Pre-Funded Warrants and a loss of $2,126,955 was immediately recognized in the net loss of the period as there were no additional rights or privileges identified. Total issue costs related to this private placement of $465,211, was recorded under finance costs.

• Estimating the fair value of the identifiable assets acquired, liabilities assumed, and consideration transferred of the acquired business, including the related call option (the "Call Option") (note 4 of the consolidated financial statements).

The allocation of the purchase price was based on management's estimate of the fair values of the acquired identifiable assets and assumed liabilities using valuation techniques including income, cost and market approaches (Level 3). The Corporation utilized both the cost and market approaches to value fixed assets, which consider external transactions and other comparable transactions, estimated replacement and reproduction costs, and estimated useful lives and consideration for physical, functional and economic obsolescence. We utilized the income approach to value intangible assets, which considers the present value of the net cash flows expected to be generated by the intangible assets, and excluding cash flows related to contributory assets.

As at the close of the transaction, the value of the asset related to the Call Option was determined to be $5.5 million, representing the difference between the market price and the contract value of the Call Option, discounted at a rate of 8.9% and assuming the transaction would take place on January 1, 2023. To establish the market price, the multiples selected were 2.3x for revenues and 12.0x for EBITDA, based on analysis of average and median industry multiples, and were adjusted to consider a 20% discount; the multiples to be used as per the contract are 3.0x for revenues and 15.0x for EBITDA, weighted at 50%.

#### CHANGES IN ACCOUNTING POLICIES AND FUTURE ACCOUNTING CHANGES
The accounting policies and basis of measurement applied in the consolidated financial statements for the years ended March 31, 2022 and 2021 and for the three months ended September 30, 2022 and 2021 are the same other than as disclosed, if any, in note 3 to the consolidated financial statements.

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#### ISSUED AND OUTSTANDING SECURITIES
The following table details the number of issued and outstanding securities as at the date of this prospectus:

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| | |
|:---|:---|
|  | Number of Securities<br>Issued and Outstanding |
|  Common shares | 11850057 |
|  Share options | 717850 |
|  Deferred share units | 4308 |
|  Restricted share units | 2790 |
|  Warrants | 12086559 |
|  Total number of securities | 24661564 |

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The Company's common shares are being traded on NASDAQ Capital Market under the symbol "NEPT". Effective August 15, 2022, the Company's common shares no longer trade on the TSX. Each option, restricted share, restricted share unit, deferred share unit and warrant is exercisable into one common share to be issued from the treasury of the Company.

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#### CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS, AND DIRECTOR INDEPENDENCE

#### Certain Relationships and Transactions
Other than the compensation agreements and other arrangements described under "Executive Compensation" and "Director Compensation" discussed below in this prospectus and the transactions described below, since April 1, 2020, there has not been and there is not currently proposed, any transaction or series of similar transactions to which we were, or will be, a party in which the amount involved exceeded, or will exceed, $120,000 and in which any director, executive officer, holder of five percent or more of any class of our capital stock or any member of the immediate family of, or entities affiliated with, any of the foregoing persons, had, or will have, a direct or indirect material interest.

In March 2022, we completed a registered direct offering (the "March Offering"), pursuant to which we issued and sold an aggregate of 528,572 common shares and equivalents and 1,428,572 warrants to purchase common shares, at a price equal to $11.20 per share and accompanying warrants. Armistice Capital Master Fund Ltd., a beneficial owner of more than 5% of our voting securities, was the sole investor in the March Offering.

In June 2022, we completed a registered direct offering (the "June Offering"), pursuant to which we issued and sold an aggregate of 1,945,526 common shares and equivalents and 3,891,052 warrants to purchase common shares, at a price equal to $2.57 per share and accompanying warrants. Armistice Capital Master Fund Ltd. and Sabby Volatility Warrant Master Fund, Ltd., beneficial owners of more than 5% of our voting securities, each purchased 972,763 common shares and equivalents and were each issued warrants to purchase 1,945,526 common shares in the June Offering.

On October 11, 2022, the Company announced the closing of a registered direct offering of 3,208,557 of its Common Shares and the Series E Warrants in the concurrent Private Placement. Armistice Capital Master Fund Ltd., Sabby Volatility Warrant Master Fund, Ltd., and Empery Asset Master, LTD (and related entities), beneficial owners of more than 5% of our voting securities, each purchased 1,069,519 common shares, in the registered direct offering and were each issued warrants to purchase 2,139,048 common shares, respectively, in the Private Placement.

#### Director Independence
Nasdaq rules require that, subject to specified exceptions, each member of a listed company's audit, compensation and nominating and corporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act and that compensation committee members satisfy independence criteria set forth in Rule 10C-1 under the Exchange Act. Under applicable Nasdaq rules, a director will only qualify as an "independent director" if, in the opinion of the listed company's board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. In addition, in affirmatively determining the independence of any director who will serve on a company's compensation committee, Rule 10C-1 under the Exchange Act requires that a company's board of directors must consider all factors specifically relevant to determining whether a director has a relationship to such company which is material to that director's ability to be independent from management in connection with the duties of a compensation committee member, including: the source of compensation to the director, including any consulting, advisory or other compensatory fee paid by such company to the director, and whether the director is affiliated with the company or any of its subsidiaries or affiliates.

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Our board of directors has determined that all members of the board of directors, except Michael Cammarata, are independent directors, including for purposes of the rules of Nasdaq and the SEC. In making such independence determination, our board of directors considered the relationships that each non-employee director has with us and all other facts and circumstances that our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. In considering the independence of the directors listed above, our board of directors considered the association of our directors with the holders of more than 5% of our common shares. There are no family relationships among any of our directors or executive officers. Mr. Cammarata is not an independent director under these rules because he is an executive officer of the Company.

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#### MANAGEMENT

#### Director and Executive Officer Biographies
The following table provides information regarding our executive officers and directors as of January 24, 2023:

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| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position(s)** |
|  *Executive Officers***:** |  |  |
| Michael Cammarata | 37 | President and Chief Executive Officer, Director |
| Raymond Silcock | 71 | Chief Financial Officer |
| John S. Wirt | 59 | Executive Vice President, Legal & Business Affairs (Chief Legal Officer) |
| *Non-Employee Directors*: |  |  |
| Julie Phillips | 40 | Chairperson of the Board |
| Joseph Buaron | 41 | Director |
| Michael De Geus | 46 | Director |
| Ronald Denis | 70 | Director |
| Philip Sanford | 69 | Director |

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#### Executive Officers
**Michael Cammarata** was appointed as President, Chief Executive Officer and a director of Neptune on July 8, 2019. He invested in and cofounded Schmidt's Naturals, one of the world's fastest growing wellness brands, leading it from fledgling start-up to acquisition in 2017 by Unilever and onto record breaking growth in 2018. He remained CEO of Schmidt's Naturals until June 2019, leading its rapid expansion into new and innovative products, retailers and global markets. Mr. Cammarata is a new breed of unconventional CEO with a personal mission to invest and scale companies globally that will make sustainable innovation and modern wellness solutions accessible to the world. He believes that natural products are the future and that every person deserves natural products that work and minimize their harm to people, the planet and animals. Through all his investments, Mr. Cammarata is looking toward future technologies, including AI and machine learning to create stronger connections and personalized products for customers. He is a passionate advocate for ending animal testing in cosmetics. Raised in New York, Mr. Cammarata's dyslexia made school challenging, but that perspective allowed him to identify opportunities others missed. We believe that Mr. Cammarata is qualified to serve as a member of our board of directors based on the perspective and experience he brings as our President and Chief Executive Officer.

**Raymond Silcock** was named Chief Financial Officer in July 2022. Prior to joining Neptune, Mr. Silcock served as Executive Vice President and Chief Financial Officer of Perrigo Company PLC from March 2019, Chief Financial Officer at INW Holdings from 2018 to 2019 and as Executive Vice President and Chief Financial Officer of CTI Foods from 2016 to 2018. In March 2019, CTI Foods filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court in Delaware. From 2013 until the company's sale in 2016, Mr. Silcock was Executive Vice President and Chief Financial Officer of Diamond Foods, Inc. and previously held Chief Financial Officer roles at UST, Inc., Swift & Co. and Cott Corporation. He also served on the board of Pinnacle Foods, Inc. from 2008 until the company was sold in 2018. His early career was highlighted by an 18-year tenure in positions of increasing responsibility at Campbell Soup Company. Mr. Silcock is a Fellow of the Chartered Institute of Management Accountants (UK).

**John S. Wirt** became Chief Legal Officer, Executive Vice President of Legal and Business Affairs, and General Counsel of Neptune in August 2021. Prior to joining Neptune, Mr. Wirt served as the President of Epic Sports & Entertainment, Inc. from 2018 and the CEO of Square Ring, Inc. from 2008, both companies engaged in the sports and entertainment industries. He has also served as the President of the law firm of Wirt & Wirt, P.A.

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since 2014. Mr. Wirt is an AV-rated Martindale Hubble attorney who has been practicing law for over thirty years. Mr. Wirt began his legal career as an associate at Jenner & Block and followed that as an associate at Sidley & Austin. He earned his B.A., graduating magna cum laude from Knox College in 1985. In 1986, he received his CPA certificate from the University of Illinois, and in 1989, he graduated with honors from the University of Illinois, where he earned his Jurisprudence degree. Mr. Wirt's previous business experience includes serving on the Board of Directors for Interactive Television Networks, a NASDAQ listed public company, where he also served as Chair of the Audit Committee. He presently serves as a director of Epic Sports, Square Ring, Wirt & Wirt, and tmc Content Group AG, a publicly-traded Swiss corporation involved in the motion picture and video industries.

#### Non-Employee Directors
**Julie Phillips** has been a director of Neptune since August 2021. She currently serves as Chief Operating Officer and Chief Creative Officer for Blackhall, a new streaming video on demand service, launching in 2024. Prior, she served as Vice President for Herschend Entertainment Studios, the media and franchise arm of Herschend Enterprises, which owns, operates and manages family-oriented them parks, aquariums, attractions and hospitality properties in the United States in Canada, where she had held this and prior roles since 2013. Ms. Phillips also has served since April 2019 as a member of the Board of Directors of the Lane Thomas Foundation, which is dedicated to supporting families of children needing life-saving organ transplants. Previously, she served as a business development manager for Miramax and as a senior financial analyst for Raytheon (NYSE: RTX). Ms. Phillips holds an MBA from Harvard Business School and a Bachelor of Arts in Business Administration from Pepperdine University. We believe that Ms. Phillips is qualified to serve as a member of our board of directors based on her experience in marketing and her educational background.

**Joseph Buaron** has been a director of Neptune since April 2020. He is co-founder and CTO of goPeer, Canada's first regulated consumer peer-to-peer lender, he additionally serves as Chief Strategy Officer to Loti Wellness Inc., a Canadian self-care consumer brand. Prior, Mr. Buaron served as CTO of Schmidt's Naturals, where he led the technology, AI, digital marketing and consumer support divisions through transition from start-up to enterprise, and subsequently through the acquisition by Unilever, and the integration that followed. Mr. Buaron is a seasoned CTO with over two-decades related experience as an entrepreneur, investor, programmer, solutions architect, and DevOps engineer. His passion for technology reflects his recognition for the tremendous impact it has on our lives and its potential for creating a better tomorrow. Immersed in technology, Mr. Buaron strives to provide vision, leadership, form relationships, and eliminate barriers to allow the brightest minds to flourish. We believe that Mr. Buaron is qualified to serve on our board of directors due to his experience as a leader in technology roles.

**Michael De Geus** has been a director of Neptune since April 2020. He is a highly accomplished security executive with domestic and international cyber investigative and physical security experience. He is the founder and Chief Executive Officer of Leatherback Gear, LLC., a producer of bullet proof backpacks. He also served as a Special Agent in federal law enforcement with the Department of Homeland Security and has served on various assignments both physically and with cyber security since 2008. Previously, he served as the Director of Sales at Koro Sun Resort in the Fiji Islands and as a consultant for MD Consulting, working on various projects from developing branding and new store layouts to helping with various start-up companies. Mr. De Geus is a Ph.D. Candidate in Public Policy specializing in Homeland Security at Walden University, holds a Master of Science in International Relations from Troy State University and holds a Bachelor of Science in Criminal Justice from California State University Fullerton. We believe that Mr. De Geus is qualified to serve on our board of directors due to his management and leadership experience.

**Ronald Denis** has been a director of Neptune since January 2001. He has been Chief of Surgery and director of the Trauma Program at Hôpital du Sacré-Coeur in Montréal since 1997. Also, since 1987, Dr. Denis has occupied the position of medical co-director of the Canadian Formula 1 Grand Prix. Dr. Denis sits on several scientific boards and management committees. We believe that Dr. Denis is qualified to serve on our board of directors because of his extensive scientific experience.

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**Philip Sanford** has been a director of Neptune since May 2022. He previously served on the executive team at N3 LLC, a global technology-enabled inside sales organization that was acquired by Accenture in 2020. He has advised a number of leading private equity firms and investment banks on mergers and acquisitions and going-private transactions in the consumer sector, including Bain Capital, Carlyle, Moelis, Blackstone, Kelso, Mid-Ocean Partners, Morgan Stanley Private Equity and Morgan Stanley Expansion Capital. He currently serves on the Advisory Board of Morgan Stanley Expansion Capital Funds, as well as the Boards of Ecentria, CMX and Image Skincare and formerly served as Chairman of the Board of Sprout Organics. Mr. Sanford has previously served on the Boards of Chattem, Inc and Caribou Coffee. He holds a Bachelor of Science degree in Finance, Economics and Philosophy from Austin Peay State University in Clarksville, Tenn. We believe that Mr. Sanford is qualified to serve on our board of directors due to his business and leadership experience, merger and acquisition experience, and extensive financial, accounting and governance knowledge.

#### Legal Proceedings with Directors or Executive Officers
There are no legal proceedings related to any of our directors or executive officers that require disclosure pursuant to Items 103 or 401(f) of Regulation S-K.

#### Family Relationships
There are no family relationships between or among any of our directors or executive officers. There is no arrangement or understanding between any of our directors and any other person or persons pursuant to which he or she is to be selected as a director.

#### Board Leadership Structure and Board's Role in Risk Oversight
Ms. Phillips is the current chairperson of the board of directors. We believe that separating the positions of Chief Executive Officer and chairperson of the board of directors allows our Chief Executive Officer to focus on our day-to-day business, while allowing a chairperson of the board of directors to lead the board of directors in its fundamental role of providing advice to and independent oversight of management. Our board of directors recognizes the time, effort and energy that the Chief Executive Officer is required to devote to his position in the current business environment, as well as the commitment required to serve as our chairperson, particularly as the board of directors' oversight responsibilities continue to grow. While our bylaws and corporate governance guidelines do not require that our chairperson and Chief Executive Officer positions be separate, our board of directors believes that having separate positions is the appropriate leadership structure for us at this time and demonstrates our commitment to good corporate governance.

Risk is inherent to every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including risks relating to our financial condition, development and commercialization activities, operations, strategic direction, and intellectual property. Management is responsible for the day-to-day management of risks we face, while our board of directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.

The role of the board of directors in overseeing the management of our risks is conducted primarily through committees of the board of directors, as disclosed in the descriptions of each of the committees below and in the charters of each of the committees. The full board of directors (or the appropriate board of directors committee in the case of risks that are under the purview of a particular committee) discusses with management our major risk exposures, their potential impact on us, and the steps we take to manage them. When a board of directors committee is responsible for evaluating and overseeing the management of a particular risk or risks, the chairperson of the relevant committee reports on the discussion to the full board of directors during the

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committee reports portion of the next board meeting. This enables the board of directors and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.

#### Information Regarding Committees of the Board
Our board of directors has established an audit committee, a compensation and human resources committee, a nominating committee, and a governance committee. Each of the audit committee, compensation committee, and nominating and corporate governance committee operates under a charter that satisfies the applicable standards of the SEC and Nasdaq. A current copy of the charter for each of the audit committee, compensation committee, nominating and corporate governance committee, and research and development committee is posted on the corporate governance section of our website, http://ir.checkmatepharma.com/corporate-governance/documents-and-charters.

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#### EXECUTIVE COMPENSATION
The information in this section summarizes the compensation earned by our executive officers.

Our named executive officers for the year ended March 31, 2022, which consist of our principal executive officer, up to two other most highly compensated executive officers who were serving as executive officers as of March 31, 2022 and up to two additional individuals who would have been another most highly compensated executive officer but for the fact that such individual was not serving as an executive officer as of March 31, 2022, are:

• Michael Cammarata, our President and Chief Executive Officer;

• Randy Weaver, our former Interim Chief Financial Officer\*;

• John S. Wirt, our Executive Vice President, Legal & Business Affairs (Chief Legal Officer and General Counsel); and

• Toni Rinow, our former Chief Financial Officer and Chief Operating Officer\*\*.

\* Mr. Weaver left the Company on July 25, 2022.

\*\* Dr. Rinow left the Company on November 15, 2021.

#### 2022 Summary Compensation Table
The following table presents the compensation awarded to, earned by or paid to each of our named executive officers for the years indicated.

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Year** | **Salary<br>($)** | **Bonus<br>($)** | **Stock<br>Awards**<br>**($)<sup>(1)</sup>** | **Option<br>Awards<br>($)<sup>(1)</sup>** | **All Other<br>Compensation<br>($)** | **Total**<br>**($)** |
|  Michael Cammarata |  |  |  |  |  |  |  |
|  *President and Chief Executive Officer* | 2022 | 1103628 | 750000 | 1252600<sup>(2)</sup> |  | 58612<sup>(3)</sup> | 3164840 |
|  | 2021 | 1083333 | 750000 | 2762841<sup>(2)</sup> | 1966117<sup>(2)</sup> | 1500000<sup>(2)</sup> | 8062291 |
|  Randy Weaver<sup>(4)</sup> |  |  |  |  |  |  |  |
|  *Former Interim Chief Financial Officer* | 2022 | 144000 |  |  | 273386 |  | 417386 |
|  | 2021 |  |  |  |  |  |  |
|  John S. Wirt |  |  |  |  |  |  |  |
|  *Executive Vice President, Legal & Business Affairs* | 2022 | 373653 |  |  | 978453 |  | 1352106 |
|  *Chief Legal Officer and General Counsel* | 2021 |  |  |  |  |  |  |
|  Toni Rinow<sup>(5)</sup> |  |  |  |  |  |  |  |
|  *Former Chief Financial Officer and* | 2022 | 612237<sup>(6)</sup> |  |  |  |  | 612237 |
|  *Chief Operating Officer* | 2021 | 292979 | 135260 |  | 628063 |  | 1056302 |

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(1) The amounts in these columns represent the aggregate grant date fair value of the awards computed in accordance with Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") Topic 718. Assumptions used in the calculation of these amounts are included in Note 16 to our consolidated financial statements included in this prospectus. These amounts do not reflect the actual economic value that will be realized by the named executive officer upon the vesting of the awards or the sale of the common shares underlying such awards.

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(2) Represents compensation in lieu of additional directors and officers' insurance required by Mr. Cammarata's employment agreement.

(3) All Other Compensation for Mr. Cammarata includes contributions to Mr. Cammarata's account under retirement plans, country club dues, premiums on group term life insurance, and occasional use of his Company-provided assistant for personal reasons.

(4) Mr. Weaver was appointed Interim Chief Financial Officer on September 27, 2021 and was replaced by Mr. Raymond Silcock on July 25, 2022.

(5) Dr. Rinow ceased serving as Chief Financial Officer of the Company on September 27, 2021 but remained in her position as Chief Operating Officer until her separation on November 15, 2021.

(6) Includes $178,353 for severance pay in connection with Dr. Rinow's separation.

#### Narrative Disclosure to Summary Compensation Table
Our board of directors and compensation committee review compensation annually for our chief executive officer and his direct reports. In setting executive base salaries and bonuses, and granting equity incentive awards, board of directors or compensation committee considers compensation for comparable positions in the market, the historical compensation levels of our executives, individual performance as compared to our expectations and objectives, our desire to motivate our employees to achieve short-and long-term results that are in the best interests of our shareholders, and a long-term commitment to our Company. We target a generally competitive position, based on independent third-party benchmark analytics to inform the mix of compensation of base salary, bonus or long-term incentives.

Our board of directors has historically determined our executives' compensation. Our compensation committee typically reviews and discusses management's proposed compensation with the chief executive officer for all of his direct reports. Based on those discussions and its discretion, taking into account the factors noted above, the compensation committee determines the compensation for each executive officer other than the chief executive officer. Our board of directors discusses the compensation committee's recommendations and ultimately approves the compensation of our chief executive officer without the chief executive officer and chief financial officer present.

*Annual base salary* 

Each named executive officer's base salary is a fixed component of annual compensation for performing specific duties and functions and has been established by our board of directors taking into account each individual's role, responsibilities, skills, and experience. Base salaries for our named executive officers are reviewed annually by our compensation committee, typically in connection with our annual performance review process, and adjusted from time to time, based on the recommendation of the compensation committee, to realign salaries with market levels after taking into account individual responsibilities, performance, and experience. The base salary of each named executive officer is noted below for fiscal 2022:

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| | |
|:---|:---|
| Name | 2022 Base<br>Salary |
|  Michael Cammarata | $1050000 |
|  John S. Wirt | $600000 |
|  Toni Rinow | $338602 |

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Mr. Weaver did not earn a base salary as he provided services as Interim Chief Financial Officer pursuant to an independent contractor agreement, as discussed further below.

#### Bonuses
For the year ended March 31, 2022, Mr. Cammarata was awarded an annual bonus of $750,000. No annual bonuses were paid to our other named executive officers and, except as discussed below, none of our named executive officers received any non-equity incentive compensation.

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On September 9, 2021, our board of directors approved the payment to Mr. Cammarata of (i) a cash retention bonus of $750,000 for fiscal year 2022.

#### Long-term equity incentives
Our equity grant program is intended to align the interests of our named executive officers with those of our shareholders and to motivate them to make important contributions to our performance. In fiscal 2022, we did not grant any long-term equity incentive awards to our named executive officers, with the exception of inducement grants.

#### Employment and Severance Agreements

#### Michael Cammarata
The Company entered into an agreement with Mr. Cammarata on July 8, 2019 in connection with his appointment as the President and Chief Executive Officer of the Company (the "Cammarata Employment Agreement"). The Cammarata Employment Agreement provided for an initial annual base salary of $1 million, an annual target bonus opportunity of at least 75% of his base salary, inducement equity incentive awards granted in the form of options and restricted share units, and a one-time cash award of $15 million payable only when the Corporation's United States market capitalization based on the 30 day volume weighted average trading price of the Common Shares on Nasdaq is at least $1 billion (the "LTIP Award"). His employment agreement contains a 12 month post-employment non-compete covenant and 18 month post-employment customer and employee non-solicit covenants.

The Cammarata Employment Agreement further provides that the Company must maintain certain levels of directors' and officers' liability insurance. For fiscal 2020 and 2021, in light of the expense associated with obtaining this coverage, Mr. Cammarata received (i) in fiscal 2020, $1.5 million in cash and 49,954 RSUs, each representing a right to receive one (1) Common Share, and 47,094 options to purchase Common Shares of the Corporation, and (ii) in fiscal 2021, 87,290 RSUs. Mr. Cammarata and the Company signed an amendment to the Cammarata Employment Agreement providing that Mr. Cammarata shall be issued an aggregate of 523,740 RSUs, including the 87,290 RSUs issued in fiscal 2021, in connection with this requirement. Subsequent to the end of fiscal 2021, the Company obtained the required directors' and officers' liability coverage.

Mr. Cammarata's employment may be terminated at any time and for any reason. If Mr. Cammarata's employment is terminated by the Company without Cause or by Mr. Cammarata for Good Reason, as those terms are defined in the Cammarata Employment Agreement, Mr. Cammarata will, subject to certain conditions, be entitled to (a) an amount equal to (i) 18 months of his then-current base salary; and (ii) one-half times his then current target bonus, payable in substantially equal installments for 18 months, (b) a pro-rated bonus equal to the then-current target bonus for the year in which Mr. Cammarata's employment was terminated, (c) a lump-sum payment equal to 18 months' premiums for health coverage, (d) the continued vesting of all of Mr. Cammarata's unvested equity awards for 18 months and the continued exercisability of all stock options for the remainder of their full term, and (e) continued eligibility for the LTIP Award for 18 months following the date of termination if the conditions of such LTIP Award is met in such period.

Upon a Change in Control (as such term is defined in the Equity Incentive Plan), Mr. Cammarata will be entitled to (a) payment of the LTIP award, if the condition to such award has been met based on the implied valuation under the Change in Control Transaction, and (b) (i) vesting of all unvested equity awards, and (ii) all stock options that have vested shall remain exercisable for the remainder of their full term, in any event only for equity awards that constitute deferred compensation within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended if the Change of Control constitutes a "change of control event" within the meaning of Treasury Regulation section 1.409A-3(i)(5)(i). In the event Mr. Cammarata's employment is terminated within 24 months following a Change in Control (as defined in the Equity Incentive Plan), Mr. Cammarata will be

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entitled to (a) an amount equal to the sum of (i) 24 months of his then-current base salary, (ii) two (2) times his then-current target bonus, and (iii) a pro-rated bonus equal to the then current target bonus for the year in which he is terminated, payable as a lump sum, and (b) a lump-sum payment equal to 18 months' premiums for health coverage.

#### Randy Weaver
The Company entered into an interim services agreement with CSuite Financial Partners ("CSuite") on September 23, 2021 (the "Weaver Services Agreement"), pursuant to which Mr. Weaver, a resource of CSuite, was engaged as Interim Chief Financial Officer of the Company. The Weaver Services Agreement provided that CSuite would be paid a monthly fee of $40,000 for the services, and that the Weaver Services Agreement could be terminated upon at least five days' written notice. Mr. Weaver's services were terminated as of July 25, 2022.

#### John S. Wirt
The Company entered into an agreement with Mr. Wirt on August 10, 2021 in connection with his appointment as Executive Vice President, Legal & Business Affairs (Chief Legal Officer and General Counsel) (the "Wirt Employment Agreement"). The Wirt Employment Agreement provided for an initial annual base salary of $600,000, an annual target bonus opportunity of approximately 75% of his base salary, subject to targets set by the board of directors, and an inducement grant of options to purchase 85,715 common shares of the Company. His employment agreement contains a 12 month post-employment non-compete and customer and employee non-solicit covenants.

Mr. Wirt's employment may be terminated at any time and for any reason. If Mr. Wirt's employment is terminated by the Company without Cause, as that term is defined in the Wirt Employment Agreement, Mr. Wirt will, subject to certain conditions, be entitled to (a) an amount equal to (i) 12 months of his then-current base salary; and (ii) any unpaid bonus for the immediately prior year, based on actual performance and payable when others are paid, and (b) reimbursement of COBRA premiums for health coverage. Upon a termination in anticipation of or on or following a "Change in Control", Mr. Wirt will be entitled to 18 months of his then-current base salary.

#### Toni Rinow
Effective as of November 15, 2021, we entered into a separation agreement (the "Separation Agreement") with Dr. Rinow in connection with her departure from the Company in her role as Chief Operating Officer of the Company. Pursuant to the Separation Agreement, Dr. Rinow was entitled to receive (i) an amount equal to 26 weeks of her base salary, payable as salary continuation over such period, (ii) reimbursement of the cost of private benefits coverage up to the earlier of 26 weeks or upon her acceptance of employment with another company and (iii) all accrued salary and vacation days. The Separation Agreement also contains a reaffirmation of Dr. Rinow's confidentiality and non-solicitation obligations to the Company and a general release of claims by Dr. Rinow.

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#### Outstanding Equity Awards at Fiscal Year End
The following table presents information regarding all outstanding common share awards and options to purchase common shares held by each of our named executive officers as of March 31, 2022.

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Option awards** | **Option awards** | **Option awards** | **Option awards** | **Option awards** | **Option awards** | **Share awards** | **Share awards** |
| **Name** | **Grant Date** | **Number of<br>securities<br>underlying<br>unexercised<br>options (#)<br>exercisable** | **Number of<br>securities<br>underlying<br>unexercised<br>options (#)**<br> **unexercisable** | **Number of<br>securities<br>underlying<br>unexercised<br>unearned<br>options<br>(#)** | **Option<br>exercise<br>price<br>per<br>share<br>($)** | **Option<br>expiration<br>date** | **Number<br>of<br>shares<br>or<br>units of<br>stock<br>that<br>have<br>not<br>vested<br>(#)** | **Market<br>value<br>of<br>shares<br>or<br>units of<br>stock<br>that<br>have not<br>vested<sup>(1)</sup><br>($)** |
|  Michael Cammarata | 7/8/2019<sup>(2)</sup> | 5239 | 477 |  | 155.05 | 7/8/2029 |  |  |
|  | 7/8/2019<sup>(3)</sup> | 21429 |  | 235715 | 155.05 | 7/8/2029 |  |  |
|  | 7/8/2019<sup>(2)</sup> |  |  |  |  |  | 6667 | 51336 |
|  | 12/16/2020<sup>(2)</sup> | 20674 | 26163 |  | 55.65 | 12/16/2030 |  |  |
|  Randy Weaver | 2/14/2022<sup>(4)</sup> |  | 14286 | 28572 | 10.50 | 2/14/2027 |  |  |
|  John S. Wirt | 8/13/2021<sup>(5)</sup> | 28572 | 57143 |  | 25.55 | 8/13/2026 |  |  |

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(1) Represents the market value of the unvested shares underlying the share awards as of March 31, 2022, based on the closing price of our common shares on such date, as reported on the Nasdaq Capital Market, which was $7.70 per share. These amounts do not reflect the actual economic value that will be realized by the named executive officer upon the vesting of the share awards or the sale of the common stock underlying such share awards.

(2) Vests in equal monthly installments over three years, subject to the terms, conditions and restrictions of the award agreement governing the grant.

(3) Vest in accordance with market-based performance criteria, subject to the terms, conditions and restrictions of the award agreement governing the grant.

(4) Vests (i) as to 14,286 common share options, in three equal annual installments over three years, and (ii) as to the remaining 28,572 common share options, following the achievement of certain performance criteria, each subject to the terms, conditions and restrictions of the award agreement governing the grants. The grant was canceled following Mr. Weaver's separation from the Company.

(5) Vests in equal annual installments over three years, with the first tranche vesting on the date of grant, subject to the terms, conditions and restrictions of the award agreement governing the grant.

#### Non-Employee Director Compensation
Effective July 21, 2021, our board of directors approved an amended non-employee director compensation policy. Pursuant to such policy, our non-employee directors were paid the following amounts for the year ended March 31, 2022 (prorated for service for a partial year): (i) CDN$100,000 per year to the chairperson of the board; (ii) CDN$50,000 per year to each other non-employee director; (iii) an additional CDN$10,000 per year to the chairperson of the each committee (other than the Audit Committee); (iv) an additional CDN$25,000 per year to the chairperson of the audit committee; and (iv) an additional CDN$10,000 per year to each member of a committee (per committee).

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The following table sets forth summary information concerning compensation paid or accrued to the members of our Board of Directors for services rendered to us for the fiscal year ended March 31, 2022.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name<sup>(1)</sup>** | **Fees<br>Earned<br>or Paid<br>in Cash<br>($)** | **Option<br>Awards<br>($)<sup>(2)</sup>** | **Stock<br>Awards<br>($)<sup>(2)(3)</sup>** | **All Other<br>Compensation<br>($)** | **Total<br>($)** |
|  Joseph Buaron | 67830 |  | 18841 | – | 86671 |
|  Michael De Geus | 35910 |  | 18841 | – | 54751 |
|  Ronald Denis | 60648 |  |  | – | 60648 |
|  John Moretz<sup>(4)</sup> | 127680 |  |  | – | 127680 |
|  Jane Pemberton<sup>(5)</sup> | 21945 |  |  | – | 21945 |
|  Frank Rochon<sup>(5)</sup> | 34912 |  |  | – | 34912 |
|  Richard Schottenfeld<sup>(6)</sup> | 7980 |  |  | – | 7980 |
|  Julie Phillips<sup>(7)</sup> | 61845 | 15329 | 18841 | – | 96015 |

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(1) Michael Cammarata, our President and Chief Executive Officer and one of our named executive officers, is not included in this table as he is an employee of ours and therefore receives no compensation for his service as a director. Mr. Cammarata's compensation is included in the section entitled "Summary Compensation Table" of this prospectus above. Philip Sanford joined our board of directors on May 19, 2022 and is therefore excluded from this table as he did not serve on our board of directors during fiscal 2022.

(2) The amounts in these columns represent the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 16 to our consolidated financial statements included in this prospectus. These amounts do not reflect the actual economic value that will be realized by the director upon the vesting of the awards or the sale of the common shares underlying such awards.

(3) Represents grants of deferred share units awarded on November 26, 2021 that vest in four equal tranches until August 26, 2022.

(4) Mr. Moretz resigned from our board of directors on February 10, 2022.

(5) Ms. Pemberton and Mr. Rochon ceased to be directors as of the 2021 annual shareholder meeting.

(6) Mr. Schottenfeld resigned from our board of directors on May 17, 2021.

(7) Ms. Phillips was elected to our board of directors at the 2021 annual shareholder meeting and was named Chair of the board of directors on February 10, 2022.

#### Compensation Committee Interlocks and Insider Participation
None of our executive officers serve, or have served during the last fiscal year, as a member of the board of directors, compensation committee, or other board committee performing equivalent functions of any other entity that has one or more executive officers serving as one of our directors or on our compensation committee.

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#### DESCRIPTION OF THE REGISTRANT'S SECURITIES TO BE REGISTERED

#### DESCRIPTION OF COMMON SHARES AND PREFERRED SHARES
The authorized share capital of the Company is comprised of an unlimited number of Common Shares and an unlimited number of Preferred Shares, issuable in one or more series. As permitted by the by-laws, in accordance with its articles of incorporation, the Company created the "Series A Preferred Shares", which are non-voting shares. The Company is offering an aggregate of 7,267,114 Common Shares, which underly the Warrants.

#### Common Shares
*Voting Rights* 

Each Common Share entitles its holder to receive notice of, and to attend and vote at, all annual or special meetings of the shareholders of the Company. Each Common Share entitles its holder to one vote at any meeting of the shareholders, other than meetings at which only the holders of a particular class or series of shares are entitled to vote due to statutory provisions or the specific attributes of this class or series.

*Dividends* 

Subject to the prior rights of the holders of Preferred Shares ranking before the Common Share as to dividends, the holders of Common Shares are entitled to receive dividends as declared by the board of directors of the Company from the Company's funds that are duly available for the payment of dividends.

*Winding-up and Dissolution* 

In the event of the Company's voluntary or involuntary winding-up or dissolution, or any other distribution of the Company's assets among its shareholders for the purposes of winding up its affairs, the holders of Common Shares shall be entitled to receive, after payment by the Company to the holders of Preferred Shares ranking prior to Common Shares regarding the distribution of the Company's assets in the case of winding-up or dissolution, share for share, the remainder of the property of the Company, with neither preference nor distinction.

The foregoing description of the terms of the Common Shares does not purport to be complete and is subject to and qualified in its entirety by reference to the articles and general by-laws of the Company, each of which is attached hereto as an exhibit.

#### Preferred Shares
The Preferred Shares carry no voting rights. Preferred Shares may be issued at any time, in one or more series. The Company's board of directors has the power to set the number of Preferred Shares and the consideration per share, as well as to determine the provisions attaching to each series of Preferred Shares (including dividends, redemption rights and conversion rights, where applicable). The shares in each series of Preferred Shares rank prior to the Common Shares of the Company with regard to payment of dividends, reimbursement of capital and division of assets in the event of the Company winding-up or dissolution. The holders of Preferred Shares shall not be entitled to receive notice of, or to attend or vote at the meetings of the shareholders, except: (i) in the event of a separate meeting or vote by class or by series as specified by law, (ii) where entitled to vote by class or series on amendments to the attributes attaching to the class or series, or (iii) where applicable, in the event of the Company's omission to pay the number of periodical dividends, whether consecutive or not, as applicable to any series.

The board of directors of the Company has passed a by-law creating the Series A Preferred Shares. Series A Preferred Shares may be issued only as part of an acquisition by the Company of other companies or material

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assets. Series A Preferred Shares are non-voting, and entitle holders thereof to a fixed, preferential and non-cumulative annual dividend of 5% of the amount paid for the said shares.

As of the date of this prospectus, there are no Preferred Shares outstanding.

The foregoing description of the terms of the Preferred Shares does not purport to be complete and is subject to and qualified in its entirety by reference to the articles and general by-laws of the Company, each of which is attached hereto as an exhibit.

#### Listing of Securities
Our Common Shares are listed on the Nasdaq under the symbol "NEPT."

#### Transfer Agent and Warrant Agent
The transfer agent for our Common Shares is Computershare Investor Services Inc.

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#### SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of January 24, 2023, with respect to the beneficial ownership of our common shares by:

• each of our directors;

• each of the named executive officers;

• all of our current directors and executive officers as a group; and

• each person, or group of affiliated persons, known to us to be the beneficial owner of more than five percent of our common shares.

The column entitled "Beneficial Ownership of Common Shares" is based on a total of 11,850,057 common shares outstanding as of January 24, 2023.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to our common stock. Common shares subject to options that are currently exercisable or exercisable within 60 days of January 24, 2023 are considered outstanding and beneficially owned by the person holding the options for the purpose of calculating the percentage ownership of that person but not for the purpose of calculating the percentage ownership of any other person. Except as otherwise noted, the persons and entities in this table have sole voting and investing power with respect to all of the shares of our common stock beneficially owned by them, subject to community property laws, where applicable. Unless otherwise indicated below, the address for each natural person listed below is care of Neptune Wellness Solutions Inc., 100-545 Promenade du Centropolis, Laval, Quebec H7T 0A3 Canada.

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| | | |
|:---|:---|:---|
|  | **Beneficial Ownership of<br>Common Shares** | **Beneficial Ownership of<br>Common Shares** |
|  | **Number of Shares** | **%** |
|  **Greater than 5% Shareholders:** |  |  |
|  Armistice Capital Master Fund Ltd<sup>(1)</sup> | 975295 | 7.8% |
|  Sabby Volatility Warrant Master Fund, Ltd.<sup>(2)</sup> | 1095913 | 8.7% |
|  Empery Asset Management, LP<sup>(3)</sup> | 989812 | 7.9% |
|  Shohaib Kassam Sumar<sup>(4)</sup> | 600000 | 5.1% |
|  **Named Executive Officers and Directors** |  |  |
|  Michael Cammarata<sup>(5)</sup> | 524973 | 4.2% |
|  Raymond Silcock<sup>(6)</sup> | 19048 | \* |
|  John S. Wirt<sup>(7)</sup> | 58099 | \* |
|  Joseph Buaron<sup>(8)</sup> | 2245 | \* |
|  Michael De Geus<sup>(9)</sup> | 2425 | \* |
|  Ronald Denis |  |  |
|  Julie Phillips<sup>(10)</sup> | 5449 | \* |
|  Philip Sanford<sup>(11)</sup> | 5618 | \* |
|  All current executive officers and directors as a group (8 persons) | 608333 | 4.8% |

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\* Denotes less than 1%. 

(1) Comprised of 975,295 common shares held directly (based upon information available to the Company as of October 31, 2022). The amounts presented exclude 5,608,375 common shares issuable upon exercise of warrants (the "Armistice Warrants") that are currently exercisable (based upon information available to the Company as of October 31, 2022). The Armistice Warrants provide that the holder may not exercise the warrants to the extent such exercise would cause the holder, together with its affiliates, to beneficially own a number of common shares which would exceed 4.99% of the then-outstanding common shares following such exercise, excluding for purposes of such determination common shares issuable upon exercise

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of the Armistice Warrants which have not been exercised. The address of this entity is c/o Armistice Capital, LLC, 510 Madison Avenue, 7th Floor New York, NY 10022. Steven Boyd has voting and dispositive power over the securities held by Armistice Capital Master Fund Ltd.

(2) Comprised of 1,095,913 common shares held directly (based upon information available to the Company as of January 9, 2023). The amounts presented exclude 2,910,594 common shares issuable upon exercise of warrants (the "Sabby Warrants") that are currently exercisable (based upon information available to the Company as of January 9, 2023). The Sabby Warrants provide that the holder may not exercise the warrants to the extent such exercise would cause the holder, together with its affiliates, to beneficially own a number of common shares which would exceed 4.99% of the then-outstanding common shares following such exercise, excluding for purposes of such determination shares of common stock issuable upon exercise of the Sabby Warrants which have not been exercised. Hal Mintz has voting and dispositive power over the securities held by Sabby Volatility Warrant Master Fund, Ltd.

(3) Based upon information available to the Company as of October 31, 2022, comprised of (i) 624,158 common shares held by Empery Asset Master Ltd., (ii) 154,207 common shares held by Empery Tax Efficient, LP, and (iii) 211,447 common shares held by Empery Tax Efficient III, LP. The amounts presented exclude all common shares issuable upon exercise of warrants held by Empery Asset Master Ltd., Empery Tax Efficient, LP and Empery Tax Efficient III, LP, which warrants provide that the holder may not exercise the warrants to the extent such exercise would cause the holder, together with its affiliates, to beneficially own a number of common shares which would exceed 4.99% of the then-outstanding common shares following such exercise, excluding for purposes of such determination shares of common stock issuable upon exercise of the warrants which have not been exercised. The address of these entities is c/o Empery Asset Management, LP, One Rockefeller Plaza, Suite 1205, New York City, NY 10020. Based upon information available to the Company as of October 31, 2022, Empery Asset Management LP is the authorized agent of each of Empery Asset Master Ltd., Empery Tax Efficient, LP and Empery Tax Efficient III, LP, has discretionary authority to vote and dispose of the securities held by each of these entities and may be deemed to be the beneficial owner of these securities. Martin Hoe and Ryan Lane, in their capacity as investment managers of Empery Asset Management LP, may also be deemed to have investment discretion and voting power over the securities held by each of Empery Asset Master Ltd., Empery Tax Efficient, LP and Empery Tax Efficient III, LP. Each of Empery Asset Master Ltd., Empery Tax Efficient, LP and Empery Tax Efficient III, LP, Martin Hoe and Ryan Lane disclaim any beneficial ownership of these securities.

(4) Based upon information contained in a Schedule 13D filed with the SEC on December 27, 2022 by Mr. Shohaib Kassam Sumar. The principal business address of the investor is 13100 Rock Canyon Road, Oklahoma City, OK 73142.

(5) Mr. Cammarata's holdings consist of (i) 462,510 common shares held directly, and (ii) 62,463 common shares issuable pursuant to common share options that are exercisable within 60 days after January 24, 2023.

(6) Mr. Silcock's holdings consist of 19,048 common shares issuable pursuant to common share options that are exercisable within 60 days after January 24, 2023.

(7) Mr. Wirt's holdings consist of (i) 956 common shares owned by John S. Wirt IRA and (ii) 57,143 common shares issuable pursuant to common share options that are exercisable within 60 days after January 24, 2023.

(8) Mr. Buaron's holdings consist of (i) 1,454 common shares issuable pursuant to deferred share units that will be vested within 60 days after January 24, 2023 and (ii) 791 common shares issuable pursuant to common share options that are exercisable within 60 days after January 24, 2023.

(9) Mr. De Geus' holdings consist of (i) 180 common shares held directly, (ii) 1,454 common shares issuable pursuant to deferred share units that will be vested within 60 days after January 24, 2023 and (iii) 791 common shares issuable pursuant to common share options that are exercisable within 60 days after January 24, 2023.

(10) Ms. Phillips' holdings consist of (i) 1,793 common shares held directly, (ii) 1,036 common shares issuable pursuant to deferred share units that will be vested within 60 days after January 24, 2023 and (iii) 2,620 common shares issuable pursuant to common share options that are exercisable within 60 days after January 24, 2023.

(11) Mr. Sanford's holdings consist of 5,618 common shares held directly.

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#### SELLING SHAREHOLDERS
This prospectus relates to the resale by the Selling Shareholders from time to time of up to 7,267,114 of our common shares. The Selling Shareholders may from time to time offer and sell any or all of the common shares set forth below pursuant to this prospectus and any accompanying prospectus supplement. As used in this prospectus, the term "Selling Shareholders" includes the persons listed in the table below, together with any additional selling shareholders listed in a subsequent amendment to this prospectus, and their pledgees, donees, transferees, assignees, successors, designees and others who later come to hold any of the Selling Shareholders' interests in the common shares, other than through a public sale.

Except as set forth in the footnotes below, the following table sets forth, based on written representations from the Selling Shareholders, certain information as of October 31, 2022 regarding the beneficial ownership of our common shares by the Selling Shareholders and the common shares being offered by the Selling Shareholders. The applicable percentage ownership of common shares is based on approximately 11,850,057 common shares outstanding as of January 24, 2023. Information with respect to common shares owned beneficially after the offering assumes the sale of all of the common shares registered hereby. The Selling Shareholders may offer and sell some, all or none of their common shares.

Except as set forth in the footnotes below, none of the Selling Shareholders has had a material relationship with us other than as a shareholder at any time within the past three years or has ever been an officer or director of one of our affiliates. Each of the Selling Shareholders has acquired (or will acquire) the common shares to be resold hereunder in the ordinary course of business and, at the time of acquisition, none of the Selling Shareholders was a party to any agreement or understanding, directly or indirectly, with any person to distribute the common shares to be resold by such Selling Shareholders under this Registration Statement of which this prospectus forms a part.

Since a Selling Shareholder may sell, some or none of the common shares that it holds that are covered by this prospectus, and because the offering contemplated by this prospectus is not underwritten, no estimate can be given as to the number of our common shares that will be held by Selling Shareholders upon the termination of the offering. The information set forth in the following table regarding the beneficial ownership after the resale of shares is based upon the assumption that the Selling Shareholders will sell all of the common shares covered by this prospectus.

We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us that Selling Shareholders have sole voting and investment power with respect to all common shares that they beneficially own, subject to applicable community property laws. Except as otherwise described below, based on the information provided to us by the Selling Shareholders, no Selling Shareholders is a broker-dealer or an affiliate of a broker dealer.

Under the terms of the warrants, a selling shareholder may not exercise the warrants to the extent such exercise would cause such selling shareholder, together with its affiliates and attribution parties, to beneficially own a number of common shares which would exceed 4.99%, as applicable, of our then outstanding common shares following such exercise, excluding for purposes of such determination common shares issuable upon exercise of such warrants which have not been exercised. The number of shares in the second and fourth columns do not reflect this limitation, but the percentages set forth in the fifth column do give effect to this limitation.

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Please see the section titled "*Plan of Distribution*" in this prospectus for further information regarding the Selling Shareholders' method of distributing these shares.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Shares Underlying the Warrants** | **Shares Underlying the Warrants** | **Shares Underlying the Warrants** | **Shares Underlying the Warrants** |
| **Name** | **Number<br>Beneficially<br>Owned<br>Prior to<br>Offering** | **Number<br>Registered<br>For Sale<br>Hereby** | **Number<br>Beneficially<br>Owned<br>After<br>Offering** | **Percent<br>Owned<br>After<br>Offering** |
|  Empery Asset Master, Ltd. | 1973004<sup>(1)</sup> | 1348846 | 624158 | 3.4% |
|  Empery Tax Efficient, LP | 487447<sup>(2)</sup> | 333240 | 154207 | \* |
|  Empery Tax Efficient III, LP | 668399<sup>(3)</sup> | 456952 | 211447 | 1.2% |
|  Sabby Volatility Warrant Master Fund, Ltd. | 910278<sup>(4)</sup> | 2139038 | 910278<sup>(5)</sup> | 5.0% |
|  Armistice Capital Master Fund Ltd. | 975295<sup>(6)</sup> | 2139038 | 975295<sup>(7)</sup> | 5.4% |
|  CCUR Holdings, Inc. | 484500<sup>(8)</sup> | 484500 |  |  |
|  Symbolic Logic, Inc. | 365500<sup>(9)</sup> | 365500 |  |  |

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\* Represents less than 1%. 

(1) Comprised of (i) 624,158 common shares held by Empery Asset Master Ltd. directly and (ii) 1,348,846 common shares issuable upon exercise of warrants held by Empery Asset Master, Ltd. (based upon information available to the Company as of October 31, 2022). The address of this entity is c/o Empery Asset Management, LP, One Rockefeller Plaza, Suite 1205, New York City, NY 10020. Based upon information available to the Company as of October 31, 2022, Empery Asset Management LP is the authorized agent of Empery Asset Master Ltd., has discretionary authority to vote and dispose of the securities held by this entity and may be deemed to be the beneficial owner of these securities. Martin Hoe and Ryan Lane, in their capacity as investment managers of Empery Asset Management LP, may also be deemed to have investment discretion and voting power over the securities held by Empery Asset Master Ltd. Empery Asset Master Ltd., Martin Hoe and Ryan Lane disclaim any beneficial ownership of these securities.

(2) Comprised of (i) 154,207 common shares held by Empery Tax Efficient, LP directly and (ii) 333,240 common shares issuable upon exercise of warrants held by Empery Tax Efficient, LP (based upon information available to the Company as of October 31, 2022). The address of this entity is c/o Empery Asset Management, LP, One Rockefeller Plaza, Suite 1205, New York City, NY 10020. Based upon information available to the Company as of October 31, 2022, Empery Asset Management LP is the authorized agent of Empery Tax Efficient, LP, has discretionary authority to vote and dispose of the securities held by this entity and may be deemed to be the beneficial owner of these securities. Martin Hoe and Ryan Lane, in their capacity as investment managers of Empery Tax Efficient, LP, may also be deemed to have investment discretion and voting power over the securities held by Empery Tax Efficient, LP. Empery Tax Efficient, LP, Martin Hoe and Ryan Lane disclaim any beneficial ownership of these securities.

(3) Comprised of (i) 211,447 common shares held by Empery Tax Efficient III, LP directly and (ii) 456,952 common shares issuable upon exercise of warrants held by Empery Tax Efficient III, LP (based upon information available to the Company as of October 31, 2022). The address of this entity is c/o Empery Asset Management, LP, One Rockefeller Plaza, Suite 1205, New York City, NY 10020. Based upon information available to the Company as of October 31, 2022, Empery Asset Management LP is the authorized agent of Empery Tax Efficient III, LP, has discretionary authority to vote and dispose of the securities held by this entity and may be deemed to be the beneficial owner of these securities. Martin Hoe and Ryan Lane, in their capacity as investment managers of Empery Tax Efficient III, LP, may also be deemed to have investment discretion and voting power over the securities held by Empery Tax Efficient III, LP. Empery Tax Efficient III, LP, Martin Hoe and Ryan Lane disclaim any beneficial ownership of these securities.

(4) Comprised of 910,278 common shares held directly (based upon information available to the Company as of January 9, 2023). The amounts presented exclude 3,111,802 common shares issuable upon exercise of

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warrants (the "Sabby Warrants") that are currently exercisable (based upon information available to the Company as of January 9, 2023). The Sabby Warrants provide that the holder may not exercise the warrants to the extent such exercise would cause the holder, together with its affiliates, to beneficially own a number of common shares which would exceed 4.99% of the then-outstanding common shares following such exercise, excluding for purposes of such determination shares of common stock issuable upon exercise of the Sabby Warrants which have not been exercised. Hal Mintz has voting and dispositive power over the securities held by Sabby Volatility Warrant Master Fund, Ltd. Includes 2,910,594 common shares underlying currently exercisable warrants. <br>

(5) Comprised of 910,278 common shares held directly (based upon information available to the Company as of January 9, 2023). The amounts presented exclude 3,111,802 common shares issuable upon exercise of the Sabby Warrants that are currently exercisable (based upon information available to the Company as of January 9, 2023).

(6) Comprised of 975,295 common shares held directly (based upon information available to the Company as of October 31, 2022). The amounts presented exclude 5,608,375 common shares issuable upon exercise of warrants (the "Armistice Warrants") that are currently exercisable (based upon information available to the Company as of October 31, 2022). The Armistice Warrants provide that the holder may not exercise the warrants to the extent such exercise would cause the holder, together with its affiliates, to beneficially own a number of common shares which would exceed 4.99% of the then-outstanding common shares following such exercise, excluding for purposes of such determination shares of common stock issuable upon exercise of the Armistice Warrants which have not been exercised. Steven Boyd has voting and dispositive power over the securities held by Armistice Capital Master Fund Ltd.

(7) Comprised of 975,295 common shares held directly (based upon information available to the Company as of October 31, 2022). The amounts presented exclude 3,469,337 common shares issuable upon exercise of Armistice Warrants that are currently exercisable (based upon information available to the Company as of October 31, 2022).

(8) Comprised of 484,500 common shares underlying January 2023 Warrants (based upon information available to the Company as of January 12, 2023). The January 2023 Warrants held by CCUR Holdings, Inc. provide that the holder may not exercise the warrants to the extent such exercise would cause the holder, together with its affiliates, to beneficially own a number of common shares which would exceed 4.99% of the then-outstanding common shares following such exercise, excluding for purposes of such determination common shares issuable upon exercise of the January 2023 Warrants which have not been exercised. Igor Volshteyn has voting and dispositive power over the securities held by CCUR Holdings, Inc.

(9) Comprised of 365,500 common shares underlying January 2023 Warrants (based upon information available to the Company as of January 12, 2023). The January 2023 Warrants held by Symbolic Logic, Inc. provide that the holder may not exercise the warrants to the extent such exercise would cause the holder, together with its affiliates, to beneficially own a number of common shares which would exceed 4.99% of the then-outstanding common shares following such exercise, excluding for purposes of such determination common shares issuable upon exercise of the January 2023 Warrants which have not been exercised. Igor Volshteyn has voting and dispositive power over the securities held by Symbolic Logic, Inc.

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#### PLAN OF DISTRIBUTION
We are registering 7,267,114 Common Shares underlying Warrants previously issued to the Selling Shareholders to permit the resale of these shares by the holders of such shares from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the Selling Shareholders of the Common Shares. We will bear all fees and expenses incident to our obligation to register the Common Shares.

The Selling Shareholders may sell all or a portion of the Common Shares beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the Common Shares are sold through underwriters or broker-dealers, the Selling Shareholders will be responsible for underwriting discounts or commissions or agent's commissions. The Common Shares may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. The Selling Shareholders will act independently of us in making decisions with respect to the timing, manner and size of each sale. These sales may be effected in transactions, which may involve crosses or block transactions:

• on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;

• in the over-the-counter market;

• in transactions otherwise than on these exchanges or systems or in the over-the-counter market;

• through the writing of options, whether such options are listed on an options exchange or otherwise;

• ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

• block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

• purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

• an exchange distribution in accordance with the rules of the applicable exchange;

• privately negotiated transactions;

• short sales;

• through the distribution of the Common Shares by any Selling Shareholders to its partners, members or shareholders;

• through one or more underwritten offerings on a firm commitment or best efforts basis;

• sales pursuant to Rule 144;

• broker-dealers may agree with the Selling Shareholders to sell a specified number of such shares at a stipulated price per share;

• a combination of any such methods of sale; and

• any other method permitted pursuant to applicable law.

If the Selling Shareholders effect such transactions by selling Common Shares to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the Selling Shareholders or commissions from purchasers of the Common Shares for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the Common Shares or otherwise, the Selling Shareholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Common Shares in the course of hedging in positions they assume. The Selling Shareholders

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may also sell Common Shares short and deliver Common Shares covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The Selling Shareholders may also loan or pledge Common Shares to broker-dealers that in turn may sell such shares.

The Selling Shareholders may pledge or grant a security interest in some or all of the Common Shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the Common Shares from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending, if necessary, the list of Selling Shareholders to include the pledgee, transferee or other successors in interest as Selling Shareholders under this prospectus. The Selling Shareholders also may transfer and donate the Common Shares in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

The Selling Shareholders and any broker-dealer participating in the distribution of the Common Shares may be deemed to be "underwriters" within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the Common Shares is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of Common Shares being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the Selling Shareholders and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers. The Selling Shareholders may indemnify any broker-dealer that participates in transactions involving the sale of the Common Shares against certain liabilities, including liabilities arising under the Securities Act.

Under the securities laws of some states, the Common Shares may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the Common Shares may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

There can be no assurance that any Selling Shareholder will sell any or all of the Common Shares registered pursuant to the Registration Statement of which this prospectus forms a part.

The Selling Shareholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934 and the rules and regulations thereunder, including, without limitation, Regulation M of the Securities Exchange Act of 1934, which may limit the timing of purchases and sales of any of the Common Shares by the Selling Shareholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the Common Shares to engage in market-making activities with respect to the Common Shares. All of the foregoing may affect the marketability of the Common Shares and the ability of any person or entity to engage in market-making activities with respect to the Common Shares.

We will pay all expenses of the registration of the Common Shares pursuant to the Registration Statement to which this prospectus forms a part; provided, however, that a Selling Shareholder will pay all underwriting discounts and selling commissions, if any. We will indemnify the Selling Shareholders against liabilities, including some liabilities under the Securities Act, in accordance with any registration rights agreement entered into between us and a Selling Shareholder, or the Selling Shareholders will be entitled to contribution. We may be indemnified by the Selling Shareholders against civil liabilities, including liabilities under the Securities Act, that may arise from any written information furnished to us by the Selling Shareholders specifically for use in this prospectus, in accordance with any registration rights agreement entered into between us and a Selling Shareholder, or we may be entitled to contribution.

Once sold under the Registration Statement of which this prospectus forms a part, the Common Shares will be freely tradable in the hands of persons other than our affiliates.

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#### LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for us by Osler, Hoskin & Harcourt LLP. Any underwriters or agents will be advised about other issues relating to the offering by counsel to be named in the applicable prospectus supplement.

#### EXPERTS
KPMG, an independent registered public accounting firm, audited the consolidated financial statements of Neptune as of March 31, 2022 and for the year ended March 31, 2022, which consolidated financial statements have been included herein and in the registration statement in reliance on the report of KPMG LLP, and upon the authority of said firm as experts in accounting and auditing. The audit report contains an explanatory paragraph that states there is substantial doubt about Neptune Wellness Solutions Inc.'s ability to continue as a going concern, including that it requires funding in the very near term in order to continue its operations and if it is unable to obtain funding in the upcoming days, it may have to liquidate its assets. The consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the going concern basis not be valid. The audit report also refers to the adoption of U.S. generally accepted accounting principles and change in its reporting currency from Canadian dollars to U.S. dollars.

The consolidated financial statements of Neptune as of March 31, 2021 and for the year ended March 31, 2021 appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, predecessor independent registered public accounting firm, as set forth in their report thereon (which contains an explanatory paragraph describing conditions that raise substantial doubt about Neptune's ability to continue as a going concern as described in Note 1 to the consolidated financial statements), included therein. Such consolidated financial statements are included herein in reliance upon such report given on the authority of such firm as experts in auditing and accounting.

#### WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-1, including exhibits, under the Securities Act of 1933, as amended, with respect to the securities offered by this prospectus. This prospectus does not contain all of the information included in the registration statement. For further information pertaining to us and our securities, you should refer to the Registration Statement/prospectus and our exhibits.

In addition, we file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public on a website maintained by the SEC located at www.sec.gov. We also maintain a website at www.promisneurosciences.com. Through our website, we make available, free of charge, annual, quarterly and current reports, proxy statements and other information as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained on, or that may be accessed through, our website is not part of, and is not incorporated into, this prospectus.

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NEPTUNE WELLNESS SOLUTIONS INC.

Consolidated Financial Statements

For the years ended March 31, 2022 and 2021

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| | |
|:---|:---|
| [Report of Independent Registered Public Accounting Firm (Auditor PCAOB Firm ID: 85)](#fin338720_1) | F-2 |
| [Report of Independent Registered Public Accounting Firm (Auditor PCAOB Firm ID: 1263)](#fin338720_2) | F-5 |
| [Consolidated Balance Sheets](#fin338720_3) | F-6 |
| [Consolidated Statements of Loss and Comprehensive Loss](#fin338720_4) | F-7 |
| [Consolidated Statements of Changes in Equity](#fin338720_5) | F-8 |
| [Consolidated Statements of Cash Flows](#fin338720_6) | F-10 |
| [Notes to Consolidated Financial Statements](#fin338720_7) | F-11 |

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Condensed Consolidated Interim Financial Statements

(Unaudited)

For the three and six month periods ended September 30, 2022 and 2021

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| | |
|:---|:---|
| [Condensed Consolidated Interim Balance Sheets](#fin338720_8) | F-62 |
| [Condensed Consolidated Interim Statements of Loss and Comprehensive Loss](#fin338720_9) | F-63 |
| [Condensed Consolidated Interim Statements of Changes in Equity](#fin338720_10) | F-64 |
| [Condensed Consolidated Interim Statements of Cash Flows](#fin338720_11) | F-68 |
| [Notes to Condensed Consolidated Financial Statements](#fin338720_12) | F-70 |

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#### **Table of Contents**
Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Neptune Wellness Solutions Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Neptune Wellness Solutions Inc. (the Corporation) as of March 31, 2022, the related consolidated statements of loss and comprehensive loss, changes in equity, and cash flows for the year ended March 31, 2022 and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Corporation as of March 31, 2022, and the results of its operations and its cash flows for the year ended March 31, 2022, in conformity with U.S. generally accepted accounting principles.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Corporation will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Corporation incurred a net loss and negative cash flows from operations for the year ended March 31, 2022, had an accumulated deficit at March 31, 2022 and has no committed sources of financing available. As of the date the financial statements are authorized for issuance, the cash balance is expected to be sufficient to operate the business for only the next two to three months under the current business plan. The Corporation requires funding in the very near term in order to continue its operations. If the Corporation is unable to obtain funding in the upcoming days, it may have to liquidate its assets. These conditions cast substantial doubt about the Corporation's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Change in Accounting Framework and Reporting Currency

As discussed in Note 2 to the consolidated financial statements, in the year ended March 31, 2022, the Corporation has retrospectively adopted U.S. generally accepted accounting principles. The financial statements were previously prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

As discussed in Note 2 to the consolidated financial statements, the Corporation has changed its reporting currency from Canadian dollars to U.S. dollars, which has been applied retrospectively.

Basis for Opinion

These consolidated financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Corporation is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Corporation's internal control over financial reporting. Accordingly, we express no such opinion.

------

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of goodwill and tradenames related to Sprout

As discussed in note 9 to the consolidated financial statements, the Corporation's tradenames intangible asset balance was $19,272,574 and the goodwill balance was $19,550,590 related to Sprout as of March 31, 2022. As discussed in note 3(k), the Corporation's long-lived assets, including amortizable tradename intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Corporation identified a trigger of impairment related to its long-lived assets and recorded an impairment charge of $1,527,000 for trademarks. The Corporation also assesses goodwill impairment annually in the fourth quarter. As part of the goodwill impairment test, the Corporation compared the carrying amount of the reporting unit to the fair value and recorded an impairment charge of $3,288,847. The fair value was determined using a discounted cash flow model and for goodwill, the Corporation also used the market multiples valuation approach. Significant assumptions used to estimate the fair values included the forecasted revenue, gross margins and net working capital investment, weighted average cost of capital and terminal value. For the goodwill impairment test, the market revenue multiple was also a significant assumption.

We identified the evaluation of tradenames and goodwill impairment analysis as a critical audit matter. Subjective auditor judgement was involved in evaluating the valuation models used and the significant assumptions used to determine the fair values. Minor changes to certain of the significant assumptions had a significant effect on the Corporation's estimate of the fair value. Additionally, the audit effort associated with the estimate requires specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter. We compared gross margins, working capital investment and revenue growth rates to historical actual results and to the Corporation's most recent plans. In addition, we involved valuation professionals with specialized skills and knowledge who assisted in:

• assessing the appropriateness of the valuation models used by the Corporation;

• comparing the discount rate used by the Corporation in the valuation to discount rate ranges that were independently developed using publicly available market data for comparable companies;

• comparing the terminal value used by the Corporation to economic growth forecast;

• assessing the appropriateness of the revenue market multiples used in the valuation model by comparing to multiples of publicly traded comparable companies.

------

Valuation of Canadian cannabis long-lived assets

As discussed in note 3(k) to the consolidated financial statements, long-lived assets, such as property plant and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. As discussed in note 7, the carrying value of the Canadian cannabis asset group as of March 31, 2022 was $20,290,929 which included the production facility land and building of $17,101,160 and equipment of $3,189,769. Indicators of impairment such as increased operating losses, decline in the share price and negative industry and economic trends were identified in the fourth quarter. The fair value of the asset group was determined to be less than the carrying value, resulting in an impairment loss of $3,150,663 to the building and components and $9,210,460 to the laboratory and plant equipment. The fair value of the asset group was determined using the market multiple valuation approach with the significant assumption of market revenue multiple. The fair value of the individual assets of land, building and equipment was determined using market prices for comparable asset.

We identified the evaluation of the fair value of the long-lived assets as a critical audit matter. Subjective auditor judgement was involved in evaluating the market revenue multiples and market prices for comparable assets.

The following are the primary procedures we performed to address this critical audit matter. We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating certain assumptions used in the fair value of the asset group and land, building and equipment. They did so by comparing (1) market revenue multiples used in evaluating the asset group to external market data for comparable businesses and (2) market prices to external market data for comparable assets.

/s/ KPMG LLP

We have served as the Corporation's auditor since 2021.

Montreal, Quebec

July 7, 2022

------

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of

Neptune Wellness Solutions Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Neptune Wellness Solutions Inc. (the Corporation) as of March 31, 2021, the related consolidated statements of loss and comprehensive loss, changes in equity and cash flows for the year ended March 31, 2021, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Corporation at March 31, 2021, and the results of its operations and its cash flows for the year ended March 31, 2021, in conformity with U.S. generally accepted accounting principles.

The Corporation's Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Corporation will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Corporation has suffered recurring losses from operations, has negative cash flows from operations, and has stated that substantial doubt exists about the Corporation's ability to continue as a going concern. Management's evaluation of the events and conditions and management's plans regarding these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on the Corporation's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Corporation is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Corporation's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Corporation's auditor from 2020 to 2021.

Montréal, Canada

July 7, 2022

------

NEPTUNE WELLNESS SOLUTIONS INC.

Consolidated Balance Sheets

(in U.S. dollars)

---

| | | | |
|:---|:---|:---|:---|
|  | Notes | As at<br>March 31,<br>2022 | As at<br>March 31,<br>2021 |
| Assets |  |  |  |
| Current assets: |  |  |  |
| Cash and cash equivalents |  | $8726341 | $59836889 |
| Short-term investment |  | 19255 | 19145 |
| Trade and other receivables | 5 | 7599584 | 8667209 |
| Prepaid expenses |  | 3983427 | 3686851 |
| Inventories | 6 | 17059406 | 17317423 |
| Total current assets |  | 37388013 | 89527517 |
| Property, plant and equipment | 7 | 21448123 | 37345716 |
| Operating lease right-of-use assets | 8 | 2295263 | 2899199 |
| Intangible assets | 9 | 21655035 | 25956830 |
| Goodwill | 9 | 22168288 | 25453372 |
| Marketable securities | 21 |  | 150000 |
| Other financial assets | 4 |  | 5615167 |
| Total assets |  | $104954722 | $186947801 |
| Liabilities and Equity |  |  |  |
| Current liabilities: |  |  |  |
| Trade and other payables | 10 | $22700849 | $19881995 |
| Current portion of operating lease liabilities | 8 | 641698 | 230016 |
| Deferred revenues |  | 285004 | 1989632 |
| Provisions | 11 | 1118613 | 2245658 |
| Liability related to warrants | 12 | 5570530 | 10462137 |
| Total current liabilities |  | 30316694 | 34809438 |
| Operating lease liabilities | 8 | 2063421 | 2886940 |
| Loans and borrowings | 13 | 11648320 | 11312959 |
| Other liability | 16(c) | 88688 | 393155 |
| Total liabilities |  | 44117123 | 49402492 |
| Shareholders' Equity: |  |  |  |
| Share capital—without par value (5,554,456 shares issued and outstanding as of March 31, 2022; 4,732,090 shares issued and outstanding as of March 31, 2021) | 14 | 317051125 | 306618482 |
| Warrants | 14(f) | 6079890 | 5900973 |
| Additional paid-in capital |  | 55980367 | 59625356 |
| Accumulated other comprehensive loss |  | (7814163) | (8567106) |
| Deficit |  | (323181697) | (248209952) |
| Total equity attributable to equity holders of the Corporation |  | 48115522 | 115367753 |
| Non-controlling interest | 15 | 12722077 | 22177556 |
| Total shareholders' equity |  | 60837599 | 137545309 |
| Commitments and contingencies | 22 |  |  |
| Subsequent events | 25 |  |  |
| Total liabilities and shareholders' equity |  | $104954722 | $186947801 |

---

See accompanying notes to the consolidated financial statements.

---

| | |
|:---|:---|
| On behalf of the Board: |  |
| /s/ Julie Philips | /s/ Michael Cammarata |
| Julie Philips | Michael Cammarata |
| Chairman of the Board | President and CEO |

---

------

NEPTUNE WELLNESS SOLUTIONS INC.

Consolidated Statements of Loss and Comprehensive Loss

(in U.S. dollars)

---

| | | | |
|:---|:---|:---|:---|
|  |  | Years ended | Years ended |
|  | Notes | March 31,<br>2022 | March 31,<br>2021 |
| Revenue from sales and services, net of excise taxes of $1,877,543 (2021—$38,056) |  | $47695828 | $34261647 |
| Royalty revenues |  | 1019861 | 1109678 |
| Other revenues |  | 81435 | 28994 |
| Total revenues | 23 | 48797124 | 35400319 |
| Cost of sales other than loss on inventories, net of subsidies of $924,644 (2021—$932,483) |  | (52561404) | (30964709) |
| Cost of services |  |  | (12846937) |
| Impairment loss on inventories | 6 | (3772066) | (18962254) |
| Total Cost of sales and services |  | (56333470) | (62773900) |
| Gross profit (loss) |  | (7536346) | (27373581) |
| Research and development expenses, net of tax credits and grants of nil (2021—$12,272) |  | (880151) | (1922195) |
| Selling, general and administrative expenses, net of subsidies of $99,840 (2021—$1,431,033) |  | (60538424) | (63824118) |
| Impairment loss related to intangible assets | 9 | (1527000) |  |
| Impairment loss related to property, plant and equipment | 7 | (14765582) | (10747692) |
| Impairment loss related to right-of-use assets |  |  | (107650) |
| Impairment loss related to goodwill | 9 | (3288847) | (26898016) |
| Net gain on sale of assets |  | 6469 |  |
| Loss from operating activities |  | (88529881) | (130873252) |
| Finance income | 17 | 7123 | 825745 |
| Finance costs | 17 | (2143978) | (1786781) |
| Foreign exchange loss |  | (685708) | (4051418) |
| Change in revaluation of marketable securities |  | (107203) | 169216 |
| Gain on revaluation of derivatives | 4, 12, 21 | 7035118 | 7974549 |
|  |  | 4105352 | 3131311 |
| Loss before income taxes |  | (84424529) | (127741941) |
| Income tax recovery | 18 |  | 3477711 |
| Net loss |  | (84424529) | (124264230) |
| Other comprehensive income |  |  |  |
| Net change in unrealized foreign currency gains on translation of net investments in foreign operations (tax effect of nil for both periods) |  | 750248 | 6737947 |
| Total other comprehensive income |  | 750248 | 6737947 |
| Total comprehensive loss |  | $(83674281) | $(117526283) |
| Net loss attributable to: |  |  |  |
| Equity holders of the Corporation |  | $(74971745) | $(123170020) |
| Non-controlling interest | 15 | (9452784) | (1094210) |
| Net loss |  | $(84424529) | $(124264230) |
| Total comprehensive loss attributable to: |  |  |  |
| Equity holders of the Corporation |  | $(74218802) | $(116206145) |
| Non-controlling interest |  | (9455479) | (1320138) |
| Total comprehensive loss |  | $(83674281) | $(117526283) |
| Basic and diluted loss per share attributable to: |  |  |  |
| Equity holders of the Corporation |  | $(15.54) | $(35.55) |
| Non-controlling interest |  | $(1.96) | $(0.32) |
| Total loss per share | 19 | $(17.50) | $(35.86) |
| Basic and diluted weighted average number of common shares |  | 4824336 | 3465059 |

---

See accompanying notes to the consolidated financial statements.

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NEPTUNE WELLNESS SOLUTIONS INC.

Consolidated Statements of Changes in Equity

(in U.S. dollars)

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | Share Capital | Share Capital | | | Accumulated<br>other<br>comprehensive<br>income (loss) | | | | |
|  | Notes | Number | Dollars | Warrants | Additional<br>paid-in<br>capital | Cumulative<br>translation<br>account | Deficit | Equity<br>attributable<br>to equity<br>holders of the<br>Corporation | Equity<br>attributable to<br>non-controlling<br>interest | Total |
| Balance as at March 31, 2021 |  | 4732090 | $306618482 | $5900973 | $59625356 | $(8567106) | $(248209952) | $115367753 | $22177556 | $137545309 |
| Net loss for the period |  |  |  | —&nbsp;&nbsp;&nbsp;&nbsp; |  |  | (74971745) | (74971745) | (9452784) | (84424529) |
| Other comprehensive income for the period |  |  |  |  |  | 752943 |  | 752943 | (2695) | 750248 |
| Total comprehensive loss for the period |  |  |  |  |  | 752943 | (74971745) | (74218802) | (9455479) | (83674281) |
| Transaction with equity holders recorded directly in equity |  |  |  |  |  |  |  |  |  |  |
| Contributions by and distribution to equity holders |  |  |  |  |  |  |  |  |  |  |
| Share-based payment | 16 |  |  |  | 7816845 |  |  | 7816845 |  | 7816845 |
| Warrants in exchange of services rendered by non-employees | 14(f) |  |  | 178917 |  |  |  | 178917 |  | 178917 |
| RSUs released, net of withholding taxes | 14(d), 16(b)(ii) | 108079 | 10050319 |  | (11461834) |  |  | (1411515) |  | (1411515) |
| Direct Offering, net of issuance costs | 14(h) | 714287 | 382324 |  |  |  |  | 382324 |  | 382324 |
| Total contributions by and distribution to equity holders |  | 822366 | 10432643 | 178917 | (3644989) |  |  | 6966571 |  | 6966571 |
| Balance as at March 31, 2022 |  | 5554456 | $317051125 | $6079890 | $55980367 | $(7814163) | $(323181697) | $48115522 | $12722077 | $60837599 |

---

See accompanying notes to the consolidated financial statements.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Consolidated Statements of Changes in Equity (Continued)

(in U.S. dollars)

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | Share Capital | Share Capital | | | Accumulated<br>other<br>comprehensive<br>income (loss) | | | | |
|  | Notes | Number | Dollars | Warrants | Additional<br>paid-in<br>capital | Cumulative<br>translation<br>account | Deficit | Equity<br>attributable to<br>equity holders<br>of the<br>Corporation | Equity<br>attributable to<br>non-controlling<br>interest | Total |
| Balance as at March 31, 2020 |  | 2838233 | $181970882 | $3997402 | $57565035 | $(15530981) | $(125039932) | $102962406 | $— | $102962406 |
| Net loss for the period |  |  |  |  |  |  | (123170020) | (123170020) | (1094210) | (124264230) |
| Other comprehensive income (loss) for the period |  |  |  |  |  | 6963875 |  | 6963875 | (225928) | 6737947 |
| Total comprehensive loss for the period |  |  |  |  |  | 6963875 | (123170020) | (116206145) | (1320138) | (117526283) |
| Transaction with equity holders recorded directly in equity |  |  |  |  |  |  |  |  |  |  |
| Contributions by and distribution to equity holders |  |  |  |  |  |  |  |  |  |  |
| Share-based payment | 16 |  |  |  | 9885138 |  |  | 9885138 |  | 9885138 |
| Warrants in exchange of services rendered by non-employees | 14(f) |  |  | 1903571 |  |  |  | 1903571 |  | 1903571 |
| Share options exercised | 14(b), 16(a) | 142909 | 10992879 |  | (3513919) |  |  | 7478960 |  | 7478960 |
| DSUs released | 14(c), 16(b)(i) | 1381 | 98093 |  | (98093) |  |  |  |  |  |
| RSUs released, net of withholding taxes | 14(d), 16(b)(ii) | 16414 | 3402824 |  | (4119959) |  |  | (717135) |  | (717135) |
| Restricted shares issued | 14(e), 16(b)(iii) | 850 | 92846 |  | (92846) |  |  |  |  |  |
| At-The-Market Offering, net of issuance costs | 14(g) | 154619 | 13069149 |  |  |  |  | 13069149 |  | 13069149 |
| Direct Offering, net of issuance costs | 14(h) | 136389 | 12017902 |  |  |  |  | 12017902 |  | 12017902 |
| Private Placement, net of issuance costs | 14(i) | 462963 | 21608448 |  |  |  |  | 21608448 |  | 21608448 |
| Business combinations | 4, 14(j) | 192617 | 17595505 |  |  |  |  | 17595505 | 23497694 | 41093199 |
| Registered Direct Offering Priced At-The-Market and Concurrent Private Placement, net of issuance costs | 14(k) | 785715 | 45769954 |  |  |  |  | 45769954 |  | 45769954 |
| Total contributions by and distribution to equity holders |  | 1893857 | 124647600 | 1903571 | 2060321 |  |  | 128611492 | 23497694 | 152109186 |
| Balance as at March 31, 2021 |  | 4732090 | $306618482 | $5900973 | $59625356 | $(8567106) | $(248209952) | $115367753 | $22177556 | $137545309 |

---

See accompanying notes to the consolidated financial statements.

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NEPTUNE WELLNESS SOLUTIONS INC.

Consolidated Statements of Cash Flows

(in U.S. dollars)

---

| | | | |
|:---|:---|:---|:---|
|  | | Years ended | Years ended |
|  | Notes | March 31,<br>2022 | March 31,<br>2021 |
| Cash flows from operating activities: |  |  |  |
| Net loss for the period |  | $(84424529) | $(124264230) |
| Adjustments: |  |  |  |
| Depreciation of property, plant and equipment |  | 2723751 | 3961317 |
| Non-cash lease expense |  | 710984 | 320669 |
| Amortization of intangible assets |  | 3356728 | 15100717 |
| Impairment loss on goodwill | 9 | 3288847 | 26898016 |
| Share-based payment | 16 | 7816845 | 9885138 |
| Impairment loss on inventories | 6 | 3772066 | 18962254 |
| Expected credit losses |  | 1675390 | 6995747 |
| Non-employee compensation related to warrants | 14(f) | 178917 | 1903571 |
| Net finance expense |  | 2136855 | 961036 |
| Unrealized foreign exchange gain |  | (117297) | (1794737) |
| Change in revaluation of marketable securities |  | 107203 | (169216) |
| Interest received |  | 8649 | 37911 |
| Interest paid |  | (970900) | (689574) |
| Revaluation of derivatives |  | (7035118) | (7974549) |
| Impairment loss on property, plant and equipment | 7 | 14765582 | 10747692 |
| Impairment loss on right-of-use assets |  |  | 107650 |
| Impairment loss on intangibles |  | 1527000 |  |
| Payment of lease liabilities |  | (703686) | (343064) |
| Income taxes expense (recovery) |  |  | (3477711) |
| Net loss from sale of property, plant and equipment |  |  | (2635) |
| Changes in operating assets and liabilities | 20 | (3163414) | (13811460) |
| Net cash used in operating activities |  | (54346127) | (56645458) |
| Cash flows from investing activities: |  |  |  |
| Maturity of previously restricted short-term investments |  |  | 9037 |
| Acquisition of a subsidiary, net of cash acquired | 4 |  | (3137242) |
| Acquisition of property, plant and equipment |  | (1938870) | (6618016) |
| Acquisition of intangible assets |  | (432714) | (389784) |
| Proceeds from sale of property, plant and equipment |  |  | 14503 |
| Sales of Acasti shares | 21 | 44360 |  |
| Net cash used in investing activities: |  | (2327224) | (10121502) |
| Cash flows from financing activities: |  |  |  |
| Repayment of loans and borrowings |  |  | (2457839) |
| Withholding taxes paid pursuant to the settlement of non-treasury RSUs |  | (1411515) | (717135) |
| Proceeds from the issuance of shares through an At-The-Market Offering | 14(g) |  | 13736868 |
| Proceeds from the issuance of shares and warrants through a Direct Offering | 14(h) | 8000000 | 12833713 |
| Proceeds from the issuance of shares and warrants through a Private Placement | 14(i) |  | 35300844 |
| Proceeds from the issuance of shares and warrants through a Registered Direct Offering Priced At-The-Market and Concurrent Private Placement | 14(k) |  | 55000000 |
| Issuance of shares and warrants costs | 14 | (636847) | (6174452) |
| Proceeds from exercise of options and pre-funded warrants | 14(b) | 650 | 7478960 |
| Net cash provided by financing activities: |  | 5952288 | 115000959 |
| Foreign exchange loss on cash and cash equivalents |  | (389485) | (185672) |
| Net increase (decrease) in cash and cash equivalents |  | (51110548) | 48048327 |
| Cash and cash equivalents, beginning of period |  | 59836889 | 11788562 |
| Cash and cash equivalents as at March 31, 2022 and 2021 |  | $8726341 | $59836889 |
| Cash and cash equivalents is comprised of: |  |  |  |
| Cash |  | $8726341 | $59836889 |

---

See accompanying notes to the consolidated financial statements.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

1. Reporting entity:

Neptune Wellness Solutions Inc. (the "Corporation" or "Neptune") is incorporated under the Business Corporations Act (Québec) (formerly Part 1A of the Companies Act (Québec)). The Corporation is domiciled in Canada and its registered office is located at 100-545 Promenade du Centropolis, Laval, Québec, with a 50,000 square-foot production facility located in Sherbrooke, Quebec and a 24,000 square-foot facility located in North Carolina. The consolidated financial statements of the Corporation comprise the Corporation and its subsidiaries, Biodroga Nutraceuticals Inc. ("Biodroga"), SugarLeaf Labs, Inc. ("SugarLeaf"), 9354-7537 Québec Inc., Neptune Holding USA, Inc., Neptune Health & Wellness Innovation, Inc., Neptune Forest, Inc., Neptune Care, Inc. (formerly known as Neptune Ocean, Inc.), Neptune Growth Ventures, Inc., 9418-1252 Québec Inc., Neptune Wellness Brands Canada, Inc. and Sprout Foods, Inc. ("Sprout").

Neptune is a diversified and fully integrated health and wellness company. Through its flagship consumer-facing brands, Neptune Wellness, Forest Remedies<sup>™</sup>, Biodroga, MaxSimil<sup>®</sup>, MoodRing<sup>™</sup>, PanHash<sup>™</sup>, Sprout<sup>®</sup>, Nosh<sup>®</sup> and NurturMe<sup>®</sup>, Neptune is redefining health and wellness by building a broad portfolio of natural, plant-based, sustainable and purpose-driven lifestyle brands and consumer packaged goods products in key health and wellness markets, including cannabis, hemp, nutraceuticals, organic baby food, personal care and home care.

Share consolidation

On June 9, 2022, Neptune announced the completion of the Corporation's proposed consolidation of its common shares (the "Common Shares") on the basis of one (1) post-consolidation Common Share for every thirty-five (35) pre-consolidation Common Shares (the "Share Consolidation"). The post-Share Consolidation Common Shares commenced trading on the NASDAQ and the TSX at the market open on June 13, 2022. The Share Consolidation reduced the number of Common Shares issued and outstanding from approximately 198 million Common Shares to approximately 5.7 million Common Shares as at June 13, 2022. These consolidated financial statements have been retrospectively adjusted to reflect the Share Consolidation. As a result, the number of common shares, options, deferred share units ("DSUs"), restricted share units ("RSUs"), restricted shares and warrants, issuance and exercise prices of options, DSUs, RSUs, restricted shares and warrants, loss per share reflect the Share Consolidation.

Going concern

These consolidated financial statements have been prepared on a going concern basis, which presumes that the Corporation will continue realizing its assets and discharging its liabilities in the normal course of business for the foreseeable future. The Corporation has incurred significant operating losses and negative cash flows from operations since inception. To date, the Corporation has financed its operations through the public offering and private placement of Common Shares, units consisting of Common Shares and warrants, and convertible debt, the proceeds from research grants and research tax credits, and the exercises of warrants, rights and options. For the year ended March 31, 2022, the Corporation incurred a net loss of $84.4 million and negative cash flows from operations of $54.3 million, and had an accumulated deficit of $323.2 million as at March 31, 2022. Furthermore, as at March 31, 2022, the Corporation's current liabilities and expected level of expenses for the next twelve months exceed cash on hand of $8.7 million. The Corporation currently has no committed sources of financing available.

As of the date these financial statements are authorized for issuance, the Corporation is required to actively manage its liquidity and expenses. The Corporation currently has minimal available cash balances. Payables

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

are now in excess of available cash balances and payments of payables are not being made as the amounts become due for certain suppliers. As of the date these financial statements are authorized for issuance, the cash balance is expected to be sufficient to operate the business for only the next two to three months under the current business plan. The Corporation requires funding in the very near term in order to continue its operations. If the Corporation is unable to obtain funding in the upcoming days, it may have to liquidate its assets.

These conditions cast substantial doubt about the Corporation's ability to continue as a going concern.

Going forward, the Corporation will seek additional financing in various forms as part of its plan to have the right funding structure in place. To achieve the objectives of its business plan, Neptune plans to raise the necessary funds through additional financings and the establishment of strategic alliances as well as additional research grants and research tax credits. While the Corporation has limited debt, all of which is subordinated, assets available for financing include real estate, accounts receivable and inventories. The ability of the Corporation to complete the needed financing and ultimately achieve profitable operations is dependent on a number of factors outside of the Corporation's control. The Corporation's business plan is dependent upon, amongst other things, its ability to achieve and maintain profitability, and continue to obtain adequate ongoing debt and/or equity financing with creditors, officers, directors and stakeholders to finance operations within and beyond the next twelve months.

While the Corporation has been successful in obtaining financing from public issuances, private placements, and related parties in the past, there is no certainty as to future financings.

Neptune announced on June 8, 2022 the intended divestiture of the cannabis business, which would include the sale of the Mood Ring<sup>™</sup> and PanHash<sup>™</sup> brands, along with the Corporation's Sherbrooke, Quebec facility, in one or more transactions. In order to accelerate its cost savings, the Corporation will focus on winding up its cannabis operations pending a transaction. This planned action is intended to provide significant cost savings and help maximize operational efficiencies. Finally, the exit of the Canadian cannabis business (see note 25) is expected to reduce the amount of financing the Corporation seeks and is expected to facilitate working with a broader set of financing sources.

On June 23, 2022, Neptune closed an offering with several institutional investors for the purchase and sale of an aggregate of 1,945,526 common shares (including common share equivalents) of the Corporation, and accompanying two series of warrants to purchase up to an aggregate of 2,591,052 common share warrants, at an offering price of $2.57 per share and accompanying warrants in a registered direct offering priced at-the-market under Nasdaq rules. The gross proceeds from the offering are $5 million, and the net proceeds are $4.3 million.

These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the going concern basis not be valid. These adjustments could be material.

2. Basis of preparation:

(a) Adoption of U.S. GAAP:

In the year ended March 31, 2022, the Corporation has retrospectively adopted United States generally accepted accounting principles ("US GAAP"). The consolidated financial statements of the Corporation have been prepared in accordance with US GAAP for all periods presented. Comparative figures, which were previously prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board, have been adjusted as required to be compliant with the Corporation's accounting policies under US GAAP.

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

(b) Functional and reporting currency:

Effective March 31, 2022, the Corporation has changed its reporting currency from Canadian dollars ("CAD") to U.S. dollars ("USD"). This change in reporting currency has been applied retrospectively such that all amounts in the consolidated financial statements of the Corporation and the accompanying notes thereto are expressed in U.S. dollars. References to "$" and "USD" are U.S dollars and references to "CAD $" and "CAD" are to Canadian dollars. For comparative purposes, historical consolidated financial statements were recast in U.S. dollars by translating assets and liabilities at the closing exchange rate in effect at the end of the respective period, revenues, expenses and cash flows at the average exchange rate in effect for the respective period and equity transactions at historical exchange rates. Translation gains and losses are included as part of the cumulative foreign currency translation adjustment, which is reported as a component of shareholders' equity under accumulated other comprehensive loss.

The assets and liabilities of foreign operations with a functional currency other than the U.S. dollar are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Revenue and expenses are translated at the monthly average exchange rates for the period. Differences arising from the exchange rate changes are recorded within foreign currency translation adjustments, a component of other comprehensive income (loss).

Transactions in foreign currencies are translated to the respective functional currencies of the Corporation's subsidiaries at the average exchange rates for the period. The monetary items denominated in currencies other than the functional currency of a subsidiary are translated at the exchange rates prevailing at the balance sheet date. Non-monetary items denominated in currencies other than the functional currency are translated at historical rates. Gains and losses resulting from re-measurement are recorded in the Corporation's consolidated statement of loss as foreign exchange gain (loss).

(c) Use of estimates:

The preparation of the consolidated financial statements in accordance with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from the estimates made by management.

Estimates are based on management's best knowledge of current events and actions that the Corporation may undertake in the future. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Estimates include the following:

• Estimating the write down of inventory;

• Estimating expected credit losses for receivables;

• Estimating the recoverable amount of non-financial assets, to determine and measure impairment losses on goodwill, intangibles, and property, plant and equipment;

• Estimating the lease term of contracts with extension options and termination options;

• Estimating the revenue from contracts with customers subject to variable consideration. For the year ended March 31, 2022, the Corporation revised its estimated provision for returns of the

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

cannabis sales as a result of new information and experience with sales returns. The impact of the revised estimate for year ended March 31, 2022 is a reduction of the provision of $1.1 million and an increase in revenue from sales and services; <br>

• Estimating the fair value of bonus, options and warrants that are based on market and non-market conditions (note 16);

• Estimating the fair value of the identifiable assets acquired, liabilities assumed, and consideration transferred of the acquired business, including the related contingent consideration and call option (note 4); and

• Estimating the litigation provision as it depends upon the outcome of proceedings (note 22).

3. Significant accounting policies:

(a) Basis of consolidation:

These consolidated financial statements include the accounts of the Corporation and its subsidiaries in which the Corporation has a controlling financial interest. All intercompany balances and transactions have been eliminated from the Corporation's consolidated financial statements. On February 10, 2021, Neptune acquired a 50.1% interest in Sprout Foods, Inc. ("Sprout" or "Sprout Foods"). The accounts of the subsidiary are included in the consolidated financial statements from that date.

(b) Business combinations and related goodwill:

Business combinations are accounted for using the acquisition method as at the acquisition date when control is transferred. The consideration transferred for the acquisition of a business is the fair value of the assets transferred, and any liability and equity interests issued by the Corporation to the former owners of the acquired business on the date control of the acquired company is obtained. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are generally measured initially at their fair values at the acquisition date. Restructuring, transaction costs other than those associated with the issue of debt or equity securities, and other direct costs of a business combination are not considered part of the business acquisition transaction and are expensed as incurred.

The Corporation measures goodwill as the fair value for the consideration transferred less the net recognized amount of the identifiable assets acquired and liabilities assumed, including the recognized amount of any non-controlling interest in the acquiree, all measured at the acquisition date.

(c) Derivative over its own equity:

The Corporation has issued liability-classified derivatives over its own equity and has a call option on the non-controlling interest of a subsidiary.

An embedded derivative is separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss.

Derivatives and separable embedded derivatives are recognized initially at fair value and attributable transaction costs are expensed as incurred. Subsequent to the initial recognition, derivatives and separable embedded derivatives are measured at fair value and all changes in the fair value are recognized in profit or loss, in the line item "Gain on revaluation of derivatives".

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

(d) Cash and cash equivalents:

The Corporation considers all highly liquid, short-term investments with original maturities of three months or less at the time of purchase to be cash equivalents. Cash equivalents consist of time deposits with a number of U.S. and non-U.S. commercial banks and money market fund investments.

(e) Investments:

Investments in equity investments in publicly traded companies in which the Corporation does not exercise significant influence are classified as available-for-sale securities. These securities are reported at fair values; based upon quoted market prices, and subsequent changes in the fair value are recognized in profit or loss, in the line item "Change in revaluation of marketable securities".

(f) Trade accounts receivable:

Trade accounts receivable consist of amounts due from normal business activities. An allowance for current expected credit losses is maintained to reflect credit risk for trade accounts receivable based on a current expected credit loss model which factors in changes in credit quality since the initial recognition of trade accounts receivable based on customer risk categories. Current expected credit losses also consider collection history and specific risks identified on a customer-by-customer basis. Trade accounts receivable are presented net of allowances for current expected credit losses.

(g) Inventories:

Inventories are measured at the lower of cost and net realizable value. The cost of finished goods, raw materials, supplies and spare parts is based on the weighted-average cost method. The cost of finished goods and work in progress includes expenditures incurred in acquiring the inventories, production or conversion costs, sub-contractor costs and other costs incurred in bringing them to their existing location and condition, as well as any appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

As necessary, the Corporation records write-downs for excess, slow moving and obsolete inventory. To determine these amounts, the Corporation regularly reviews inventory quantities on hand and compares them to estimates of historical utilization, future product demand, and production requirements.

Write-downs of inventories to net realizable value are recorded in cost of sales in the consolidated financial statements.

(h) Property, plant and equipment, net:

Property, plant and equipment are measured at historical cost less accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditures that are directly attributable to the acquisition of the asset, including all costs incurred in bringing the asset to its present location and condition.

Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.

Depreciation is calculated on the cost of an asset using either a straight-line basis or a declining basis over the estimated useful lives of each item of property, plant and equipment.

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

The estimated useful lives are as follows:

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| | | |
|:---|:---|:---|
| Asset | Method | Period/Rate |
| Building and building components | Straight-line | 20 to 40 years |
| Laboratory, and plant equipment | Straight-line | 10 to 20 years |
| Furniture and office equipment | Declining balance | 20% to 30% |
| Computer equipment | Straight-line | 2 to 5 years |

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(i) Goodwill and other Intangible assets:

(i) Initial recognition:

Goodwill represents the excess purchase price over the estimated fair value of net assets acquired in a business combination. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.

Intangible assets with finite lives are carried at cost less accumulated amortization and impairment losses, if any, and are amortized on a straight-line basis over the estimated useful life of the intangible asset. The estimated useful lives are as follows:

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| | | |
|:---|:---|:---|
| Asset | Method | Period/Rate |
| Customer relationships <sup>(1)</sup> | Straight-line | 10 years |
| Farmer relationships <sup>(1)</sup> | Straight-line | 3 years |
| License agreements | Straight-line | 31 months to 12 years |
| Website and trademarks | Straight-line | 4 years |
| Tradenames | Straight-line | 15 years |
| Computer software | Straight-line | 3 to 5 years |

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(1) During the year ended March 31, 2021, the amortization of customer relationships and farmer relationships, both related to SugarLeaf, was accelerated and those assets were then fully amortized.

(ii) Subsequent expenditure:

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures, including expenditure on internally generated goodwill and brands, are recognized in profit or loss as incurred.

(j) Research and development:

Research and development expenditures are expensed as incurred. These costs primarily consist of employees' salaries and benefits related to research and development activities, consultants that conduct the Corporation's clinical trials, independent auditors and consultants to perform investigation activities on behalf of the Corporation, clinical trial materials, stock-based compensation expense, and other non-clinical costs and regulatory approvals. Advance payments for goods and services that will be used in future research and development are recognized in prepaids or other assets and are expensed when the services are performed, or the goods are used.

(k) Impairment:

(i) Long-lived assets:

Long-lived assets, such as property, plant, and equipment, and finite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Corporation first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. Any impairment loss recognized is not reversed in future periods.

(ii) Goodwill:

Goodwill is assessed for impairment annually in the fourth quarter or more frequently if events or changes in circumstances indicate that the carrying value of a reporting unit more likely than not exceeds its fair value. Goodwill is tested for impairment at the reporting unit level, which is the operating segment, or a component, which is one level below that operating segment. Components are aggregated as a single reporting unit if they have similar economic characteristics.

Goodwill is tested for impairment when there is a triggering event indicating that the carrying amount may be impaired. When impairment indicators are identified, the Corporation compares the reporting unit's fair value to its carrying amount, including goodwill. An impairment loss is recognized as the difference, if any, between the reporting unit's carrying amount and its fair value, to the extent the difference does not exceed the total amount of goodwill allocated to the reporting unit. Any impairment loss recognized is not reversed in future periods.

For the purposes of annual impairment testing, the carrying amounts of goodwill are allocated to the reporting units. In conducting its annual impairment test, the Corporation first reviews qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Factors considered in a qualitative assessment include, among other things, macroeconomic conditions, industry and market considerations, financial performance of the respective reporting unit and other relevant entity and reporting-unit specific considerations. If factors indicate that the fair value of the reporting unit is less than its carrying amount, the Corporation performs a quantitative assessment. The fair value of the reporting unit is determined by analyzing scenarios of business projections and sensitivities attempting to model various assumptions as to how the revenues and cash flows of the business may evolve depending on factors including macroeconomic conditions, industry and market considerations, cost factors and overall financial performance specific to the reporting unit. The Corporation estimates the fair values of its reporting units based on discounted cash flow ("DCF") methodology reflecting the latest projections.

(l) Revenue:

The Corporation's revenue is comprised of sales of (i) nutraceutical products, (ii) cannabis and hemp products, (iii) food and beverages products, (iv) innovation products and (v) processing services. Payment terms are short-term in nature and are generally less than one year. In addition, if the good is transferred and payment is received within one year, the Company does not determine significant financing components.

Sale of products:

The Corporation's revenue-generating activities from the sale of products in the course of ordinary activities are recognized at a point in time when control of the products is transferred to the customer

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

and the Corporation's obligations have been fulfilled. The Corporation transfers control generally on shipment of the goods or in some cases, upon reception by the customer. Revenue is measured as the amount of consideration the Corporation expects to receive in exchange for the Corporation's product as specified in the customer contract. Certain of the Corporation's customer contracts, most notably those with the Canadian provincial and territorial agencies, may provide the customer with a right of return. In certain circumstances, the Corporation may also provide a retrospective price adjustment to a customer. These items give rise to variable consideration, which is recognized as a reduction of the transaction price based upon the expected amounts of the product returns and price adjustments at the time revenue for the corresponding product sale is recognized. The determination of the reduction of the transaction price for variable consideration requires that the Corporation make certain estimates and assumptions that affect the timing and amounts of revenue recognized. The Corporation estimates this variable consideration by taking into account factors such as historical information, current trends, forecasts, provincial and territorial inventory levels, availability of actual results and expectations of demand. The Corporation recognizes a liability for sales refunds within other current liabilities with a corresponding decrease in revenues. Furthermore, the Corporation recognizes an asset for the value of inventory which is expected to be returned within prepaid expenses and other assets on the consolidated balance sheets with a corresponding reduction of cost of sale.

Processing services:

The Corporation is involved in the extraction, purification and formulation of health and wellness products. Revenue earned on processing services is recognized as the services are rendered in accordance with contractual terms, recovery of the consideration is probable and the amount of revenue can be measured reliably. The Corporation recognizes revenue from processing services in proportion to the stage of completion of the service at the reporting date. The stage of completion is assessed based on surveys of work performed. All related production costs are expensed as incurred.

Royalty revenues:

Royalties are earned under the terms of the applicable agreement and are recognized when it is probable that the economic benefits associated with the transaction will be received and the amount can be measured reliably.

Principal versus agent arrangements:

The Corporation may be involved with other parties, including suppliers of products, in providing goods or services to a customer when it enters into revenue transactions for the sale of products that it does not manufacture. In these instances, the Corporation must determine whether it is a principal in these transactions by evaluating the nature of its promise to the customer. The Corporation is a principal and records revenue on a gross basis if it controls a promised good before transferring that good to the customer. On the other hand, the Corporation records revenue as the net amount when it does not meet the criteria to be considered a principal.

(m) Cost of revenue:

Cost of revenue includes all costs directly related to the manufacturing of products, including the cost of raw materials, direct labor, packaging, direct production costs, plant overhead, depreciation expense related to manufacturing and corresponding right-of-use assets. For manufacturing outsourced to third-party contractors, cost of revenue represents the amount invoiced by the contractors. Cost of revenue

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

also includes the costs relating to warehousing, maintenance, inspection activities, freight and inventory write-downs.

(n) Selling, general and administrative expenses:

Selling, general and administrative ("SG&A") expenses include selling and administrative personal costs, sales and marketing expenses, professional fees, depreciation expense related to non-manufacturing assets, operating lease rent expense, non-manufacturing overhead, gains and losses on the sale of property, plant and equipment, and other general and administrative expenses. Additionally, SG&A expenses include a portion of costs related to employee benefits, share-based compensation expense and amortization of customer relationships and other intangibles.

(o) Government grants:

Government grants, consisting of grants, subsidies and Quebec provincial investment tax credits, are recorded as a reduction of the related expense or cost of the asset acquired. Government grants are recognized when there is reasonable assurance that the Corporation has met or will meet the requirements of the approved grant program and there is reasonable assurance that the grant will be received.

Grants that compensate the Corporation for expenses incurred are recognized in profit or loss in reduction thereof on a systematic basis in the same years in which the expenses are recognized. Grants that compensate the Corporation for the cost of an asset are recognized in profit or loss on a systematic basis over the useful life of the asset.

(p) Leases:

The Corporation determines if an arrangement is or contains a lease at contract inception and classifies it as either an operating or finance lease. In addition to lease agreements, the Corporation reviews all material contracts that could contain an embedded lease for potential embedded lease obligations. The Corporation recognizes a right-of-use (ROU) asset and a lease liability at the lease commencement date.

The lease liability is recognized based on the present value of the remaining fixed or in-substance fixed lease payments discounted using the Corporation's incremental borrowing rates unless the lessor's rate implicit in the lease is readily determinable, in which case it is used. The Corporation uses a specific incremental borrowing rate for leases, which is determined based on the geography and term of the lease. These rates are determined based on inputs provided by external banks and updated periodically. The lease liability includes the exercise of a purchase option only if the Corporation is reasonably certain to exercise as of the commencement date of the lease. The residual value guarantee amount is only included in the lease liability calculation to the extent payment is probable to the lessor as of the commencement of the lease. The right-of-use ("ROU") asset is calculated based on the lease liability adjusted for any lease payments paid to the lessor at or before the commencement date (i.e., prepaid rent) and initial direct costs incurred by the Corporation and excluding any lease incentives received from the lessor.

Variable lease payments that do not depend on an index or a specified rate are not included in the measurement of lease liabilities but instead are recognized as expenses in the period in which the event or condition that triggers the payment occurs.

The lease term for purposes of lease accounting may include options to extend or terminate the lease when it is reasonably certain that the Corporation will exercise that option as of the commencement date of the lease. For operating leases, the lease expense is recognized on a straight-line basis over the

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

lease term as rent expense. For finance leases, the Corporation amortizes the ROU asset on a straight-line basis and records interest expense on the lease liability created at lease commencement over the lease term.

After the commencement date, the carrying amount of lease liabilities is increased to reflect the accretion of interest and reduced to reflect lease payments made. In addition, the carrying amount of lease liabilities is remeasured when there is a change in future lease payments arising from a change in an index or specified rate, if there is a modification to the lease terms and conditions, a change in the estimate of the amount expected to be payable under residual value guarantee, or if the Corporation changes its assessment of whether it will exercise a termination, extension or purchase option. The re-measurement amount of the lease liabilities is recognized as an adjustment to the right-of-use asset, or in the consolidated statement of loss when the carrying amount of the right-of-use asset is reduced to zero.

Leases with an initial term of twelve months or less are not recorded on the consolidated balance sheets; the Corporation recognizes lease expense for these leases over their lease term.

(q) Share-based payment:

The Corporation offers a stock option plan, which is further described in Note 16, Share-based payments.

For equity-settled awards, the grant date fair value of share-based payment awards is recognized as an expense, with a corresponding increase in equity, over the applicable vesting period of the awards. The grant date fair value takes into consideration market performance conditions when applicable. The Corporation has elected to record awards that vest on multiple instalments as multiple awards, otherwise referred to as graded vesting. For performance-based options issued, the fair value of the instrument is measured at the grant date and expensed over the vesting term when the performance targets are considered probable of being achieved. The Corporation also elected to adjust the amount recognized as an expense to reflect the number of awards for which the related service and non-market performance vesting conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

Equity based awards, consisting of RSUs, DSUs and cash bonus based on the price of the Corporation common share price, are initially measured based on the fair value of the share-based payment awards at grant date. The cash bonus is remeasured at the end of each reporting period, until settlement.

The fair value of the share-based payment transactions is measured using the Black-Scholes model. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on the historical volatility), weighted average expected life of the instruments (based on contractual life, tranche vesting term and general option holder behavior), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions, if any, are not taken into account in determining fair value. Certain instruments have a market condition considered in the determination of the fair value of the award. The fair value of those awards considers the market condition and is determined generally using a Monte Carlo simulation model.

(r) Income tax:

Income taxes are comprised of current and deferred taxes. These taxes are accounted for using the liability method. Current tax is recognized in connection with income for tax purposes, unrealized tax

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

benefits and the recovery of tax paid in a prior period and measured using the enacted tax rates and laws applicable to the taxation period during which the income for tax purposes arose.

Deferred tax is recognized on the difference between the carrying amount of an asset or a liability, as reflected in the financial statements, and the corresponding tax base, used in the computation of income for tax purposes (temporary differences) and measured using the enacted tax rates and laws as at the balance sheet date that are expected to apply to the income that the Corporation expects to arise for tax purposes in the period during which the difference is expected to reverse. Management assesses the likelihood that a deferred tax asset will be realized, and a valuation allowance is provided to the extent that it is more likely than not that all or a portion of a deferred tax asset will not be realized. The determination of both current and deferred taxes reflects the Corporation's interpretation of the relevant tax rules and judgement.

An unrealized tax benefit may arise in connection with a period that has not yet been reviewed by the relevant tax authority. A change in the recognition or measurement of an unrealized tax benefit is reflected in the period during which the change occurs.

Income taxes are recognized in the consolidated statement of loss, except when they relate to an item that is recognized in other comprehensive income (loss) or directly in equity, in which case, the taxes are also recognized in other comprehensive income (loss) or directly in equity respectively. Where income taxes arise from the initial accounting for a business combination, these are included in the accounting for the business combination.

Interest and penalties in respect of income taxes are not recognized in the consolidated statement of loss as a component of income taxes but as a component of interest expense.

(s) Net earnings or loss per share:

Basic net earnings or loss per share is calculated by dividing the profit or loss attributable to common shareholders of the Corporation by the weighted average number of common shares outstanding during the period. Diluted net earnings or loss per share is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding, adjusted for own shares held, for the effects of all dilutive potential common shares, which comprise warrants, share options, deferred share units, restricted share units and restricted shares granted to employees and directors.

(t) New standards and interpretations not yet adopted:

Accounting pronouncements not yet adopted

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which amends ASC Topic 848, Reference Rate Reform. This ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. This new guidance is optional and may be elected over time through December 31, 2022 as reference rate reform activities occur. This new guidance is not expected to have a material impact on the Corporation's consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which amends ASC Subtopic 470-20, Debt with Conversion and Other Options and ASC Subtopic 815-40, Derivatives and Hedging – Contracts in Entity's Own Equity. The ASU simplifies the accounting for convertible instruments by reducing the number of

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

accounting models for convertible debt instruments and convertible preferred stock. In addition, the ASU enhances information transparency by making targeted improvements to the disclosures for convertible instruments and earnings-per-share guidance and amends the guidance for the derivatives scope exception for contracts in an entity's own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2021. Management has not yet evaluated the impact of this ASU on the consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends ASC Topic 805, Business Combinations, The ASU improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the (1) recognition of an acquired contract liability and (2) payment terms and their direct effect on subsequent revenue recognized by the acquirer. ASU 2021-08 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2022. Management has not yet evaluated the impact of this ASU on the consolidated financial statements.

The Corporation does not intend to early adopt any of the above amendments.

4. Business combination:

The Corporation had no business acquisitions for the year ended March 31, 2022. The Corporation acquired the following business for the year ended March 31, 2021:

(a) Acquisition of a controlling interest in Sprout Foods:

On February 10, 2021, Neptune acquired a 50.1% equity interest in Sprout Foods, Inc. ("Sprout" or "Sprout Foods"). Through Sprout Foods, Neptune entered a new market: the organic baby food market. Sprout is committed to offering products that contain whole foods, no preservatives, no concentrates, no added sugar, are USDA certified organic and are non-GMO. Sprout's products target four markets: Stage 2 (children 6 months and up), Stage 3 (children 8 months and up), Toddler (children aged 12 months and up) and Snacks (children 8 months and up).

Upon the acquisition of 50.1% of the outstanding equity of Sprout in February 2021, the Corporation assessed its control of Sprout through its exposure and rights to variable returns from its involvement with Sprout and its ability to affect those returns through its power over Sprout. The former controlling shareholder retained a participation of 39.7% and is a minority representative through the execution of their voting power on Sprout's Board of Directors, as long as it holds more than half of its current investment. Based on the contractual terms of the acquisition agreement, the Corporation assessed that the voting rights in Sprout, in combination with its majority representation on the Board of Directors, are the dominant factors in deciding who controls Sprout. Therefore, Sprout is consolidated in the Corporation's consolidated financial statements

The transaction consideration includes a cash payment of $6,000,000 and the issuance of 192,617 Neptune common shares (or 6,741,573 pre-consolidation shares) having a value of $17,595,505.

Additionally, Neptune is guaranteeing a $10,000,000 note issued by Sprout in favor of Morgan Stanley Expansion Capital ("MSEC").

Furthermore, Sprout's other equity interest owners granted Neptune a call option (the "Call Option") to purchase the remaining 49.9% outstanding equity interests of Sprout, at any time beginning on January 1, 2023 and ending on December 31, 2023. The total consideration payable for the additional

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

shares ("Call Shares") upon the exercise of the Call Option and the closing of Neptune's acquisition of the Call Shares would be equal to the total equity value of the Call Shares, which would be based upon the applicable percentage acquired by Neptune of the total enterprise value for Sprout.

As at the close of the transaction, the value of the asset related to the Call Option was determined to be $5,523,255, representing the difference between the market price and the contract value of the Call Option, discounted at a rate of 8.9% and assuming the transaction would take place on January 1, 2023. To establish the market price, the multiples selected were 2.3x for revenues and 12.0x for EBITDA, based on analysis of average and median industry multiples, and were adjusted to consider a 20% discount; the multiples to be used as per the contract are 3.0x for revenues and 15.0x for EBITDA, weighted at 50%. As at March 31, 2022, the fair value of the asset was remeasured to nil (2021 – $5,615,167), generating a loss on re-measurement of $5,598,198 (2021 – gain of $83,428) accounted under revaluation of derivatives for the year ended on that date.

The cash consideration of this transaction was funded with the proceeds of the previous issuances of shares.

The allocation of the purchase price was based on management's estimate of the fair values of the acquired identifiable assets and assumed liabilities using valuation techniques including income, cost and market approaches (Level 3). The Corporation utilized both the cost and market approaches to value fixed assets, which consider external transactions and other comparable transactions, estimated replacement and reproduction costs, and estimated useful lives and consideration for physical, functional and economic obsolescence. We utilized the income approach to value intangible assets, which considers the present value of the net cash flows expected to be generated by the intangible assets, and excluding cash flows related to contributory assets.

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

The following table summarizes the final purchase price allocation of the Sprout Foods assets acquired and liabilities assumed at the acquisition date

---

| | |
|:---|:---|
|  | Fair value recognized<br>on acquisition |
| Assets acquired |  |
| Cash and cash equivalents | $2862758 |
| Trade receivables | 2062773 |
| Inventories | 7705273 |
| Prepaid expenses and other current assets | 178229 |
| Property and equipment | 140619 |
| Right-of-use asset | 892472 |
| Tradenames | 22364000 |
| Other assets | 5550279 |
|  | 41756403 |
| Liabilities assumed |  |
| Trade and other payables | $5163813 |
| Lease liability | 892472 |
| Promissory note | 11446356 |
|  | 17502641 |
| Total identifiable net assets at fair value | 24253762 |
| Non-controlling interest measured at fair value (49.9%) | (23497694) |
| Goodwill arising on acquisition | 22839437 |
| Purchase price | $23595505 |
| Consist of: |  |
| Cash | $6000000 |
| Common shares issued, at fair value | 17595505 |
| Total consideration | $23595505 |

---

---

| | |
|:---|:---|
| Note: | As part of the acquisition of Sprout, net deferred tax assets of $15,251,439 were acquired for which a full valuation allowance was recognized. |

---

The pending inquiries and potential findings described under note 22(b)(ii) could result in material litigation and may have a material adverse effect on Sprout's business, financial condition, or results of operations.

From the date of acquisition to March 31, 2021, Sprout Foods has contributed $2,403,074 to the total revenues from sales and services and a net loss of $2,192,805 to the consolidated loss from operating activities.

The following unaudited pro forma information for the years ended March 31, 2021, represents the results of operations of the Corporation as if the acquisition of Sprout Foods had occurred on April 1, 2020. This pro forma information does not purport to be indicative of the results that would have occurred for the periods presented or that may be expected in the future.

---

| | |
|:---|:---|
| (unaudited) | March 31,<br>2021 |
| Total revenues | 53823888 |
| Net loss | (150267710) |

---

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

Acquisition-related costs for the year ended March 31, 2021 of $314,122 have been excluded from the consideration transferred and have been recognized as an expense within selling, general and administrative expenses in the consolidated statement of loss.

The gross amount of the trade accounts receivable amount to $3,826,350 of which $1,763,577 was expected to be uncollectible at the acquisition date.

The goodwill recognized in connection with this acquisition is primarily attributable to synergies with existing business, and other intangibles that do not qualify for separate recognition including assembled workforce. Goodwill and intangible assets are not deductible for income tax purposes.

5. Trade and other receivables:

---

| | | |
|:---|:---|:---|
|  | March 31,<br>2022 | March 31,<br>2021 |
| Trade receivables | $6987865 | $6099627 |
| Sales taxes receivable | 497824 | 740201 |
| Accrued and other receivables | 47985 | 547039 |
| Tax credits receivable | 14487 |  |
| Grants and subsidies receivables | 51423 | 1280342 |
|  | $7599584 | $8667209 |

---

Wage and rent subsidies related to the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS) were recorded during the year ended March 31, 2022 in the amount of $1,024,484 with $51,423 receivable as at March 31, 2022 (2021 – $2,363,516 and $1,280,342 respectively). This has been recorded in cost of goods sold and selling, general and administrative expenses, against the related salary and rent expenses, in the amounts of $924,644 and $99,840, respectively, compared to $932,483 and $1,431,033 for the previous year.

The aging of trade receivable balances and the allowance for doubtful accounts as at March 31, 2022 and 2021 were as follows:

---

| | | |
|:---|:---|:---|
|  | March 31,<br>2022 | March 31,<br>2021 |
| Current | $4898533 | $2372855 |
| Past due 0-30 days | 909643 | 1002752 |
| Past due 31-120 days | 423836 | 1001901 |
| Past due over 121 days | 10388106 | 9637609 |
| Trade receivables | 16620118 | 14015117 |
| Less expected credit loss | (9632253) | (7915490) |
|  | $6987865 | $6099627 |

---

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

The movement in expected credit loss in respect of trade receivables was as follows:

---

| | | |
|:---|:---|:---|
|  | March 31,<br>2022 | March 31,<br>2021 |
| Balance, beginning of year | $7915490 | $514595 |
| Bad debt expenses | 2505738 | 7339626 |
| Foreign exchange loss | 41373 | 405148 |
| Recoveries collected | (830348) | (343879) |
| Balance, end of year | $9632253 | $7915490 |

---

Credit risk is the risk of a loss if a customer or counterparty to a financial asset fails to meet its contractual obligations, and arises primarily from the Corporation's trade receivables. The Corporation may also have credit risk relating to cash and cash equivalents and short-term investments, which are managed by dealing only with highly-rated Canadian institutions. The carrying amount of these financial assets, as disclosed in the consolidated statements of financial position, represents the Corporation's credit exposure at the reporting date. The Corporation's trade receivables and credit exposure fluctuate throughout the year. The Corporation's average trade receivables and credit exposure during the year may be higher than the balance at the end of that reporting period.

As at March 31, 2022, no customers accounted for more than 10% of total trade receivables included in trade and other receivables. As at March 31, 2021, one customer accounted for 23.3% of total trade accounts included in trade and other receivables.

Most of the Corporation's customers are distributors for a given territory and are privately-held, provincially owned and publicly owned companies. The profile and credit quality of the Corporation's customers vary significantly. Adverse changes in a customer's financial position could cause the Corporation to limit or discontinue conducting business with that customer, require the Corporation to assume more credit risk relating to that customer's future purchases or result in uncollectible accounts receivable from that customer. Such changes could have a material adverse effect on business, consolidated results of operations, financial condition and cash flows.

The Corporation's extension of credit to customers involves judgment and is based on an evaluation of each customer's financial condition and payment history. From time to time, the Corporation will temporarily transact with customers on a prepayment basis where circumstances warrant. The Corporation's credit controls and processes cannot eliminate credit risk.

During the year ended March 31, 2022, the Corporation transacted with a few new customers, for which financial positions deteriorated during the year. The Corporation has recorded specific provisions related to these customers.

6. Inventories:

---

| | | |
|:---|:---|:---|
|  | March 31,<br>2022 | March 31,<br>2021 |
| Raw materials | $7920190 | $6917716 |
| Work in progress | 1016916 | 5912935 |
| Finished goods | 7974690 | 3455365 |
| Supplies and spare parts | 147610 | 1031407 |
|  | $17059406 | $17317423 |

---

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

During the years ended March 31, 2022 and 2021, inventories have been reduced by $3,772,066 and $18,962,254 respectively, as a result of a write-down to their net realizable value, which is included in cost of sales.

7. Property, plant and equipment:

The Corporation's property, plant and equipment balances consisted of the following:

---

| | | |
|:---|:---|:---|
|  | Years ended | Years ended |
|  | March 31,<br>2022 | March 31,<br>2021 |
| Land | $182831 | $182001 |
| Building and building components | 27226065 | 26499100 |
| Laboratory and plant equipment | 37372148 | 36583756 |
| Furniture and office equipment | 597075 | 539648 |
| Computer equipment | 878101 | 692855 |
| Total | $66256220 | $64497360 |
| Less: Accumulated depreciation and impairment loss | (44808097) | (27151644) |
|  | $21448123 | $37345716 |

---

Depreciation expense has been recorded in the following accounts in the consolidated statements of loss:

---

| | | |
|:---|:---|:---|
|  | Years ended | Years ended |
|  | March 31,<br>2022 | March 31,<br>2021 |
| Cost of sales | $1902214 | $2442208 |
| Selling, general and administrative expenses | 821537 | 1519109 |
|  | $2723751 | $3961317 |

---

As of March 31, 2022, the Corporation identified a trigger of impairment related to its Canadian cannabis asset group and recorded an impairment charge of $12,361,123. Impairment indicators such as increased operating losses, decline in the share price and negative industry and economic trends were identified in the fourth quarter. The fair value of the asset group was determined to be less than the carrying value, resulting in an impairment loss of $3,150,663 of the building and components and $9,210,460 to the laboratory and plant equipment. After impairment, the carrying value of the Canadian cannabis asset group as of March 31, 2022 was $20,290,929 which included the production facility land and building of $17,101,160 and equipment of $3,189,769. The fair value of the asset group was determined using the market multiple valuation approach with the significant assumption of market revenue multiple. The fair value of the individual assets of land, building and equipment was determined using market prices for comparable asset (level 3).

During the quarter ended September 30, 2021, the Corporation impaired the equipment of the Canadian cannabis long-lived assets that were subject to impairment write downs as of March 31, 2021. As at September 30, 2021, the fair value of these long-lived assets was established to be nil and as such an impairment charge of $1,424,517 was recorded.

During the quarter ended September 30, 2021, the Corporation impaired the long-lived assets of the Sugarleaf reporting unit as they were no longer generating economic benefits. The fair value of these long-lived assets was established to be nil and as such an impairment charge of $979,942 was recorded.

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

As of March 31, 2021, as result of Neptune's transition into the Consumer Packaged Good ("CPG") industry, the Corporation tested its property, plant and equipment related to its cannabis processing business for impairment. As of March 31, 2021, certain equipment with a carrying value of $10,689,806 were no longer expected to be used. The fair value was estimated to $1,475,880 based on comparable transactions and market data (level 3). Consequently, an impairment loss of $9,213,926 was recognized as at March 31, 2021 on the consolidated statement of loss and comprehensive loss, under impairment loss related to property, plant and equipment.

During the year ended March 31, 2021, the Corporation also impaired $1,533,766 of property, plant, and equipment related to the SugarLeaf reporting unit (refer to note 9). Subsequent to the impairment, the Corporation revised the useful life of certain plant equipment and as a result, an amount of $951,540 of accelerated amortization for these property, plant and equipment was recorded.

8. Leases:

The Corporation has operating leases for a variety of different assets, which include land, and buildings and certain manufacturing and office equipment.

The operating lease costs, included within cost of sales and general and administrative expenses amounted to $710,984 (2021 – $320,669).

During the year ended March 31, 2021, the Corporation entered into the following significant operating leases:

In January 2021, the Corporation entered into a new building lease and recorded a right-of-use asset and a lease liability of $1,350,240. Annual payments start at $168,267 and end at $219,540. The lease term is 10 years, which includes the initial lease term of 5 years and a renewal option of 5 years that is reasonably certain to be exercised.

In February 2021, the Corporation entered into a new building lease and recorded a right-of-use asset and a lease liability of $892,472. Annual payments start at $192,772 and end at $225,153. The initial lease term expires in November 2025. There is one renewal option of 5 years that is not reasonably certain to be exercised.

Additional information related to operating leases was as follows:

The following table summarizes the lease liabilities amounts recognized in the consolidated balance sheets:

---

| | | |
|:---|:---|:---|
|  | March 31,<br>2022 | March 31,<br>2021 |
| Current | $641698 | $230016 |
| Non-current | 2063421 | 2886940 |
| Total | $2705119 | $3116956 |

---

The following table summarizes the movements in cash and non-cash flows from operating leases:

---

| | | |
|:---|:---|:---|
|  | Years ended | Years ended |
|  | March 31,<br>2022 | March 31,<br>2021 |
| Operating cash flow payments for operating lease liabilities | $(25201) | $(36445) |
| Operating cash inflow payments for sublease classified as operating lease | 61166 | 21320 |
| Operating leases from business combination |  | 892472 |
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | 275840 | 1282743 |

---

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

The Corporation has calculated the weighted-average remaining lease term, presented in years below, and the weighted-average discount rate for the operating lease population. The Corporation uses the incremental borrowing rate as the lease discount rate, unless the lessor's rate implicit in the lease is readily determinable, in which case it is used.

---

| | | |
|:---|:---|:---|
|  | March 31,<br>2022 | March 31,<br>2021 |
| Weighted-average remaining operating lease term (in years) | 6.34 | 5.38 |
| Weighted-average operating lease discount rate | 5.69% | 6.12% |

---

(a) Maturity analysis – contractual undiscounted cash flows:

---

| | |
|:---|:---|
|  | March 31,<br>2022 |
| 2023 | $753444 |
| 2024 | 575223 |
| 2025 | 457263 |
| 2026 | 340263 |
| 2027 | 194593 |
| 2028 and thereafter | 878569 |
| Total lease liabilities payments | $3199355 |
| Less: Imputed interest | (494236) |
| Total operating lease liabilities | $2705119 |

---

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

9. Intangible assets and goodwill:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| As at March 31, 2022 | Cost | Accumulated<br>amortization | Accumulated<br>impairment<br>losses | Net | Weighted<br>remaining<br>average useful<br>life (in years) |
| Customer relationships | 11127771 | (9896889) |  | 1230882 | 4.75 |
| Farmer relationships | 10446700 | (10446700) |  |  |  |
| Patents | 288541 | (288541) |  |  |  |
| License agreements | 4088843 | (3050053) |  | 1038790 | 3.79 |
| Website and trademarks | 529441 | (457836) |  | 71605 | 1.00 |
| Computer software | 710525 | (669341) |  | 41184 | 0.25 |
| Tradenames | 22504329 | (1704755) | (1527000) | 19272574 | 14.00 |
| Intangible assets | $49696150 | $(26514115) | $(1527000) | $21655035 | 7.73 |
| Goodwill | $127442658 | $— | $(105274370) | $22168288 | N/A |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| As at March 31, 2021 | Cost | Accumulated<br>amortization | Accumulated<br>impairment<br>losses | Net | Weighted<br>remaining<br>average useful<br>life (in years) |
| Customer relationships | 11077278 | (9525598) |  | 1551680 | 5.75 |
| Farmer relationships | 10399298 | (10399298) |  |  |  |
| Patents | 287231 | (287231) |  |  |  |
| License agreements | 4070290 | (2309950) |  | 1760340 | 4.79 |
| Website and trademarks | 95221 | (24554) |  | 70667 | 2.00 |
| Computer software | 707301 | (297006) |  | 410295 | 1.25 |
| Tradenames | 22364201 | (200353) |  | 22163848 | 15.00 |
| Intangible assets | $49000820 | $(23043990) | $— | $25956830 | 8.57 |
| Goodwill | $126864388 | $— | $(101411016) | $25453372 | N/A |

---

Amortization expense has been recorded in the following accounts in the consolidated statement of loss:

---

| | | |
|:---|:---|:---|
|  | Years ended | Years ended |
|  | March 31,<br>2022 | March 31,<br>2021 |
| Cost of sales | $582096 | $901856 |
| Selling, general and administrative expenses | 2774632 | 14198861 |
|  | $3356728 | $15100717 |

---

The estimated aggregate amortization expense related to intangible assets with finite useful life for each of the next five fiscal years is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | 2023 | 2024 | 2025 | 2026 | 2027 |
| Estimated aggregate amortization expense | $2514571 | $2442943 | $2442943 | $2342144 | $2032939 |

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------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

Goodwill as of March 31, 2022 and March 31, 2021 was as follows:

---

| | | |
|:---|:---|:---|
|  | Notes | Goodwill |
| Balance as at March 31, 2020 |  | $30104661 |
| Business acquisition | 4 | 22839437 |
| Impairment loss |  | (26898016) |
| Effect of movements in exchange rates |  | (592710) |
| Balance as at March 31, 2021 |  | 25453372 |
| Impairment loss |  | (3288847) |
| Effect of movements in exchange rates |  | 3763 |
| Balance as at March 31, 2022 |  | $22168288 |

---

An impairment test of goodwill is performed on an annual basis, or more frequently if an impairment indicator is triggered. Impairment is determined by assessing the recoverable amount of the reporting unit to which goodwill is allocated and comparing it to the reporting units' carrying amount. For the purpose of impairment testing, this represents the lowest level within the Corporation at which the goodwill is monitored for internal management purposes.

The aggregate amount of goodwill is allocated to each reporting unit as follows:

---

| | | |
|:---|:---|:---|
|  | March 31,<br>2022 | March 31,<br>2021 |
| Biodroga | $2617698 | $2613935 |
| Sprout | 19550590 | 22839437 |
|  | $22168288 | $25453372 |

---

(a) Annual impairment testing of Biodroga:

The Corporation performed its annual impairment testing of the Biodroga goodwill as at March 31, 2022 and 2021. The fair value of the Biodroga reporting unit's operations was determined to be higher than the carrying value and resulted in no impairment of goodwill recorded in the year ended March 31, 2022 and March 31, 2021.

The fair value of the reporting unit was estimated using discounted cash flow model with a WACC pre-tax discount rate of 15.175% (2021 – 12.13%) and also used the market multiples valuation approach. The discount rate represents the WACC for comparable companies operating in similar industries as the reporting unit, based on publicly available information. Determination of the WACC requires separate analysis of the cost of equity and debt, and considers a risk premium based on an assessment of risks related to the projected cash flows of the reporting unit. We believe these assumptions are consistent with the assumptions that a hypothetical marketplace participant would use.

Cash flows were projected based on past experience, actual operating results and the three-year business plan including a terminal growth rate of 2.5% (2021 – 2.5%).

The most significant assumptions used to estimate the fair values using discounted cash flow model included the forecasted revenue, gross margins, net working capital investment, terminal value as well as the discount rate. These significant assumptions are classified as Level 3 in the fair value hierarchy, signifying that they are not based on observable market data. A decrease in the projected cash flow or an increase in discount rate could have resulted in an impairment charge. Should these projections not be realized, an impairment loss may be needed in future periods. As at March 31, 2022, the

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

assumptions used in determining the fair value were not subject to a degree of uncertainty that would have caused impairment to be recorded as there was sufficient headroom between the fair value of the reporting unit and its carrying value.

These significant assumptions are classified as Level 3 in the fair value hierarchy, signifying that they are not based on observable market data. The model is particularly sensitive to the future expected cash flows in the upcoming periods, should these not be realized, an impairment loss may be needed in future periods.

(b) Accelerated amortization and impairment of SugarLeaf Labs:

During the year ended March 31, 2021, the downturn in oil prices for cannabis persisted (as was the case for the previous year), and the commercial viability of the SugarLeaf reporting unit was reviewed. Management noted that the customers for which a customer relationship intangible asset was acquired with the SugarLeaf reporting unit had ceased placing orders and there were minimal active business relationships with these customers. As the reporting unit was no longer viable given declining pricing and demand, the Corporation would not benefit from these relationships and thus decided to take accelerated amortization for this intangible asset, in the amount of $5,803,135 during the year ended March 31, 2021.

Also, Neptune was not producing or selling any products resulting from the farmer relationships acquired with the SugarLeaf reporting unit. Furthermore, SugarLeaf did not have any contracts with customers and there was no commercial viability to these supplier relationships with the farmers. Neptune will not realize future economic benefits from these relationships and thus, Management decided to take accelerated amortization for this intangible asset, in the amount of $4,749,174 during the year ended March 31, 2021.

Amortization charges are recorded in selling, general and administrative expenses.

As a result of the above events, Management determined there were impairment indicators during the quarter ended December 31, 2020 and performed an impairment test of the SugarLeaf reporting unit, for which the fair value of goodwill of the SugarLeaf reporting unit was estimated at $6.0 million, which resulted in an impairment of goodwill of $26,898,016. Management also tested other long-lived assets for impairment and consequently, Neptune recorded an impairment loss on property, plant and equipment and right-of-use assets in the amount of $1,533,766 and $107,650 respectively, during the year ended March 31, 2021.

Fair value was determined using the market approach using Level 3 inputs. Significant assumptions used in determining the fair value were the revenue of the SugarLeaf reporting unit and revenue multiples derived from comparable company transactions.

During the year ended March 31, 2022, negative industry and economic trends were identified in the second quarter. The fair value of the asset group was determined to be less than the carrying value, resulting in an impairment loss of $2,323,062 to other long-lived assets. The fair value of the asset group was determined using market multiple valuation approach with the significant assumption of market revenue multiple. The fair value of the individual assets of land, building and equipment was determined using market prices for comparable asset.

(c) Impairment testing of Sprout:

The Corporation performed an annual impairment testing of the Sprout goodwill in the fourth quarter. The Corporation compared the carrying amount of the reporting unit to the fair value. The fair value of the Sprout reporting unit was determined to be lower than the carrying value and $3,288,847 goodwill impairment expense was recorded in the year ended March 31, 2022.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

The fair value of the reporting unit was estimated using a discounted cash flow model with a WACC pre-tax discount rate of 9.4% and also used the market multiples valuation approach. The discount rate represents the WACC for comparable companies operating in similar industries as the reporting unit, based on publicly available information. Determination of the WACC requires separate analysis of the cost of equity and debt, and considers a risk premium based on an assessment of risks related to the projected cash flows of the reporting unit.

Cash flows

were projected based on past experience, actual operating results and the three-year business plan including a terminal growth rate of 3%.

The Corporation also identified a trigger of impairment related to its long-lived assets and recorded an impairment charge of $1,527,000 for trademarks. The fair value was determined using a discounted cash flow model.

The most significant assumptions used to estimate the fair values using discounted cash flow model included the forecasted revenue, gross margins, net working capital investment, terminal value as well as the discount rate. These significant assumptions are classified as Level 3 in the fair value hierarchy, signifying that they are not based on observable market data. A decrease in the projected cash flow or an increase in discount rate could have resulted in an impairment charge. Should these projections not be realized, an impairment loss may be needed in future periods. Due to the impairment losses recorded in the fourth quarter of fiscal 2022, there is no headroom between the fair value of the reporting unit and its carrying value and therefore, changes in assumptions in future periods may result in additional impairment charges.

The assumptions used by the Corporation in the cash flow forecast discounting model are classified as Level 3 in the fair value hierarchy, signifying that they are not based on observable market data. The model is particularly sensitive to the future expected cash flows in the upcoming periods, should these not be realized, an impairment loss may be needed in future periods.

10. Trade and other payables:

---

| | | |
|:---|:---|:---|
|  | March 31,<br>2022 | March 31,<br>2021 |
| Trade payables | $10667780 | $12154734 |
| Accrued liabilities and other payables | 11211335 | 5841675 |
| Employee salaries and benefits payable | 576826 | 1750375 |
| Short-term portion of long-term payables | 244908 | 135211 |
|  | $22700849 | $19881995 |

---

11. Provisions

(a) During the year ended March 31, 2019, the Corporation received a judgment from the Superior Court of Québec (the "Court") in respect of certain royalty payments alleged to be owed and owing to a former chief executive officer of the Corporation (the "Former CEO") pursuant to the terms of an agreement entered into on February 23, 2001 between Neptune and the Former CEO (the "Royalty Agreement"). The Corporation appealed the judgment which was dismissed by the Court of Appeal of Québec in February 2021. Under the terms of the Royalty Agreement and as maintained by the court, annual royalties of 1 % of the sales and other revenue made by the Corporation on a consolidated basis are payable by the Corporation to the Former CEO biannually, but only to the extent that the cost of the

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

royalty would not cause the Corporation to have a loss before interest, taxes and amortization (in which case, the payments would be deferred to the following fiscal year).

As of

March 31, 2022, a provision of $362,809 (March 31, 2021 - $1,489,854) has been recorded by the Corporation. During the current fiscal year, the Corporation increased the provision by $626,914, recorded foreign currency translation adjustments of $4,122 and made payments totaling $1,758,081 to the Former CEO in relation to this provision. During the prior fiscal year, the Corporation increased the provision by $571,619, recorded foreign currency translation adjustments of $124,818 and made no payments to the Former CEO in relation to this provision.

(b) In September 2020, Neptune submitted a claim and demand for arbitration against Peter M. Galloway and PMGSL Holdings, LLC (collectively "PMGSL") in accordance with the SugarLeaf Asset Purchase Agreement ("APA") dated May 9, 2019 between Neptune, PMGSL, Peter M. Galloway and Neptune Holding USA, Inc. Separately, PMGSL submitted a claim and demand for arbitration against Neptune. The Neptune claims and PMGSL claims have been consolidated into a single arbitration and each are related to the purchase by Neptune of substantially all of the assets of the predecessor entities of PMGSL Holdings, LLC. Neptune is claiming, among other things, breach of contract and negligent misrepresentation by PMGSL in connection with the APA and is seeking, among other things, equitable restitution and any and all damages recoverable under law. PMGSL is claiming, among other things, breach of contract by Neptune and is seeking, among other things, payment of certain compensation contemplated by the APA. A merit hearing in the arbitration started in April 2022 with a further week of testimony starting August 1, 2022. On June 15, 2022, a one-day hearing took place on Neptune's motion to enforce a settlement agreement reached on April 2021 (which was repudiated by PMGSL in June 2021). Final oral argument is scheduled for July 7, 2022, after which the arbitrator will issue a decision on whether the settlement is enforceable. While Neptune believes there is no merit to the claims brought by PMGSL, a judgment in favor of PMGSL may have a material adverse effect on our business and Neptune intends to continue vigorously defending itself. Based on currently available information, a provision of $600,000 has been recognized for this case as at March 31, 2022 ($600,000 as at March 31, 2021).

(c) A supplier of cannabis initiated a lawsuit against 9354-7537 Quebec Inc. (operating as Neptune Wellness Solutions, Inc.) ("Neptune") for breach of a Wholesale Cannabis Supply Agreement (the "Supply Agreement") for the purchase of cannabis trim. The purchased trim was rejected by Neptune due to quality concerns. The supplier refused to refund the purchase price and ultimately sued Neptune for breach of the Supply Agreement. The matter proceeded to trial in November 2021, and on March 23, 2022, an arbitrator entered an arbitration award against Neptune for the full purchase price of the trim. With fees and costs, the final arbitrator's award entered against Neptune is of $1,127,024, plus applicable interest. A provision of $1,127,024 has been recognized in trade and other payables.

(d) On November 15, 2021, the Corporation announced restructuring initiatives. These initiatives resulted in immediate reductions in personnel and a severance charge of $850,799 and was paid before year-end.

(e) As at March 31, 2022, the Corporation has various additional other provisions for legal obligations for an aggregate amount of $155,804 (March 31, 2021 – $155,804).

12. Liability related to warrants:

During the years ended March 31, 2022 and 2021, the Corporation issued common share, pre-funded warrants and warrants as part of its financing arrangements which are exercisable for a variable number of

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

shares. Common shares and pre-funded warrants are classified as equity. Warrants are classified as liabilities rather than equity.

On March 14, 2022, Neptune issued a total of 185,715 pre-funded warrants ("Pre-Funded Warrants"), along with 528,572 common shares of the Corporation , as part of a registered direct offering ("Direct Offering"), and with each Pre-Funded Warrant, which qualified as equity, exercisable for one Common Share. The common shares and the Pre-Funded Warrants were sold together with 714,286 Series A Warrants (the "Series A Warrants") to purchase up to an aggregate of 714,286 common shares, and with 714,286 Series B Warrants (the "Series B Warrants" and collectively with the Series A Warrants, the "Common Warrants") to purchase up to another aggregate of 714,286 common shares. Each common share and Pre-Funded Warrants and the accompanying Common Warrants were sold together at a combined offering price of $11.20, for aggregate gross proceeds of $8.0 million before deducting fees and other estimated offering expenses. The Pre-Funded Warrants are funded in full at closing except for a nominal exercise price of $0.0035 and are exercisable commencing on the Closing Date and will terminate when such Pre-Funded Warrants are exercised in full. The Series A Warrants have an exercise price of $11.20 per share and are exercisable six months after the closing date and will expire five and a half years from the date of issuance. The Series B Warrants have an exercise price of $11.20 per share and are exercisable six months after the closing date and expire 18 months from the date of issuance.

Proceeds of the Direct Offering were allocated between common shares and warrants first by allocating proceeds to the warrants classified as a liability and measured at fair value each period with changes in fair value recorded in the income statement based on their fair value and then allocating the residual to the equity instruments, which includes the Pre-Funded Warrants. The fair value of the liability-classified warrants was determined using the Black-Scholes model, resulting in an initial warrant liability of $4,757,559 for the Series A Warrants and $2,857,755 for the Series B Warrants. The residual amount of $306,868 and $107,818 was then allocated to the Common Share and Pre-Funded Warrants on a relative fair value basis. The Pre-Funded Warrants were exercised in full on March 30, 2022 for gross proceeds of $650.

The Series A Warrants and Series B Warrants liability was determined using the Black-Scholes model. Series A Warrants and Series B Warrants are revalued each period-end at fair value through profit and loss in "gain on revaluation of derivatives". The change in fair value of the warrant liability between the issuance date and the end of the fiscal year was a decrease of $1,572,299.

During the previous fiscal year, on October 22, 2020, Neptune issued a total of 300,926 warrants ("2020 Warrants") with an exercise price of $78.75 expiring on October 22, 2025. The warrants, issued as part of the Private Placement entered into on October 20, 2020 (see note 14 (i)), are exercisable beginning anytime on or after April 22, 2021 until October 22, 2025. Proceeds were allocated between common shares and warrants first by allocating proceeds to the warrants classified as liability and measured at fair value and then allocating the residual to the equity instruments. The fair value of the warrants was determined using the Black-Scholes model, resulting in an initial warrant liability of $11,831,000. The residual amount of $23,169,000 was then allocated to the Common Share. Warrants are revalued each period-end at fair value through profit and loss. The change in fair value of this warrant liability for the twelve-month period ended March 31, 2022 was a decrease of $5,877,802 (2021—a decrease of $5,893,160).

On February 19, 2021, the Corporation issued 196,429 warrants ("2021 Warrants") with an exercise price of $78.75 expiring on August 19, 2026. The warrants, issued as part of a Registered Direct Offering entered into on February 17, 2021 (see note 14(f)(ii)), are exercisable beginning anytime on or after August 19, 2021 until August 19, 2026. Proceeds were allocated between common shares and first by allocating proceeds to the warrants classified as liability and measured at fair value with changes in fair value recorded in the income statement based on their fair value and then allocating the residual to the equity instruments.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

The fair value of the warrants was determined using the Black-Scholes model, resulting in an initial warrant liability of $6,288,998. The residual amount of $48,711,002 was then allocated to the Common Shares. Warrants are revalued each period-end at fair value through profit and loss. The change in fair value of this warrant liability for the twelve-month period ended March 31, 2022 was a decrease of $3,990,948 (2021 -1,976,093).

Changes in the value of the liability related to the warrants for the years ended March 31, 2022 and 2021 were as follows:

---

| | | |
|:---|:---|:---|
|  | Warrants | Amount |
| Outstanding as at March 31, 2020 |  | $— |
| Warrants issued during the year | 497355 | 18119998 |
| Revaluation |  | (7869253) |
| Movements in exchange rates |  | 211392 |
| Outstanding as at March 31, 2021 | 497355 | 10462137 |
| Warrants issued during the year | 1428574 | 7585314 |
| Revaluation |  | (12633316) |
| Movements in exchange rates |  | 156395 |
| Outstanding as at March 31, 2022 | 1925929 | 5570530 |

---

The following table

provides the relevant information on the outstanding warrants as at March 31, 2022:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Reference | Date of issuance | Number of<br>warrants<br>outstanding | Number of<br>warrants<br>exercisable | Exercise<br>price | Expiry date |
| 2020 Warrants | October 22, 2020 | 300926 | 300926 | $78.75 | October 22, 2025 |
| 2021 Warrants | February 19, 2021 | 196429 | 196429 | $78.75 | August 19, 2026 |
| Series A Warrants | March 14, 2022 | 714287 |  | $11.20 | September 14, 2027 |
| Series B Warrants | March 14, 2022 | 714287 |  | $11.20 | March 14, 2028 |
|  |  | 1925929 | 497355 | $28.64 |  |

---

The derivative warrant liabilities are measured at fair value at each reporting period and the reconciliation of changes in fair value is presented in the following tables:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | 2020 Warrants | 2020 Warrants | 2021 Warrants | 2021 Warrants |
|  | March 31,<br>2022 | March 31,<br>2021 | March 31,<br>2022 | March 31,<br>2021 |
| Balance - beginning of year | $6174137 | $— | $4288000 | $— |
| Warrants issued during the year |  | 11831000 |  | 6288998 |
| Change in fair value | (5877802) | (5893160) | (3990948) | (1976093) |
| Translation effect | 13434 | 236297 | 9652 | (24905) |
| Balance - end of year | $309769 | $6174137 | $306704 | $4288000 |

---

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Series A Warrants | Series A Warrants | Series B Warrants | Series B Warrants |
|  | March 31,<br>2022 | March 31,<br>2021 | March 31,<br>2022 | March 31,<br>2021 |
| Balance - beginning of year | $— | $— | $— | $— |
| Warrants issued during the year | 4757559 |  | 2827755 |  |
| Change in fair value | (1572299) |  | (1192267) |  |
| Translation effect | 85556 |  | 47753 |  |
| Balance - end of year | $3270816 | $— | $1683241 | $— |

---

The fair value of the derivative warrant liabilities was estimated using the Black-Scholes option pricing model and based on the following assumptions:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | 2020 Warrants | 2020 Warrants | 2021 Warrants | 2021 Warrants |
|  | March 31,<br>2022 | March 31,<br>2021 | March 31,<br>2022 | March 31,<br>2021 |
| Share price | $7.70 | $45.85 | $7.70 | $45.85 |
| Exercise price | $78.75 | $78.75 | $78.75 | $78.75 |
| Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
| Risk-free interest | 2.44% | 0.80% | 2.49% | 1.01% |
| Remaining contractual life (years) | 3.57 | 4.57 | 4.39 | 5.39 |
| Expected volatility | 83.2% | 76.1% | 83.5% | 72.0% |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Series A Warrants | Series A Warrants | Series B Warrants | Series B Warrants |
|  | March 31,<br>2022 | March 14, 2022<br>(Issue date) | March 31,<br>2022 | March 14, 2022<br>(Issue date) |
| Share price | $7.70 | $45.85 | $7.70 | $45.85 |
| Exercise price | $11.20 | $11.20 | $11.20 | $11.20 |
| Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
| Risk-free interest | 1.94% | 2.12% | 1.46% | 1.58% |
| Remaining contractual life (years) | 5.46 | 5.50 | 1.46 | 1.50 |
| Expected volatility | 77.5% | 76.1% | 87.0% | 83.3% |

---

The Corporation measured its derivative warrant liabilities at fair value on a recurring basis. These financial liabilities were measured using level 3 inputs. The Corporation uses the historical volatility of the underlying share to establish the expected volatility of the warrants. An increase or decrease in this assumption to estimate the fair values using the Black-Scholes option pricing model would result in a decrease or an increase in the fair value of the instruments, respectively.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

13. Loans and borrowings:

---

| | | |
|:---|:---|:---|
|  | March 31,<br>2022 | March 31,<br>2021 |
| Loans and borrowings: |  |  |
| Promissory note of $10,000,000 issued by Sprout, guaranteed by the Corporation and secured through a first-ranking mortgage on all movable assets of Sprout current and future, corporeal and incorporeal, and tangible and intangible. The outstanding principal balance bears interest at the rate of 10.0% per annum, payable quarterly in arrears on the last day of each fiscal quarter during the term, commencing March 31, 2021. The principal is payable on February 1, 2024. | $11648320 | $11312959 |
|  | 11648320 | 11312959 |
| Less current portion of loans and borrowings |  |  |
| Loans and borrowings | $11648320 | $11312959 |

---

During the years ended March 31, 2022 and 2021, interest expense of $1,000,000 and $293,250 respectively were recognized on loans and borrowings. There are no covenants to be met for the loans and borrowings outstanding as at March 31, 2022 and 2021.

14. Capital and other components of equity:

(a) Share capital:

Authorized capital stock:

Unlimited number of shares without par value:

• Common shares

Preferred shares, issuable in series, rights, privileges and restrictions determined at time of issuance:

• Series A preferred shares, non-voting, non-participating, fixed, preferential, and non-cumulative dividend of 5% of paid-up capital, exchangeable at the holder's option under certain conditions into common shares (none issued and outstanding).

All issued shares are fully paid.

(b) Share options exercised:

During the twelve-month period ended March 31, 2022, Neptune issued no common shares of the Corporation upon exercise of stock options.

During the twelve-month period ended March 31, 2021, Neptune issued 142,909 common shares of the Corporation upon exercise of stock options at a weighted average exercise price of $54.61 per common; including, 714 common shares were issued upon exercise of market performance options at a weighted average exercise price of $43.19 per common share, for a total cash consideration of $7,478,960.

(c) DSUs released:

During the twelve-month period ended March 31, 2022, Neptune issued no common shares of the Corporation to former and current members of the Board of Directors.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

During the

twelve-month period ended March 31, 2021, Neptune issued 1,381 common shares of the Corporation to a former member of the Board of Directors at a weighted average price of $72.44 per common share for past services.

(d) RSUs released:

During the twelve-month period ended March 31, 2022, Neptune issued 108,079 common shares of the Corporation to the CEO as part of his employment agreement at a weighted average price of $39.74 per common share. Withholding taxes of $1,411,515 were paid by the Corporation pursuant to the issuance of these RSUs resulting in the Corporation not issuing an additional 64,105 RSUs.

During the twelve-month period ended March 31, 2021, Neptune issued 16,414 common shares of the Corporation to the CEO as part of his employment agreement at a weighted average price of $155.05 per common share. Withholding taxes of $717,135 were paid by the Corporation pursuant to the issuance of these RSUs resulting in the Corporation not issuing an additional 10,254 RSUs.

(e) Restricted shares:

During the twelve-month period ended March 31, 2022, Neptune issued no restricted common shares of the Corporation to employees.

During the twelve-month period ended March 31, 2021, Neptune issued 850 common shares of the Corporation to employees at a weighted average price of $116.74 per common share for past services. Although issued as restricted shares under the equity incentive plan, there was no actual restriction nor restricted period on the shares, and they immediately converted into registered shares upon acceptance by the employees.

(f) Warrants:

On March 14, 2022, as part of the Direct Offering described under note 14(h), Neptune issued a total of 185,715 pre-funded warrants ("Pre-Funded Warrants"), with each Pre-Funded Warrant exercisable for one Common Share. The Pre-Funded Warrants are funded in full at closing except for a nominal exercise price of $0.0035 and are exercisable commencing on the Closing Date, and will terminate when such Pre-Funded Warrants are exercised in full. The Pre-Funded Warrants were exercised in full on March 30, 2022 for gross proceeds of $650.

Changes in the value of equity related to the warrants for the years ended March 31, 2022 and 2021 were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | March 31, 2022 | March 31, 2022 | March 31, 2021 | March 31, 2021 |
|  | Weighted<br>average<br>exercise price | Number of<br>warrants | Weighted<br>average<br>exercise price | Number of<br>warrants |
| Warrants outstanding at April 1, 2021 and 2020 | $325.34 | 176429 | $325.34 | 176429 |
| Issued | 0.0035 | 185715 |  |  |
| Exercised | 0.0035 | (185715) |  |  |
| Warrants outstanding at March 31, 2022 and 2021 | $325.34 | 176429 | $325.34 | 176429 |
| Warrants exercisable at March 31, 2022 and 2021 | $325.34 | 176429 | $325.34 | 147858 |

---

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

Warrants of the Corporation classified as equity are composed of the following as at March 31, 2022 and March 31, 2021:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | | | March 31,<br>2022 | | | March 31,<br>2021 |
|  | Number<br>outstanding | Number<br>exercisable | Amount | Number<br>outstanding | Number<br>exercisable | Amount |
| Warrants IFF <sup>(i)</sup> | 57143 | 57143 | $1630210 | 57143 | 28572 | $1451293 |
| Warrants AMI <sup>(ii)</sup> | 119286 | 119286 | 4449680 | 119286 | 119286 | 4449680 |
|  | 176429 | 176429 | $6079890 | 176429 | 147858 | $5900973 |

---

(i) During the year ended March 31, 2020, Neptune granted 57,143 warrants ("Warrants IFF") with an exercise price of $420.00 expiring on November 7, 2024. The warrants, granted in exchange for services to be rendered by non-employees, vest proportionally to the services rendered. An expense of $178,917 was recognized during the twelve-month period ended March 31, 2022 (2021 - $822,316) under the research and development expenses.

(ii) During the year ended March 31, 2020, Neptune granted 119,286 warrants ("Warrants AMI") with an exercise price of $280.00 with 85,715 expiring on October 3, 2024 and 33,572 expiring on February 5, 2025. The warrants, granted in exchange for services to be rendered by non-employees, vest proportionally to the services rendered. The warrants fully vested in fiscal year ended March 31, 2021 and as such no expense was recognized in relation to those instruments in the year ended March 31, 2022. During the twelve-month period ended March 31, 2021, expenses of $1,113,884 were recognized in selling, general and administrative expenses.

(g) At-The-Market Offering:

On March 11, 2020, Neptune entered into an Open Market Sale Agreement with Jefferies LLC pursuant to which the Corporation may from time to time sell, through at-the-market (ATM) offerings with Jefferies LLC acting as sales agent, such common shares as would have an aggregate offer price of up to $50 million.

During the twelve-month period ended March 31, 2021, the Corporation sold a total of 154,619 shares through the ATM program over the NASDAQ stock market, for gross proceeds of $13,736,868 and net proceeds of $13,069,149. The 3% commissions paid and other transaction costs amounted to $667,719. The shares were sold at the prevailing market prices which resulted in an average of approximately $88.55 per share. The ATM Offering was terminated as of February 16, 2021.

(h) Direct Offerings:

On March 14, 2022, Neptune issued a total of 528,572 common shares of the Corporation , along with 185,715 pre-funded warrants ("Pre-Funded Warrants"), as part of a registered direct offering ("Direct Offering"), with each Pre-Funded Warrant exercisable for one Common Share. The common shares and the Pre-Funded Warrants were sold together with 714,287 Series A Warrants (the "Series A Warrants") and 714,287 Series B Warrants (the "Series B Warrants" and collectively with the Series A Warrants, the "Common Warrants") to purchase up to an aggregate of 1,428,572 common shares. Each common share and Pre Funded Warrants and the accompanying Common Warrants were sold together at a combined offering price of $11.20, for aggregate gross proceeds of $8.0 million before deducting fees and other estimated offering expenses. The Pre-Funded Warrants are funded in full at closing except for a nominal exercise price of $0.0035 and are exercisable commencing on the Closing Date, and will terminate when such Pre-Funded Warrants are exercised in full. The Series A Warrants have

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

an exercise price of $11.20 per share and are exercisable six months after the closing date, and will expire five and one half years from the date of issuance. The Series B Warrants have an exercise price of $11.20 per share and are exercisable six months after the closing date, and expire 18 months from the date of issuance. Common Warrants are recognized as liabilities, as the exercise price of the warrants is in USD, whereas the Corporation's functional currency is the Canadian dollar. The proceeds were allocated amongst common shares and Pre Funded Warrants using the relative fair value approach after allocating proceeds to the Common Warrants corresponding to their fair value. The residual amount of $306,868 and $107,818 was then allocated to the Common Share and Pre-Funded Warrants. Total issue costs related to this private placement amounted to $636,847, of which $33,012 were recorded against share capital and the portion related to the warrants, in the amount of $603,835, was recorded under finance costs.

On July 13, 2020, the Corporation issued 136,389 common shares at an offering price of $92.75 per share for gross proceeds of $12,649,998 and net proceeds of $12,017,902. The transaction costs amounted to $801,462.

(i) Private placement:

During the year ended March 31, 2021, Neptune completed a private placement with certain US healthcare focused institutional investors for a private placement of 462,963 common shares and 300,926 warrants. Each warrant is exercisable for one common share at an exercise price of $78.75. The gross proceeds of this offering were $35,000,000 before deducting fees and other offering expenses.

Proceeds were allocated first to the warrants based on their fair value and then the residual to the common shares, resulting in an initial warrant liability of $11,831,000 (note 12) and $23,169,000 recorded in the equity of the Corporation. Purchase warrants are recognized as liabilities, as the exercise price of the warrants is in USD, whereas the Corporation's functional currency is the Canadian dollar. Total issue costs related to this private placement amounted to $2,081,879, of which $1,560,552 were recorded against share capital and the portion related to the warrants, in the amount of $521,327, was recorded under finance costs.

(j) Business combination:

On February 10, 2021, as part of the consideration paid for the acquisition of a 50.1% interest in Sprout Foods, Inc., Neptune issued 192,617 common shares of the Corporation, for a total consideration of $17,595,505 representing the fair value of the common shares at the date of acquisition (note 4).

(k) Registered Direct Offering Priced At-The-Market and Concurrent Private Placement:

On February 17, 2021, Neptune entered into definitive agreements with institutional investors for the purchase of 785,715 common shares. The Corporation has also agreed to issue to the investors, in a concurrent private placement, unregistered common share purchase warrants to purchase an aggregate of 196,429 common shares. Each common share and accompanying quarter of a warrant are being sold together at a combined offering price of $70.00, pursuant to a registered direct offering, priced at-the-market under Nasdaq rules, for aggregate gross proceeds of approximately $55.0 million before deducting fees and other estimated offering expenses (the "Offering"). The warrants will have an exercise price of $78.75 per share, will be exercisable commencing on the six-month anniversary of the date of issuance, and will expire 5.5 years from the date of issuance. The Offering closed on February 19, 2021.

Proceeds

were allocated first to the warrants based on their fair value and then the residual to the common shares, resulting in an initial warrant liability of $6,288,998 (note 12) and $48,711,002

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

recorded in the equity of the Corporation. Purchase warrants are recognized as liabilities, as the exercise price of the warrants is in USD, whereas the Corporation's functional currency is the Canadian dollar. Total issue costs related to this private placement amounted to

$2,958,406, of which $2,609,043 were recorded against share capital and the portion related to the warrants, in the amount of $349,363, was recorded under finance costs.

15. Non-controlling interest:

The summarized financial information of Sprout Foods, Inc. subsidiary is provided below, based on their financial statements prepared in accordance with US GAAP. This information is based on amounts before inter-company eliminations and include the effects of the Corporation's purchase price adjustments.

Summarized statement of loss and comprehensive loss:

---

| | | |
|:---|:---|:---|
|  | Year ended<br>March 31, 2022 | February 10, 2021<br>to March 31, 2021 |
| Revenue from contracts with customers | $25971480 | $2403074 |
| Cost of sales | (28200621) | (3192259) |
| Selling, general and administrative expenses | (9459448) | (1253251) |
| Impairment loss on intangible assets | (1527000) |  |
| Impairment loss on goodwill | (3288847) |  |
| Finance costs | (2427165) | (140218) |
| Loss before tax | (18931601) | (2182654) |
| Income tax | (11854) | (1398) |
| Net loss | (18943455) | (2184052) |
| Total comprehensive loss | (18948855) | (2635006) |
| Loss attributable to the subsidiary's non-controlling interest | (9452784) | (1094210) |
| Comprehensive loss attributable to the subsidiary's non-controlling interest | $(9455479) | $(1320138) |

---

Summarized statement of balance sheets:

---

| | | |
|:---|:---|:---|
|  | March 31,<br>2022 | March 31,<br>2021 |
| Current assets | $12260375 | 11338209 |
| Non-current assets | 39000367 | 51263341 |
| Current liabilities | 5991483 | 6125690 |
| Non-current liabilities | 25362259 | 12031860 |
| Total equity | 19907000 | 44444000 |
| Attributable to: |  |  |
| Equity holders to parent | $7184923 | $22266444 |
| Non-controlling interest | 12722077 | 22177556 |

---

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

Summarized statement of cash flow:

---

| | | |
|:---|:---|:---|
|  | Year ended<br>March 31, 2022 | February 10, 2021<br>to March 31, 2021 |
| Cash flow used in operating activities | $(10214243) | $(2225032) |
| Cash flow used in investment activities | (122136) |  |
| Cash flow from (used in) financing activities<sup>(1)</sup> | 11280528 | (26286) |
| Net increase (decrease) in cash and cash equivalents | $944149 | $(2251318) |
| <sup>(1)</sup>Cash flow from financing activities is provided through intercompany advances. | <sup>(1)</sup>Cash flow from financing activities is provided through intercompany advances. | <sup>(1)</sup>Cash flow from financing activities is provided through intercompany advances. |

---

16. Share-based payment:

Under the Corporation's share-based payment arrangements, a total stock-based compensation of $7,816,845 was recognized in the consolidated statement of loss and comprehensive loss for the twelve-month period ended March 31, 2022 (2021 - $9,885,138).

As at March 31, 2022, the Corporation had the following share-based payment arrangements:

(a) Corporation stock option plan:

(i) Stock option plan:

The Corporation has established a stock option plan for directors, officers, employees and consultants. The exercise price of the stock options granted under the plan is not lower than the closing price of the common shares listed on the TSX on the eve of the grant. The terms and conditions for acquiring and exercising options are set by the Board of Directors, subject, among others, to the following limitations: the term of the options cannot exceed ten years and every stock option granted under the stock option plan will be subject to conditions no less restrictive than a minimum vesting period of 18 months and a gradual and equal acquisition of vesting rights at least on a quarterly basis. The Corporation's stock-option plan allows the Corporation to issue a number of stock options not exceeding 15% of the number of common shares issued and outstanding at the time of any grant. The total number of stock options issuable to a single holder cannot exceed 5% of the Corporation's total issued and outstanding common shares at the time of the grant, with the maximum of 2% for any one consultant.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

The number and weighted average exercise prices of stock options are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | 2022 | 2022 | 2021 | 2021 |
|  | Notes | Weighted<br> average<br> exercise<br> price | Number of<br> options | Weighted<br> average<br> exercise<br> price | Number of<br> options |
| Options outstanding at April 1st, 2022 and 2021 |  | $65.91 | 121208 | $65.76 | 229784 |
| Granted |  | 25.41 | 286554 | 56.91 | 57839 |
| Exercised | 14 (b) |  |  | 51.88 | (142193) |
| Forfeited |  | 37.41 | (94298) | 127.32 | (24222) |
| Expired |  | 89.90 | (7143) |  |  |
| Options outstanding at March 31, 2022 and 2021 |  | $37.41 | 306321 | $65.91 | 121208 |
| Options exercisable at March 31, 2022 and 2021 |  | $56.68 | 102883 | $67.23 | 61526 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | 2022 | 2022 | 2022 | 2022 |
|  | Options outstanding | Options outstanding | Exercisable options | Exercisable options |
| Exercise<br>price | Weighted<br> remaining<br> contractual<br> life<br> outstanding | Number of<br> options<br> outstanding | Weighted<br> number of<br> options<br> exercisable | Weighted<br> average<br> exercise<br> price |
| $43.40 - $66.85 | 4.87 | 67858 |  |  |
| $66.86 - $71.75 | 4.35 | 135071 | 29665 | 69.30 |
| $71.76 - $82.60 | 5.18 | 86294 | 60131 | 74.55 |
| $82.61 - $181.65 | 2.61 | 10350 | 7102 | 149.45 |
| $181.66 - $232.75 | 6.50 | 6748 | 5985 | 210.00 |
|  |  | 306321 | 102883 |  |

---

The fair value of options granted has been estimated using the Black-Scholes option pricing model and based on the weighted average of the following assumptions for options granted to employees during the twelve-month period ended March 31, 2022 and 2021 as at the date of grant:

---

| | | |
|:---|:---|:---|
|  | Year ended<br> March 31, 2022 | Year ended<br> March 31, 2021 |
| Exercise price and share price | $25.41 | $56.91 |
| Dividend yield |  |  |
| Risk-free interest | 0.94% | 0.46% |
| Estimated life (years) | 4.29 | 3.74 |
| Expected volatility | 82.73% | 98.65% |

---

The weighted average fair value of the options granted to employees during the twelve-month period ended March 31, 2022 was $13.68 (2021 - $54.00).&nbsp;&nbsp;&nbsp;&nbsp;

Stock-based compensation recognized under this plan amounted to $2,101,474 for the twelve-month period ended March 31, 2022 (2021 - $1,363,318). Unrecognized compensation cost of $1,408,530 as at March 31, 2022 with a weighted average period remaining of 1.16 years. Unrecognized compensation cost of $1,662,751 as at March 31, 2021 with a weighted average period remaining of 1.55 years.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

(ii) Non-market performance options:

On July 8, 2019, the Corporation granted 100,000 non-market performance options under the Corporation stock option plan at an exercise price of $155.05 per share to the CEO, expiring on July 8, 2029. These options vest after the attainment of non-market performance conditions within the following ten years. These non-market performance options required the approval of amendments to the stock option plan and therefore the fair value of these options was revalued up to the date of approval of the amendments (grant date). None of these non-market performance options have vested as at March 31, 2022. These options were not exercisable as at March 31, 2022 and 2021.

During the twelve-month period ended March 31, 2022, changes in estimated probability of achievement of the non-market performance conditions or the expected number of years to achieve the performance conditions resulted in a recovery of stock-based compensation recognized under this plan amounted to $(689,464). Stock-based compensation expense of $88,621 was recognized for the year ended March 31, 2021.

(iii) Market performance options:

On July 8, 2019, the Corporation granted 157,142 market performance options under the Corporation stock option plan at an exercise price of $155.05 per share to the CEO, expiring on July 8, 2029. These options vest after the attainment of market performance conditions within the following ten years. Some of these market performance options required the approval of amendments to the stock option plan and therefore the fair value of these options was revaluated up to the date of approval of the amendments (grant date).

The number and weighted average exercise prices of market performance options are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | 2022 | 2022 | 2021 | 2021 |
|  | Notes | Weighted<br> average<br> exercise<br> price | Number of<br> options | Weighted<br> average<br> exercise<br> price | Number of<br> options |
| Options outstanding at April 1, 2021 and 2020 |  | $155.05 | 157142 | $154.12 | 157857 |
| Exercised | 14 (b) |  |  | 40.64 | (715) |
| Options outstanding at March 31, 2022 and 2021 |  | $155.05 | 157142 | $155.05 | 157142 |
| Options exercisable at March 31, 2022 and 2021 |  | $155.05 | 21429 | $155.05 | 21429 |

---

Stock-based compensation recognized under this plan amounted to $2,465,163 and $2,337,085 respectively for the years ended March 31, 2022 and 2021. Unrecognized compensation cost at March 31, 2022 is $12,134,126 with a weighted average period remaining of 1.16 years. (2021 - $14,539,128 with a weighted average period remaining of 2.16 years)

(b) Deferred Share Units, Restricted Share Units and Restricted Shares:

The Corporation has established an equity incentive plan for employees, directors and consultants of the Corporation. The plan provides for the issuance of restricted share units, performance share units, restricted shares, deferred share units and other share-based awards, subject to restricted conditions as may be determined by the Board of Directors. Upon fulfillment of the restricted conditions, as the case may be, the plan provides for settlement of the awards outstanding through shares.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

(i) Deferred Share Units ("DSUs")

The number and weighted average share prices of DSUs are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | 2022 | 2022 | 2021 | 2021 |
|  | Notes | Weighted<br>average<br>share<br>price | Number of<br>DSUs | Weighted<br>average<br>share<br>price | Number of<br>DSUs |
| DSUs outstanding at April 1, 2022 and 2021 |  | $63.00 | 3362 | $68.39 | 3544 |
| Granted |  | 19.26 | 3106 | 63.00 | 1199 |
| Released through the issuance of common shares | 14 (c) |  |  | 68.82 | (1381) |
| DSUs outstanding at March 31, 2022 and 2021 |  | $66.45 | 6468 | $63.00 | 3362 |
| DSUs exercisable at March 31, 2022 and 2021 |  | $39.93 | 2753 | $58.50 | 809 |

---

Of the 6,468 DSUs outstanding as at March 31, 2022 (2021 – 3,362), 1,944 DSUs vested upon services to be rendered during a period of twelve months from date of grant (2021 – 809). The fair value of the DSUs is determined to be the share price at the date of grant and is recognized as stock-based compensation, through additional paid-in capital, over the vesting period.

Stock-based compensation recognized under this plan amounted to $49,826 and $63,407 respectively for the years ended March 31, 2022 and 2021.Unrecognized compensation cost of $11,873 as at March 31, 2022 with a weighted average period remaining of 0.31 years. ($4,992 unrecognized compensation cost as at March 31, 2021 with a weighted average period remaining of 0.11 years).

(ii) Restricted Share Units (''RSUs'')

During the year ended March 31, 2020, as part of the employment agreement of the CEO, the Corporation granted RSUs which vest over three years in 36 equal instalments. During the year ended March 31, 2021, Neptune granted additional RSUs to the CEO and to executives of the Corporation, which vest over periods ranging from 6 months to 3 years. The fair value of the RSUs is determined to be the share price at the date of grant and is recognized as stock-based compensation, through additional paid-in capital, over the vesting period. The fair value of the RSUs granted during the twelve-month period ended March 31, 2022 was $16.19 per unit (2021 - $58.50)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | 2022 | 2022 | 2021 | 2021 |
|  | Notes | Weighted<br>average<br>share<br>price | Number of<br>RSUs | Weighted<br>average<br>share<br>price | Number of<br>RSUs |
| RSUs outstanding at April 1st, 2022 and 2021 |  | $92.08 | 95845 | $155.05 | 59999 |
| Granted |  | 16.19 | 111915 | 58.50 | 62514 |
| Forfeited |  | 51.65 | (10538) |  |  |
| Released through the issuance of common shares | 14 (d) | 50.53 | (108079) | 155.05 | (16414) |
| Withheld as payment of withholding taxes | 14 (d) | 10.61 | (64105) | 155.05 | (10254) |
| RSUs outstanding at March 31, 2022 and 2021 |  | $59.75 | 25038 | $92.08 | 95845 |

---

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

Stock-based

compensation recognized under this plan amounted to $3,889,846 and $5,931,983 respectively for the years ended March 31, 2022 and 2021. Unrecognized compensation cost at March 31, 2022 is $235,075 with a weighted average remaining life of 1.30 years (2021 - $5,081,038 unrecognized compensation cost with a weighted average remaining life of 0.6 years).

On November 14, 2021, the Corporation and its CEO entered into an agreement pursuant to which the CEO's existing employment agreement was amended to waive the Corporation's obligation to procure directors and officers insurance coverage of up to $15 million for the period covering July 1, 2021 to July 31, 2022. The parties agreed that if the Corporation had successfully completed a strategic partnership prior to December 31, 2021, the CEO would have been entitled to approximately $6.9 million in cash and would have been granted fully vested options to purchase 8.5 million shares of the Corporation's common stock. As the strategic partnership was not consummated by December 31, 2021, the CEO will be entitled to a grant of vested RSUs with a value of approximately $4.7 million. The Corporation has accrued the liability to the CEO $4,708,063 as at March 31, 2022 in trade and other payables, with a charge to selling general and administrative expenses. The compensation to be settled in RSUs or if the Corporation is unable to grant such RSUs, then a combination of cash and vested RSUs with equivalent value, is not reflected in the number of RSUs outstanding above.

(iii) Restricted Shares

During the year ended March 31, 2021, the Corporation granted restricted shares to employees for past services. The fair value of the restricted shares is determined to be the higher of the 10-day VWAP on TSX and Nasdaq prior to the date of grant and is recognized as stock-based compensation, through additional paid-in capital on date of release.

The number and weighted average share prices of restricted shares are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | 2022 | 2022 | 2021 | 2021 |
|  | Notes | Weighted<br>average<br>share<br>price | Number of<br>RSUs | Weighted<br>average<br>share<br>price | Number of<br>RSUs |
| Restricted shares outstanding at April 1st, 2022 and 2021 |  | $— |  | $— |  |
| Granted |  |  |  | 146.65 | 1004 |
| Forfeited |  |  |  | 146.65 | (154) |
| Released through the issuance of common shares | 14 (e) |  |  | 146.65 | (850) |
| Restricted shares outstanding at March 31, 2022 and 2021 |  | $— |  | $— |  |
| Restricted shares exercisable at March 31, 2022 and 2021 |  | $— |  | $— |  |

---

Stock-based compensation recognized under this plan amounted to nil and $100,724 for the years ended March 31, 2022 and 2021.

(c) Long term cash bonus:

According to the employment agreement with the CEO, a long-term incentive of $15 million is payable if the Corporation's US market capitalization is at least $1 billion. Based on the risk-neutral Monte Carlo simulation, the Corporation could reach this market capitalization in 6.51 years (2021 – 5.56 years). The incentive is recognized over the estimated period to reach the market capitalization. The

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

assumptions used in the simulation include a risk free-rate o

f 2.32% and a volatility of 67.35% (respectively 1.74% and 66.46% for the previous year). As at March 31, 2022, the liability related to this long-term incentive of $88,688 ($393,155 as at March 31, 2021) is presented in Other liability in the consolidated balance sheets. During the year ended March 31, 2022, a recovery of $304,467 (2021- a recovery of $471,341) was recorded in connection with the long-term incentive under selling, general and administrative expenses in the consolidated statement of loss.

17. Finance income and finance costs:

(a) Finance income:

---

| | | |
|:---|:---|:---|
|  | Years ended | Years ended |
|  | March 31,<br>2022 | March 31,<br>2021 |
| Interest income | $7123 | $38327 |
| Other finance income |  | 787418 |
| Finance income | $7123 | $825745 |

---

(b) Finance costs:

---

| | | | |
|:---|:---|:---|:---|
|  | | Years ended | Years ended |
|  | Notes | March 31,<br>2022 | March 31,<br>2021 |
| Interest charges and other finance costs |  | $540143 | $622841 |
| Interest expense on loans and borrowings | 13 | 1000000 | 293250 |
| Warrants issuance costs | 12 | 603835 | 870690 |
| Finance costs |  | $2143978 | $1786781 |

---

18. Income taxes:

Income tax (recovery) expense:

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
| Current | $– $|  |
| Deferred taxes recovery | – | (3477711) |
| Total tax recovery | $– $| (3477711) |

---

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

Reconciliation of effective tax rate:

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
| Loss before income taxes | $(84424529) | $(127741941) |
| Basic combined Canadian statutory income tax rate <sup>1</sup> | 26.50% | 26.50% |
| Income tax | $(22372500) | $(33851614) |
| Increase (decrease) resulting from: |  |  |
| Change in valuation allowance | 18982099 | 26696339 |
| Permanent difference on impairment on goodwill | 788642 | 999782 |
| Permanent difference related to derivative | (1656038) | (2004305) |
| Non deductible and tax exempt items | 71653 | (347773) |
| Non-deductible stock-based compensation | 2050909 | 2660390 |
| Foreign exchange | 236512 | (101188) |
| Difference in statutory tax rates of foreign subsidiaries | 1121068 | 2778258 |
| Other permanent differences | 474339 | (571275) |
| Adjustments in relation to prior years | 303316 | 263675 |
| Total tax recovery | $— | $(3477711) |

---

1 The Canadian combined statutory income tax rate.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

Components of the net deferred tax asset (liability)

---

| | | |
|:---|:---|:---|
|  | March 31,<br>2022 | March 31,<br>2021 |
| Net operating losses ("NOL") and tax credit carryforwards | $76346005 | $61321242 |
| Intangible assets and goodwill | 554187 | 653006 |
| Reserves and accruals not currently deductible for tax purposes | 290413 | 389037 |
| Financing fees not currently deductible for tax purposes | 1446462 | 22651 |
| Research and development costs | 3098560 | 533372 |
| Non-deductible interest | 3349307 | 3985157 |
| Other | 1693301 | 1723027 |
| Subtotal | 86778235 | 68627492 |
| Less: valuation allowance | 83934321 | 64418752 |
| Total net deferred tax assets | 2843914 | 4208740 |
| Property, plant and equipment |  | (2991756) |
| Intangible assets and goodwill | (1921815) |  |
| Right-of-use assets | (767164) | (748475) |
| Other | (154935) | (468509) |
| Total deferred tax liabilities | (2843914) | (4208740) |
| Net deferred tax | $— | $— |

---

Management assesses the available positive and negative evidence to determine the valuation allowance required with respect to the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the years. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.

On the basis of this evaluation, as of March 31, 2022, a valuation allowance of $83,934,321 has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

Tax losses carried forward

We have income tax NOL carryforwards which will expire on various dates in the next 20 years as follows:

---

| | | |
|:---|:---|:---|
|  | Federal | Provincial/State |
| 2027 | 46000 |  |
| 2028 |  |  |
| 2029 |  |  |
| 2030 |  | 149000 |
| 2031 | 474000 | 1523000 |
| 2032 | 4249000 | 741000 |
| 2033 | 11099000 | 11210000 |
| 2034 | 16244000 | 15247000 |
| 2035 | 11275000 | 10429000 |
| 2036 | 18956000 | 18399000 |
| 2037 | 9835000 | 9178000 |
| 2038 | 22000 | 18000 |
| 2039 | 7974000 | 8473000 |
| 2040 | 32672000 | 39443000 |
| 2041 | 42380000 | 40506000 |
| 2042 | 38544000 | 38149000 |
|  | $193770000 | $193465000 |

---

As at March 31, 2022, the Corporation had NOL that can be carried forward indefinitely ($101,174,000 for federal purposes and $96,884,000 for States purposes).

As at March 31, 2022, the Corporation had realized and unrealized capital losses of $2,060,000 ($2,709,000 in 2021) that can be carried forward indefinitely.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

Tax credits receivable and recoverable

Unused federal Investment tax credits may be used to reduce federal income tax payable and expire as follows:

---

| | |
|:---|:---|
| 2023 | $174000.0 |
| 2024 | 60000.0 |
| 2025 | 43000.0 |
| 2026 | 73000.0 |
| 2027 | 116000.0 |
| 2028 | 51000.0 |
| 2029 | 113000.0 |
| 2030 | 179000.0 |
| 2031 | 216000.0 |
| 2032 | 126000.0 |
| 2033 | 104000.0 |
| 2034 | 94000.0 |
| 2035 | 234000.0 |
| 2036 | 168000.0 |
| 2037 | 127000.0 |
| 2038 | 50000.0 |
| 2039 | 58000.0 |
|  | $1986000.0 |

---

The amounts

recorded as tax credits receivable or recoverable are subject to a government tax audit and the final amount received may differ from those recorded.

19. Loss per share:

Diluted loss per share was the same amount as basic loss per share, as the effect of options, DSUs, RSUs and warrants would have been anti-dilutive, as the Corporation has incurred losses in each of the periods presented. All outstanding options, DSUs, RSUs and warrants could potentially be dilutive in the future.

20. Supplemental cash flow disclosure:

(a) Changes in operating assets and liabilities:

---

| | | |
|:---|:---|:---|
|  | March 31,<br>2022 | March 31,<br>2021 |
| Trade and other receivables | $(163066) | $(8518941) |
| Prepaid expenses | (279770) | (994471) |
| Inventories | (2674208) | (17631474) |
| Trade and other payables | 2654024 | 11965278 |
| Deferred revenues | (1563113) | 634393 |
| Provisions | (1137281) | 733755 |
| Changes in operating assets and liabilities | $(3163414) | $(13811460) |

---

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

(b) Non-cash transactions:

---

| | | |
|:---|:---|:---|
|  | March 31,<br>2022 | March 31,<br>2021 |
| Acquired property, plant and equipment included in trade and other payables | $155352 | $158309 |
| Intangible assets included in trade and other payables | 109971 | 72043 |

---

21. Fair-value:

The Corporation uses various methods to estimate the fair value recognized in the consolidated financial statements. The fair value, hierarchy reflects the significance of inputs used in determining the fair values:

• Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);

• Level 3 – Fair value based on valuation techniques which includes inputs related to the asset or liability that are not based on observable market data (unobservable inputs).

Financial assets and liabilities measured at fair value on a recurring basis are the investment in Acasti Pharma Inc. ("Acasti"), the call option granted to Neptune by Sprout's non-controlling interest owners of equity (the "Call Option"), the liability to CEO for long-term incentive, and liability related to warrants.

The following

table presents the Corporation's hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and 2021:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | March 31, 2022 | March 31, 2022 | March 31, 2022 | March 31, 2022 |
|  | Notes | Level 1 | Level 2 | Level 3 | Total |
| Assets |  |  |  |  |  |
| Other financial assets - Sprout Call Option | 4 | $— | $— | $— | $— |
| Total |  | $— | $— | $— | $— |
| Liabilities |  |  |  |  |  |
| Liability related to warrants | 12 | $— | $— | $5570530 | $5570530 |
| Total |  | $— | $— | $5570530 | $5570530 |
|  |  | March 31, 2021 | March 31, 2021 | March 31, 2021 | March 31, 2021 |
|  | Notes | Level 1 | Level 2 | Level 3 | Total |
| Assets |  |  |  |  |  |
| Marketable securities - Acasti Shares |  | $150000 | $— | $— | $150000 |
| Other financial assets - Sprout Call Option | 4 |  |  | 5615167 | 5615167 |
| Total |  | $150000 | $— | $5615167 | $5765167 |
| Liabilities |  |  |  |  |  |
| Liability related to warrants | 12 | $— | $— | $10462137 | $10462137 |
| Total |  | $— | $— | $10462137 | $10462137 |

---

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

As at

March 31, 2022, the Corporation has no common shares of Acasti (31,250 as at March 31, 2021, considering the 8 to 1 reverse stock split). The investment was measured using Acasti's stock market price. The fair value of the investment in Acasti was $150,000 or $4.80 per share as at March 31, 2021.

During the year ended March 31, 2021, 750,000 Acasti pre-consolidation shares were sold on the market for net proceeds of $420,219. During the year ended March 31, 2022, the remaining 31,250 shares, were sold on the market for net proceeds of $55,610.

The net change in fair value of the investment including any gain or loss on the sale of the shares amounted to a $101,634 loss and a $151,799 gain respectively for the years ended March 31, 2022 and 2021 and were recognized in the profit and loss statement.

As at the close of the acquisition of Sprout, 2021, the fair value of the asset related to the Call Option was determined to be $5,523,255, representing the excess of the market price over the contract value of the Call Option, discounted at a rate of 8.9% and assuming the exercise of the Call Option to acquire the remaining interest in Sprout would take place on January 1, 2023. To establish the market price, the multiples selected were 2.3x for revenues and 12.0x for EBITDA, based on analysis of average and median industry multiples, and were adjusted for a 20% discount; the multiples to be used as per the contract are 3.0x for revenues and 15.0x for EBITDA, weighted at 50%. Changes in the underlying assumptions of budgeted revenues as well as lower revenue market multiples resulted in a revaluation of the Call Option to nil during the year ended March 31, 2022. The measurement is based on level 3 inputs.

The following table presents a reconciliation of the beginning and ending balance of the Call Option:

---

| | | | |
|:---|:---|:---|:---|
|  | | Years ended | Years ended |
|  | Notes | March 31,<br>2022 | March 31,<br>2021 |
| Balance as at April 1st 2021 and 2020 |  | $5615167 | $— |
| Increase arising from business combination | 4 |  | 5523255 |
| Change in fair value |  | (5606683) | 83428 |
| Effect of movements in exchange rate |  | (8484) | 8484 |
| Balance as at March 31, 2022 and 2021 |  | $— | $5615167 |

---

The liabilities related to warrants were recorded at their fair value using a Black-Scholes pricing model. Warrants are revalued each period-end at fair value through profit and loss using level 3 inputs (note 12).

The Corporation has determined that the carrying values of its short-term financial assets and liabilities approximate their fair values given the short-term nature of these instruments. The carrying value of the short-term investment also approximates its fair value given the short-term maturity of the reinvested funds. For variable rate loans and borrowings, the fair value is considered to approximate the carrying amount.

The fair value of the fixed rate loans and borrowings and long-term payable is determined by discounting future cash flows using a rate that the Corporation could obtain for loans with similar terms, conditions and maturity dates. The fair value of these instruments approximates the carrying amounts and was measured using level 3 inputs.

22. Commitments and contingencies:

(a) Commitments:

(i) On November 2, 2017, Neptune entered into an exclusive commercial agreement for a specialty ingredient in combination with cannabinoids coming from cannabis or hemp for a period of 11

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

years with minimum annual volumes of sales starting in 2019. On January 31, 2020, Neptune entered into other commercial agreements for the same specialty ingredient in combination with fish oil products for a period of 8 years in replacement of a previous terminated agreement. According to these agreements signed with the same third-party's beneficial owner, Neptune will pay royalties on sales. To maintain the exclusivity, Neptune must reach minimum annual volumes of sales for the duration of the agreements for which minimum volumes are being reached. The corresponding total remaining amount of minimum royalties is $3,878,449. <br>

(ii) On April 14, 2020, the Corporation signed a two-year agreement with the Jane Goodall Institute ("JGI") in which Neptune agreed to donate 5% of the net sales of products branded as Forest Remedies with the JGI identification to support continued research, conservation and education efforts. For the year ended March 31, 2022 and 2021, the donations on sales were negligeable.

(iii) On March 21, 2019, the Corporation received a judgment from the Court regarding certain previously disclosed claims made by a corporation controlled by the former CEO against the Corporation in respect to certain royalty payments alleged to be owed and owing to the former CEO pursuant to the terms of an agreement entered into on February 23, 2001 between Neptune and the former CEO (the "Agreement"). The Court declared that under the terms of the agreement, the Corporation is required to pay royalties of 1% of its revenues in semi-annual instalments, for an unlimited period. Based on currently available information, a provision of $362,809 for royalty payments has been recognized as of March 31, 2022 ($1,489,854 as at March 31, 2021). Refer to note 11.

(iv) On May 28, 2021, Sprout entered into a license agreement with Moonbug Entertainment Limited ("Moonbug"), pursuant to which it would license certain intellectual property, relating to characters from the children's entertainment property CoComelon, for use on certain Sprout products through December 31, 2023 in exchange for a royalty on net sales. Sprout is required to make minimum guaranteed annual payments to Moonbug of $200,000 over the term of the agreement. The agreement may be extended for an additional three years in exchange for an additional minimum guaranteed annual payment to Moonbug of $200,000 over the extended term of the agreement. Royalties payable under the agreement are set off against minimum guaranteed payments made.

(b) Contingencies:

In the normal course of business, the Corporation is involved in various claims and legal proceedings, for which the outcomes, inflow or outflow of economic benefits, are uncertain. The most significant of which are ongoing are as follows:

(i) In September 2020, Neptune submitted a claim and demand for arbitration against Peter M. Galloway and PMGSL Holdings, LLC (collectively "PMGSL") in accordance with the SugarLeaf Asset Purchase Agreement ("APA") dated May 9, 2019 between Neptune, PMGSL, Peter M. Galloway and Neptune Holding USA, Inc. Separately, PMGSL submitted a claim and demand for arbitration against Neptune. The Neptune claims and PMGSL claims have been consolidated into a single arbitration and each are related to the purchase by Neptune of substantially all of the assets of the predecessor entities of PMGSL Holdings, LLC. Neptune is claiming, among other things, breach of contract and negligent misrepresentation by PMGSL in connection with the APA and is seeking, among other things, equitable restitution and any and all damages recoverable under law. PMGSL is claiming, among other things, breach of contract by Neptune and is seeking, among other things, payment of certain compensation contemplated by the APA. A merit hearing

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

in the arbitration started in April 2022 with a further week of testimony starting August 1, 2022. On June 15, 2022, a one-day hearing took place on Neptune's motion to enforce a settlement agreement reached on April 2021 (which was repudiated by PMGSL in June 2021). Final oral argument is scheduled for July 7, 2022, after which the arbitrator will issue a decision on whether the settlement is enforceable. While Neptune believes there is no merit to the claims brought by PMGSL, a judgment in favor of PMGSL may have a material adverse effect on our business and Neptune intends to continue vigorously defending itself. Based on currently available information, a provision of $600,000 has been recognized for this case as at March 31, 2022 ($600,000 as at March 31, 2021). <br>

(ii) On February 4, 2021, the United States House of Representatives Subcommittee on Economic and Consumer Policy, Committee on Oversight and Reform (the "Subcommittee"), published a report, "Baby Foods Are Tainted with Dangerous Levels of Arsenic, Lead, Cadmium, and Mercury" (the "Report"), which stated that, with respect to Sprout, "independent testing of Sprout Organic Foods" has confirmed that their baby foods contain concerning levels of toxic heavy metals." The Report further stated that after receiving reports alleging high levels of toxic metals in baby foods, the Subcommittee requested information from Sprout but did not receive a response.

On February 11, 2021, following the acquisition of a 50.1% stake in Sprout by Neptune, the Subcommittee contacted Sprout, reiterating its requests for documents and information about toxic heavy metals in Sprout's baby foods. Sprout provided an initial response to the Subcommittee on February 25, 2021 and is cooperating with the Subcommittee requests.

Further, on February 24, 2021, the Office of the Attorney General of the State of New Mexico ("NMAG") delivered to Sprout a civil investigative demand requesting similar documents and information with regards to the Report and the NMAG's investigation into possible violations of the False Advertising Act of New Mexico. Sprout is responding to the requests of the NMAG.

Since February 2021, several putative consumer class action lawsuits have been brought against Sprout alleging that its products (the "Products") contain unsafe and undisclosed levels of various naturally occurring heavy metals, namely lead, arsenic, cadmium and mercury. There are currently two active putative class action lawsuits, which allege that Sprout violated various state consumer

protection laws and make other state and common law warranty and for unjust enrichment claims related to the alleged failure to disclose the presence of these metals, whereas consumers would have allegedly either not purchased the Products or would have paid less had Sprout made adequate disclosures. These putative class actions seek to certify a nationwide class of consumers as well as various state subclasses. These kinds of class actions have also been separately filed against all of the major baby food manufacturers in federal courts across the country. The U.S. Judicial Panel on Multidistrict Litigation ("JPML") declined a request to centralize all of the consumer class action lawsuits against all of the baby food manufacturers into a single multidistrict proceeding. One of the class actions is currently pending in New Jersey Superior Court. The other class action is currently pending in the U.S. District Court for the Central District of California, but has been ordered to be transferred to the U.S. District for the District of New Jersey. Sprout denies the allegations in these lawsuits and contends that its baby foods are safe and properly labeled. No provision has been recorded in the financial statements for these cases.

In addition to the consumer class actions discussed above, Sprout is currently named in a lawsuit filed on June 16, 2021 in the state court of California alleging some form of personal injury from the ingestion of Sprout's Products, purportedly due to unsafe and undisclosed levels of various naturally occurring heavy metals. This lawsuit alleges injuries related to neurological development

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

disorders, such as autism spectrum disorder and attention deficit hyperactivity disorder. Sprout denies that its Products contributed to any of these injuries and will defend the case vigorously. No provision has been recorded in the financial statements for this matter.

In addition, the Office of the Attorney General for the District of Columbia ("OAG") recently sent a letter to Sprout, similar to letters sent to other baby food manufacturers, alleging potential labeling and marketing misrepresentations and omissions regarding the health and safety of its baby food products, constituting an unlawful trade practice. Sprout has agreed to meet with the OAG and will vigorously defend against the allegations. No provision has been recorded in the financial statements for this matter.

These matters may have a material adverse effect on Sprout's, financial condition, or results of operations.

(iii) On March 16, 2021, a purported shareholder class action was filed in United States District Court for the Eastern District of New York against the Corporation and certain of its current and former officers alleging violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 with respect to the Corporation's acquisition of SugarLeaf Labs, Inc. The Corporation believes these claims are without merit and intends to vigorously defend itself. No provision has been recorded in the financial statements for this matter.

(iv) A supplier of cannabis initiated a lawsuit against 9354-7537 Quebec Inc. (operating as Neptune Wellness Solutions, Inc.) ("Neptune") for breach of a Wholesale Cannabis Supply Agreement (the "Supply Agreement") for the purchase of cannabis trim. The purchased trim was rejected by Neptune due to quality concerns. The supplier refused to refund the purchase price and ultimately sued Neptune for breach of the Supply Agreement. The matter proceeded to trial in November 2021, and on March 23, 2022, an arbitrator entered an arbitration award against Neptune for the full purchase price of the trim. With fees and costs, the final arbitrator's award entered against Neptune is of $1,127,024, plus applicable interest. A provision of $1,127,024 has been recognized in trade and other payables.

The outcome of these claims and legal proceedings against the Corporation cannot be determined with certainty and is subject to future resolution, including the uncertainties of litigation.

23. Operating Segments:

The Corporation measures its performance based on a single segment, which is the consolidated level, as the previous segment income (loss) before corporate expenses is not used in internal management reports that are reviewed by the Corporation's Chief Operating Decision Maker, management believing that such information is no longer relevant in evaluating the results of the Corporation.

a) Geographical information:

Revenue is attributed to geographical locations based on the origin of customers' location:

---

| | | |
|:---|:---|:---|
|  | Years ended | Years ended |
|  | March 31,<br> 2022 | March 31,<br> 2021 |
| Canada | $12447125 | $13433549 |
| United States | 35330138 | 20857092 |
| Other countries | 1019861 | 1109678 |
|  | $48797124 | $35400319 |

---

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

b) Information about major customers:

During the year ended March 31, 2022, the Corporation realized revenues amounting to $5,005,000 from one customer accounting for 10.26% of consolidated revenues. During the year ended March 31, 2021, the Corporation realized revenues amounting to $5,261,979 from one customer accounting for 14.86% of consolidated revenues.

c) Revenues

The Corporation derives revenue from the sales of goods which are recognized at a point in time and the processing services which are recognized over time as follows:

---

| | | |
|:---|:---|:---|
|  | Years ended | Years ended |
|  | March 31,<br> 2022 | March 31,<br> 2021 |
| Recognized at a point in time |  |  |
| Nutraceutical products | $13622744 | $12183362 |
| Cannabis and hemp products | 7779092 | 314827 |
| Food and beverages products | 26220519 | 2403075 |
| Innovation products | 73473 | 10960359 |
| Recognized over time |  |  |
| Processing services |  | 8400024 |
|  | $47695828 | $34261647 |

---

d) Geographical information on long-lived assets:

Long-lived assets of the Corporation are located in the following geographical location:

---

| | | |
|:---|:---|:---|
|  | March 31,<br> 2022 | March 31,<br> 2021 |
| Canada | $20724674 | $35644781 |
| United States | 723449 | 1700935 |
| Total property, plant and equipment | $21448123 | $37345716 |

---

---

| | | |
|:---|:---|:---|
|  | March 31,<br> 2022 | March 31,<br> 2021 |
| Canada | $2353054 | $3792982 |
| United States | 19301981 | 22163848 |
| Total intangible assets | $21655035 | $25956830 |

---

---

| | | |
|:---|:---|:---|
|  | March 31,<br> 2022 | March 31,<br> 2021 |
| Canada | $2625851 | $2613935 |
| United States | 19542437 | 22839437 |
| Total goodwill | $22168288 | $25453372 |

---

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

24. Related parties:

Related party transactions and balances not disclosed elsewhere in these notes of the financial statements are as follows:

On November 11, 2019, Neptune announced that the Corporation entered into a collaboration agreement with International Flavors & Fragrances Inc. ("IFF") to co-develop hemp-derived products for the mass retail and health and wellness markets. App Connect Service, Inc. ("App Connect"), a company indirectly controlled by Michael Cammarata, CEO and Director of Neptune, is also a party to the agreement to provide related branding strategies and promotional activities.

Neptune will be responsible for the marketing and the sales of the products and will receive the amounts from the product sales. Neptune will in turn pay a royalty to IFF and App Connect associated with the sales of the co-developed products. The payment of royalties to App Connect, subject to certain conditions, has been approved by the TSX.

During the years ended March 31, 2022 and 2021, the Corporation recorded a negligeable amount of royalty expense pursuant to the co-development contract and no royalties were paid to date.

25. Subsequent events:

On June 8, 2022, Neptune announced that the launch of a new Consumer Packaged Goods ("CPG") focused strategic plan to reduce costs, improve the Corporation's path to profitability and enhance current shareholder value. This plan builds on the Corporation's initial strategic review that took place in fall of 2021 and focuses on two primary actions: (1) planned accelerated divestiture of the Canadian cannabis business and (2) a realignment of focus and operational resources toward increasing the value of Neptune's consumer products business. With the planned divestiture of its cannabis business, Neptune is renewing its focus on the core brands – Sprout Organics and Biodroga Solutions.

On June 9, 2022, Neptune announced the completion of the Corporation's proposed consolidation of its common shares (the "Common Shares") on the basis of one (1) post-consolidation Common Share for every thirty-five (35) pre-consolidation Common Shares (the "Share Consolidation"). The post-Share Consolidation Common Shares commenced trading on the NASDAQ and the TSX at the market open on June 13, 2022. The Share Consolidation reduced the number of Common Shares issued and outstanding from approximately 198 million Common Shares to approximately 5.7 million Common Shares as at June 13, 2022.

On June 23, 2022, Neptune closed agreements with several institutional investors for the purchase and sale of an aggregate of 1,300,000 common shares of the Corporation, 645,526 pre-funded warrants and accompanying series of warrants to purchase up to an aggregate of 2,591,052 common shares warrants, at an offering price of $2.57 per share and accompanying warrants in a registered direct offering priced at-the-market under Nasdaq rules. Each series of warrants have an exercise price of $2.32 per share and are immediately exercisable upon issuance. One series of warrants will expire two years following the date of issuance and one series of warrants will expire five years following the date of issuance. The gross proceeds from the offering are $5 million, prior to deducting placement agent's fees and other offering expenses payable by Neptune. The Pre-funded warrants were fully exercised on June 24, 2022 for $64.55.

(b) (Unaudited)

On July 13, 2022, Neptune announced that Sprout has entered into an amendment of each of its existing Promissory notes. In connection with this amendment, investment funds managed by MSEC have financed an additional $3 million in Promissory notes to Sprout. The maturity date of the note facility of February 1,

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

2024 is consistent with the maturity date of the existing Promissory notes with MSEC and Neptune. The $13.0 million of amended Promissory notes are secured, have a 10% interest rate per annum, increasing by 1% per annum every three months during the term of the Promissory notes. The interest will be compounded and added to the principal amount on a quarterly basis. The amended Promissory notes may be converted, in whole or in part, at any time upon the mutual consent of Sprout, the Corporation and MSEC, into common shares of the Corporation. MSEC was issued 372,670 common shares of Neptune, of an approximate value of $570,000, in connection with this financing.

On October 11, 2022, the Corporation closed a registered direct offering of 3,208,557 common shares and 6,417,114 warrants in a concurrent private placement. The Corporation received gross proceeds of approximately $6.0 million in connection with the offering, before deducting placement agent fees and related offering expenses. The net proceeds to the Corporation from the offering, after deducting the placement agent fees and expenses, and the Corporation's offering expenses were approximately $5.15 million.

On October 17, 2022, the Corporation announced that it had entered into a binding agreement for the sale of its Canadian cannabis business, including the Sherbrooke building, for $3.8 million (C$5.15 million) to be paid to the Corporation in cash. The transaction closed on November 9, 2022. The Corporation

recorded a loss on remeasurement of the assets to fair value less cost of sale in the in the amount of $15.3 million in the six-months ended September 30, 2022.

On October 21, 2022, the Corporation announced that it had agreed to settle and resolve a putative shareholder class action lawsuit filed against Neptune and certain of its current and former officers and directors (refer to note 22(b)iii) , captioned Gong v. Neptune Wellness Solutions, Inc. pending in the United States District Court for the Eastern District of New York, for a gross payment to the class of between $4 and $4.25 million, with the exact amount being within the Corporation's control and dependent on the type of consideration used. The settlement is subject to court approval and certification by the court of the class. The Corporation recorded a litigation settlement expense of $4.0 million in the six-months ended September 30, 2022

On August 26, 2022, Sprout entered into an additional $250,000 Secured Promissory Note, which is on the same terms as the Secured Promissory Note entered into with MSEC discussed above. Neptune issued 36,765 common shares for a value of $75,736 in connection with this Secured Promissory Note in connection with this commitment. On November 8, 2022, Sprout entered into an agreement to issue an additional $525,000 of Secured Promissory Notes, on the same terms as the Secured Promissory Note entered into with MSEC discussed above. In connection with this financing, Neptune will issue common shares to the holders of these Secured Promissory Notes for a value of $105,000.

On January 12, 2023, the Company entered into a Note Purchase Agreement among the purchasers named therein and the Company, pursuant to which the Company issued and sold $4 million in aggregate principal amount of senior secured promissory notes. The Company may also issue and sell, and the purchasers have agreed to purchase, up to an additional $1 million in aggregate principal amount of senior secured promissory notes to occur not later than February 28, 2023. The second closing will occur only in the event that the Company completes an incremental equity issuance by February 28, 2023, and the aggregate principal amount of the second closing will not exceed the lesser of $1 million or 25% of the proceeds actually received from any such incremental equity issuance. The notes may be prepaid or redeemed in whole or in part by the Company, subject to the payment of a premium in an amount equal to ten percent (10%) of the principal amount of notes being repaid (other than principal in respect of PIK interest), less the aggregate amount of cash interest paid on the Notes being repaid on or before the date of such prepayment.

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to Consolidated Financial Statements (Audited)

For the years ended March 31, 2022 and 2021

The notes are due and payable no later than January 12, 2024, unless earlier accelerated in accordance with the terms of the Note Purchase Agreement, with interest accruing at a rate of 16.5% per annum from the date of issuance and payable on the last business day of each calendar month in which the notes are outstanding. For the first six interest payment dates following the initial closing, interest will be paid in kind and thereafter payments shall be made in cash on the interest payment date in arrears. Under the terms of the Note Purchase Agreement, the Company issued to the purchasers of the initial notes warrants to purchase a total of 850,000 common shares of the Company exercisable at an exercise price of $0.53 per share at any time until January 12, 2028.

On January 23, 2023, Sprout entered into an accounts receivable factoring facility with Alterna Capital Solutions, LLC ("Alterna"), pursuant to which Sprout agreed to sell certain of its accounts receivable to Alterna. The maximum amount available to Sprout under the facility is $5 million, and funds deployed to Sprout incur a usage fee of the primate rate plus 1%, with a minimum interest rate of 8% per annum. The facility has a one-year term and renews automatically. The Company provided a commercial guaranty in connection with this agreement.

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**NEPTUNE WELLNESS SOLUTIONS INC.** 

Condensed Consolidated Interim Balance Sheets

(Unaudited) (in U.S. dollars)

---

| | | | |
|:---|:---|:---|:---|
|  | Notes | As at<br>September 30,<br>2022 | As at<br>March 31,<br>2022 |
| Assets |  |  |  |
| Current assets: |  |  |  |
| Cash and cash equivalents |  | $1394603 | $8726341 |
| Short-term investment |  | 17489 | 19255 |
| Trade and other receivables |  | 4946406 | 7599584 |
| Prepaid expenses |  | 2876115 | 3983427 |
| Inventories | 4 | 15808436 | 17059406 |
| Assets held for sale | 2(d) | 3203557 |  |
| Total current assets |  | 28246606 | 37388013 |
| Property, plant and equipment | 5 | 2145027 | 21448123 |
| Operating lease right-of-use assets |  | 2474370 | 2295263 |
| Intangible assets | 6 | 17792596 | 21655035 |
| Goodwill | 6 | 14354340 | 22168288 |
| Total assets |  | $65012939 | $104954722 |
| Liabilities and Equity |  |  |  |
| Current liabilities: |  |  |  |
| Trade and other payables |  | $22960348 | $22700849 |
| Current portion of operating lease liabilities |  | 585536 | 641698 |
| Deferred revenues |  | 130464 | 285004 |
| Provisions | 7 | 5860704 | 1118613 |
| Liability related to warrants | 8 | 2820025 | 5570530 |
| Total current liabilities |  | 32357077 | 30316694 |
| Operating lease liabilities |  | 2343311 | 2063421 |
| Loans and borrowings | 9 | 14692156 | 11648320 |
| Other liability | 12(c) | 24000 | 88688 |
| Total liabilities |  | 49416544 | 44117123 |
| Shareholders' Equity: |  |  |  |
| Share capital - without<br> par value (8,516,894<br> shares issued and outstanding as of September 30, 2022; 5,560,829<br> shares issued and outstanding as of March 31, 2022)<br>| 10(a) | 321769905 | 317051125 |
| Warrants | 10(f) | 6079890 | 6079890 |
| Additional paid-in capital |  | 56306211 | 55980367 |
| Accumulated other comprehensive loss |  | (14307804) | (7814163) |
| Deficit |  | (358363505) | (323181697) |
| Total equity attributable to equity holders of the Company |  | 11484697 | 48115522 |
| Non-controlling interest | 11 | 4111698 | 12722077 |
| Total shareholders' equity |  | 15596395 | 60837599 |
| Commitments and contingencies | 15 |  |  |
| Subsequent events | 2(d), 7, 18 |  |  |
| Total liabilities and shareholders' equity |  | $65012939 | $104954722 |

---

See accompanying notes to the condensed consolidated interim financial statements.

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| | |
|:---|:---|
| <br> On behalf of the Board: |  |
| <br> /s/ Julie Philips | <br> /s/ Michael Cammarata |
| <br> Julie Philips | <br> Michael Cammarata |
| <br> Chair of the Board | <br> President and CEO |

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NEPTUNE WELLNESS SOLUTIONS INC.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

(Unaudited) (in U.S. dollars)

For the three and six-month periods ended September 30, 2022 and 2021

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | Three-month periods ended | Three-month periods ended | Six-month periods ended | Six-month periods ended |
|  | Notes | September 30,<br>2022 | September 30,<br>2021 | September 30,<br>2022 | September 30,<br>2021 |
| Revenue from sales net of excise taxes of $1,600 and $643,476 (2021 - $240,080 and $380,699)<br>|  | $11755056 | $12309755 | $27723154<br>| $22131395 |
| Royalty revenues |  | 218731 | 188593 | 502920<br>| 424660<br>|
| Other revenues |  | 13055 | 20283 | 32996<br>| 41085<br>|
| Total revenues | 16 | 11986842 | 12518631 | 28259070<br>| 22597140<br>|
| Cost of sales other than impairment loss on inventories, net of subsidies of nil and nil (2021 - $269,210 <br>and $931,705) |  | (10878974) | (10681881) | (26965552) | (23082924) |
| Impairment loss on inventories | 4 |  | (3009098) | (3079997) | (3009098) |
| Total Cost of sales |  | (10878974) | (13690979) | (30045549) | (26092022) |
| Gross profit (loss) |  | 1107868 | (1172348) | (1786479) | (3494882) |
| Research and development expenses |  | (207598) | (91110)<br>| (422285) | (350776) |
| Selling, general and administrative expenses, net of subsidies of nil and nil(2021 - $36,306 and<br>$100,605)<br>| 12(c) | (15907638) | (15447682) | (26461372) | (31462316) |
| Impairment loss related to property, plant and equipment<br>| 5 |  | (1884970) | —<br>| (2414702) |
| Impairment loss on assets held for sale<br>| 2(d) | (14530458) | —<br>| (15346119) | —<br>|
| Impairment loss related to goodwill<br>| 6 | (7570471) | —<br>| (7570471) | —<br>|
| Impairment loss related to tradenames<br>| 6 | (2593529) | —<br>| (2593529) | —<br>|
| Net gain on sale of property, plant and equipment<br>|  |  |  | 85002<br>| —<br>|
| Loss from operating activities |  | (39701826) | (18596110) | (54095253) | (37722676) |
| Finance income |  | 16 | 4 | 1440<br>| 7343<br>|
| Finance costs |  | (379007) | (458786) | (1295529) | (816902) |
| Loss on issuance of derivatives | 8 |  |  | (2126955) | —<br>|
| Foreign exchange gains |  | 4613545 | 1501869 | 6020830<br>| 214482<br>|
| Change in revaluation of marketable securities |  |  | (77712) | — <br>| (89924) |
| Gain (loss) on revaluation of derivatives | 8, 14 | (1807890) | 5528509 | 7715810<br>| 7461839<br>|
|  |  | 2426664 | 6493884 | 10315596<br>| 6776838<br>|
| Loss before income taxes |  | (37275162) | (12102226) | (43779657) | (30945838) |
| Income tax (recovery) expense<br>|  | (12530) | 154 | (12530) | (11944) |
| Net loss |  | (37287692) | (12102072) | (43792187) | (30957782) |
| Other comprehensive loss |  |  |  |  |  |
| Net change in unrealized foreign currency losses on translation of net investments in foreign operations (tax effect of nil for all periods) |  | (3702162) | (2693068) | (6493641) | (716506) |
| Total other comprehensive loss<br>|  | (3702162) | (2693068) | (6493641) | (716506) |
| Total comprehensive loss |  | $(40989854) | $(14795140) | $(50285828) | $(31674288) |
| Net loss attributable to: |  |  |  |  |  |
| Equity holders of the Company<br>|  | $(30897458) | $(11112863) | $(35181808) | $(28020491) |
| Non-controlling interest | 11 | (6390234) | (989209) | (8610379) | (2937291) |
| Net loss |  | $(37287692) | $(12102072) | $(43792187) | $(30957782) |
| Total comprehensive loss attributable to: |  |  |  |  |  |
| Equity holders of the Company<br>|  | $(34599620) | $(13805931) | $(41675449) | $(28736997) |
| Non-controlling interest |  | (6390234) | (989209) | (8610379) | (2937291) |
| Total comprehensive loss |  | $(40989854) | $(14795140) | $(50285828) | $(31674288) |
| Basic and diluted loss per share attributable to: |  |  |  |  |  |
| Equity holders of the Company<br>|  | $(3.94) | $(2.33) | $(5.03) | $(5.89) |
| Non-controlling interest |  | $(0.81) | $(0.21) | $(1.23) | $(0.62) |
| Total loss per share | 13 | $(4.75) | $(2.54) | $(6.26) | $(6.51) |
| Basic and diluted weighted average number of common shares |  | 7842731 | 4776381 | 6996916<br>| 4760620<br>|

---

See accompanying notes to the condensed consolidated interim financial statements.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Condensed Consolidated Interim Statements of Changes in Equity

(Unaudited) (in U.S. dollars)

For the three and six-month periods ended September 30, 2022 and 2021

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | Share Capital | Share Capital | | | Accumulated<br>other<br>comprehensive<br>income (loss) | | | | |
|  | Notes | Number | Dollars | Warrants | Additional<br>paid-in<br>capital | Cumulative<br>translation<br>account | Deficit | Equity<br>attributable<br>to equity<br>holders<br>of the<br>Company | Equity<br>attributable to<br>non-controlling<br>interest | Total |
| Balance as at March 31, 2022 |  | 5560829 | $317051125 | $6079890 | $55980367 | $(7814163) | $(323181697) | $48115522 | $12722077 | $60837599 |
| Net loss for the period |  |  |  |  |  |  | (35181808) | (35181808) | (8610379) | (43792187) |
| Other comprehensive loss for the period |  |  |  |  |  | (6493641) |  | (6493641) |  | (6493641) |
| Total comprehensive loss for the period |  |  |  |  |  | (6493641) | (35181808) | (41675449) | (8610379) | (50285828) |
| Transaction with equity <br>holders recorded directly in <br>equity |  |  |  |  |  |  |  |  |  |  |
| Contributions by and distribution to equity holders |  |  |  |  |  |  |  |  |  |  |
| Share-based payment | 12 |  |  |  | 1826983 |  |  | 1826983 |  | 1826983 |
| Common shares issued in connection with debt financing<br>| 9, 10(g) | 409435<br>| 645921<br>| —<br>| —<br>| —<br>| —<br>| 645921<br>| —<br>| 645921<br>|
| Warrants exercised<br>| 8 | 384446<br>| 1769000<br>| —<br>| —<br>|  | —<br>| 1769000<br>| —<br>| 1769000<br>|
| RSUs released, net of withholding taxes | 10(d), 12(b)(ii) | 216658 | 2303859 |  | (1501139) |  |  | 802720 |  | 802720 |
| Direct Offering, net of issuance costs | 8 | 1945526 |  |  |  |  |  |  |  |  |
| Total contributions by and distribution to equity holders |  | 2956065 | 4718780 |  | 325844 |  |  | 5044624 |  | 5044624 |
| Balance as at September 30, 2022<br>|  | 8516894 | $321769905 | $6079890 | $56306211 | $(14307804) | $(358363505) | $11484697 | $4111698 | $15596395 |

---

See accompanying notes to the condensed consolidated interim financial statements.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Condensed Consolidated Interim Statements of Changes in Equity

(Unaudited) (in U.S. dollars)

For the three and six-month periods ended September 30, 2022 and 2021

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Attributable to equity holders of the Company | Attributable to equity holders of the Company | Attributable to equity holders of the Company | Attributable to equity holders of the Company | Attributable to equity holders of the Company | Attributable to equity holders of the Company | Attributable to equity holders of the Company | | | |
|  |  | Share Capital | Share Capital | | | Accumulated<br>other<br>comprehensive<br>income (loss) | | | | |
|  |  | Number | Dollars | Warrants | Additional<br>paid-in<br>capital | Cumulative<br>translation<br>account | Deficit | Equity<br>attributable to<br>equity holders<br>of the<br>Company | Equity<br>attributable to<br>non-controlling<br>interest | Total |
| Balance as at June 30, 2022 |  | 7614434 | $318921917 | $6079890 | $56346589 | $(10605642) | $(327466047) | $43276707 | $10501932 | $53778639 |
| Net loss for the period |  |  |  |  |  |  | (30897458) | (30897458) | (6390234) | (37287692) |
| Other comprehensive loss for <br>the period |  |  |  |  |  | (3702162) |  | (3702162) |  | (3702162) |
| Total comprehensive loss for <br>the period |  |  |  |  |  | (3702162) | (30897458) | (34599620) | (6390234) | (40989854) |
| Transaction with equity <br>holders recorded directly in <br>equity |  |  |  |  |  |  |  |  |  |  |
| Contributions by and <br>distribution to equity <br>holders |  |  |  |  |  |  |  |  |  |  |
| Share-based payment | 12 |  |  |  | 639883 |  |  | 639883 |  | 639883 |
| Common shares <br>issued in <br>connection with <br>debt financing | 9, 10(g) | 409435 | 645921 |  |  |  |  | 645921 |  | 645921 |
| Warrants exercised | 8 | 384446 | 1769000 |  |  |  |  | 1769000 |  | 1769000 |
| RSUs released, net of <br>withholding taxes | 10(d), 12(b)(ii) | 108579 | 433067 |  | (680261) |  |  | (247194) |  | (247194) |
| Total contributions by and <br>distribution to equity holders |  | 902460 | 2847988 |  | (40378) |  |  | 2807610 |  | 2807610 |
| Balance as at September 30, <br>2022 |  | 8516894 | $321769905 | $6079890 | $56306211 | $(14307804) | $(358363505) | $11484697 | $4111698 | $15596395 |

---

See accompanying notes to the condensed consolidated interim financial statements.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Condensed Consolidated Interim Statements of Changes in Equity (Continued)

(Unaudited) (in U.S. dollars)

For the three and six-month periods ended September 30, 2022 and 2021

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | Share Capital | Share Capital | | | Accumulated<br>other<br>comprehensive<br>income (loss) | | | | |
|  | Notes | Number | Dollars | Warrants | Additional<br>paid-in<br>capital | Cumulative<br>translation<br>account | Deficit | Equity<br>attributable to<br>equity holders<br>of the<br>Company | Equity<br>attributable to<br>non-controlling<br>interest | Total |
| Balance as at March 31, 2021 |  | 4732090 | $306618482 | $5900973 | $59625356 | $(8567106) | $(248209952) | $115367753 | $22177556 | $137545309 |
| Net loss for the period |  |  |  |  |  |  | (28020491) | (28020491) | (2937291) | (30957782) |
| Other comprehensive loss for the period |  |  |  |  |  | (716506) |  | (716506) |  | (716506) |
| Total comprehensive loss for the period |  |  |  |  |  | (716506) | (28020491) | (28736997) | (2937291) | (31674288) |
| Transaction with equity<br> holders recorded directly in <br>equity |  |  |  |  |  |  |  |  |  |  |
| Contributions by and distribution to equity holders |  |  |  |  |  |  |  |  |  |  |
| Share-based payment | 12 |  |  |  | 5237918 |  |  | 5237918 |  | 5237918 |
| Warrants in exchange of services rendered by non-employees | 10(f)(i) |  |  | 153650 |  |  |  | 153650 |  | 153650 |
| RSUs released, net of withholding taxes | 10(d), 12(b)(ii) | 47051 | 5568679 |  | (6546796) |  |  | (978117) |  | (978117) |
| Total contributions by and distribution to equity holders |  | 47051 | 5568679 | 153650 | (1308878) |  |  | 4413451 |  | 4413451 |
| Balance as at September 30, 2021 |  | 4779141 | $312187161 | $6054623 | $58316478 | $(9283612) | $(276230443) | $91044207 | $19240265 | $110284472 |

---

See accompanying notes to the condensed consolidated interim financial statements.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Condensed Consolidated Interim Statements of Changes in Equity (Continued)

(Unaudited) (in U.S. dollars)

For the three and six-month periods ended September 30, 2022 and 2021

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | Attributable to equity holders of the Company | Attributable to equity holders of the Company | Attributable to equity holders of the Company | Attributable to equity holders of the Company | Attributable to equity holders of the Company | Attributable to equity holders of the Company | | | |
|  |  | Share Capital | Share Capital | | | Accumulated<br>other<br>comprehensive<br>income | | | | |
|  |  | Number | Dollars | Warrants | Additional<br>paid-in<br>capital | Cumulative<br>translation<br>account | Deficit | Equity<br>attributable to<br>equity holders<br>of the<br>Company | Equity<br>attributable to<br>non-controlling<br>interest | Total |
| Balance as at June 30, 2021 |  | 4773750 | $310780282 | $5993658 | $57565128 | $(6590544) | $(265117580) | $102630944 | $20229474 | $122860418 |
| Net loss for the period |  |  |  |  |  |  | (11112863) | (11112863) | (989209) | (12102072) |
| Other comprehensive loss for <br>the period |  |  |  |  |  | (2693068) |  | (2693068) |  | (2693068) |
| Total comprehensive loss for the <br>period |  |  |  |  |  | (2693068) | (11112863) | (13805931) | (989209) | (14795140) |
| Transaction with equity <br>holders recorded directly in <br>equity |  |  |  |  |  |  |  |  |  |  |
| Contributions by and <br>distribution to equity <br>holders |  |  |  |  |  |  |  |  |  |  |
| Share-based payment | 12 |  |  |  | 2157649 |  |  | 2157649 |  | 2157649 |
| Warrants in exchange <br>of services rendered <br>by non-employees | 10(f)(i) |  |  | 60965 |  |  |  | 60965 |  | 60965 |
| RSUs released, net of <br>withholding taxes | 10(d), 12(b)(ii) | 5391 | 1406879 |  | (1406299) |  |  | 580 |  | 580 |
| Total contributions by and <br>distribution to equity holders |  | 5391 | 1406879 | 60965 | 751350 |  |  | 2219194 |  | 2219194 |
| Balance as at September 30, <br>2021 |  | 4779141 | $312187161 | $6054623 | $58316478 | $(9283612) | $(276230443) | $91044207 | $19240265 | $110284472 |

---

See accompanying notes to the condensed consolidated interim financial statements.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited) (in U.S. dollars)

For the three and six-month periods ended September 30, 2022 and 2021

---

| | | | |
|:---|:---|:---|:---|
|  | Six-month periods ended | Six-month periods ended | Six-month periods ended |
|  | Notes | September 30,<br>2022 | September 30,<br>2021 |
| Cash flows from operating activities: |  |  |  |
| Net loss for the period |  | $(43792187) | $(30957782) |
| Adjustments: |  |  |  |
| Depreciation of property, plant and equipment |  | 462193 | 1411846 |
| Non-cash lease expense |  | 314900 | 432742 |
| Amortization of intangible assets |  | 952057 | 1775889 |
| Impairment loss on goodwill<br>| 6 | 7570471 | — <br>|
| Impairment loss on tradenames<br>| 6 | 2593529<br>|  |
| Share-based payment | 12 | 1826983 | 5237918 |
| Impairment loss on inventories | 4 | 3079997 | 3009098 |
| Expected credit losses |  | 133685 | 1987134 |
| Non-employee compensation related to warrants | 10(f)(i) |  | 153650 |
| Loss on issuance of derivatives |  | 2126955 |  |
| Net finance expense |  | 1294089 | 809559 |
| Unrealized foreign exchange (gain) loss |  | (6020830) | 486852 |
| Change in revaluation of marketable securities |  |  | 89924 |
| Interest received |  | 1440 | 7167 |
| Interest paid |  | (44784) | (391022) |
| Revaluation of derivatives |  | (7715810) | (7461839) |
| Impairment loss on property, plant and equipment | 5 |  | 2414702 |
| Impairment loss on assets held for sale<br>| 5 | 15346119 | — <br>|
| Payment of lease liabilities |  | (227107) | (145138) |
| Income tax expense |  | 12530 | 11944 |
| Net gains from sale of property, plant and equipment |  | (85002) |  |
| Changes in operating assets and liabilities |  | 8087556 | (12426342) |
| Income taxes paid |  | (360) | (11944) |
| Net cash used in operating activities |  | (14083576) | (33565642) |
| Cash flows from investing activities: |  |  |  |
| Acquisition of property, plant and equipment |  | (601743) | (524844) |
| Acquisition of intangible assets |  |  | (436018) |
| Net cash used in investing activities: |  | (601743) | (960862) |
| Cash flows from financing activities: |  |  |  |
| Increase in loans and borrowings, net of financing fees |  | 3250000<br>| —<br>|
| Proceeds from sale of property, plant and equipment |  | 85002<br>| —<br>|
| Withholding taxes paid pursuant to the settlement of non-treasury RSUs |  | (260034) | (978117) |
| Gross proceeds from the issuance of shares and warrants through a Direct Offering | 8 | 5000002 |  |
| Issuance of shares and warrants costs | 8 | (465211) |  |
| Proceeds from exercise of options and pre-funded warrants | 8 | 65 |  |
| Net cash provided by (used in) financing activities: |  | 7609824 | (978117) |
| Foreign exchange loss on cash and cash equivalents |  | (256243) | (13054) |
| Net decrease in cash and cash equivalents |  | (7331738) | (35517675) |
| Cash and cash equivalents, beginning of period |  | 8726341 | 59836889 |
| Cash and cash equivalents as at September 30, 2022 and 2021 |  | $1394603 | $24319214 |
| Cash and cash equivalents is comprised of: |  |  |  |
| Cash |  | $1394603 | $24319214 |

---

See accompanying notes to the condensed consolidated interim financial statements.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Condensed Consolidated Interim Statements of Cash Flows (continued)

(Unaudited) (in U.S. dollars)

For the three and six-month periods ended September 30, 2022 and 2021

Supplemental cash flow disclosure:

Changes in operating assets and liabilities:

---

| | | |
|:---|:---|:---|
|  | Six-month periods ended | Six-month periods ended |
|  | September 30,<br>2022 | September 30,<br>2021 |
| Trade and other receivables | $2519493 | $(2749349) |
| Prepaid expenses | 1107312 | (465022) |
| Inventories | (1829027) | (1188778) |
| Trade and other payables | 1766915 | (7067094) |
| Deferred revenues | (154540) | 452621 |
| Provisions | 4742091 | (1256033) |
| Other liabilities | (64688) | (152687) |
| Changes in operating assets and liabilities | $8087556 | $(12426342) |

---

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

1. **Reporting entity:** 

Neptune Wellness Solutions Inc. (the "Company" or "Neptune") is incorporated under the Business Corporations Act (Québec) (formerly Part 1A of the Companies Act (Québec)). The Company is domiciled in Canada and its registered office is located at 100-545 Promenade du Centropolis, Laval, Québec. The condensed consolidated interim financial statements of the Company comprise the Company and its subsidiaries, Biodroga Nutraceuticals Inc. ("Biodroga"), SugarLeaf Labs, Inc. ("SugarLeaf"), 9354-7537 Québec Inc., Neptune Holding USA, Inc., Neptune Health & Wellness Innovation, Inc., Neptune Forest, Inc., Neptune Care, Inc. (formerly known as Neptune Ocean, Inc.), Neptune Growth Ventures, Inc., 9418-1252 Québec Inc., Neptune Wellness Brands Canada, Inc. and Sprout Foods, Inc. ("Sprout").

Neptune is a diversified and fully integrated health and wellness company. Through its flagship consumer-facing brands, Neptune Wellness, Forest Remedies<sup>™</sup>, Biodroga, MaxSimil<sup>®</sup>, Sprout<sup>®</sup>, Nosh<sup>®</sup> and NurturMe<sup>®</sup>, Neptune is redefining health and wellness by building a broad portfolio of natural, plant-based, sustainable and purpose-driven lifestyle brands and consumer packaged goods products in key health and wellness markets, including nutraceuticals, organic baby food, personal care and home care.

On June 8, 2022, Neptune announced the launch of a new Consumer Packaged Goods ("CPG") focused strategic plan to reduce costs, improve the Company's path to profitability and enhance current shareholder value. This plan builds on the Company's initial strategic review that took place in fall of 2021 and focuses on two primary actions: (1) the divestiture of the Company's Canadian cannabis business and (2) a realignment of focus and operational resources toward increasing the value of Neptune's CPG business.

Sale of Cannabis Assets

On October 17, 2022, Neptune announced an agreement to sell substantially all of its Cannabis assets (including, but not limited to, the production facility located in Sherbrooke, Québec and certain legal entities including various related brand names and trademarks, including MoodRing and PanHash) to PurCann Pharma Inc. These assets were reported as Assets Held For Sale ("AHFS") as of September 30, 2022. On November 9, 2022 the sale to PurCann Pharma Inc. was completed.

Share consolidation and delisting from TSX

On June 9, 2022, Neptune announced the completion of the Company's proposed consolidation of its common shares (the "Common Shares") on the basis of one (1) post-consolidation Common Share for every thirty-five (35) pre-consolidation Common Shares (the "Share Consolidation"). The post-consolidation Common Shares commenced trading on the NASDAQ and the TSX at the market open on June 13, 2022. The Share Consolidation reduced the number of Common Shares issued and outstanding from approximately 198 million Common Shares to approximately 5.7 million Common Shares as at June 13, 2022. These consolidated financial statements have been retroactively adjusted to reflect the Share Consolidation. As a result, the number of common shares, options, deferred share units ("DSUs"), restricted share units ("RSUs"), restricted shares and warrants, issuance and exercise prices of options, DSUs, RSUs, restricted shares and warrants, loss per share reflect the Share Consolidation.

On July 29, 2022, Neptune announced that it has applied and received approval for a voluntary delisting of its common shares from the Toronto Stock Exchange ("TSX"). The delisting from the TSX will not affect the Company's listing on the Nasdaq Capital Market ("Nasdaq"). Neptune's common shares were delisted from the TSX at the close of trading on August 15, 2022.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

Going concern

These condensed consolidated interim financial statements have been prepared on a going concern basis, which presumes that the Company will continue realizing its assets and discharging its liabilities in the normal course of business for the foreseeable future. The Company has incurred significant operating losses and negative cash flows from operations since inception. To date, the Company has financed its operations primarily through the public offering and private placement of Common Shares, units consisting of Common Shares and warrants, and convertible debt, the proceeds from research grants and research tax credits, and the exercises of warrants, rights and options. For the six-month period ended September 30, 2022, the Company incurred a net loss of $43.8 million and negative cash flows from operations of$14.1 million, and had an accumulated deficit of $358.4 million as of September 30, 2022. For the year ended March 31, 2022, the Company incurred a net loss of $84.4 million and negative cash flows from operations of $54.3 million. Furthermore, as at September 30, 2022, the Company's current liabilities and expected level of expenses for the next twelve months exceed cash on hand of $1.4 million and its total current liabilities exceed its total current assets. Accordingly, the Company is required to actively manage its liquidity and expenses and payments of payables are not being made as the amounts become due for certain suppliers.

The Company currently has no committed sources of financing available other than from transactions completed after period-end from the sale of its Canadian cannabis business (see note 2(d)) and the registered direct offering (see note 18).

As of the date these financial statements are authorized for issuance, the cash balance is expected to be sufficient to operate the business for only the next two to three months under the current business plan. The Company requires funding in the very near term in order to continue its operations. If the Company is unable to obtain funding in the near-term, it may have to cease operations and liquidate its assets.

These conditions cast substantial doubt about the Company's ability to continue as a going concern.

Going forward, the Company will seek additional financing in various forms. To achieve the objectives of its business plan, Neptune plans to raise the necessary funds through additional securities offerings and the establishment of strategic alliances. Other than the secured promissory notes issued by Sprout, the Company has limited debt and assets available for financing include accounts receivable and inventories. The ability of the Company to complete the needed financing and ultimately achieve profitable operations is dependent on a number of factors outside of the Company's control. The Company's business plan is dependent upon, among other things, its ability to achieve and maintain profitability, continue to obtain adequate ongoing debt and/or equity financing to finance operations within and beyond the next twelve months.

While the Company has been successful in obtaining financing from public issuances and private placements, there is no certainty as to future financings.

These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the going concern basis not be valid. These adjustments could be material.

2. Basis of preparation:

(a) Adoption of U.S. GAAP:

As at March 31, 2022, the Company retroactively adopted United States generally accepted accounting principles ("US GAAP"). The consolidated financial statements of the Company have been prepared in accordance with US GAAP for all periods presented. Comparative figures, which were previously

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board, have been adjusted as required to be compliant with the Company's accounting policies under US GAAP.

(b) Functional and reporting currency:

Effective March 31, 2022, the Company changed its reporting currency from Canadian dollars ("CAD") to U.S. dollars ("USD"). This change in reporting currency has been applied retroactively such that all amounts in the consolidated financial statements of the Company and the accompanying notes thereto are expressed in U.S. dollars. References to "$" and "USD" are U.S dollars and references to "CAD $" and "CAD" are to Canadian dollars. For comparative purposes, historical consolidated financial statements were recast in U.S. dollars by translating (i) assets and liabilities at the closing exchange rate in effect at the end of the respective period, (ii) revenues, expenses and cash flows at the average exchange rate in effect for the respective period and (iii) equity transactions at historical exchange rates. Translation gains and losses are included as part of the cumulative foreign currency translation adjustment, which is reported as a component of shareholders' equity under accumulated other comprehensive loss.

The assets and liabilities of foreign operations with a functional currency other than the U.S. dollar are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Revenue and expenses are translated at the monthly average exchange rates for the period. Differences arising from the exchange rate changes are recorded within foreign currency translation adjustments, a component of other comprehensive income (loss).

Transactions in foreign currencies are translated to the respective functional currencies of the Company's subsidiaries at the average exchange rates for the period. The monetary items denominated in currencies other than the functional currency of a subsidiary are translated at the exchange rates prevailing at the balance sheet date. Non-monetary items denominated in currencies other than the functional currency are translated at historical rates. Gains and losses resulting from re-measurement are recorded in the Company's consolidated statement of loss as foreign exchange gain (loss).

The functional currency of the Company is the Canadian dollars.

(c) Use of estimates:

The preparation of the condensed consolidated interim financial statements in accordance with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from the estimates made by management.

Estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Estimates include the following:

• Estimating the write down of inventory.

• Estimating expected credit losses for receivables.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

• Estimating the recoverable amount of non-financial assets, to determine and measure impairment losses on goodwill, intangibles, and property, plant and equipment.

• Estimating the lease term of contracts with extension options and termination options.

• Estimating the revenue from contracts with customers subject to variable consideration.

• Estimating the fair value of bonus, options and warrants that are based on market and non-market conditions (note 12).

• Estimating the fair value of the identifiable assets acquired, liabilities assumed, and consideration transferred of the acquired business, including the related contingent consideration and call option.

• Estimating the litigation provision as it depends upon the outcome of proceedings (note 7) and

• Estimating fair value less costs to sell off assets held for sale (note 2 (d)).

(d) Assets held for sale:

On June 8, 2022, the Company announced a planned divestiture of the Canadian cannabis business and that the Company would focus on winding up its cannabis operations pending one or more sales transactions. Following this announcement, the Canadian cannabis disposal group assets met the criteria to be classified as held for sale. As at September 30, 2022, non-current assets related to the Canadian cannabis business are presented under assets held for sale on Neptune's balance sheet. Comparative balance sheet amounts have not been reclassified. The disposal group has been measured at fair value less cost to sell and impaired to reflect the asset sale and purchase agreement (the "ASPA") signed with a third-party on October 16, 2022 for approximately $3,790,340 ($5,150,000 CAD), with expected cost to sell the Canadian cannabis disposal group asset in the amount of $586,783, for net assets held for sale of $3,203,557, resulting in impairment losses of $14,530,458 and $15,346,119 respectively for the three and six-month periods ended September 30, 2022. The transaction closed on November 9, 2022.

The following table presents information related to the major classes of assets and liabilities that were classified as held for sale

---

| | |
|:---|:---|
|  | September 30,<br>2022 |
| Land<br>| $165878 |
| Building and building components<br>| 16064102 |
| Laboratory and plant equipment<br>| 2816144 |
| Intangible assets<br>| 90335 |
| Costs related to sale of assets<br>| (586783) |
| Impairment loss<br>| (15346119) |
| Assets held for sale | $3203557 |

---

3. **Significant accounting policies:** 

These unaudited Consolidated Interim Financial Statements have been prepared in accordance U.S. GAAP and on a basis consistent with those accounting principles followed by the Company and disclosed in note 2 of its Annual Consolidated Financial Statements for the year ended March 31, 2022, (except as disclosed in note 3(c) to these financial statements) and should be read in conjunction with and Notes thereto.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

(a) Basis of consolidation:

These consolidated financial statements include the accounts of the Company and its subsidiaries in which the Company has a controlling financial interest. All intercompany balances and transactions have been eliminated from the Company's consolidated financial statements. On February 10, 2021, Neptune acquired a 50.1% interest in Sprout Foods, Inc. ("Sprout" or "Sprout Foods"). The accounts of the subsidiary are included in the consolidated financial statements from that date.

(b) New standards and interpretations not yet adopted:

Accounting pronouncements not yet adopted

In October 2021, the FASB issued ASU 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends ASC Topic 805, Business Combinations, ASU 2021-18 improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the (1) recognition of an acquired contract liability and (2) payment terms and their direct effect on subsequent revenue recognized by the acquirer. ASU 2021-08 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2022. Management has not yet evaluated the impact of this ASU on the Company's consolidated financial statements and the Company does not intend to adopt ASU 2021-18 for periods prior to periods beginning after December 15, 2022.

(c) Assets held for sale:

The Company classifies long-lived assets or disposal groups to be sold as held for sale in the period in which all of the following criteria are met: management, having the authority to approve the action, commits to a plan to sell the asset or disposal group; the asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets or disposal groups; an active program to locate a buyer and other actions required to complete the plan to sell the asset or disposal group have been initiated; the sale of the asset or disposal group is probable, and transfer of the asset or disposal group is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond our control extend the period of time required to sell the asset or disposal group beyond one year; the asset or disposal group is subject to an asset sale and purchase agreement (see notes 2(d)); and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Assets and liabilities directly associated with assets held for sale are measured at the lower of carrying amount and fair value less costs to sell immediately prior to their classification. Any loss resulting from this measurement is recognized in the period in which the held-for-sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset or disposal group until the date of sale.

Assets classified as held for sale, and the assets and liabilities included within a disposal group classified as held for sale are presented separately on the face of the balance sheet. Non-current assets that are classified as held for sale are not depreciated.

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

4. Inventories:

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| | | |
|:---|:---|:---|
|  | September 30,<br>2022 | March 31,<br>2022 |
| Raw materials | $5428373 | $7920190 |
| Work in progress | 414356 | 1016916 |
| Finished goods | 9708583 | 7974690 |
| Supplies and spare parts | 257124 | 147610 |
|  | $15808436 | $17059406 |

---

During the three and six-month periods ended September 30, 2022, the Company recorded impairment losses of nil

and $3,079,997 respectively (2021 – Impairment losses of $3,009,098 and $3,009,098, respectively) as a result of inventory measurements to their net realizable value. The impairment loss during the six-month period ended September 30, 2022 are related Cannabis inventories that were impaired because they were subsequently sold at lower than costs or expected to be sold at net realizable values that are lower than costs.

5. Property, plant and equipment:

As at September 30, 2022, property, plant and equipment related to the Canadian cannabis asset group were classified as assets held for sale on the balance sheet (refer to note 2(d)). As indicated in note 2(d), the Cannabis related assets were written down, resulting in impairment losses of $14,530,458 and $15,346,119 respectively for the three and six-month periods ended September 30, 2022.

Impairment losses for the three and six-month periods ended September 30, 2021 were $1,884,970 and $2,414,702 respectively. The Company impaired certain equipment of the Canadian cannabis long-lived assets to nil resulting in an impairment charge of $905,028 and $1,434,760 for the three and six-months ended September 30, 2021 respectively. In addition, the Company impaired the long-lived assets of the SugarLeaf reporting unit as they were no longer generating economic benefits. The fair value of these long-lived assets was established to be nil and as such an impairment charge of $979,942 was recorded during the six-month period ended September 30, 2021.

6. Goodwill and intangible assets:

The Company assesses at each reporting date whether there is an indication that an asset group or a reporting unit may be impaired. During the second quarter of 2022, there were changes in the general economic and financial conditions of the markets the Company serves. The Company's Sprout reporting unit was adversely impacted during the second quarter of 2022 by these conditions, which impacted the current period results. Accordingly, management concluded that these factors were indicators of impairment.

As a result, management performed an impairment test for the Sprout reporting unit, for which it revised its assumptions on projected earnings and cash flows growth, as well as its assumptions on discount rates used to apply to the forecasted cash flows, using its best estimate of the conditions existing at September 30, 2022. Although management used its best estimate to assess the potential impact of the changes in the general economic conditions on the Company's business, management exercised significant judgment to estimate forecasted cash flows and discount rate, using assumptions which are subject to significant uncertainties. Accordingly, differences in estimates could affect whether a reporting unit is impaired and the

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

dollar amount of that impairment, which could be material. The Company compared the carrying amount of the reporting unit to the fair value. The fair value of the Sprout reporting unit was determined to be lower than the carrying value and a $7,570,471 goodwill impairment expense was recorded in the quarter ended September 30, 2022.

The fair value of the reporting unit was estimated using a discounted cash flow model with a WACC post-tax discount rate of 11.0% and a market multiples valuation approach. The discount rate represents the risk adjusted WACC of the reporting unit, based on publicly available information and that of comparable companies operating in similar industries. Determination of the WACC requires separate analysis of the cost of equity and debt, and considers a risk premium based on an assessment of risks related to the projected cash flows of the reporting unit.

Cash flows were projected based on past experience, actual operating results and the three-year business plan including a terminal growth rate of 3.5%.

The most significant assumptions used to estimate the fair values using a discounted cash flow model included the forecasted revenue, gross margins, net working capital investment, terminal value as well as the discount rate. These significant assumptions are classified as Level 3 in the fair value hierarchy, signifying that they are not based on observable market data. A decrease in the projected cash flow or an increase in discount rate could have resulted in a higher impairment charge. Should these projections not be realized, or the discount rate needs to be increased, an impairment loss may be needed in future periods. Due to the impairment losses recorded during the second quarter of 2023, there is no headroom between the fair value of the reporting unit and its carrying value and therefore, changes in assumptions in future periods may result in additional impairment charges.

The aggregate amount of goodwill is allocated to each reporting unit as follows:

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| | | |
|:---|:---|:---|
|  | September 30,<br> 2022 | March 31,<br> 2022 |
| Biodroga | $2382374 | $2625851 |
| Sprout | 11971966 | 19542437 |
|  | $14354340 | $22168288 |

---

The Company also identified a trigger of impairment related to its intangible assets and recorded an impairment charge of $2,593,529 for Sprout trademarks. The fair value was determined using a relief from royalty discounted cash flow model.

7. **Provisions** 

(a) During the year ended March 31, 2019, the Company received a judgment from the Superior Court of Québec (the "Court") in respect of certain royalty payments alleged to be owed and owing to a former chief executive officer of the Company (the "Former CEO") pursuant to the terms of an agreement entered into on February 23, 2001 between Neptune and the Former CEO (the "Royalty Agreement"). The Company appealed the judgment which was dismissed by the Court of Appeal of Québec in February 2021. Under the terms of the Royalty Agreement and as maintained by the court, annual royalties of 1 % of the sales and other revenue made by the Company on a consolidated basis are payable by the Company to the Former CEO biannually, but only to the extent that the cost of the royalty would not cause the Company to have a loss before interest, taxes and amortization (in which case, the payments would be deferred to the following fiscal year).

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

As of September 30, 2022, a provision of $532,614

(March 31, 2022—$362,809) has been recorded by the Company. During the three and six-month periods ended September 30, 2022, the Company increased the provision by $90,625 and $216,829 respectively, recorded foreign currency translation adjustments of $(35,993) and $(47,024) respectively, and made no payments to the Former CEO in relation to this provision. During the three and six-month periods ended September 30, 2021, the Company increased the provision by $399,005 and $515,472 respectively, recorded foreign currency translation adjustments of $(21,962) and $9,811 respectively, and made payments totaling $354,287 and $1,771,506 respectively to the Former CEO in relation to this provision.

Effective as of September 20, 2022, the Company notified the Former CEO that it was exercising its legal rights to terminate the Royalty Agreement. In response to such termination, the Former CEO is seeking a declaratory judgment that the Company did not have the legal right to terminate the Royalty Agreement.

(b) In September 2020, Neptune submitted a claim and demand for arbitration against Peter M. Galloway and PMGSL Holdings, LLC (collectively "PMGSL") in accordance with the SugarLeaf Asset Purchase Agreement ("APA") dated May 9, 2019 between Neptune, PMGSL, Peter M. Galloway and Neptune Holding USA, Inc. Separately, PMGSL submitted a claim and demand for arbitration against Neptune. The Neptune claims and PMGSL claims have been consolidated into a single arbitration and each are related to the purchase by Neptune of substantially all of the assets of the predecessor entities of PMGSL Holdings, LLC. Neptune is claiming, among other things, breach of contract and negligent misrepresentation by PMGSL in connection with the APA and is seeking, among other things, equitable restitution and any and all damages recoverable under law. PMGSL is claiming, among other things, breach of contract by Neptune and is seeking, among other things, payment of certain compensation contemplated by the APA. A merit hearing in the arbitration took place in April 2022 and August 1, 2022. While Neptune believes there is no merit to the claims brought by PMGSL, a judgment in favor of PMGSL may have a material adverse effect on our business and Neptune intends to continue vigorously defending itself. Based on currently available information, a provision of $600,000 has been recognized for this case as at September 30 , 2022 ($600,000 as at March 31, 2022).

(c) A supplier of cannabis initiated a lawsuit against the Company's subsidiary, 9354-7537 Quebec Inc., ("9354") for breach of a Wholesale Cannabis Supply Agreement (the "Supply Agreement") for the purchase of cannabis trim. The purchased trim was rejected by 9354 due to quality concerns. The supplier refused to refund the purchase price and ultimately sued 9354 for breach of the Supply Agreement. The matter proceeded to trial in November 2021, and on March 23, 2022, an arbitrator entered an arbitration award against 9354 for the full purchase price of the trim. With fees and costs, the final arbitrator's award entered against 9354 was $1,127,024 , plus applicable interest. During the quarter ended June 30, 2022, the parties engaged into settlement negotiations which resulted in the execution of a settlement agreement dated July 13, 2022 . As at June 30, 2022, the payable was revised to the settlement amount of $543,774 which resulted in the recognition of a settlement gain of $583,430 under Selling, general and administrative expenses for the three-month period ended June 30, 2022. During the three-month period ended September 30, 2022, the Company made a payment of $328,439 to the supplier, and recorded foreign currency translation adjustments of $(15,814). As at September 30, 2022, the balance of this payable was $199,521 ($1,127,024 as at March 31, 2022) and it was paid on October 12, 2022. This provision was included in trade and other payables as at March 31, 2022 and September 30, 2022.

(d) On March 16, 2021, a purported shareholder class action was filed in United States District Court for the Eastern District of New York against the Company and certain of its current and former officers alleging violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, with respect to

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

the Company's acquisition of SugarLeaf Labs, Inc. On October 21, 2022, the Company announced that it had agreed to settle and resolve the purported shareholder class action for a gross payment to the class of between $4 and $4.25 million, with the exact amount being within the Company's control and dependent on the type of consideration used. The settlement is subject to court approval and certification by the court of the class. An installment of $500,000 will be made seven days after the approval date, with two additional payments to be made 30 days and 60 days after the first payment. The rest is payable either in cash ($2500000) or in shares ($2750000) at Neptune's election. As of September 30, 2022, a provision and an expense within selling, general administration of $4,000,000 (March 31, 2022 - nil) has been recorded by the Company. <br>

(e) As at September 30, 2022, the Company has various additional other provisions for legal fees obligations for an aggregate amount of $728,090 (March 31, 2022 – $155,804).

8. Liability related to warrants:

The Company has issued common shares, pre-funded warrants and warrants as part of its financing arrangements which are exercisable for a variable number of shares. Common shares and pre-funded warrants are classified as equity. Warrants are classified as liabilities rather than equity.

On June 23, 2022, Neptune issued a total of 645,526 pre-funded warrants ("Pre-Funded Warrants"), along with 1,300,000 common shares of the Company, as part of a registered direct offering ("June 2022 Direct Offering"). Each Pre-Funded Warrant was exercisable for one Common Share. The common shares and the Pre-Funded Warrants were sold together with 1,945,526 Series C Warrants (the "Series C Warrants"), and 1,945,526 Series D Warrants (the "Series D Warrants") and collectively, the "June 2022 Common Warrants". Each of the June 2022 Common Warrant is exercisable for one common share. Each of the common share and Pre-Funded Warrants and the accompanying June 2022 Common Warrants were sold together at a combined offering price of $2.57, for aggregate gross proceeds of $5,000,002 before deducting fees and other estimated offering expenses. The Pre-Funded Warrants are funded in full at closing except for a nominal exercise price of $0.0001 and are exercisable commencing on the Closing Date and will terminate when such Pre-Funded Warrants are exercised in full. The Series C Warrants and the Series D Warrants have an exercise price of $2.32 per share and can be exercised for a period of 5 years and 2 years respectively from the date of issuance. On October 6, 2022, the Company agreed to extend the termination date of 972,763 Series C Warrants by two years.

Proceeds of the June 2022 Direct Offering were allocated between common shares and warrants first by allocating proceeds to the warrants classified as a liability based on their fair value and then allocating the residual to the equity instruments, which includes the Pre-Funded Warrants. The fair value of the liability-classified warrants was determined using the Black-Scholes model, resulting in an initial warrant liability of $4,046,836 for the Series C Warrants and $3,080,121 for the Series D Warrants. Because the fair value of the liability classified warrant exceeded the total proceeds, no consideration was allocated to the Common Shares and Pre-Funded Warrants and a loss $2,126,955 was immediately recognized in the net loss of the period as there were no additional rights or privileges identified. The Company is in need of financing to be able to continue its activities as described in note 1. The Pre-Funded Warrants were exercised in full on June 24, 2022 for gross proceeds of $65. Total issue costs related to this private placement of $465,211, were recorded under finance costs.

During the month of August 2022, a total of 201,207 Series C Warrants and 972,763 Series D Warrants were exercised at $2.32 each in cashless transactions, which resulted in an aggregate total of 384,446 shares being issued for an aggregate value of $1,769,000.

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

The fair value of the Series C Warrants and Series D Warrants liability was determined using the Black-Scholes model. Warrants are revalued each period-end at fair value and accounted for in the Company's profit and loss statement under "gain on revaluation of derivatives".

Changes in the value of the liability related to the warrants for the six-month period ended September 30, 2022 and 2021 were as follows:

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| | | |
|:---|:---|:---|
|  | Warrants | Amount |
| Outstanding as at March 31, 2021 | 497355 | $10462137 |
| Revaluation |  | (7231224) |
| Movements in exchange rates |  | 39349 |
| Outstanding as at September 30, 2021<br>| 497355 | 3270262 |
| Outstanding as at March 31, 2022 | 1925929 | $5570530 |
| Warrants issued during the period | 3891052 | 7126957 |
| Warrants exercised during the period<br>| (1173970) | (1769000) |
| Revaluation gain |  | (7715810) |
| Movements in exchange rates |  | (392652) |
| Outstanding as at September 30, 2022<br>| 4643011 | 2820025 |

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The following table provides the relevant information on the outstanding warrants as at September 30, 2022:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| <br>Reference | Date of issuance | Number of warrants<br>outstanding | Number of warrants<br>exercisable | Exercise price | Expiry date |
| <br>2020 Warrants | October 22, 2020 | 300926 | 300926 | $78.75 | October 22, 2025 |
| <br>2021 Warrants | February 19, 2021 | 196429 | 196429 | $78.75 | August 19, 2026 |
| <br>Series A Warrants | March 14, 2022 | 714287 | 714287 | $11.20 | September 14, 2027 |
| Series B Warrants | March 14, 2022 | 714287 | 714287 | $11.20 | March 14, 2028 |
| Series C Warrants | June 23, 2022 | 771556 | 771556 | $2.32 | June 23, 2027 |
| Series C Warrants<br>| June 23, 2022<br>| 972763<br>| 972763<br>| $2.32<br>| June 23, 2029<br>|
| Series D Warrants | June 23, 2022 | 972763 | 972763 | $2.32 | June 24, 2024 |
|  |  | 4643011 | 4643011 | $13.24 |  |

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The derivative warrant liabilities are measured at fair value at each reporting period and the reconciliation of changes in fair value is presented in the following tables:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | 2020 Warrants | 2020 Warrants | 2021 Warrants | 2021 Warrants |
|  | September 30,<br>2022 | September 30,<br>2021 | September 30,<br>2022 | September 30,<br>2021 |
| Balance - beginning of period | $309769 | $6174137 | $306704 | $4288000 |
| Change in fair value | (279056) | (4279268) | (276527) | (2951956) |
| Translation effect | (11655) | 23614 | (11525) | 15735 |
| Balance - end of period | $19058 | $1918483 | $18652 | $1351779 |

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Series A Warrants | Series A Warrants | Series B Warrants | Series B Warrants |
|  | September 30,<br>2022 | September 30,<br>2021 | September 30,<br>2022 | September 30,<br>2021 |
| Balance - beginning of period | $3270816 | $— | $1683241 | $— |
| Change in fair value | (2728178) |  | (1571237) |  |
| Translation effect | (136418) |  | (59975) |  |
| Balance - end of period | $406220 | $— | $52029 | $— |

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Series C Warrants | Series C Warrants | Series D Warrants | Series D Warrants |
|  | September 30,<br>2022 | September 30,<br>2021 | September 30,<br>2022 | September 30,<br>2021 |
| Balance - beginning of period | $— | $— | $— | $— |
| Warrants issued during the period | 4046836 |  | 3080121 |  |
| Warrants exercised during the period<br>| (365224) | —<br>| (1403776) | —<br>|
| Change in fair value | (1881806) |  | (979006) |  |
| Translation effect | (121760) |  | (51319) |  |
| Balance - end of period | $1678046 | $— | $646020 | $— |

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

The fair value of the derivative warrant liabilities was estimated using the Black-Scholes option pricing model and based on the following assumptions:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | 2020 Warrants | 2020 Warrants | 2021 Warrants | 2021 Warrants |
|  | September 30,<br>2022 | September 30,<br>2021 | September 30,<br>2022 | September 30,<br>2021 |
| Share price | $1.52 | $21.00 | $1.52 | $21.00 |
| Exercise price | $78.75 | $78.75 | $78.75 | $78.75 |
| Dividend yield |  |  |  |  |
| Risk-free interest | 4.18% | 0.77% | 4.10% | 0.96% |
| Remaining contractual life (years) | 3.06 | 4.07 | 3.88 | 4.89 |
| Expected volatility | 99.0% | 81.6% | 93.1% | 76.1% |

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Series A Warrants | Series A Warrants | Series B Warrants | Series B Warrants |
|  | September 30,<br>2022 | September 30,<br>2021 | September 30,<br>2022 | September 30,<br>2021 |
| Share price | $1.52 | $— | $1.52 | $— |
| Exercise price | $11.20 | $— | $11.20 | $— |
| Dividend yield |  |  |  |  |
| Risk-free interest | 3.98% |  | 3.97% |  |
| Remaining contractual life (years) | 4.96 |  | 0.96 |  |
| Expected volatility | 90.8% |  | 117.1% |  |

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Series C Warrants | Series C Warrants | Series D Warrants | Series D Warrants |
|  | September 30,<br>2022 | June 23, 2022<br>(Grant date) | September 30,<br>2022 | June 23, 2022<br>(Grant date) |
| Share price | $1.52 | $2.90 | $1.52 | $2.90 |
| Exercise price | $2.32 | $2.32 | $2.32 | $2.32 |
| Dividend yield |  |  |  |  |
| Risk-free interest | 4.01% | 3.38% | 4.11% | 3.21% |
| Remaining contractual life (years) | 4.73 | 5.00 | 1.73 | 2.00 |
| Expected volatility | 90.1% | 84.0% | 107.7% | 88.7% |

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The Company measured its derivative warrant liabilities at fair value on a recurring basis. These financial liabilities were measured using level 3 inputs. The Company uses the historical volatility of the underlying share to establish the expected volatility of the warrants. An increase or decrease in this assumption to estimate the fair values using the Black-Scholes option pricing model would result in an increase or a decrease in the fair value of the instruments, respectively.

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

9. Loans and borrowings:

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| | | |
|:---|:---|:---|
|  | September 30,<br>2022 | March 31,<br>2022 |
| Loans and borrowings: |  |  |
| Promissory note originally of $10,000,000 and increased to $13,000,000 on July 13, 2022, issued by Sprout, guaranteed by the Company and secured through a first-ranking mortgage on all movable current and future, corporeal and incorporeal, and tangible and intangible assets of Sprout. The outstanding principal balance bears interest at the rate of 10.0% per annum, increasing by 1.00% every three months commencing September 30, 2022. Interest is accrued and added to the principal amount of the loan and is presented net of borrowing costs. The principal and accrued interest may also be converted, in whole or in part, at any time before February 1, 2024, upon the mutual consent of Sprout, the Company and MSEC, into common shares of the Company. | $14481024 | $11648320 |
| Promissory note of $250,000 issued by Sprout on August 26, 2022, guaranteed by the Company and secured by the issued and outstanding capital stock of Sprout. The outstanding principal balance bears interest at the rate of 10.0% per annum, increasing by 1.00% every three months commencing September 30, 2022. Interest is accrued and added to the principal amount of the loan and is presented net of borrowing costs. The principal is payable on February 1, 2024 in cash, or, upon the prior consent of the holder, fully or partially in common shares of Neptune at the Company's discretion.<br>| $211132<br>| $— <br>|
|  | 14692156 | 11648320 |
| Less current portion of loans and borrowings |  |  |
| Loans and borrowings | $14692156 | $11648320 |

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On July 13, 2022, Sprout entered into an amendment of each of its existing Secured Promissory Notes. In connection with this amendment, investment funds managed by Morgan Stanley Expansion Capital ("Morgan Stanley" or "MSEC") agreed to immediately commit an additional $3 million in Secured Promissory Notes to Sprout. The maturity date of the note facility of February 1, 2024 is consistent with the maturity date of the existing Secured Promissory Notes with MSEC and Neptune. The $13.0 million of amended Secured Promissory Notes have a 10% interest rate per annum, increasing by 1% per annum every three months during the term of the Secured Promissory Notes. The interest will be compounded and added to the principal amount on a quarterly basis. MSEC was issued 372,670 common shares of Neptune, of a value of $570,185, in connection with this commitment.

On August 26, 2022, Sprout entered into an additional $250,000 Secured Promissory Note, which is on the same terms as the Secured Promissory Note entered into with MSEC discussed above. Neptune issued 36,765 common shares for a value of $75,736 in connection with this Secured Promissory Note in connection with this commitment.

During the three and six-month periods ended September 30, 2022, interest expense of

$224,632 and $474,632 respectively were recognized on loans and borrowings (2021 - $252,055 and $504,833). There are

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NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

no covenants to be met for the loans and borrowings outstanding as at September 30, 2022 and March 31, 2022.

10. Capital and other components of equity:

(a) Share capital:

Authorized capital stock:

Unlimited number of shares without par value:

• Common shares

Preferred shares, issuable in series, rights, privileges and restrictions determined at time of issuance:

• Series A preferred shares, non-voting, non-participating, fixed, preferential, and non-cumulative dividend of 5 % of paid-up capital, exchangeable at the holder's option under certain conditions into common shares (none issued and outstanding).

All issued shares are fully paid.

(b) Share options exercised:

During the three and six-month periods ended September 30, 2022 and

2021, Neptune issued no common shares of the Company upon exercise of stock options.

(c) DSUs released:

During the three and six-month periods ended September 30, 2022 and

2021 , Neptune issued no common shares of the Company for the release of DSUs to former and current members of the Board of Directors.

(d) RSUs released:

During the six-month period ended September 30, 2022, Neptune issued 216,658 common shares of the Company for RSUs released to the CEO as part of his employment agreement at a weighted average price of $11.96 per common share. The Company, with the consent of the CEO delayed issuance of an additional 139,145 RSUs.

During the six-month period ended September 30, 2021, Neptune issued 47,051 common shares of the Company to the CEO as part of his employment agreement at a weighted average price of $155.05 per common share. Withholding taxes of $978,117 were paid by the Company pursuant to the issuance of these RSUs resulting in the Company not issuing an additional 24,511 RSUs.

(e) Restricted shares:

During the three and six-month periods ended September 30, 2022 and 2021, Neptune issued no restricted common shares of the Company to employees.

(f) Warrants:

On June 23, 2022, as part of the June 2022 Direct Offering described under note 8, Neptune issued a total of 645,526 pre-funded warrants ("Pre-Funded Warrants"), with each Pre-Funded Warrant exercisable for one Common Share. The Pre-Funded Warrants were funded in full at closing except for a nominal exercise price of $0.001 and were exercisable commencing on the Closing Date, and were to terminate when such Pre-Funded Warrants would be exercised in full. The Pre-funded warrants were fully exercised on June 24, 2022 for $65.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

Changes in the value of equity related to the warrants were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | September 30, 2022 | September 30, 2022 | September 30, 2021 | September 30, 2021 |
|  | Weighted<br>average<br>exercise price | Number of<br>warrants | Weighted<br>average<br>exercise price | Number of<br>warrants |
| Warrants outstanding at April 1, 2022 and 2021 | $325.34 | 176429 | $325.34 | 176429 |
| Issued | 0.0001 | 645526 |  |  |
| Exercised | 0.0001 | (645526) |  |  |
| Warrants outstanding at September 30, 2022 and September 30, 2021<br>| $325.34 | 176429 | $325.34 | 176429 |
| Warrants exercisable at September 30, 2022 and September 30, 2021<br>| $325.34 | 176429 | $317.00 | 162144 |

---

Warrants of the Company classified as equity are composed of the following as at September 30, 2022 and March 31, 2022:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | September 30, 2022 | September 30, 2022 | September 30, 2022 | March 31, 2022 | March 31, 2022 | March 31, 2022 |
|  | Number<br>outstanding | Number<br>exercisable | Amount | Number<br>outstanding | Number<br>exercisable | Amount |
| Warrants IFF <sup>(i)</sup> | 57143 | 57143 | $1630210 | 57143 | 57143 | $1630210 |
| Warrants AMI <sup>(ii)</sup> | 119286 | 119286 | 4449680 | 119286 | 119286 | 4449680 |
|  | 176429 | 176429 | $6079890 | 176429 | 176429 | $6079890 |

---

(i) During the year ended March 31 , 2020 , Neptune granted 57,143 warrants ("Warrants IFF") with an exercise price of $420.00 expiring on November 7, 2024 . The warrants, granted in exchange for services to be rendered by non-employees, vest proportionally to the services rendered . No expense was recognized during the three and six-month periods ended September 30, 2022 (2021 - $60,965 and $153,650 respectively) under the research and development expenses.

(ii) During the year ended March 31 , 2020 , Neptune granted 119,286 warrants ("Warrants AMI") with an exercise price of $280.00 wit h 85,715 e xpiring on October 3, 2024 and 33,572 expiring on February 5, 2025 . The warrants, granted in exchange for services to be rendered by non-employees, vest proportionally to the services rendered . The warrants fully vested in fiscal year ended March 31 , 2021 and as such no expense was recognized in relation to those instruments since then.

(g) Common shares issued in connection with debt financing:

On July 13, 2022, Neptune issued 372,670 common shares for a value of $570,185 in connection with the amendment of the Secured Promissory Notes that were issued by Sprout for the payment of borrowing costs. In connection with this amendment, investment funds managed by MSEC have provided an additional $3 million in Secured Promissory Notes to Sprout.

On September 9, 2022, Neptune issued 36,765 common shares for a value of $75,736 in connection with a new $250,000 Secured Promissory Note that was issued by Sprout, for the payment of borrowing costs.

11. Non-controlling interest:

The summarized financial information of Sprout is provided below. This information is based on amounts before inter-company eliminations and include the effects of the Company's purchase price adjustments.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

Summarized statement of loss and comprehensive loss:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three-month period ended | Three-month period ended | Six-month period ended | Six-month period ended |
|  | September 30,<br>2022 | September 30,<br>2021 | September 30,<br>2022 | September 30,<br>2021 |
| Revenue from contracts with customers | $8364475 | $7016918 | $16522072 | $12664345 |
| Cost of sales | (7610969) | (7324782) | (15923258) | (12894061) |
| Selling, general and administrative expenses | (2472272) | (930384) | (6227801) | (4971533) |
| Impairment loss on goodwill and intangible assets | (10164000) |  | (10164000) |  |
| Finance costs | (923315) | (744289) | (1462282) | (673161) |
| Loss before tax | (12806081) | (1982537) | (17255269) | (5874410) |
| Income tax (expense) recovery |  | 154 |  | (11944) |
| Net loss | (12806081) | (1982383) | (17255269) | (5886354) |
| Total comprehensive loss | (12806081) | (1982383) | (17255269) | (5886354) |
| Loss attributable to the subsidiary's non-controlling interest | (6390234) | (989209) | (8610379) | (2937291) |
| Comprehensive loss attributable to the subsidiary's non-controlling interest | $(6390234) | $(989209) | $(8610379) | $(2937291) |

---

Summarized statement of balance sheets:

---

| | | |
|:---|:---|:---|
|  | September 30,<br>2022 | March 31,<br>2022 |
| Current assets | $12743435 | 12260375 |
| Non-current assets | 28610930 | 39000367 |
| Current liabilities | 7292715 | 5991483 |
| Non-current liabilities | 31409919 | 25362259 |
| Total equity | 2651731 | 19907000 |
| Attributable to: |  |  |
| Equity holders of the Company | $(1459967) | $7184923 |
| Non-controlling interest | 4111698 | 12722077 |

---

Summarized statement of cash flow:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three-month period ended | Three-month period ended | Six-month period ended | Six-month period ended |
|  | September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 |
| Cash flow from (used in) operating activities | $(2490182) | $(4324098) | $(3925100) | $(8073510) |
| Cash flow used in investment activities |  | (1246) |  | (1246) |
| Cash flow from (used in) financing activities<sup>(1)</sup> | 3250000 | 4309030 | 3250000 | 7972635 |
| Net increase (decrease) in cash and cash equivalents | $759818 | $(16314) | $(675100) | $(102121) |

---

(1) Cash flow from financing activities is partially provided through intercompany advances.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

12. Share-based payment:

Under the Company's share-based payment arrangements, stock-based compensation expenses of $639,883 and $1,826,983 were recognized on equity share based awards and expenses of $1,750 and $3,152,578 on liability based awards were recognized in the consolidated statement of loss and comprehensive loss for the three and six-month periods ended September 30, 2022 respectively (2021 - equity expenses of $2,157,649 and $5,237,918 respectively) and nil for liability based awards for the three and six-month periods ended September 30, 2021.

As at September 30, 2022, the Company had the following share-based payment arrangements:

(a) Company stock option plan:

(i) Stock option plan:

The Company has established a stock option plan for directors, officers, employees and consultants. The exercise price of the stock options granted under the plan is not lower than the closing price of the common shares listed on the Nasdaq on the eve of the grant. The terms and conditions for acquiring and exercising options are set by the Board of Directors, subject, among others, to the following limitations: the term of the options cannot exceed ten years and every stock option granted under the stock option plan will be subject to conditions no less restrictive than a minimum vesting period of 18 months and a gradual and equal acquisition of vesting rights at least on a quarterly basis. The Company's stock-option plan allows the Company to issue a number of stock options not exceeding 15% of the number of common shares issued and outstanding at the time of any grant. The total number of stock options issuable to a single holder cannot exceed 5% of the Company's total issued and outstanding common shares at the time of the grant, provided that the maximum number of stock options issuable to a single consultant cannot exceed 2% of the Company's total issued and outstanding common shares at the time of the grant.

The number and weighted average exercise prices of stock options are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | 2022 | 2022 | 2021 | 2021 |
|  | Notes | Weighted<br>average<br>exercise<br>price | Number of<br>options | Weighted<br>average<br>exercise<br>price | Number of<br>options |
| Options outstanding at April 1st, 2022 and 2021 |  | $37.41 | 306321 | $65.91 | 121208 |
| Granted |  | 1.60 | 229715 | 30.10 | 218697 |
| Forfeited/Cancelled |  | 14.21 | (55615) | 41.36 | (2897) |
| Expired |  | 34.54 | (1094) | 85.52 | (6429) |
| Options outstanding at September 30, 2022 and 2021 |  | $22.13 | 479327 | $43.61 | 330579 |
| Options exercisable at September 30, 2022 and 2021 |  | $47.38 | 154722 | $57.67 | 95572 |

---

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | September 30, 2022 | September 30, 2022 | September 30, 2022 | September 30, 2022 |
|  | Options outstanding | Options outstanding | Exercisable options | Exercisable options |
| Exercise price | Weighted<br>remaining<br>contractual<br>life<br>outstanding | Number of<br>options<br>outstanding | Weighted<br>number of<br>options<br>exercisable | Weighted<br>average<br>exercise<br>price |
| $1.55 - $22.60 | 4.88 | 252574 | 477 | 13.97 |
| $22.61 - $27.68 | 3.87 | 85715 | 57143 | 25.64 |
| $27.69 - $40.12 | 3.81 | 37637 | 14474 | 29.71 |
| $40.13 - $55.10 | 0.17 | 39203 | 39203 | 50.41 |
| $55.11 - $154.65 | 6.66 | 64198 | 43425 | 79.42 |
|  |  | 479327 | 154722 |  |

---

The fair value of options granted has been estimated using the Black-Scholes option pricing model and based on the weighted average of certain assumption. The Company granted 114,000 and 114,000 options to non-employees respectively during the three and six-month periods ended September 30, 2022 (nil for the three and six-month periods ended September 30, 2021) resulting in a $128,680 and nil stock-based compensation expense, respectively.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Three-month periods ended | Three-month periods ended | Three-month periods ended | Three-month periods ended | Six-month periods ended | Six-month periods ended | Six-month periods ended | Six-month periods ended |
| Black Sholes assumptions used | September 30,<br>2022 | September 30,<br>2022 | September 30,<br>2021 | September 30,<br>2021 | September 30,<br>2022 | September 30,<br>2022 | September 30,<br>2021 | September 30,<br>2021 |
| Share price | $| 1.55-$1.64 | $| 25.55-$31.53 | $| 1.55-$1.64 | $| 25.55-$31.53 |
| Exercise price | $| 1.55-$1.64 | $| 25.55-$31.53 | $| 1.55-$1.64 | $| 25.55-$31.53 |
| Dividend yield |  |  |  |  |  |  |  |  |
| Risk-free interest |  | 3.10% - 3.60% |  | 0.33% - .80% |  | 3.10% - 3.60% |  | 0.33% - .80% |
| Expected life (years) |  | 4.0 |  | 2.5 - 5.0 |  | 4.0 |  | 2.5 - 5.0 |
| Expected volatility |  | 94.38% - 106.70% |  | 83.4% - 86.04% |  | 94.38% - 106.70% |  | 83.4% - 86.04% |

---

Stock-based compensation recognized under this plan amounted to $(5,138) and $475,273 respectively for the three and six-month periods ended September 30, 2022 (2021—$1,035,099 and $1,435,643). Unrecognized compensation cost at September 30, 2022 is $752,005 with a weighted average period remaining of 1.03 years (2021—$1,340,444 with a weighted average period remaining of 1.52 years).

(ii) Non-market performance options:

On July 8, 2019, the Company granted 100,000 non-market performance options under the Company stock option plan at an exercise price of $4.43 per share to the CEO, expiring on July 8, 2029. These options vest after the attainment of non-market performance conditions within the following ten years. These non-market performance options required the approval of amendments to the stock option plan and therefore the fair value of these options was revalued up to the date of the approval of the amendments (grant date). None of these non-market performance options have vested as at September 30, 2022. These options were not exercisable as at September 30, 2022 and 2021.

No stock-based compensation expense was recognized during the three and six-month periods ended September 30, 2022 (three and six-month periods ended September 30, 2021- $99,845 and

$201,164 respectively).

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

(iii) Market performance options:

On July 8, 2019, the Company granted 157,142 market performance options under the Company stock option plan at an exercise price of $4.43per share to the CEO, expiring on July 8, 2029. These options vest after the attainment of market performance conditions within the following ten years. Some of these market performance options required the approval of amendments to the stock option plan and therefore the fair value of these options was revaluated up to the date of the approval of the amendments (grant date).

The number and weighted average exercise prices of market performance options are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | 2022 | 2022 |  | 2021 |
|  | Notes | Weighted<br>average<br>exercise<br>price | Number of<br>options | Weighted<br>average<br>exercise<br>price | Number of<br>options |
| Options outstanding at April 1, 2022 and 2021 |  | $155.05 | 157142 | $155.05 | 157142 |
| Options outstanding at September 30, 2022 and 2021 |  | $155.05 | 157142 | $155.05 | 157142 |
| Options exercisable at September 30, 2022 and 2021 |  | $155.05 | 21429 | $155.05 | 21429 |

---

Stock-based compensation recognized under this plan amounted to $601,957 and $1,202,991 respectively for the three and six-month periods ended September 30, 2022. Stock-based compensation expenses of

$618,135 and $1,245,396 were recognized for three and six-month periods ended September 30, 2021 respectively. Unrecognized compensation cost at September 30, 2022 is $9,884,878 with a weighted average period remaining

of 7.01 years (2021 -

$13,181,905 with a weighted average period remaining of

8.01 years).

(b) Deferred Share Units and Restricted Share Units:

The Company has established an equity incentive plan for employees, directors and consultants of the Company. The plan provides for the issuance of restricted share units, performance share units, restricted shares, deferred share units and other share-based awards, subject to restricted conditions as may be determined by the Board of Directors. Upon fulfillment of the restricted conditions, as the case may be, the plan provides for settlement of the awards outstanding through shares.

(i) Deferred Share Units ("DSUs")

The number and weighted average share prices of DSUs are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | 2022 | 2022 | 2021 | 2021 |
|  | Notes | Weighted<br>average<br>share<br>price | Number of<br>DSUs | Weighted<br>average<br>share<br>price | Number of<br>DSUs |
| DSUs outstanding at April 1, 2022 and 2021 |  | $66.45 | 4308 | $63.00 | 1202 |
| DSUs outstanding at September 30, 2022 and 2021 |  | $66.45 | 4308 | $66.96 | 1202 |
| DSUs exercisable at September 30, 2022 and 2021 |  | $66.45 | 4308 | $66.96 | 1108 |

---

Of the 4,308 DSUs outstanding as at September 30, 2022 (2021 – 1,202), no DSUs vested upon services to be rendered during a period of twelve months from date of grant (2021 – 1,108). The fair value of the DSUs is determined to be the share price at the date of grant and is recognized as stock-based compensation, through additional paid-in capital, over the vesting period.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

Stock-based compensation recognized under this plan amounted to $3,831 and $13,025 respectively for the three and six-month periods ended September 30, 2022. Stock-based compensation expenses of $1,103 and $5,307 were recognized for three and six-month periods ended September 30, 2021 respectively.

(ii) Restricted Share Units (''RSUs'')

During the year ended March 31, 2020, as part of the employment agreement of the CEO, the Company granted RSUs which vest over three years in 36 equal instalments. During the year ended March 31, 2021, Neptune granted additional RSUs to the CEO and to executives of the Company, which vest over periods ranging from 6 months to 3 years. The fair value of the RSUs is determined to be the share price at the date of grant and is recognized as stock-based compensation, through additional paid-in capital, over the vesting period. The fair value of the RSUs granted during the six-month period ended September 30, 2022 was $6.65 per unit.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | 2022 | 2022 | 2021 | 2021 |
|  | Notes | Weighted<br>average<br>share<br>price | Number of<br>RSUs | Weighted<br>average<br>share<br>price | Number of<br>RSUs |
| RSUs outstanding at April 1st, 2022 and 2021 |  | $59.75 | 25038 | $92.08 | 95845 |
| Granted |  | 6.65 | 349160 | 29.54 | 7681 |
| Forfeited |  | 59.75 | (21) | 29.54 | (7681) |
| Released through the issuance of common shares | 10 (d) | 11.96 | (216658) | 155.05 | (47051) |
| Withheld as payment of withholding taxes | 10 (d) | 11.96 | (139145) | 155.05 | (24511) |
| RSUs outstanding at September 30, 2022 and 2021 |  | $25.44 | 18374 | $148.49 | 24283 |

---

Stock-based compensation recognized under this plan amounted to

$39,233 and $135,694 respectively for the three and six-month periods ended September 30, 2022. Stock-based compensation expenses

of $403,467 and $2,350,408 were recognized for three and six-month periods ended September 30, 2021 respectively. Unrecognized compensation cost at September 30, 2022 is $132,681 with a weighted average remaining life

of 1.49 years (2021 -

$617,362 unrecognized compensation cost with a weighted average remaining life of

0.68 years).

On November 14, 2021, the Company and its CEO entered into an agreement pursuant to which the CEO's existing employment agreement was amended to waive the Company's obligation to procure directors and officers insurance coverage of

up to $15 million for the period covering July 1, 2021 to July 31, 2022. The parties agreed that if the Company had successfully completed a strategic partnership prior to December 31, 2021, the CEO would have been entitled to approximately

$6.9 million in cash and would have been granted fully vested options to purchase 8.5 million shares of the Company's common stock. As the strategic partnership was not consummated by December 31, 2021, the CEO was entitled to monthly cash payments for an aggregate value of approximately

$6.9 million or the issuance over time of a fixed amount of fully vested RSUs, at the option of the Company.

The balance of the liability accrual to the CEO is

$446,700 (including withholding taxes) as at September 30, 2022, in trade and other payables. The revaluation of the liability amounted to a loss of $1,750 and a gain

of $3,152,578 respectively for the three and six-month periods ended September 30, 2022 and were recorded into selling, general and administrative expenses (2021 - nil for both periods). During the three and six-month periods ended September 30, 2022, settlements in RSUs were

of $235,683 and $1,422,904 respectively. The compensation to be

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

settled in RSUs or if the Company is unable to grant such RSUs, then a combination of cash and vested RSUs with equivalent value, is not reflected in the number of RSUs outstanding above.

(c) Long term cash bonus:

According to the employment agreement with the CEO, a long-term incentive of $15 million is payable if the Company's US market capitalization is at least $1 billion. The Company uses a risk-neutral Monte Carlo simulation to estimate the fair-value of this instrument and recognizes the incentive over the estimated period to reach the market capitalization.

As at September 30, 2022, the liability related to this long-term incentive of $24,000 ($88,688 as at March 31, 2022) is presented in Other liability in the consolidated balance sheets. During the six-month period ended September 30, 2022, a recovery

of $64,688 (2021 - a recovery of

$152,687) was recorded in connection with the long-term incentive under selling, general and administrative expenses in the consolidated statement of loss. During the three-month period ended September 30, 2022, the Company recorded an expense

of $11,069 (2021 - a recovery of $248,532).

13. Loss per share:

The effects of options, DSUs, RSUs and warrants are excluded from the calculation of diluted loss per share for periods in which a company sustains a loss. Accordingly, diluted loss per share was the same as basic loss per share because the Company has incurred losses in each of the periods presented. All outstanding options, DSUs, RSUs and warrants could potentially be dilutive in the future.

14. Fair-value:

The Company uses various methods to estimate the fair value recognized in the consolidated financial statements. The fair value hierarchy reflects the significance of inputs used in determining the fair values:

• Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);

• Level 3 – Fair value based on valuation techniques which includes inputs related to the asset or liability that are not based on observable market data (unobservable inputs).

Financial assets and liabilities measured at fair value on a recurring basis are the assets held for sale, the call option granted to Neptune by Sprout's non-controlling interest owners of equity (the "Call Option") and the liability related to warrants.

The following table presents the Company's hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2022 and March 31, 2022:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | September 30, 2022 | September 30, 2022 | September 30, 2022 | September 30, 2022 |
|  | Notes | Level 1 | Level 2 | Level 3 | Total |
| Assets |  |  |  |  |  |
| Assets held for sale | 2 (d) | $3203557 | $— | $— | $3203557 |
| Total |  | $3203557 | $— | $— | $3203557 |
| Liabilities |  |  |  |  |  |
| Liability related to warrants | 8 | $— | $— | $2820025 | $2820025 |
| Total |  | $— | $— | $2820025 | $2820025 |

---

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | March 31, 2022 | March 31, 2022 | March 31, 2022 | March 31, 2022 |
|  | Notes | Level 1 | Level 2 | Level 3 | Total |
| Liabilities |  |  |  |  |  |
| Liability related to warrants | 8 | $— | $— | $5570530 | $5570530 |
| Total |  | $— | $— | $5570530 | $5570530 |

---

On June 8, 2022, the Company announced a planned divestiture of the Canadian cannabis business and the Company will focus on winding up its cannabis operations pending one or more sales transactions. Following this announcement, the disposal group was first measured based on level 3 inputs, at fair value less cost to sell using market prices for comparative assets, and then based on level 1 inputs during the quarter ended September 30, 2022, as per the ASPA (note 2(d)).

On February 10, 2021, Sprout's other equity interest owners granted Neptune a call option (the "Call Option") to purchase the remaining 49.9% outstanding equity interests of Sprout, at any time beginning on January 1, 2023 and ending on December 31, 2023. On September 30, 2022 and March 31, 2022, the Call Option was measured based on level 3 inputs to nil. For the three and six-month periods ended September 30, 2022, the Company recorded gains on re-measurement of nil (2021 - gains of $126,615 and $230,615 respectively).

The liabilities related to warrants were recorded at their fair value using a Black-Scholes pricing model. Warrants are revalued each period end at fair value through profit and loss using level 3 inputs (note 8).

The Company has determined that the carrying values of its short-term financial assets and liabilities approximate their fair values given the short-term nature of these instruments. The carrying value of the short-term investment also approximates its fair value given the short-term maturity of the reinvested funds. For variable rate loans and borrowings, the fair value is considered to approximate the carrying amount.

The fair value of the fixed rate loans and borrowings and long-term payable is determined by discounting future cash flows using a rate that the Company could obtain for loans with similar terms, conditions and maturity dates. The fair value of these instruments approximates the carrying amounts and was measured using level 3 inputs.

15. Commitments and contingencies:

(a) Commitments:

(i) On January 31, 2020, Neptune entered into an exclusive license agreement for a specialty ingredient in combination with fish oil products in nutraceutical products for a period of 8 years. Neptune is required to pay royalties on sales for these products. To maintain exclusivity, Neptune must reach annual minimum volumes of sales for the duration of the agreement or make corresponding minimum royalty payments. The total remaining amount of minimum royalties under the license agreement is $1,269,680. Failure to make the minimum royalty payments will solely result in the license granted thereunder becoming non-exclusive.

(ii) On March 21, 2019, the Company received a judgment from the Court regarding certain previously disclosed claims made by a corporation controlled by the former CEO against the Company in respect to certain royalty payments alleged to be owed and owing to the former CEO pursuant to the terms of an agreement entered into on February 23, 2001 between Neptune and the former CEO (the "Agreement"). The Court declared that under the terms of the agreement, the Company is required to pay royalties of 1 % of its revenues in semi-annual instalments, for an unlimited period. Based on currently available information, a provision of $532,614 for royalty

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

payments has been recognized as of September 30, 2022 ($362,809 as at March 31, 2022). Refer to note 7. <br>

(iii) On May 28, 2021, Sprout entered into a license agreement with Moonbug Entertainment Limited ("Moonbug"), pursuant to which it would license certain intellectual property, relating to characters from the children's entertainment property CoComelon, for use on certain Sprout products through December 31, 2023 in exchange for a royalty on net sales. Sprout is required to make minimum guaranteed annual payments to Moonbug of $200,000 over the term of the agreement. The agreement may be extended for an additional three years in exchange for an additional minimum guaranteed annual payment to Moonbug of $200,000 over the extended term of the agreement. Royalties payable under the agreement are set off against minimum guaranteed payments made.

(b) Contingencies:

In the normal course of business, the Company is involved in various claims and legal proceedings, for which the outcomes, inflow or outflow of economic benefits, are uncertain. The most significant of which are ongoing are as follows:

(i) In September 2020, Neptune submitted a claim and demand for arbitration against Peter M. Galloway and PMGSL Holdings, LLC (collectively "PMGSL") in accordance with the SugarLeaf Asset Purchase Agreement ("APA") dated May 9, 2019 between Neptune, PMGSL, Peter M. Galloway and Neptune Holding USA, Inc. Separately, PMGSL submitted a claim and demand for arbitration against Neptune. The Neptune claims and PMGSL claims have been consolidated into a single arbitration and each are related to the purchase by Neptune of substantially all of the assets of the predecessor entities of PMGSL Holdings, LLC. Neptune is claiming, among other things, breach of contract and negligent misrepresentation by PMGSL in connection with the APA and is seeking, among other things, equitable restitution and any and all damages recoverable under law. PMGSL is claiming, among other things, breach of contract by Neptune and is seeking, among other things, payment of certain compensation contemplated by the APA. A merit hearing in the arbitration started in April 2022 with a further week of testimony from August 1-5, 2022. On June 15, 2022, a one-day hearing took place on Neptune's motion to enforce a settlement agreement reached on April 2021 (which was repudiated by PMGSL in June 2021). Following oral argument on July 7, 2022, that motion was denied. While Neptune believes there is no merit to the claims brought by PMGSL, a judgment in favor of PMGSL may have a material adverse effect on our business and Neptune intends to continue vigorously defending itself. Based on currently available information, a provision of $600,000 has been recognized for this case as at September 30, 2022 ($600,000 as at March 31, 2022).

(ii) On February 4, 2021, the United States House of Representatives Subcommittee on Economic and Consumer Policy, Committee on Oversight and Reform (the "Subcommittee"), published a report, "Baby Foods Are Tainted with Dangerous Levels of Arsenic, Lead, Cadmium, and Mercury" (the "Report"), which stated that, with respect to Sprout, "independent testing of Sprout Organic Foods" has confirmed that their baby foods contain concerning levels of toxic heavy metals." The Report further stated that after receiving reports alleging high levels of toxic metals in baby foods, the Subcommittee requested information from Sprout but did not receive a response.

On February 11, 2021, following the acquisition of a 50.1% stake in Sprout by Neptune, the Subcommittee contacted Sprout, reiterating its requests for documents and information about toxic heavy metals in Sprout's baby foods. Sprout provided an initial response to the Subcommittee on February 25, 2021 and is cooperating with the Subcommittee requests.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

Further, on February 24, 2021, the Office of the Attorney General of the State of New Mexico ("NMAG") delivered to Sprout a civil investigative demand requesting similar documents and information with regards to the Report and the NMAG's investigation into possible violations of the False Advertising Act of New Mexico. Sprout is responding to the requests of the NMAG.

Since February 2021, several putative consumer class action lawsuits have been brought against Sprout alleging that its products (the "Products") contain unsafe and undisclosed levels of various naturally occurring heavy metals, namely lead, arsenic, cadmium and mercury. Sprout has denied the allegations in these lawsuits and contends that its baby foods are safe and properly labeled. The claims raised in these lawsuits were brought in the wake of the highly publicized Report. All such putative class actions have since been dismissed. No provision has been recorded in the financial statements for these cases.

In addition to the consumer class actions discussed above, Sprout is currently named in one lawsuit filed on June 16, 2021 in California state court alleging some form of personal injury from the ingestion of Sprout's Products, purportedly due to unsafe and undisclosed levels of various naturally occurring heavy metals. This lawsuit generally alleges injuries related to neurological development disorders such as autism spectrum disorder and attention deficit hyperactivity disorder. Sprout denies that its Products contributed to any of these injuries and will defend the case vigorously. In addition, the Office of the Attorney General for the District of Columbia ("OAG") sent a letter to Sprout dated October 1, 2021, similar to letters sent to other baby food manufacturers, alleging potential labeling and marketing misrepresentations and omissions regarding the health and safety of its baby food products, constituting an unlawful trade practice. Sprout has agreed to meet with the OAG and will vigorously defend against the allegations. No provision has been recorded in the financial statements for this matter.

These matters may have a material adverse effect on Sprout's financial condition, or results of operations.

The outcome of these claims and legal proceedings against the Company cannot be determined with certainty and is subject to future resolution, including the uncertainties of litigation.

16. Operating Segments:

The Company measures its performance based on a single

segment, which is the consolidated level used in internal management reports that are reviewed by the Company's Chief Operating Decision Maker.

a) Geographical information:

Revenue is attributed to geographical locations based on the origin of customers' location:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three-month periods ended | Three-month periods ended | Six-month periods ended | Six-month periods ended |
|  | September 30,<br>2022 | September 30,<br>2021 | September 30,<br>2022 | September 30,<br>2021 |
| Canada | $670557 | $2077052 | $5727059 | $4360276 |
| United States | 11097554 | 10252986 | 22029091 | 17812204 |
| Other countries | 218731 | 188593 | 502920 | 424660 |
|  | $11986842 | $12518631 | $28259070 | $22597140 |

---

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

Long-lived assets of the Company are located in the following geographical location:

---

| | | |
|:---|:---|:---|
|  | September 30,<br>2022 | March 31,<br>2022 |
| Canada | $1055778 | $20724674 |
| United States | 1089249 | 723449 |
| Total property, plant and equipment | $2145027 | $21448123 |

---

---

| | | |
|:---|:---|:---|
|  | September 30,<br>2022 | March 31,<br>2022 |
| Canada | $1792595 | $2353054 |
| United States | 16000001 | 19301981 |
| Total intangible assets | $17792596 | $21655035 |

---

---

| | | |
|:---|:---|:---|
|  | September 30,<br>2022 | March 31,<br>2022 |
| Canada | $2382374 | $2625851 |
| United States | 11971966 | 19542437 |
| Total goodwill | $14354340 | $22168288 |

---

Assets held for sale by the Company are located in the following geographical location:

---

| | | |
|:---|:---|:---|
|  | September 30,<br>2022 | March 31,<br>2022 |
| Canada | $3203557 | $— |
| Total assets held for sale | $3203557 | $— |

---

b) Revenues

The Company derives revenue from the sales of goods which are recognized at a point in time as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three-month periods ended | Three-month periods ended | Six-month periods ended | Six-month periods ended |
|  | September 30,<br>2022 | September 30,<br>2021 | September 30,<br>2022 | September 30,<br>2021 |
| Nutraceutical products | $3177413 | $4040553 | $8303527 | $7241221 |
| Cannabis and hemp products | 17357 | 1203486 | 2717327 | 2142551 |
| Food and beverages products | 8560286 | 7031337 | 16702300 | 12678764 |
| Innovation products |  | 34379 | —  | 68859 |
|  | $11755056 | $12309755 | $27723154 | $22131395 |

---

17. Related parties:

Related party transactions and balances not disclosed elsewhere in these notes of the financial statements are as follows:

On November 11, 2019, Neptune announced that the Company entered into a collaboration agreement with International Flavors & Fragrances Inc. ("IFF") to co-develop hemp-derived products for the mass retail and health and wellness markets. App Connect Service, Inc. ("App Connect"), a company indirectly controlled

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

by Michael Cammarata, CEO and Director of Neptune, is also a party to the agreement to provide related branding strategies and promotional activities.

Neptune will be responsible for the marketing and the sales of the products and will receive the amounts from the product sales. Neptune will in turn pay a royalty to IFF and App Connect associated with the sales of the co-developed products. The payment of royalties to App Connect, subject to certain conditions, has been approved by the TSX.

During the three and six-month periods ended September 30, 2022 and 2021, the Company recorded a negligible amount of royalty expense pursuant to the co-development contract and no royalties were paid to date.

18. Subsequent events :

On October 11, 2022, the Company announced the closing of a registered direct offering of 3,208,557 of its Common Shares and warrants to purchase up to 6,417,114 Common Shares in the concurrent Private Placement. The combined purchase price for one Common Share and one warrant was $1.87. The warrants have an exercise price of $1.62 per Common Share, are exercisable immediately following the date of issuance and will expire five years from the date of issuance. The Company received gross proceeds of approximately $6.0million and net proceeds of $5.15 million after deducting the placement agent fees and expenses, and the Company's offering expenses. Based on the fair value of the warrants as at the date of closing, the Company expects to record the full proceeds to liabilities and a loss on initial recognition of approximately $1.0 million. Consequently, no value will be attributed to the common shares issued on October 11, 2022.

On November 8, 2022, Sprout entered into an agreement to issue an additional $525,000 of Secured Promissory Notes, on the same terms as the Secured Promissory Note entered into with MSEC discussed in note 9. In connection with this financing, Neptune will issue common shares to the holders of these Secured Promissory Notes for a value of $105,000.

On January 12, 2023, the Company entered into a Note Purchase Agreement among the purchasers named therein and the Company, pursuant to which the Company issued and sold $4 million in aggregate principal amount of senior secured promissory notes. The Company may also issue and sell, and the purchasers have agreed to purchase, up to an additional $1 million in aggregate principal amount of senior secured promissory notes to occur not later than February 28, 2023. The second closing will occur only in the event that the Company completes an incremental equity issuance by February 28, 2023, and the aggregate principal amount of the second closing will not exceed the lesser of $1 million or 25% of the proceeds actually received from any such incremental equity issuance. The notes may be prepaid or redeemed in whole or in part by the Company, subject to the payment of a premium in an amount equal to ten percent (10%) of the principal amount of notes being repaid (other than principal in respect of PIK interest), less the aggregate amount of cash interest paid on the Notes being repaid on or before the date of such prepayment.

The notes are due and payable no later than January 12, 2024, unless earlier accelerated in accordance with the terms of the Note Purchase Agreement, with interest accruing at a rate of 16.5% per annum from the date of issuance and payable on the last business day of each calendar month in which the notes are outstanding. For the first six interest payment dates following the initial closing, interest will be paid in kind and thereafter payments shall be made in cash on the interest payment date in arrears. Under the terms of the Note Purchase Agreement, the Company issued to the purchasers of the initial notes warrants to purchase a total of 850,000 common shares of the Company exercisable at an exercise price of $0.53 per share at any time until January 12, 2028.

------

NEPTUNE WELLNESS SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three-month periods ended September 30, 2022 and 2021

On January 23, 2023, Sprout entered into an accounts receivable factoring facility with Alterna Capital Solutions, LLC ("Alterna"), pursuant to which Sprout agreed to sell certain of its accounts receivable to Alterna. The maximum amount available to Sprout under the facility is $5 million, and funds deployed to Sprout incur a usage fee of the primate rate plus 1%, with a minimum interest rate of 8% per annum. The facility has a one-year term and renews automatically. The Company provided a commercial guaranty in connection with this agreement.

------

#### PART II

#### INFORMATION NOT REQUIRED IN PROSPECTUS

#### Item 13. Other Expenses of Issuance and Distribution.
The following is a statement of estimated expenses payable by the registrant in connection with the offering described in this registration statement. All amounts are estimates except the SEC registration fee.

---

| | |
|:---|:---|
|  SEC expenses | $1195 |
|  Accounting fees and expenses | $150000.0 |
|  Legal fees and expenses | $30000.0 |
|  Miscellaneous | 10000.0 |
|  Total<sup>(1)</sup> | $191195.0 |

---

(1) Discounts, concessions, commissions and similar selling expenses attributable to the sale of common shares covered by this prospectus will be borne by the Selling Shareholders. We will pay all expenses (other than discounts, concessions, commissions and similar selling expenses) relating to the registration of the shares with the Securities and Exchange Commission, as estimated in the table above.

#### Item 14. Indemnification of Directors and Officers
Under the Business Corporations Act (Québec) (the "QBCA"), a corporation must indemnify a director or officer of the corporation, a former director or officer of the corporation or any other person who acts or acted at the corporation's request as a director or officer of another group, against all costs, charges and expenses reasonably incurred in the exercise of their functions, including an amount paid to settle an action or satisfy a judgment, or arising from any investigative or other proceeding in which the person is involved if (1) the person acted with honesty and loyalty in the interest of the corporation or, as the case may be, in the interest of the other group for which the person acted as director or officer or in a similar capacity at the corporation's request; and (2) in the case of a proceeding that is enforced by a monetary penalty, the person had reasonable grounds for believing that his or her conduct was lawful. The corporation must also advance moneys to such a person for the costs, charges and expenses of a proceeding referred to above. In the event that a court or any other competent authority judges that the conditions set out in (1) and (2) are not fulfilled, the corporation may not indemnify the person and the person must repay to the corporation any moneys advanced for such purposes. Furthermore, the corporation may not indemnify such person if the court determines that the person has committed an intentional or gross fault. In such a case, the person must repay to the corporation any moneys advanced. A corporation may also, with the approval of the court, in respect of an action by or on behalf of the corporation or other group as referred to above, against such a person, advance the necessary moneys to the person or indemnify the person against all costs, charges and expenses reasonably incurred by the person in connection with the action, if the person fulfills the conditions set out in this paragraph.

In accordance with and subject to the QBCA, the by-laws of the Registrant provide that the Registrant shall indemnify a director or officer of the Registrant, a former director or officer of the Registrant, or a person who acts or acted at the Registrant's request as a director or officer of a body corporate of which the Registrant is or was a shareholder or creditor, and his or her heirs and legal representatives, to the extent permitted by the QBCA, as set forth above.

------

The Registrant maintains directors' and officers' liability insurance which insures the directors and officers of the Registrant and its subsidiaries against certain losses resulting from any wrongful act committed in their official capacities for which they become obligated to pay, to the extent permitted by applicable law.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been informed that, in the opinion of the U.S. Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

#### Item 15. Recent Sales of Unregistered Securities.
*Note Purchase Agreement*

On January 12, 2023, the Company entered into a Note Purchase Agreement with certain purchasers pursuant to which it issued and sold $4 million in aggregate principal amount of senior secured promissory notes. Under the terms of the Note Purchase Agreement, the Company issued to the Purchasers warrants to purchase the 850,000 January 2023 Warrants being registered in this Registration Statement. The January 2023 Warrants and the Common Shares underlying the January 2023 Warrants were issued in a private placement under Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder. Each January 2023 Warrant is exercisable for one Common Share at an exercise price of $0.53 per share. The January 2023 Warrants are immediately exercisable and expire five years from the issuance date.

A holder (together with its affiliates) may not exercise any portion of the January 2023 Warrants to the extent that the holder would own more than 4.99% (or, at the holder's option upon issuance, 9.99%) of the Company's outstanding Common Shares immediately after exercise, as such percentage ownership is determined in accordance with the terms of the January 2023 Warrant. The Warrants are subject to full ratchet anti-dilution protection with respect to the first offering, if any, of securities registered under the Securities Act of 1934, as amended, with net proceeds of at least $5,000,000 consummated by the Company subsequent to the Initial Closing, as well as customary adjustments for the term of the Warrants.

In January 2023, the Company issued 71,665 common shares to the Company's financial advisor in connection with its strategic review. The common shares were issued in a private placement under Section 4(a)(2) under the Securities Act as consideration for the services provided by the financial advisor.

*Registered Direct Offering and Concurrent Private Placement* 

On October 6, 2022, the Company entered into the Purchase Agreement with certain institutional investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering (the "Offering"), 3,208,557 of its common shares (the "Common Shares"), and the 6,417,114 Warrants being registered in this Registration Statement/prospectus in the Private Placement. The combined purchase price of each Common Share and accompanying Warrants was $1.87. The Purchase Agreement contains customary representations, warranties, covenants and indemnification rights and obligations of the Company and each of the purchasers. The Offering closed on October 11, 2022. A.G.P./Alliance Global Partners served as exclusive placement agent in connection with the Offering.

The Company received gross proceeds of approximately $6.0 million in connection with the Offering, before deducting placement agent fees and related offering expenses. The net proceeds to the Company from the Offering, after deducting the placement agent fees and expenses, and the Company's estimated offering expenses, were approximately $5.15 million.

The Common Shares were offered by the Company pursuant to a registration statement on Form S-3 (File No. 333-267070) filed with the SEC and declared effective by the SEC on September 23, 2022 (the "Registration Statement"), and a prospectus supplement thereto dated October 11, 2022.

The Warrants and the Common Shares underlying the Warrants sold in the Private Placement were issued in a private placement under Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder Each Warrant is exercisable for one Common Share at an exercise price of $1.62 per share. The Warrants are immediately exercisable and expire five years from the issuance date. A holder (together with its affiliates) may not exercise any portion of the Warrant or Pre-Funded Warrant, as applicable, to the extent that the holder would own more than 4.99% (or, at the holder's option upon issuance, 9.99%) of the Company's outstanding Common Shares immediately after exercise, as such percentage ownership is determined in accordance with the terms of the Warrant.

In lieu of making the cash payment otherwise contemplated to be made to the Company upon exercise of a Warrant in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of Common Shares determined according to a formula set forth in the Warrants, provided that such cashless exercise shall only be permitted if a registration statement registering the issuance of the Common Shares underlying the Warrants is not effective at the time of such exercise or if the prospectus to which the registration statement is a part is not available for the issuance of Common Shares to the Warrant holder.

In July and September 2022, the Company issued to two accredited investors an aggregate of 409,435 common shares in connection with loans to Sprout Foods, Inc. On July 13, 2022, the Company issued an amended and restated secured promissory note in favor of NH Expansion Credit Fund Holdings LP, an investment fund managed by Morgan Stanley Expansion Capital, in the principal amount of $13,000,000. The amended note amended and restated the prior promissory note in the principal amount of $10,000,00 in connection with a loan of an additional $3,000,000 to Sprout from Morgan Stanley Expansion Capital. The common shares were issued in a private placement under Section 4(a)(2) under the Securities Act.

In June 2022, the Company issued 7,104 common shares to the Company's financial advisor in connection with its then proposed divestiture of our Canadian cannabis business. The common shares were issued in a private placement under Section 4(a)(2) under the Securities Act as consideration for the services provided by the financial advisor.

In October 2020, the Company issued 462,963 common shares and 300,926 warrants to purchase common shares at an offering of $75.60 per share to institutional investors for gross proceeds of $35 million. The warrants and the common shares underlying the warrants were issued in a private placement under Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder.

The Company's use of proceeds from the above referenced offerings is for general corporate purposes.

#### Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits.

The exhibits listed below are filed as part of this registration statement.

------

---

| | |
|:---|:---|
| **Exhibit<br>No.** | **Description of Exhibit** |
| &nbsp;&nbsp;&nbsp;&nbsp;3.1 | [Translation of Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form F-3 filed on January 28, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/0001401395/000119312522021746/d292716dex31.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;3.2 | [Translation of Articles of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on June 13, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/0001401395/000095017022011532/nept-ex3_1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;3.3 | [Amended & Restated General By-Law (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on September 27, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/1401395/000095017022018896/nept-ex3_1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;3.4 | [Advance Notice By-Law (incorporated by reference to Exhibit 3.3 to the Company's Registration Statement on Form F-3 filed on January 28, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/0001401395/000119312522021746/d292716dex33.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;4.1 | [Specimen Common Share Certificate (incorporated by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K filed on July 8, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/1401395/000095017022012532/nept-ex4_1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;4.2 | [Amended and Restated Promissory Note, dated July 13, 2022, issued in favor of NH Expansion Credit Fund Holdings LP by Sprout Foods, Inc. (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on July 13, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/0001401395/000095017022012800/nept-ex4_1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;4.3 | [Form of Common Share Purchase Warrant (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on June 24, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/1401395/000095017022012065/nept-ex4_1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;4.4 | [Form of Pre-Funded Common Share Purchase Warrant (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on June 24, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/1401395/000095017022012065/nept-ex4_2.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;4.5 | [Form of Common Share purchase Warrant (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on October 12, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/1401395/000095017022019496/nept-ex4_1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;4.6 | [Amendment No. 1 to Series C Common Stock Purchase Warrant between Neptune Wellness Solutions Inc. and Armistice Capital Master Fund Ltd, dated October 6, 2022 (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on October 12, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/1401395/000095017022019496/nept-ex4_2.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;4.7 | [Form of Warrant, dated January 12, 2023 (including a schedule of all executed warrants adopting the same form in respect of each of the purchasers) (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated January 13, 2023).](http://www.sec.gov/Archives/edgar/data/1401395/000095017023000771/nept-ex4_1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;5.1\* | [Opinion of Osler, Hoskin & Harcourt LLP](d338720dex51.htm) |
| 10.1# | [Stock Option Plan (incorporated by reference to Exhibit 10.1 to the Company's Registration Statement on Form F-3 filed on January 28, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/0001401395/000119312522021746/d292716dex101.htm) |
| 10.2# | [Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Registration Statement on Form F-3 filed on January 28, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/0001401395/000119312522021746/d292716dex102.htm) |
| 10.3# | [Form of Stock Option Agreement (incorporated by reference to Exhibit 10.3 to the Company's Registration Statement on Form F-3 filed on January 28, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/0001401395/000119312522021746/d292716dex103.htm) |
| 10.4# | [Form of Award Agreement (incorporated by reference to Exhibit 10.4 to the Company's Registration Statement on Form F-3 filed on January 28, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/0001401395/000119312522021746/d292716dex104.htm) |
| 10.5# | [Form of Indemnification Agreement between the Registrant and its directors and officers (incorporated by reference to Exhibit 10.5 to the Company's Registration Statement on Form F-3 filed on January 28, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/0001401395/000119312522021746/d292716dex105.htm) |
| 10.6# | [Employment Agreement by and between the Registrant and Michael Cammarata dated July 7, 2019 (incorporated by reference to Exhibit 10.6 to the Company's Registration Statement on Form F-3 filed on January 28, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/0001401395/000119312522021746/d292716dex106.htm) |
| 10.7#† | [Letter Agreement by and between the Registrant and Michael Cammarata dated November 14, 2021 (incorporated by reference to Exhibit 10.7 to the Company's Registration Statement on Form F-3 filed on January 28, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/0001401395/000119312522021746/d292716dex107.htm) |
| 10.8# | [Interim Services Agreement by and among the Registrant, CSuite Financial Partners and Randy Weaver dated September 23, 2021 (incorporated by reference to Exhibit 10.8 to the Company's Registration Statement on Form F-3 filed on January 28, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/0001401395/000119312522021746/d292716dex108.htm) |
| 10.9# | [Employment Agreement by and between the Registrant and John Wirt dated August 10, 2021 (incorporated by reference to Exhibit 10.9 to the Company's Registration Statement on Form F-3 filed on January 28, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/0001401395/000119312522021746/d292716dex109.htm) |
| 10.10 | [Amended and Restated Secured Promissory Note issued by Sprout Foods, Inc. to NH Expansion Credit Fund Holdings LP, dated July 13, 2022 (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on July 18, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/1401395/000095017022012800/nept-ex4_1.htm) |
| 10.11# | [Employment Agreement by and between the Registrant and Raymond Silcock dated June 13, 2022 (incorporated by reference to the Company's Current Report on Form 8-K filed on June 14, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/1401395/000095017022011601/nept-ex10_1.htm) |
| 10.12\*\* | [Securities Purchase Agreement, dated June 21, 2022, by and between Neptune Wellness Solutions Inc. and certain institutional investors.](http://www.sec.gov/Archives/edgar/data/1401395/000119312522278411/d338720dex1012.htm) |
| 10.13\*\* | [Securities Purchase Agreement between Neptune Wellness Solutions Inc. and the Purchasers, dated October 6, 2022.](http://www.sec.gov/Archives/edgar/data/1401395/000119312522278411/d338720dex1013.htm) |
| 10.14\*\* | [Leak-Out Agreement between Neptune Wellness Solutions Inc. and the Purchasers, dated October 6, 2022.](http://www.sec.gov/Archives/edgar/data/1401395/000119312522278411/d338720dex1014.htm) |
| 10.15 | [Placement Agency Agreement between Neptune Wellness Solutions Inc. and A.G.P./Alliance Global Partners (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on October 12, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/1401395/000095017022019496/nept-ex10_3.htm) |
| 10.16 | [Asset Purchase Agreement by and among N Real Estate L.P., Neptune Wellness Solutions Inc., 9354-7537 Quebec Inc. and PurCann Pharma Inc., dated October 16, 2022 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed October 18, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/1401395/000095017022019677/nept-ex10_1.htm) |
| 10.17 | [Stock Purchase Agreement by and among Sprout Foods, Inc., Neptune Growth Ventures, Inc. and NH Expansion Credit Fund Holdings LP, dated February 10, 2021 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed August 15, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/1401395/000095017022017391/nept-ex10_1.htm) |
| 10.18\* | [Third Amended and Restated Stockholders' Agreement, dated as of February 10, 2021, by and among Sprout Foods, Inc., Neptune Growth Ventures, Inc., NH Expansion Credit Fund Holdings L.P. and certain other stockholders.](d338720dex1018.htm) |
| 10.19 | [First Amendment to Stock Purchase Agreement by and among Sprout Foods, Inc., Neptune Growth Ventures, Inc. and NH Expansion Credit Fund Holdings LP, dated July 13, 2022 (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed August 15, 2022, and incorporated by reference herein)](http://www.sec.gov/Archives/edgar/data/1401395/000095017022017391/nept-ex10_2.htm) |
| 10.20 | [Note Purchase Agreement, dated January 12, 2023, by and among the Company and each of the Purchasers named therein (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated January 13, 2023).](http://www.sec.gov/Archives/edgar/data/1401395/000095017023000771/nept-ex10_1.htm) |
| 10.21 | [Form of Promissory Note, dated January 12, 2023 (including a schedule of all executed promissory notes adopting the same form in respect of each of the Purchasers) (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K dated January 13, 2023).](http://www.sec.gov/Archives/edgar/data/1401395/000095017023000771/nept-ex10_2.htm) |
| 10.22 | [Registration Rights Agreement, dated January 12, 2023, by and among the Company and each of the Purchasers named therein (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K dated January 13, 2023).](http://www.sec.gov/Archives/edgar/data/1401395/000095017023000771/nept-ex10_3.htm) |
| 10.23 | [Invoice Purchase and Security Agreement between Sprout Foods, Inc. and Alterna Capital Solutions, LLC, dated effective January 20, 2023 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated January 26, 2023)](http://www.sec.gov/Archives/edgar/data/1401395/000095017023001229/nept-ex10_1.htm) |
| 10.24 | [Commercial Guaranty by the Company in favor of the Lender dated effective January 20, 2023 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K dated January 26, 2023)](http://www.sec.gov/Archives/edgar/data/1401395/000095017023001229/nept-ex10_2.htm) |
| 21.1\*\* | [Subsidiaries of the Registrant](http://www.sec.gov/Archives/edgar/data/1401395/000119312522278411/d338720dex211.htm) |
| 23.1\* | [Consent of Independent Registered Public Accounting Firm](d338720dex231.htm) |
| 23.2\* | [Consent of Independent Registered Public Accounting Firm](d338720dex232.htm) |

---

------

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| | |
|:---|:---|
| 23.3\* | [Consent of Osler, Hoskin & Harcourt LLP (included in Exhibit 5.1)](d338720dex51.htm) |
| 24.1\*\* | [Power of Attorney (included on the signature page to the initial filing of the Registration Statement)](http://www.sec.gov/Archives/edgar/data/../../../ix?doc=/Archives/edgar/data/1401395/000119312522278411/d338720ds1.htm#sig) |
| 101.INS\* | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
| 101.SCH\* | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL\* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF\* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB\* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE\* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 107\* | [Filing Fee Table](d338720dexfilingfees.htm) |

---

# Indicates a management contract or compensatory plan or arrangement.

† Certain identified information has been excluded from the exhibit pursuant to Item 601(a) (6) and/or Item 601(b) (10) (iv) of Regulation S-K

\* Filed herewith

\*\* Previously filed.

#### Item 17. Undertakings.
*The undersigned registrant hereby undertakes:* 

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement (notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement); and (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of securities, in a primary offering of securities of the registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) any preliminary prospectus or prospectus of the registrant relating to the offering required to be filed pursuant to Rule 424; (ii) any free writing prospectus relating to the offering prepared by or on behalf of the registrant or used or referred to by the registrant; (iii) the portion of any other free writing prospectus relating to the offering containing material information about the registrant or its securities provided by or on behalf of the registrant; and (iv) any other communication that is an offer in the offering made by the registrant to the purchaser.

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(5) That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(6) That, prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the registrant undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.

(8) That every prospectus (i) that is filed pursuant to the immediately preceding paragraph, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment has become effective, and that for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial *bona fide* offering thereof.

(9) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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#### SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this amended registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the United States, on January 30, 2023.

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| | |
|:---|:---|
| NEPTUNE WELLNESS SOLUTIONS INC. | NEPTUNE WELLNESS SOLUTIONS INC. |
| By: | /s/ Raymond Silcock |
|  | Raymond Silcock |
|  | Chief Financial Officer |

---

Pursuant to the requirements of the Securities Act of 1933, as amended, this amended registration statement has been signed below by the following persons in the capacities indicated on November 7, 2022.

---

| | | |
|:---|:---|:---|
| **NAME** | **POSITION** | **DATE** |
| \*<br> Michael Cammarata | President, Chief Executive Officer and Director | January 30, 2023 |
| /s/ Raymond Silcock<br> Raymond Silcock | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | January 30, 2023 |
| \*<br> Julie Phillips | Director | January 30, 2023 |
| \*<br> Joseph Buaron | Director | January 30, 2023 |
| \*<br> Michael de Geus | Director | January 30, 2023 |
| \*<br> Dr. Ronald Denis | Director | January 30, 2023 |
| \*<br> Philip Sanford | Director | January 30, 2023 |

---

---

| | |
|:---|:---|
| \* Pursuant to Power of Attorney | \* Pursuant to Power of Attorney |
| By: | /s/ Raymond Silcock |
|  | Raymond Silcock |
|  | *As Attorney-in-Fact* |

---

------

#### AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, the undersigned has signed this amended Registration Statement, in the capacity of the duly authorized representative of the Registrant in the United States, on January 30, 2023.

---

| | |
|:---|:---|
| NEPTUNE WELLNESS SOLUTIONS INC. | NEPTUNE WELLNESS SOLUTIONS INC. |
| By: | /s/ Raymond Silcock |
|  | Name: Raymond Silcock |
|  | Title: Chief Financial Officer |

---

## Exhibit 5.1

**Exhibit 5.1** 

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| | |
|:---|:---|
| **Osler, Hoskin & Harcourt LLP**<br> 1000 De La Gauchetière Street West<br> Suite 2100<br> Montréal, Québec, Canada H3B 4W5<br> 514.904.8100 MAIN<br> 514.904.8101 FACSIMILE | ![LOGO](g338720g1103011825528.jpg) |

---

Montréal

Toronto

Calgary

Ottawa

Vancouver

New York

January 30, 2023

**Neptune Wellness Solutions Inc.** 

545 Promenade du Centropolis

Suite 100

Laval, Québec

H7T 0A3

Dear Sirs/Mesdames:

**Re: <u>Neptune Wellness Solutions Inc. – Registration Statement on Form S-1</u>** 

We have acted as Canadian counsel to Neptune Wellness Solutions Inc. (the "**Corporation**"), a corporation organized under the *Business Corporations Act* (Québec) in connection with the Registration Statement on Form S-1 (the "**Registration Statement**"), including a related prospectus filed with the Registration Statement (the "**Prospectus**"), filed by the Corporation on November 7, 2022 with the U.S. Securities and Exchange Commission under the U.S. Securities Act of 1933, as amended, covering the registration for resale of up to 7,267,114 common shares of the Corporation (the "**Shares**") on behalf of the selling shareholders identified in the Prospectus issuable upon the exercise of certain warrants issued to the selling shareholders in private placements on October 11, 2022 and January 12, 2023 (the "**Warrants**").

We have examined (a) the Registration Statement, (b) the Prospectus, and (c) the Warrants and all such corporate and public records, statutes and regulations and have made such investigations and have reviewed such other documents as we have deemed relevant and necessary and have considered such questions of law as we have considered relevant and necessary in order to give the opinion hereinafter set forth. As to various questions of fact material to such opinions which were not independently established, we have relied upon a certificate of an officer of the Corporation certifying, among other things, the certificate, articles of incorporation and by-laws of the Corporation and certain resolutions passed by the board of directors of the Corporation relating to the matters set forth herein.

In reviewing the foregoing documents and in giving this opinion, we have assumed (a) the legal capacity of all individuals, the genuineness of all signatures, the veracity of the information contained therein, the authenticity of all documents submitted to us as originals and the conformity to authentic or original documents of all documents submitted to us as certified, conformed, electronic, photostatic or facsimile copies and (b) the completeness, truth and accuracy of all facts set forth in the official public records, certificates and documents supplied by public officials or otherwise conveyed to us by public officials.

![LOGO](g338720g1103012556863.jpg)

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![LOGO](g338720g1103011825528.jpg)

We are qualified to practice law in the Province of Québec and this opinion is rendered solely with respect to the Province of Québec and the federal laws of Canada applicable in the Province of Québec.

Where our opinion expressed herein refers to the Shares having been issued as being "fully-paid and non-assessable" common shares of the Corporation, such opinion assumes that all required consideration (in whatever form) has been paid or provided. No opinion is expressed as to the adequacy of any consideration received.

We express no opinion to the extent that, notwithstanding the Corporation's current reservation of the Shares as of the date hereof, future issuances of securities of the Corporation, including the Shares, and/or antidilution adjustments to outstanding securities of the Corporation, including the Warrants, may cause the Warrants to be exercisable for more common shares of the Corporation than the number that then remain authorized but unissued.

On the basis of the foregoing and the qualifications set forth herein, we are of the opinion that the Shares, when issued and paid for upon exercise of the Warrants, will be validly issued, fully paid and non-assessable.

Our opinion is limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters expressly stated. Our opinion is based on these laws as in effect on the date hereof, and we disclaim any obligation to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinion expressed herein.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference of our firm under the caption "Legal Matters" in the Prospectus. In giving such consent, we do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the U.S. Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder.

Yours very truly,

*(signed) Osler, Hoskin & Harcourt LLP* 

Osler, Hoskin & Harcourt LLP

## Exhibit 10.18

**Exhibit 10.18** 

**THIRD AMENDED AND RESTATED** 

**STOCKHOLDERS' AGREEMENT** 

**THIRD AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT** (this "***Agreement***"), dated as of February 10, 2021 (the "***Effective Date***"), by and among, Sprout Foods, Inc., a Delaware corporation (the "***Company***"), Neptune Growth Ventures Inc. ("***Neptune***"), NH Expansion Credit Fund Holdings L.P. ("***MSEC***"), the other Stockholders (as defined below) listed on the signature pages hereto and any other Person that hereafter becomes a signatory hereto as a Stockholder (collectively with the Original Stockholder, the "***Other Stockholders***").

**<u>W</u> <u>I</u> <u>T</u> <u>N</u> <u>E</u> <u>S</u> <u>S</u> <u>E</u> <u>T</u> <u>H</u> :** 

**WHEREAS**, the Company and the then-current Stockholders as of such time entered into (i) that certain Stockholders' Agreement, dated as of June 19, 2015 (as amended, the "***2015 Stockholders' Agreement***"), (ii) that certain Amended and Restated Stockholders' Agreement, dated as of January 3, 2020 (as amended, the "***A&R Stockholders' Agreement***"), which A&R Stockholders' Agreement completely amended, restated and replaced the 2015 Stockholders' Agreement, and (iii) that certain Second Amended and Restated Stockholders' Agreement, dated as of January 25, 2021 (the "***2<sup>nd</sup> A&R Stockholders' Agreement***"; together with the 2015 Stockholders' Agreement and the A&R Stockholders' Agreement, the "***Prior Agreements***"), which 2<sup>nd</sup> A&R Stockholders' Agreement completely amended, restated and replaced the A&R Stockholders' Agreement;

**WHEREAS**, simultaneously with the execution of this Agreement, amongst other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Company is entering into that certain Stock Purchase Agreement (the "***Purchase Agreement***"), dated as of even date herewith, by and among the Company, Neptune, and MSEC, pursuant to which, among other things, Neptune is acquiring newly-issued capital stock of the Company which, after giving effect to such issuance to Neptune, shall constitute 50.1% of the Company's issued and outstanding capital stock, calculated on a Fully-Diluted Basis, for a total purchase price of $28,000,000 (the "***Purchase Price***"), which Purchase Price will be payable (a) partly in cash delivered by Neptune ($6,000,000), (b) partly in the form of a promissory note (the "***MSEC Note***") issued by the Company to MSEC and guaranteed by Neptune Parent ($10,000,000), and (c) partly in the form of Neptune Parent common stock issued by Neptune Parent to MSEC and certain named designees of MSEC ($12,000,000), a portion of which shall be subject to a lock-up period restricting trading of such shares pursuant to the terms of a Lock-Up Agreement, in each case, as more fully described in the Purchase Agreement (such transaction, the "***Change of Control Transaction***");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) each Stockholder (other than Neptune) is granting, by virtue of the amendment and restatement of the 2<sup>nd</sup> A&R Stockholders' Agreement with this Agreement, Neptune a call option (the "***Call Option***") to purchase the remaining Shares held by such Stockholders (all such Stockholders, other than Neptune, collectively, the "***Call Option Grantors***") immediately following the closing of the Change of Control Transaction and all Shares (if any) acquired or owned by any Call Option Grantors prior to the expiration of the Call Option Period (or the later Call Closing Date if the Call Option is exercised) ("***Call Option Shares***") pursuant to the Call Option Terms attached hereto as <u>Exhibit A</u> (the "***Call Option Terms***");

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) all issued and outstanding shares of Preferred Stock of the Company are being converted into shares of Common Stock, based on the conversion ratios set forth in the Company's Ninth Amended and Restated Certificate of Incorporation (as amended, the "***Prior Certificate***") and all other outstanding securities of the Company are being converted or exchanged for shares of Common Stock such that following such transaction and as of immediately prior to the Closing (as defined in the Purchase Agreement) all Stockholders (other than Neptune) collectively will own 49.9% of the total issued and outstanding shares of Common Stock and no other Shares or securities will be issued or outstanding;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) the Company is executing and filing a Tenth Amended and Restated Certificate of Incorporation of the Company (as more particularly defined below, the "***Certificate of Incorporation***"), which Certificate of Incorporation shall completely amend, restate and replace the Prior Certificate; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) the Company is amending and restating the Third Amended and Restated Bylaws of the Company by adopting and approving the Fourth Amended and Restated Bylaws of the Company (as more particularly defined below, the "***Bylaws***");

**WHEREAS**, pursuant to Section 21 of the 2<sup>nd</sup> A&R Stockholders' Agreement, in connection with the Change of Control Transaction, the Company and the Required Holders desire to amend and restate the 2<sup>nd</sup> A&R Stockholders' Agreement in its entirety to reflect the terms and conditions set forth herein; and

**WHEREAS**, this Agreement, the Certificate of Incorporation and the Bylaws shall completely amend, restate and replace any and all previous governing documents of the Company, including, without limitation, the Prior Agreements.

**NOW**, **THEREFORE**, in consideration of the premises and of the mutual covenants and obligations hereinafter set forth, the parties hereto hereby agree that the 2<sup>nd</sup> A&R Stockholders' Agreement is hereby amended and restated in its entirety as follows:

**SECTION 1. *<u>Definitions</u>***. As used herein, the following terms shall have the following respective meanings (other defined terms are contained in the body of this Agreement):

***"Acceptance Period for New Securities"*** shall have the meaning set forth in Section 2(a).

***"accredited investor"*** shall have the meaning given to such term in Regulation D promulgated under the Securities Act.

***"Accredited Stockholder"*** shall have the meaning set forth in Section 2(a).

***"Additional Capital Support"*** shall have the meaning set forth in Section 16(b)(i).

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***"Affiliate"*** shall mean, with respect to any Person, any other Person Controlling, Controlled by or under common Control with such first Person. An "Affiliate" with respect to an NCP Entity includes, without limiting the foregoing (i) any NCP Entity, (ii) the equityholders of an NCP Entity in connection with dissolution of such NCP Entity, and (iii) the equityholders of any member of any NCP Entity in connection with dissolution of such member. An "Affiliate" with respect to an MSEC Entity includes, without limiting the foregoing (i) any MSEC Entity, (ii) the equityholders of an MSEC Entity in connection with dissolution of such MSEC Entity, and (iii) the equityholders of any member of any MSEC Entity in connection with dissolution of such member.

***"Approved Sale"*** shall have the meaning set forth in Section 5(a).

***"Board"*** shall mean the board of directors of the Company or a duly authorized committee thereof.

***"Business Day"*** shall mean any day which is not a Saturday, Sunday or other day on which banks are obligated to close in the State of New York.

***"Bylaws"*** shall mean the Fourth Amended and Restated Bylaws of the Company, as the same may be further amended and/or restated from time to time.

***"Call Option"*** shall have the meaning assigned to that term in the recitals of this Agreement.

***"Call Option Grantors"*** shall have the meaning assigned to that term in the recitals of this Agreement.

***"Call Option Period"*** shall have the meaning set forth in the Call Option Terms.

***"Call Option Shares"*** shall have the meaning assigned to that term in the recitals of this Agreement.

***"Call Option Terms"*** shall have the meaning assigned to that term in the recitals of this Agreement.

***"Certificate of Incorporation"*** shall mean the Tenth Amended and Restated Certificate of Incorporation of the Company, as amended, as the same may be further amended and/or restated from time to time.

***"Change of Control Transaction"*** shall have the meaning assigned to that term in the recitals of this Agreement.

***"Common Stock"*** shall mean the shares of any class or series of the Company's common stock, par value $0.001 per share, that the Company may be authorized to issue from time to time, and any stock or other securities issued or issuable with respect to such shares, including pursuant to a stock dividend, stock split, or like action, or pursuant to a plan of recapitalization, reorganization, reclassification, conversion, exchange, merger, sale of assets or otherwise.

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***"Company Option Period"*** shall have the meaning set forth in Section 3(a)(ii).

***"Company's Notice of Intention to Sell"*** shall have the meaning set forth in Section 2(a).

***"Control"*** shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

***"Effective Date"*** shall have the meaning assigned to that term in the introductory paragraph of this Agreement.

**"*Equity Equivalents***" shall mean any and all shares, interests, participations or other equivalents (however designated) of capital stock of the Company and any options, warrants or other rights to acquire the foregoing, including any rights to acquire securities exercisable for, convertible into or exchangeable for any of the foregoing.

***"Family Group"*** shall mean (a) the spouse and descendants (by birth or adoption) of a Stockholder, (b) any custodian of a custodianship for and on behalf of a Stockholder or such Stockholder's spouse or descendants (by birth or adoption), or (c) any trustee of a trust solely for the benefit of a Stockholder or such Stockholder's spouse or descendants (by birth or adoption).

***"Fully Diluted Basis"*** shall mean the number of shares of Common Stock which would be outstanding, as of the date of computation, if all issued and outstanding Preferred Stock and all other outstanding Equity Equivalents had been converted, exercised or exchanged; <u>provided</u>, <u>however</u>, that any Equity Equivalents which are subject to vesting but have not vested as of the date of computation will be disregarded for purposes of determining Fully Diluted Basis (for clarity, no such unvested Equity Equivalents are outstanding as of the Effective Date).

***"Independent Third Party"*** shall mean any Person who, immediately before the contemplated transaction, (a) does not own Common Stock (a ***"Holder"***), (b) is not an Affiliate of a Holder, (c) together with its Affiliates would not in the aggregate be a Holder, and (d) is not the spouse or descendent (by birth or adoption) of a Holder*.*

***"Initiating Stockholder"*** shall have the meaning set forth in Section 4(a).

***"Management Fee"*** shall have the meaning set forth in Section 16(a).

***"Minority Stockholders"*** shall have the meaning set forth in Section 17.

***"Minority Vote"*** shall have the meaning set forth in Section 17.

***"Modification"*** shall have the meaning set forth in Section 23(a).

***"MSEC"*** shall have the meaning assigned to that term in the introductory paragraph of this Agreement.

***"MSEC Designee"*** shall have the meaning set forth in Section 6(a).

------

***"MSEC Entity"*** shall mean MSEC and shall include each of its successors and permitted assigns.

***"MSEC Note"*** shall have the meaning assigned to that term in the recitals of this Agreement.

***"NCP V"*** shall mean North Castle Partners V, L.P., a Delaware limited partnership.

***"NCP V-A"*** shall mean North Castle Partners V-A, L.P., a Delaware limited partnership.

***"NCP Entity"*** shall mean each of NCP V and NCP V-A and shall include each such Person's successors and permitted assigns.

***"Neptune"*** shall have the meaning assigned to that term in the introductory paragraph of this Agreement.

***"Neptune Entity"*** shall mean Neptune and shall include each of its successors and permitted assigns.

***"Neptune Parent"*** shall mean Neptune Wellness Solutions Inc. and shall include each of its successors.

***"New Securities"*** shall have the meaning set forth in Section 2.

***"Non-Transferring Stockholder"*** shall have the meaning set forth in Section 3(a)(iii).

***"NurturMe Holdings"*** shall mean NurturMe Holdings LLC, a Delaware limited liability company.

***"Offer Price"*** shall have the meaning set forth in Section 3(a)(i).

***"Offered Securities"*** shall have the meaning set forth in Section 3(a)(i).

***"Original Stockholder"*** shall mean SFI Investment Corp., a Delaware corporation.

***"Other Stockholders"*** shall mean all Stockholders other than the MSEC Entity and the Neptune Entity.

***"Participating Offeree"*** shall have the meaning set forth in Section 4(a).

***"Participation Notice"*** shall have the meaning set forth in Section 4(a).

***"Participation Price"*** shall have the meaning set forth in Section 4(a).

***"Participation Sale"*** shall have the meaning set forth in Section 4(a).

***"Participation Securities"*** shall have the meaning set forth in Section 4(a).

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***"Permitted Issuances"*** shall mean any issuances of Equity Equivalents (a) pursuant to the exercise or conversion of any Preferred Stock or Equity Equivalents issued after the Effective Date so long as the original issuance of such Preferred Stock or Equity Equivalents complied with Section 2, (b) pursuant to a stock split, stock dividend, plan of recapitalization, reorganization, restructuring, conversion or like action, (c) pursuant to a Public Offering, (d) to the current or future directors, managers, officers, employees or consultants of the Company or any of its Subsidiaries pursuant to an equity incentive plan approved by the Board, or pursuant to a compensation-related plan of the Company approved by the Board, (e) in connection with the acquisition of all or a substantial portion of another Person's business by the Company or any of its Subsidiaries (whether by acquisition of stock or assets or by merger, consolidation, reorganization or other similar transaction) or the formation of a joint venture, in each case approved by the Board, (f) for non-cash consideration, such as issuances of Equity Equivalents to vendors or strategic or marketing partners or in a joint venture, in each case approved by the Board, (g) pursuant to any equipment loan or leasing arrangement, real property leasing arrangement or to lenders as partial consideration for any debt financing for the Company or any of its Subsidiaries after the Effective Date approved by the Board, and (h) in connection with the reissuance of Equity Equivalents previously purchased by the Company from directors, managers, officers, employees or consultants of the Company to new or other directors, managers, officers, employees or consultants of the Company.

***"Permitted Offeree"*** shall have the meaning set forth in Section 2(d).

***"Permitted Transfer"*** shall mean a Transfer of Shares as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) between any Stockholder who is a natural person and such Stockholder's Family Group (whether *inter vivos* or upon death); <u>provided</u>, <u>however</u>, that, prior to any such Transfer, the Stockholder must demonstrate to the reasonable satisfaction of the Company that the Stockholder will retain, until such Stockholder's death, all rights to vote and Transfer the Shares that are proposed to be Transferred to such Stockholder's Family Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) between any Stockholder who is a natural person and such Stockholder's guardian or conservator;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) by any Stockholder who is a natural person and who is deceased or adjudicated incompetent to the personal representative of such Stockholder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) by the personal representative of any Stockholder who is a natural person and who is deceased or adjudicated incompetent to such Stockholder's Family Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) by any Stockholder (other than those referenced in clauses (vi) through (ix) below) that is a limited partnership formed by a Stockholder to the limited partners of such limited partnership; provided, however, that such limited partners are part of such Stockholder's Family Group and, prior to any such Transfer, the Stockholder must demonstrate to the reasonable satisfaction of the Company that the Stockholder that originally formed such limited partnership will retain, until such Stockholder's death, all rights to vote and Transfer the Shares that are proposed to be Transferred to such limited partner;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) by any NCP Entity to any of its Affiliates;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) by any MSEC Entity to any of its Affiliates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) by NurturMe Holdings to any of its Affiliates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) by any Neptune Entity to any of its Affiliates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) by any Other Stockholder to the Company, provided such Transfer is approved by the Board; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) by any Call Option Grantor to Neptune pursuant to the Call Option Terms.

Notwithstanding the foregoing, (A) no Permitted Transfer shall be effective unless and until the transferee of the Shares so Transferred, if such transferee is not a party to this Agreement, executes and delivers to the Company a Joinder Agreement in substantially the form attached hereto as <u>Appendix A</u>, (B) no Stockholder shall avoid the provisions of this Agreement by making one or more Transfers to one or more Permitted Transferees and then disposing of all or any portion of such party's or its Affiliate's interest in any such Permitted Transferee, (C) if a Stockholder is a Person other than an individual, such Stockholder shall not avoid the provisions of this Agreement by transferring a controlling equity interest in such Stockholder to a non-Permitted Transferee, and (D) no Call Option Grantor may effect a Permitted Transfer (except under clause (xi) above) prior to the end of the Call Option Period (or the later closing of the acquisition of the Call Option Shares by Neptune thereunder if the Call Option is exercised) unless such Permitted Transferee executes a Joinder Agreement in substantially the form attached hereto as <u>Appendix A</u> and represents to Neptune in writing that such Permitted Transferee is an accredited investor and, in the case of clause (vii) above, such Permitted Transferee agrees in writing with Neptune to be jointly and several liable with MSEC under the Purchase Agreement with respect to MSEC's obligations thereunder.

***"Permitted Transferee"*** shall mean any Person who shall have acquired and who shall hold Shares pursuant to a Permitted Transfer.

***"Person"*** shall mean any individual, partnership, corporation, limited liability company, association, joint stock company, trust, estate, joint venture, unincorporated organization, or the United States of America or any other nation, state or other political subdivision thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions of government.

***"Preferred Stock"*** shall mean the shares of any class or series of the Company's preferred stock, par value $0.001 per share, that the Company may be authorized to issue from time to time, and any stock or other securities issued or issuable with respect to such shares, including pursuant to a stock dividend, stock split, or like action, or pursuant to a plan of recapitalization, reorganization, reclassification, exchange, conversion, merger, sale of assets or otherwise. As of the Effective Date, there are no shares of Preferred Stock outstanding.

***"Prior Agreements"*** shall have the meaning assigned to that term in the recitals of this Agreement.

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***"Prior Certificate"*** shall have the meaning assigned to that term in the recitals of this Agreement.

***"Public Offering"*** shall mean the completion of a sale of Common Stock pursuant to a registration statement which has become effective under the Securities Act, excluding registration statements on Form S-4, S-8 or similar limited purpose forms, occurring after the date of this Agreement.

***"Purchase Agreement"*** shall have the meaning assigned to that term in the recitals of this Agreement.

***"Purchase Price"*** shall have the meaning assigned to that term in the recitals of this Agreement.

"***Required Holders***" shall mean Stockholders holding at least 50% of the shares of Common Stock then outstanding, on a Fully Diluted Basis.

***"ROFN"*** shall have the meaning set forth in Section 5(f).

***"ROFN Notice"*** shall have the meaning set forth in Section 5(f).

***"ROFN Period"*** shall have the meaning set forth in Section 5(f).

***"ROFR Allocation"*** shall have the meaning set forth in Section 3(a)(iii).

***"Sale of the Company"*** shall mean any transaction or series of related transactions pursuant to which any Independent Third Party or group of Independent Third Parties acquires (a) more than 50% of the Common Stock on a Fully Diluted Basis (whether by merger, consolidation, sale or other Transfer of Common Stock, reorganization, recapitalization or otherwise), or (b) all or substantially all of the assets of the Company and its Subsidiaries, determined on a consolidated basis. For purposes of this definition, all Common Stock that is issuable upon exercise or conversion of any Equity Equivalents acquired by an Independent Third Party shall be deemed to be issued and held by such Independent Third Party. Notwithstanding anything to the contrary herein, as used in Sections 5(a)(ii) and 5(f), "**Sale of the Company**" means any transaction or series of related transactions pursuant to which any Independent Third Party or group of Independent Third Parties acquires (a) 100% of the Common Stock on a Fully Diluted Basis (whether by merger, consolidation, sale or other Transfer of Common Stock, reorganization, recapitalization or otherwise), or (b) all or substantially all of the assets of the Company and its Subsidiaries, determined on a consolidated basis, in each case immediately following which all of the net proceeds from such transaction are distributed to the Shareholders in a liquidation of the Company in accordance with their distribution rights upon liquidation under the Company's governing documents.

***"Sale Request"*** shall have the meaning set forth in Section 5(a).

***"2<sup>nd</sup> A&R Stockholders' Agreement"*** shall have the meaning assigned to that term in the recitals of this Agreement.

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"***Securities Act***" shall mean the Securities Act of 1933, as amended, or any similar Federal statute, and the rules and regulations thereunder, all as the same shall be in effect at the time.

***"Selling Holders"*** shall have the meaning set forth in Section 5(a).

"***Shares***" shall mean, with respect to any Stockholder, (i) the shares of capital stock of the Company, including Preferred Stock and Common Stock, and (ii) all Equity Equivalents, in each case held at any time by such Stockholder.

***"Stockholder"*** shall mean each MSEC Entity, each NCP Entity, each Neptune Entity, the Original Stockholder, each Other Stockholder and each other Person who holds Equity Equivalents and agrees in writing with the Company to be bound by and to comply with all applicable provisions of this Agreement.

***"Subsequent Offer Notice"*** shall have the meaning set forth in Section 3(a)(iii).

***"Subsequent Option Period"*** shall have the meaning set forth in Section 3(a)(iii).

***"Subsidiary"*** shall mean any corporation, limited liability company, partnership, association, joint stock company, trust, joint venture or unincorporated organization of which the Company, at the time in respect of which such term is used, (a) owns directly or indirectly more than 50% of the equity or beneficial interests, on a consolidated basis, or (b) owns directly or controls with power to vote, indirectly through one or more subsidiaries, shares of capital stock or beneficial interests having the power to cast a majority of the votes entitled to be cast for the election of directors, trustees, managers or other officials having powers analogous to those of directors of a corporation. Unless otherwise specifically indicated, when used in this Agreement, the term Subsidiary shall refer to a direct or indirect Subsidiary of the Company.

***"Transfer"*** shall mean any direct or indirect transfer, distribution, donation, sale, assignment, pledge, encumbrance, hypothecation, gift, creation of a security interest in or lien on, or other disposition, irrespective of whether any of the foregoing are effected with or without consideration, voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise, *inter vivos* or upon death or dissolution. For avoidance of doubt, no transfer, distribution, donation, sale, assignment, pledge, encumbrance, hypothecation, gift, creation of a security interest in or lien on, or other disposition, irrespective of whether any of the foregoing are effected with or without consideration, voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise, *inter vivos* or upon death or dissolution, of any equity or debt securities of (a) the Original Stockholder shall be considered a Transfer unless the same is made in connection with any transaction or series of related transactions pursuant to which any non-affiliates or group of non-affiliates of the Original Stockholder acquires more than 50% of the outstanding voting shares of equity of the Original Stockholder (whether by merger, consolidation, sale or other transfer of such shares, reorganization, recapitalization or otherwise) or (b) Neptune Parent directly or indirectly (no matter how remote) shall be considered a Transfer of any Neptune Entity's Shares (and all such dispositions directly or indirectly by any holder of equity or debt securities of Neptune Parent are free of restrictions hereunder and will not cause a breach hereof) (any Transfer of an interest in Neptune Parent, a "<u>Neptune Parent Transfer</u>").

***"Transfer Notice"*** shall have the meaning set forth in Section 3(a)(i).

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***"Transferring Stockholder"*** shall have the meaning set forth in Section 3(a)(i).

**SECTION 2. *<u>Preemptive Rights</u>***. Subject to the provisions of this Agreement and the Certificate of Incorporation, each Stockholder acknowledges that the Company shall have the absolute right, in its sole discretion, to raise capital from all sources and in all manners available to it, including the incurrence of debt in any form.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If at any time the Company wishes to issue any Equity Equivalents other than pursuant to a Permitted Issuance (***"New Securities"***) to any Person or Persons, the Company shall promptly deliver a written notice of its intention to sell (the ***"Company's Notice of Intention to Sell*"**) to each Stockholder who is an accredited investor (each an "***Accredited Stockholder***") and to the Original Stockholder (whether or not the Original Stockholder is an accredited investor), setting forth a description of the New Securities to be sold, the proposed purchase price thereof and the terms and conditions of sale. Holders of securities of the Original Stockholder who are accredited investors shall be entitled to form a limited liability company or corporation for the purpose of acquiring New Securities pursuant to this Section 2 (the "***Original Stockholder Investment Entity***"), in which case such entity shall be considered an Accredited Stockholder entitled to rights of an Accredited Stockholder pursuant to this Section 2. Upon receipt of the Company's Notice of Intention to Sell, each Accredited Stockholder shall have the right to elect to purchase, at the price and on the terms and conditions stated in the Company's Notice of Intention to Sell, up to a number of the New Securities equal to the product of (i) a fraction, the numerator of which is the aggregate number of shares of Common Stock owned by such Accredited Stockholder (calculated on a Fully Diluted Basis) and the denominator of which is the aggregate number of shares of Common Stock (calculated on a Fully Diluted Basis) held by all Accredited Stockholders, *multiplied by* (ii) the number of New Securities to be issued. For purposes of clause (i) of the immediately preceding sentence, the number of shares of Common Stock owned by the Original Stockholder Investment Entity shall be deemed to be the number of shares owned by the Original Stockholder. Such election is to be made by the Accredited Stockholders by written notice to the Company within thirty (30) Business Days after receipt by such Accredited Stockholders of the Company's Notice of Intention to Sell (the ***"Acceptance Period for New Securities"***). Each Accredited Stockholder also shall have the option, exercisable by so specifying in such written notice, to purchase on a *pro rata* basis similar to that described above, any remaining New Securities not purchased by other Accredited Stockholders, in which case the Accredited Stockholders exercising such further option shall be deemed to have elected to purchase such remaining New Securities on such *pro rata* basis, up to the aggregate number of New Securities which such Accredited Stockholder shall have specified until either (A) no Accredited Stockholder shall have elected to purchase any further amount of the New Securities which are the subject of the Company's Notice of Intention to Sell or (B) all the New Securities which are the subject of the Company's Notice of Intention to Sell shall have been subscribed for by the Accredited Stockholders. The Company shall promptly notify each electing Accredited Stockholder in writing of each notice of election received from other Accredited Stockholders pursuant to this Section 2(a). Notwithstanding anything herein to the contrary, if the Original Stockholder Investment Entity participates in any issuance of New Securities pursuant to this Section 2, the Original Stockholder shall not be permitted to participate in such issuance of New Securities.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If effective acceptances shall not be received pursuant to Section 2(a) above in respect of all the New Securities which are the subject of the Company's Notice of Intention to Sell, then the Company may, at its election, during a period of one hundred and twenty (120) days following the expiration of the Acceptance Period for New Securities, sell and issue the remaining New Securities to another Person or Persons at a price and upon terms not more favorable to such Person or Persons than those stated in the Company's Notice of Intention to Sell. In the event the Company has not sold the New Securities, or entered into an agreement to sell the New Securities, within such one hundred and twenty (120) day period, the Company shall not thereafter issue or sell any New Securities without first offering such securities to each Stockholder in the manner provided in Section 2(a) hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If an Accredited Stockholder gives the Company notice, pursuant to the provisions of this Section 2, that such Accredited Stockholder desires to purchase any of the New Securities, payment therefor shall be by check or wire transfer, against delivery of the securities at the executive offices of the Company within twenty (20) Business Days after giving the Company such notice, or, if later, the closing date for the sale of such New Securities. In the event that any such proposed issuance is for a consideration other than cash, such Accredited Stockholder will be entitled to pay cash for each share or other unit, in lieu of such other consideration, in the amount determined in good faith by the Board to constitute the fair value of such consideration other than cash to be paid per share or other unit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Notwithstanding the foregoing, the Company shall be permitted to issue New Securities to any Person and such Person (the ***"Permitted Offeree"***) shall be permitted to purchase New Securities for cash without first complying with the foregoing provisions of this Section 2; <u>provided</u>, that in connection with such purchase (i) the Company shall promptly (but in no event later than fifteen (15) Business Days following such sale) give notice to the Accredited Stockholders, which notice shall describe in reasonable detail the New Securities being purchased by the Permitted Offeree and the purchase price thereof, and (ii) the participating Permitted Offeree and the Company shall take all commercially reasonable steps (whether involving the issuance of additional Equity Equivalents by the Company or a direct transfer of a ratable number of Equity Equivalents by the Permitted Offeree at a purchase price equal to cost) necessary to enable the Accredited Stockholders to effectively exercise their respective rights under this Section 2 with respect to the purchase of their *pro rata* share of the Equity Equivalents issued to the Permitted Offeree on the same price and terms as were provided to the Permitted Offeree within thirty (30) days after such purchase by the Permitted Offeree, or such longer period of time as may be reasonably required to effect the provisions of this Section 2 in a commercially reasonable manner.

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**SECTION 3. *<u>Restrictions on Transfers; Right of First Refusal.</u>*** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to Section 3(c), no Stockholder may Transfer any interest in all or any part of any of the Shares owned by such Stockholder, except in accordance with the following procedures:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) If any Stockholder desires to Transfer any Shares to any Person (a ***"Transferring Stockholder"***), then such Transferring Stockholder shall deliver written notice of such proposed Transfer to the Company and the Company shall forward such notice to the other Stockholders. Such written notice (the ***"Transfer Notice"***) shall set forth, in reasonable detail, the terms and conditions of such proposed Transfer, including the name of the prospective purchaser, the payment terms, the type of disposition, the number and type of Shares proposed to be Transferred (***"Offered Securities"***), the proposed purchase price for the Offered Securities on a per share basis (the ***"Offer Price"***) and any other information reasonably requested by the Company with respect to such proposed Transfer and the prospective purchaser, together with a complete and accurate copy of the prospective purchaser's written offer to purchase the Offered Securities from the Transferring Stockholder. The Transfer Notice shall further state that the Company and the Stockholders may acquire, in accordance with the provisions of this Agreement, the Offered Securities for the price and upon the other terms and conditions set forth in the Transfer Notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) For a period of twenty (20) days after receipt of the Transfer Notice (the ***"Company Option Period"***), the Company may elect, by delivery of written notice to the Transferring Stockholder, to purchase all or any portion of the Offered Securities at the Offer Price and on the other terms and conditions set forth in the Transfer Notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) If the Company does not elect to purchase all of the Offered Securities pursuant to clause (ii) above, then, prior to the expiration of the Company Option Period, the Company shall notify each of the Stockholders other than the Transferring Stockholder (the "***Non Transferring Stockholders***") of the number of Offered Securities, if any, which the Company has not elected to purchase (the "***Subsequent Offer Notice***"). For a period of twenty (20) days after the expiration of the Company Option Period (the "***Subsequent Option Period***"), each Non Transferring Stockholder may elect, by giving written notice as described below, to purchase up to that number of remaining Offered Securities as shall be equal to the product obtained by multiplying (A) the total number of remaining Offered Securities by (B) a fraction, the numerator of which is the total number of shares of Common Stock on a Fully Diluted Basis owned by such Non Transferring Stockholder on the date of the Subsequent Offer Notice and the denominator of which is the total number of shares of Common Stock on a Fully Diluted Basis then held by all of the Non Transferring Stockholders on the date of the Subsequent Offer Notice, subject to increase as hereinafter provided. The number of shares that each Non Transferring Stockholder is entitled to purchase under this Section 3(a) shall be referred to as a "***ROFR Allocation***." If any Non Transferring Stockholder does not wish to purchase its ROFR Allocation, then all other Non Transferring Stockholders who so elect shall have the right to accept the offer to purchase, on a pro rata basis with all other Non Transferring Stockholders who so elect (as hereinafter provided), any ROFR Allocation not purchased by such Non Transferring Stockholder. Each Non Transferring Stockholder shall have the right to purchase such number of remaining Offered Securities by giving written notice of such acceptance to the Company and the Transferring Stockholder within the Subsequent Option Period, which notice shall indicate the maximum number of shares of Offered Securities which such Non Transferring Stockholder is willing to purchase in the event fewer than all of the Non Transferring Stockholders elect to purchase their ROFR Allocations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The closing of the purchase of any Offered Securities pursuant to Sections 3(a)(ii) and 3(a)(iii) shall take place at the principal office of the Company as soon as practical after the delivery of all applicable election notices, but in no event later than the 45th day after the expiration of the Company Option Period. At such closing, each purchaser of Offered Securities shall deliver to the Transferring Stockholder the Offer Price, on the same terms and

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conditions as set forth in the Transfer Notice, payable in respect of the Offered Securities being acquired by such purchaser in exchange for certificates duly endorsed representing such Offered Securities being acquired by such purchaser, together with stock powers, free and clear of all claims, liens and other encumbrances. All of the foregoing deliveries will be deemed to be made simultaneously and none shall be deemed completed until all have been completed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) If the Company and the Non Transferring Stockholders do not elect to purchase, in the aggregate, all of the Offered Securities pursuant to Sections 3(a)(i) through (iv) above, then the Transferring Stockholder may elect not to sell any of the Offered Securities to the Company and the Non Transferring Stockholders and instead the Transferring Stockholder may proceed to Transfer, subject to Section 4, all (but not less than all) of the Offered Securities to the prospective purchaser identified in the Transfer Notice, but only in accordance with Section 3(b) and in accordance with the terms (including the purchase price) set forth in the Transfer Notice, within three (3) months after expiration of the Subsequent Option Period. Any of such Offered Securities that have not been Transferred by the Transferring Stockholder in such three (3) month period shall again be subject to the restrictions set forth in this Section 3 and must be reoffered to the Company and the other Stockholders pursuant to this Section 3(a) before any subsequent Transfer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any Shares Transferred pursuant to this Section 3, or to a Permitted Transferee, shall remain subject to the Transfer restrictions of this Agreement, and each purchaser of Offered Securities (other than the Company) who is not a party to this Agreement shall execute and deliver to the Company a Joinder Agreement in substantially the form attached hereto as <u>Appendix A</u> and shall take such other actions and execute such other documents as the Company reasonably requests. Any Transfer made not in compliance with the immediately preceding sentence shall be deemed void *ab initio*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding Section 3(a), the provisions of Section 3(a) shall not apply to a Transfer of Shares which is (i) a Permitted Transfer, (ii) a Transfer pursuant to Section 4(a) (other than a Transfer by an Initiating Stockholder), (iii) a Transfer pursuant to Section 5, (iv) a Transfer made pursuant to or after a Public Offering, (iv) a Transfer by a Call Option Grantor to Neptune pursuant to the Call Option Terms, or (v) a Neptune Parent Transfer. Notwithstanding anything to the contrary contained in this Agreement, (w) in no event shall any Stockholder Transfer any interest in any Shares to a competitor of the Company or any of its Subsidiaries (for clarity, each Neptune Entity and Neptune Parent is deemed to not be a competitor of the Company), unless such Transfer is pursuant to a Sale Request or the Call Option Terms, (x) a Transfer of Shares (other than pursuant to the Call Option Terms) will not be valid or of any force or effect if such Transfer would result in a violation or breach of this Agreement or any applicable Federal or state securities law or any agreement to which the Company or any Subsidiary is a party, and (y) the purchase price specified in any Transfer Notice shall be payable solely in cash at the closing of the transaction or in installments over time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Notwithstanding anything to the contrary contained in this Agreement, (i) no Stockholder shall avoid the provisions of this Agreement by making one or more Transfers to a Permitted Transferee and then Transferring all or substantially all of such Person's equity interest in such Permitted Transferee, and (ii) a Transfer (or series of Transfers) of a controlling equity interest of a Stockholder that is not an individual shall be deemed a Transfer by such Stockholder of the Shares owned by it.

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**SECTION 4. *<u>Tag Along</u>***. Subject to Section 4(f), no Stockholder shall Transfer any Shares owned by such Stockholder to any Person without complying with the terms and conditions set forth in this Section 4; <u>provided</u>, that a Stockholder may be an Initiating Stockholder (defined below) under this Section 4 only if such Transfer is not prohibited under Section 3 and only after such Stockholder has fully complied with any applicable requirements of Section 3.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If any Stockholder desires to Transfer any Shares to any Person (the ***"Initiating Stockholder"***), then such Initiating Stockholder shall deliver written notice of such proposed Transfer (the ***"Participation Sale"***) to each other Stockholder (each a ***"Participating Offeree"***) and to the Company. Such written notice (the ***"Participation Notice"***) shall be delivered not less than fifteen (15) days prior to such proposed Transfer and shall set forth, in reasonable detail, the terms and conditions of such proposed Transfer, including the name of the prospective purchaser, the payment terms, the type of disposition, the number and type of Shares proposed to be Transferred (the ***"Participation Securities"***), and the proposed purchase price for the Participation Securities on a per share basis (the ***"Participation Price"***), together with a complete and accurate copy of the prospective purchaser's written offer to purchase the Participation Securities from the Initiating Stockholder. Within ten (10) days following the delivery of the Participation Notice by the Initiating Stockholder to each Participating Offeree and to the Company, each Participating Offeree may elect, by delivery of written notice to the Initiating Stockholder and to the Company, to Transfer to the purchaser in such Participation Sale up to that number of Shares owned by such Participating Offeree as shall be equal to the product obtained by multiplying (A) the number of Participation Securities by (B) a fraction, the numerator of which is the total number of shares of Common Stock on a Fully Diluted Basis owned by such Participating Offeree on the date of such Participation Notice and the denominator of which is the total number of shares of Common Stock on a Fully Diluted Basis then held by all of the Stockholders on the date of the Participation Notice. If any Participating Offeree fails to deliver such written notice to the Initiating Stockholder and the Company within such ten (10) day period, then such Participating Offeree shall no longer have any right to Transfer any Shares pursuant to this Section 4 in such Participation Sale.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Participation Securities consist of more than one series or class or type of Shares and if a Participating Offeree exercises rights pursuant to this Section 4, then such Participating Offeree shall be required as a condition of such exercise (and shall be entitled) to Transfer the same proportionate amount of the series or class or type of Shares that the Initiating Stockholder Transfers to the purchaser in connection with such Participation Sale; <u>provided</u>, that this sentence shall not apply to the extent that such Participating Offeree does not then own a sufficient number of such series, class or type of Shares or securities then convertible or exchangeable into such series, class or type of Shares. If the purchaser of any Participation Securities refuses to buy any of the Shares which any Participating Offeree has validly elected to include in the Participation Sale pursuant to this Section 4, then the Initiating Stockholder may not Transfer any of its Shares to such purchaser unless the Initiating Stockholder purchases from such Participating Offeree the number of Shares that such Participating Offeree would be entitled to Transfer pursuant to this Section 4 for the consideration the Participating Offeree would have received pursuant to this Section 4 if it sold such Shares to such purchaser.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Participating Offerees that have validly elected to participate in the Participation Sale shall receive, upon the consummation of such Participation Sale, the same form and amount (subject to appropriate adjustment to reflect any differences in the rights, preferences and privileges of different series, class or type of Shares) of consideration on a per Share basis, or if any such Participating Offerees are given an option as to the form and amount (subject to appropriate adjustment to reflect any differences in the rights, preferences and privileges of different classes or series of capital stock) of consideration to be received, all such Participating Offerees must be given substantially the same option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) At the closing of any Participation Sale, the Initiating Stockholder, together with all Participating Offerees validly electing to participate in such Participation Sale, shall deliver to the proposed transferee certificates evidencing the Shares to be sold, free and clear of all claims, liens and encumbrances (except the provisions of this Agreement, including the Call Option Terms), together with stock powers duly endorsed. To the extent any Participating Offeree does not comply with this Section 4(d) or Section 4(e), such Participating Offeree shall not be entitled to participate in such Participation Sale and the Initiating Stockholder shall be entitled to sell an additional number of Shares equal to the Shares that otherwise would have been sold by such Participating Offeree.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) As a condition to the effective exercise of its rights under this Section 4 each Participating Offeree validly electing to participate in the Participation Sale shall (A) be required to make such representations, warranties and covenants and agree to provide such indemnification as the Initiating Stockholder agrees to make or provide in connection with such Participation Sale, (B) pay such Stockholder's *pro rata* share of the reasonable costs and expenses incurred in connection with such Participation Sale to the extent such costs and expenses are incurred for the benefit of the Stockholders participating in such Participation Sale generally and are not otherwise paid by the Company (it being agreed that costs incurred by each Participating Offeree on its own behalf will not be considered costs of such Participation Sale), and (C) take such other actions and execute such documents as the Company or the Initiating Stockholder may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The provisions of this Section 4, shall not apply to (A) a Permitted Transfer, (B) a Transfer made pursuant to or after a Public Offering or (C) a Transfer pursuant to Section 5, (D) a Transfer by a Call Option Grantor to Neptune pursuant to the Call Option Terms, or (E) a Neptune Parent Transfer. Any Shares Transferred pursuant to this Section 4 shall remain subject to the Transfer restrictions of this Agreement, including the Call Option Terms, and each purchaser of Shares who is not a party to this Agreement shall execute and deliver to the Company a Joinder Agreement in substantially the form attached hereto as <u>Appendix A</u> and shall take such other actions and execute such other documents as the Company reasonably requests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Notwithstanding anything contained in this Section 4 or any notice given hereunder, the provisions of this Section 4 shall be suspended immediately upon the exercise by the Selling Holders of the Bring-Along Right as set forth in Section 5, subject to any Minority Vote required by Section 17.

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**SECTION 5. *<u>Right of Bring-Along</u>***.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to any Minority Vote required by Section 17, if (i) at any time prior to the expiration of the Call Option Period (or the later Call Closing Date if the Call Option is exercised), the Required Holders approve a Sale of the Company, or (ii) at any time after the expiration of the Call Option Period if the Call Option has not been exercised, but subject to compliance with the terms of Section 5(f), MSEC, acting on behalf of the Minority Stockholders, approves a Sale of the Company (in the case of each of (i) and (ii) above, such Sale of the Company, an ***"Approved Sale"***; such Required Holders or MSEC, as applicable, the ***"Selling Holders"***), then the Company shall give notice to the Stockholders of the Approved Sale, which notice shall include the material terms of the Approved Sale (the ***"Sale Request"***). Each Stockholder agrees not to directly or indirectly, without the prior written consent of the Selling Holders, disclose to any other Person any information related to the Sale Request or the Approved Sale, other than disclosures to legal counsel in confidence or as otherwise necessary to protect such Stockholder's rights under this Agreement or as otherwise required by law. In connection with the Approved Sale, (i) each Stockholder shall be obligated to and agrees that, in such Stockholder's capacity as a stockholder of the Company, such Stockholder will vote, or grant proxies relating to such shares to vote, all of such Stockholder's Shares in favor of, consent to, raise no objections to, and waive any dissenters', appraisal or similar rights with respect to, the Approved Sale and will not exercise any right to dissent or seek appraisal rights in respect of the Approved Sale, (ii) each Stockholder shall take all actions which the Selling Holders deem necessary or advisable in the sole judgment of the Selling Holders in connection with the consummation of the Approved Sale, including executing, delivering and agreeing to be bound by the terms of any agreement related to the Approved Sale and any other agreement, instrument or certificates necessary to effectuate the Approved Sale (subject to the limitations set forth in this Section 5), (iii) if the Approved Sale is structured as a Transfer of Shares, each Stockholder will agree to Transfer its Shares and shall deliver at the closing of the Approved Sale its Shares, including certificates relating thereto, free and clear of all claims, liens and encumbrances except the provisions of this Agreement, including the Call Option Terms, on the terms and conditions as approved by the Selling Holders (it being understood and agreed that each Stockholder will only be obligated to Transfer the same percentage of its Common Stock on a Fully Diluted Basis as the percentage of the Common Stock on a Fully Diluted Basis proposed to be Transferred in the Approved Sale), and (iv) each Stockholder shall pay such Stockholder's *pro rata* share of the reasonable costs and expenses incurred in connection with the Approved Sale to the extent such costs and expenses are incurred for the benefit of the Stockholders generally and are not otherwise paid by the Company. Costs incurred by any Stockholder on its own behalf will not be considered costs of the Approved Sale. Without limiting the foregoing, and subject to the limitations set forth in this Section 5, each Stockholder agrees that, in connection with the Approved Sale, such Stockholder will make such representations, warranties and covenants, and agree to provide such indemnification, as the Selling Holders agree to make or provide in connection with such Approved Sale, <u>provided</u> that each Stockholder's indemnification obligation and liability for breaches of representations and warranties of the Company under any agreement entered into in connection with an Approved Sale will not exceed the consideration received by such Stockholder in connection with such Approved Sale. As a condition to the Stockholders' obligations under this Section 5, unless the Selling Holders agree otherwise, each holder of outstanding Shares will receive in respect of such Shares the same proportion of the aggregate consideration from such Approved Sale that such holder would have received if such aggregate consideration had been distributed by the Company upon a liquidation of the Company, <u>provided</u> that if any of the Shares are options, convertible securities,

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warrants, or other rights to acquire capital stock of the Company, the purchase price paid in the Approved Sale with respect to such Shares will be the price that would be paid for the Shares issuable upon the exercise or conversion thereof minus the exercise or conversion price thereof. In connection with any Sale of the Company, all indebtedness owed to Neptune and/or MSEC and/or their respective Affiliates, including as related to the Additional Capital Support, shall be paid in full at the closing of such transaction and prior to any distributions to the Stockholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding the foregoing, a Stockholder will not be required to comply with Section 5(a) above in connection with an Approved Sale unless: (i) any representations and warranties to be made by such Stockholder in connection with the Approved Sale are limited to representations and warranties related to authority, ownership, the ability to convey title to such Shares, absence of brokers, and the enforceability of such transaction documents as to such Stockholder; (ii) the Stockholder shall not be liable for the inaccuracy of any representation or warranty made by any other Person in connection with the Approved Sale other than the Company (except to the extent that funds may be paid out of an escrow established to cover breach of representations, warranties and covenants of the Company as well as breach by any stockholder of any of identical representations, warranties and covenants provided by all stockholders); (iii) the Stockholder shall not be liable for more than such Stockholder's *pro rata* share (based on the number of shares of Common Stock owned by such Stockholder determined on a Fully Diluted Basis) of any liability of the Stockholders in connection with such Approved Sale (except with respect to the representations and warranties described in clause (i) above as they relate to such Stockholder) and (iv) such stockholder shall not be bound by any non-compete, non-solicitation or other restrictive covenants, except for customary confidentiality obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event of any Approved Sale, the Original Stockholder will not distribute, pay or otherwise transfer the proceeds received by it in such Approved Sale to any of its creditors or any holders or owners (collectively, the "***Stakeholders***") of shares, interests, participations or other equivalents (however designated) of capital stock of the Original Stockholder or any options, warrants or other rights to acquire the foregoing, or any rights to acquire securities exercisable for, convertible into or exchangeable for any of the foregoing, unless such Stakeholder has agreed in writing to guaranty such Stakeholder's pro rata portion (based on the proceeds to be received by such Stakeholder relative to the proceeds received or to be received by the Original Stockholder) of the Original Stockholder's indemnification obligations in connection with such Approved Sale.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If the Company or the Stockholders enter into any negotiation or transaction for which Rule 506 promulgated under the Securities Act (or any similar rule then in effect) may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), the Stockholders who are not Accredited Stockholders shall, at the request of the Company, appoint a purchaser representative (as such term is defined in Rule 501 promulgated under the Securities Act (or any similar rule then in effect) reasonably acceptable to the Company. If any such Stockholder appoints a purchaser representative designated by the Company, the Company will pay the fees of such purchaser representative, but if any such Stockholder declines to appoint the purchaser representative designated by the Company, such Stockholder will appoint another purchaser representative (who shall be reasonably acceptable to the Company), and such Stockholder will be responsible for the fees of the purchaser representative so appointed.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Without limiting Section 5(d), the Company shall pay all transaction costs associated with any transaction contemplated by this Section 5 to the extent such costs are incurred for the benefit of all Stockholders. To the extent such costs (or any costs for which the Company is responsible pursuant to Section 5(d)) are not paid by the Company prior to the distribution to the Stockholders of proceeds from such transaction, or by the acquiring company, such costs shall be borne by each Stockholder according to his, her or its pro rata share (as if such expenses reduced the aggregate proceeds available for distribution or payment to the Stockholders in such transaction) of the costs of such transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) *Right of First Negotiation*. If the Call Option is not exercised during the Call Option Period with respect to the Call Option Shares, then the Company, at the direction of MSEC in its capacity as the representative of the Call Option Grantors, would have the right to retain an investment bank to assist in selling and marketing a Sale of the Company; provided that, prior to commencing the Sale of the Company process, Neptune shall be afforded a thirty (30)-day right of first negotiation (such right, the "***ROFN***"; such time period, the "***ROFN Period***") to exclusively negotiate with the Company and/or MSEC and to make an offer for a Sale of the Company. In the event MSEC and Neptune, following good faith discussions, are unable to come to an agreement with respect to the principal terms of a Sale of the Company on or before the expiration of the ROFN Period, MSEC shall be permitted to negotiate a Sale of the Company transaction with an Independent Third Party; provided that, if Neptune made an offer for the Sale of the Company during the ROFN Period, and thereafter MSEC or the Company receive an offer for the Sale of the Company, then MSEC shall promptly provide written notice to Neptune stating that it has received an offer and specifying: (1) the name of the Person who has made an offer for the Sale of the Company, (2) the purchase price (including the per-share purchase price if applicable) and the other material terms and conditions of the Sale of the Company, including a description of any non-cash consideration in sufficient detail to permit the valuation thereof, and (3) the proposed date and time of the closing of the Sale of the Company "***ROFN Notice***"). If the offer for a Sale of the Company is for a lower price than Neptune's highest offer (such offers to be compared on the basis of a sale of 100% of the Company's capital stock or assets, as the case may be, and subject to the reasonable valuation of non-cash and contingent consideration offered therein), then Neptune shall have a right of first refusal to consummate a Sale of the Company transaction at a price resulting in consideration of the same value as would have been paid in such offer to the other Stockholders by providing written notice thereof to MSEC within twenty (20) days following Neptune's receipt from MSEC of the ROFN Notice. If Neptune elects to not exercise its right of first refusal, MSEC may proceed with the Sale of the Company to such Independent Third Party at such lower price; provided that if the price offered by such Independent Third Party is reduced or the terms and conditions of such Sale of the Company are materially modified, or if another Person makes an offer for the Sale of the Company, MSEC must again provide notice to Neptune as described above and, if applicable in accordance with the terms of this Section 5(f), Neptune must again be granted a right of first refusal to consummate the Sale of the Company. The Sale of the Company under this Section 5(f) would be in the form of a bring-along sale pursuant to this Section 5 (i.e., an "***Approved Sale***").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Statutory Merger</u>. Notwithstanding anything to the contrary in this Agreement, if any Call Option Grantor fails to comply and transfer its Shares to Neptune in accordance with the Call Option Terms, then Neptune will have the right (without having to obtain the consent or approval of any Stockholder or other Person, including any Minority Vote) to cause the statutory merger of the Company with another Person controlled by Neptune in a transaction (***"Merger Transaction"***) that would cause (i) each such Call Option Grantor to receive in exchange for such Shares consideration in form and amount substantially the same as would have been paid to such Call Option Grantor for such Shares upon the sale and transfer of such Shares to Neptune pursuant to the Call Option Terms and (ii) Neptune to be the sole equity owner of the surviving entity in the Merger Transaction. Each Stockholder shall fully cooperate with Neptune and do all things reasonably requested by Neptune to cause the Merger Transaction to be consummated. In connection with a Merger Transaction, (A) each Stockholder shall be obligated to and agrees that, in such Stockholder's capacity as a stockholder of the Company, such Stockholder will vote, or grant proxies relating to such shares to vote, all of such Stockholder's Shares in favor of, consent to, raise no objections to, and waive any dissenters', appraisal or similar rights with respect to, the Merger Transaction and will not exercise any right to dissent or seek appraisal rights in respect of the Merger Transaction, and (B) each Stockholder shall take all actions that Neptune deem necessary or advisable in the sole judgment of Neptune in connection with the consummation of the Merger Transaction, including executing, delivering and agreeing to be bound by the terms of any agreement related to the Merger Transaction and any other agreement, instrument or certificates necessary to effectuate the Merger Transaction.

**SECTION 6. *<u>Election of Directors</u>.*** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) From and after the Effective Date each Stockholder agrees to vote the Shares owned of record by such Stockholder or the Shares over which such Stockholder has voting control at any annual or special stockholders' meeting called for such purpose, or by written consent in lieu of a meeting, and to take all other necessary or desirable actions within his, her or its control (i) to maintain a five (5) member Board, or, subject to any Minority Vote required by Section 17, such greater number as the Board shall specify from time to time, and (ii) to elect to the Board (A) three (3) nominees designated by Neptune (the "***Neptune Designees***"), who shall initially shall be Michael Cammarata (who shall be Chairman of the Board), Robert DiPede and Toni Rinow (each of whom is hereby elected to serve as a member of the Board by written consent of the Stockholders), (B) one (1) nominee designated by MSEC (the "***MSEC Designee***"), who shall initially be Lincoln Isetta (who is hereby elected to serve as a member of the Board by written consent of the Stockholders), and (C) the Company's then-current Chief Executive Officer, currently Capp Culver (who was previously elected to serve as member of the Board by written consent of the Stockholders). All of the above designated directors shall hold office until their respective successors shall have been elected and shall have qualified, or until their earlier death, resignation or removal. The reasonable travel expenses incurred by any director in attending any meetings of the Board shall be reimbursed by the Company to the extent consistent with the Company's then existing policy of reimbursing directors generally for such expenses. The Company shall at all times maintain, from financially sound and reputable insurers, directors' and officers' insurance in an amount and upon terms and pricing customary for a company of its size and operating in its industry, and will use commercially reasonable efforts to cause such insurance policy to be maintained until such time as the Board determines that such insurance should be discontinued. The adoption of, cancellation of, and any change to the terms of, such insurance shall be subject to approval of the Board.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event that a vacancy is created on the Board at any time due to the death, disability, retirement, resignation or removal of a Neptune Designee or the MSEC Designee, then Neptune or MSEC, as the case may be, shall have the right to designate an individual to fill such vacancy and the Company and each Stockholder hereby agree to take such actions as may be necessary or desirable within his, her or its control to ensure the election or appointment of such designee to fill such vacancy on the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The parties hereto will cause the Board to meet at least once annually, or more frequently to the extent that the Chairman of the Board or the MSEC designee reasonably wish to meet.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Company shall take all steps within its power, including voting any capital stock of any Subsidiary, to cause each person then serving as a member of the Board pursuant to Section 6(a), to be elected to the board of directors of each majority owned Subsidiary.

**SECTION 7. *<u>Irrevocable Proxy and Power of Attorney</u>.*** Each party to this Agreement hereby constitutes and appoints as the proxies of the party and hereby grants a power of attorney to the Company with full power of substitution, with respect to any Approved Sale pursuant to Section 5 hereof, and election of persons as members of the Board in accordance with Section 6 hereof, and hereby authorizes each of them, individually and/or jointly, to represent and to vote, if and only if the party (i) fails to vote or (ii) attempts to vote (whether by proxy, in person or by written consent), in a manner which is inconsistent with the terms of this Agreement, all of such party's Shares in approval of any Approved Sale pursuant to and in accordance with the terms and provisions of Section 5 of this Agreement and in favor of the election of persons as members of the Board determined pursuant to and in accordance with the terms and provisions of Section 6 of this Agreement, and to take any action necessary to effect Sections 5 and 6, respectively, of this Agreement. Each of the proxy and power of attorney granted pursuant to the immediately preceding sentence is given in consideration of the agreements and covenants of the Company and the parties in connection with the transactions contemplated by this Agreement and, as such, each is coupled with an interest and shall be irrevocable unless and until this Agreement terminates or expires pursuant to Section 13 hereof. Each party hereto hereby revokes any and all previous proxies or powers of attorney with respect to the Shares and shall not hereafter, unless and until this Agreement terminates or expires pursuant to Section 13 hereof, purport to grant any other proxy or power of attorney with respect to any of the Shares, deposit any of the Shares into a voting trust or enter into any agreement (other than this Agreement), arrangement or understanding with any person, directly or indirectly, to vote, grant any proxy or give instructions with respect to the voting of any of the Shares, in each case, with respect to any of the matters set forth herein, except as set forth in the Call Option Terms.

**SECTION 8. *<u>Information Rights</u>***.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company shall provide to each of the Original Stockholder and the NCP Entities, for so long as such Person owns any of capital stock of the Company, and to each other Stockholder that owns at least ten percent (10%) (calculated on a Fully-Diluted Basis) of all issued and outstanding shares of Common Stock (each of the Original Stockholder and such other Stockholder, a "***Receiving Stockholder***"): (i) as soon as available unaudited annual consolidated financial statements of the Company and its Subsidiaries, including, in each case, the notes thereto, consisting of a consolidated balance sheet at the end of such completed fiscal year and the related consolidated and consolidating statements of income, retained earnings, cash flows and owners'

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equity for such completed fiscal year, and (ii) as soon as available and in any event within thirty (30) calendar days after the end of each calendar month of the Company, unaudited consolidated financial statements of the Company and its Subsidiaries consisting of a balance sheet and statements of income, retained earnings and cash flows, in each case as of the end of the immediately preceding month.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each Receiving Stockholder will treat and hold confidential all information regarding the Company and its Subsidiaries received pursuant to Section 8(a) or otherwise (the "***Confidential Information***"), and refrain from using any of the Confidential Information except in connection with evaluating its investment in the Company or for the internal purposes of such Receiving Stockholder or its Affiliates (including, but not limited to, recordkeeping purposes). In the event that any Receiving Stockholder is requested or required pursuant to written or oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process to disclose any such Confidential Information, such Receiving Stockholder will notify the Company promptly of the request or requirement and cooperate with the Company to seek an appropriate protective order. To the extent, in the absence of a protective order or the receipt of a waiver hereunder, such Receiving Stockholder is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal, such Receiving Stockholder may disclose the Confidential Information to the tribunal; <u>provided</u>, <u>however</u>, that such Receiving Stockholder shall use its reasonable best efforts to obtain, at the request of the Company, an order or other assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as the Company shall designate. The foregoing definition of "Confidential Information" and, therefore, the foregoing provisions, shall not apply to any information (i) that is generally available to the public immediately prior to the time of disclosure unless such information is so available due to the actions of such Receiving Stockholder, (ii) that was available to such Receiving Stockholder prior to its disclosure pursuant hereto, (iii) that becomes available to such Receiving Stockholder (whether on a confidential or non-confidential basis) from a Person who, to such Receiving Stockholder's knowledge, is not prohibited by a duty to or agreement with the Company or any subsidiary thereof from disclosing such information, or (iv) that has been independently developed by such Receiving Stockholder or its authorized representatives without the use of Confidential Information, in the case of each of the foregoing clauses (ii) through (iv), as evidenced by written or electronic records. Notwithstanding anything to the contrary contained herein, (X) any Receiving Stockholder shall be permitted to disclose any information received by it pursuant hereto to such Receiving Stockholder's managers, partners, directors, officers, employees, advisers, agents, stockholders and representatives (including counsel, accountants, appraisers, investment bankers, coinvestors and lenders, collectively "***Representatives***") who need to know such information, (X) the NCP Entities shall be permitted to disclose any information received by it pursuant hereto to each of their partners or members and their respective Representatives, (Y) the MSEC Entities shall be permitted to disclose any information received by it pursuant hereto to each of their partners or members and their respective Representatives and (Z) the Neptune Entities shall be permitted to disclose any information received by them pursuant hereto (1) to each of the shareholders and Representatives of each Neptune Entity, (2) to the extent required by law or regulation, each of the shareholders of Neptune Parent, and (3) to the Representatives (other than shareholders) of Neptune Parent. Each Receiving Stockholder shall be liable for any breach of this Section 8(b) by any Persons to whom such Receiving Stockholder discloses any information in accordance with the immediately preceding sentence as if such Person was bound by the provisions hereof as a Receiving Stockholder. Notwithstanding anything herein to the contrary, the provisions of this Section 8(a) shall survive the termination of this Agreement and the termination of the rights of any Stockholder hereunder pursuant to Section 13.

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**SECTION 9. *<u>Legend on Stock Certificates</u>****.* Each certificate of the signatories hereto representing Shares shall bear the following legend until such time as the Shares represented thereby are no longer subject to the provisions hereof:

"THE SALE, TRANSFER OR ENCUMBRANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A THIRD AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT, DATED AS OF FEBRUARY 10, 2021 AMONG THE COMPANY AND CERTAIN HOLDERS OF ITS OUTSTANDING CAPITAL STOCK, AS SUCH AGREEMENT MAY BE AMENDED FROM TIME TO TIME. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY."

**SECTION 10. *<u>Effectiveness of Transfers; Additional Stockholders</u>***. Unless otherwise consented to by the Company, any Person who is not a party to this Agreement shall, on or before the Transfer or issuance to it of Equity Equivalents, execute and deliver to the Company a Joinder Agreement in substantially the form attached hereto as <u>Appendix A</u>. No Shares shall be Transferred on the Company's books and records, and no Transfer of Shares shall be otherwise effective, unless any such Transfer is made in accordance with the terms and conditions of this Agreement, and the Company is hereby authorized by all of the Stockholders to enter appropriate stop transfer notations on its transfer records to give effect to this Agreement.

**SECTION 11. *<u>Action Necessary to Effectuate the Agreement</u>*<u>.</u>** The parties hereto agree to take or cause to be taken all such corporate and other action as may be necessary to effect the intent and purposes of this Agreement.

**SECTION 12. *<u>No Strict Construction</u>*.** The parties hereto jointly participated in the negotiation and drafting of this Agreement. The language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their collective mutual intent, this Agreement will be construed as if drafted jointly by the parties hereto, and no rule of strict construction will be applied against any Person.

**SECTION 13. *<u>Duration of Agreement</u>****.* From and after the date that a Stockholder ceases to own any Shares, such Stockholder will no longer be deemed to be a Stockholder for purposes of this Agreement and all rights such Stockholder may have under this Agreement will terminate. Upon consummation of a Public Offering or the sale of all or substantially all of the assets of the Company and its Subsidiaries by merger, consolidation, or otherwise, to a third party in an arm's length transaction and the distribution to the Stockholders of all net proceeds of such sale, the rights and obligations of each Stockholder under this Agreement shall terminate.

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**SECTION 14. *<u>Representations and Warranties</u>****.* Each Stockholder, severally and not jointly, represents and warrants as to itself to the other Stockholders as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The execution, delivery and performance of this Agreement by such Stockholder will not violate any provision of law, any order of any court or other agency of government, or any provision of any indenture, agreement or other instrument to which such Stockholder or any of his, her or its properties or assets is bound, or conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of such Stockholder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) This Agreement has been duly executed and delivered by such Stockholder and constitutes the legal, valid and binding obligation of such Stockholder, enforceable against such Stockholder in accordance with its terms, subject to (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors and (ii) rules of law governing specific performance, injunctive relief or other equitable remedies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Shares of such Stockholder listed on <u>Schedule I</u> hereto constitute all of the Equity Equivalents of the Company owned by such Stockholder and, except as specifically provided herein, including in the Call Option Terms, such Stockholder does not have any right or obligation to acquire any additional Equity Equivalents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The representations and warranties contained in this Section 14 shall survive the execution and delivery of this Agreement.

**SECTION 15. *<u>Original Stockholder Rights and Obligations</u>***.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Original Stockholder shall not acquire or Transfer any assets or conduct any business activities other than in order to exercise its rights under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) For so long as the Original Stockholder continues to hold at least 2,303 shares of Common Stock held by it on the date hereof (as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like), the Company shall not (by amendment, merger, consolidation or otherwise) without first obtaining the approval (by vote or written consent, as provided by law) of the Original Stockholder, (i) amend the Company's Certificate of Incorporation or Bylaws to adversely affect any class of Common Stock held by the Original Stockholder, in a manner disproportionate to any other class of Common Stock or Preferred Stock, or (ii) adversely alter or change the powers or special rights of any class of Common Stock held by the Original Stockholder. For clarity, no such subclasses of Common Stock exist as of the Effective Date.

**SECTION 16. *<u>Neptune Rights and Obligations</u>***.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Management Fee*. As further specified in and subject to the terms and conditions of the Management Fee Agreement entered into between the Company and Neptune Parent on the Effective Date, the Company will pay Neptune Parent a monthly management fee equal to two percent (2%) of the Company's annual net sales.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Additional Capital Support*.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Based on an operating budget forecasting the Company's revenues, expenses, and cash position on a month-to-month basis for fiscal years 2021 and 2022 which is approved by the Board (including the affirmative vote of the MSEC Designee) and Neptune, Neptune shall provide additional capital support to the Company, in an amount which adequately supports the Company's business, up to $7,500,000, which may be in the form of drawings on any Neptune credit facility, in each case, in exchange for the issuance by the Company to Neptune of additional debt of the Company to be agreed upon by the Board (including the affirmative vote of the MSEC Designee) and Neptune ("***Additional Capital Support***"). For the avoidance of doubt, MSEC, the Company and Neptune hereby acknowledge and agree that: (x) Neptune shall be obligated to provide the Additional Capital Support; (y) the consideration for such Additional Capital Support shall be in the form of non-convertible debt and shall be non-dilutive to the Stockholders; and (z) such debt capital will carry a payment-in-kind interest rate of eight percent (8%) per annum (i.e., the accrued interest would be added to the principal balance of the loan annually and be paid in cash together with the remaining outstanding principal at maturity).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If additional capital is required beyond the Additional Capital Support as determined and agreed upon by the Board, the Board shall establish the terms of such financing, subject to any Minority Vote required by Section 17.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) *New Business Lines and Extension of the Company's Brand*. The Company, MSEC and Neptune acknowledge that the Company has meaningful brand equity which provides Neptune with the opportunity to extend the Company's brand into complementary lines of business, other than food-related products for babies and toddlers, including but not limited to, vitamins, diapers, teenage snacks and foods and adult snacks and supplements. In the event the Board approves of the launch of a new business line under the Company's brand, the cost and expenses of any such launch shall not exceed $1,000,000 per new product line unless otherwise approved by the Board, and may be financed from funds provided as part of the Additional Capital Support.

**SECTION 17. *<u>Minority Stockholder Protective Provisions</u>***. Until such time as the Call Option is exercised, if ever, and provided that MSEC (together with its Affiliates) continues to own at least 9,348,820 Shares (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Shares), the Company shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law, this Agreement or the Certificate of Incorporation) the written consent or affirmative vote of MSEC, acting on behalf of the holders of a majority of the Shares held by all Stockholders other than Neptune and its Affiliates (the "***Minority Stockholders***"; such vote, "***Minority Vote***"), and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect (except for any transactions contemplated by the Call Option Terms, the Purchase Agreement or other Transaction Documents (as defined in the Purchase Agreement), or this Agreement (including payment of the Management Fee)):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) increase or decrease the issued number of Shares;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) create or issue (by merger, reclassification or otherwise) any additional class of capital stock having rights, preferences or privileges senior to the Common Stock with respect to voting, dividend, redemption, conversion or liquidation, or any other rights (including registration rights), or change the rights, preferences or privileges of the Common Stock in a material adverse manner, or amend or waive any provision of the Certificate of Incorporation, Bylaws, this Agreement or any other governing documents of the Company, in any case, which would adversely affect the rights of the Common Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) effect any merger, business combination, corporate reorganization, Sale of the Company, or any transaction in which all or substantially all of the assets of the Company are sold or exclusively licensed, including any bring-along Sale of the Company initiated by the Required Holders under Section 5(a)(i), but excluding any other Transfer of Shares by any Stockholder in accordance with this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) increase or decrease the authorized number of directors constituting the Board of Directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) acquire any capital stock or all, or substantially all, of the assets of another Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) incur indebtedness for borrowed money, in a single or related series of transactions, in an amount in excess of the Additional Capital Support;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) enter into or be a party to any transaction with any Affiliate, director, officer or Stockholder of the Company, but excluding any agreement entered into in connection with the Purchase Agreement or pursuant to any agreement in effect as of the Effective Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) terminate, decrease the salary or other compensation terms, or otherwise modify the roles and reporting practices of any of the following executives of the Company (except in accordance with their respective employment agreements with the Company): (i) Capp Culver, the Company's Chief Executive Officer, (ii) Sarah Tynan, the Company's Chief Revenue Officer, and (iii) Zachary Maodus, the Company's Chief Supply Chain Officer, in each case, provided that the MSEC Note remains outstanding and the Call Option has not been exercised;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) change the Company's brand name;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) establish or materially modify any existing or new equity incentive plan, phantom equity plan, transaction bonus plan or similar arrangement; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) enter into an agreement to take any of the preceding actions.

**SECTION 18. *<u>GOVERNING LAW</u>****.* THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED IN ACCORDANCE WITH, AND ENFORCED UNDER, THE LAW OF THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS OR INSTRUMENTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN SUCH STATE WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY OTHER JURISDICTION.

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**SECTION 19. *<u>JURISDICTION</u>***.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY AGREES THAT ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE BROUGHT IN THE COURTS OF THE STATE OF DELAWARE OR THE UNITED STATES DISTRICT COURTS LOCATED IN THE STATE OF DELAWARE AND HEREBY EXPRESSLY SUBMITS TO THE EXCLUSIVE PERSONAL JURISDICTION AND VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM THAT SUCH COURTS ARE AN INCONVENIENT FORUM. EACH PARTY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN SECTION 21, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) EACH PARTY TO THIS AGREEMENT WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, EACH PARTY TO THIS AGREEMENT HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH PARTY TO THIS AGREEMENT (X) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (Y) ACKNOWLEDGES THAT EACH OTHER PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.

**SECTION 20.*<u>Benefits of Agreement</u>.*** This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, legal representatives and heirs. Any purported issuance of Equity Equivalents by the Company, or Transfer of the Shares, in violation of the provisions of this Agreement shall be null and void *ab initio*.

**SECTION 21. *<u>Notices.</u>*** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile or registered or certified mail (postage prepaid, return receipt requested) to the respective parties hereto at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 21), or by email to the respective parties hereto at the following email addresses (or at such other email address for a party as shall be specified in a notice given in accordance with this Section 21):

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if to the Company, to:

Sprout Foods, Inc.

50 Chestnut Ridge Road, Suite 205

Montvale, NJ 07645

Attention: Chief Executive Officer

Facsimile No.: (201) 746-6999

with a copy (which shall not constitute notice) to:

Giannuzzi Lewendon, LLP

411 West 14<sup>th</sup> Street, 4<sup>th</sup> Floor

New York, New York 10014

Fax No.: (212) 504-2066

Email: nick@gllaw.us

Attention: Nicholas L. Giannuzzi, Esq.

if to an NCP Entity, to:

c/o North Castle Partners, L.L.C.

183 East Putnam Avenue

Greenwich, CT 06830

Facsimile: (203) 862-3270

Email: alison@northcastlepartners.com

Attention: Alison Minter

with a copy (which shall not constitute notice) to:

Morrison Cohen LLP

909 Third Avenue

New York, New York 10022

Fax No.: (212) 735-8708

Attention: David A. Scherl, Esq., Randi Mason, Esq.

if to an MSEC Entity, to:

c/o NH Expansion Credit Fund Holdings LP

1585 Broadway, 29<sup>th</sup> Floor

New York, NY 10036

Attn: Debra Abramovitz, William Reiland

with a copy (which shall not constitute notice) to:

Proskauer Rose LLP

One International Place, Floor 22

Boston, MA 02110

Attention: Stephen A. Boyko, Esq.

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if to NurturMe Holdings, to:

Grays Peak Capital

320 Park Avenue, 18th Floor

New York, NY 10022

Attention: Scott Stevens

Email: Scott@grayspeakcapital.com

with a copy (which shall not constitute notice) to:

Rupp Baase Pfalzgraf Cunningham LLC

1600 Liberty Building

Buffalo, NY 14202

Attention: Benjamin D. Burge, Esq.

Email: burge@ruppbaase.com

if to Neptune, to:

Neptune Growth Ventures, Inc.

100-545 Promenade du Centropolis

Laval, Quebec H7T 0A3

Canada

Attention: Toni Rinow

Email: t.rinow@neptunecorp.com and legal@neptunecorp.com

with a copy (which shall not constitute notice) to:

Akerman LLP

201 East Las Olas Boulevard, Suite 1800

Ft. Lauderdale, FL 33301

Attention: Rick J. Fucci, Esq.

Email: rick.fucci@akerman.com

if to any Other Stockholder, to the address listed on <u>Schedule II</u> attached hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each Stockholder agrees, at all times, to provide the Company with an address for notices hereunder. All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial overnight courier service; or if mailed, five (5) business days after being deposited in the mail, postage prepaid.

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**SECTION 22. *<u>Business Days</u>***. If any time period for giving notice or taking action hereunder expires on a day which is not a Business Day, the time period shall automatically be extended to the next Business Day.

**SECTION 23. *<u>Modification</u>***.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Except as otherwise provided herein, neither this Agreement nor any provision hereof shall be modified, amended, waived, discharged or terminated (collectively, a "***Modification***") except by an instrument in writing signed by (i) the Company and (ii) the Required Holders, <u>provided</u>, <u>however</u>, that (u) any Modification that adversely affects the rights or privileges of any particular Stockholder and does not affect other Stockholders in a substantially similar manner shall require the prior written consent of such adversely affected Stockholder; (v) any Modification which adversely affects the rights or privileges of any class of Shares and does not affect other classes of Shares in a substantially similar manner shall require the prior written consent of the holders of a majority of the shares of the class of Shares so affected; (w) any amendment, modification, waiver, discharge or termination of the definition of "MSEC Entity" or "Affiliate", clause (vii) of the definition of "Permitted Transfer", <u>Section</u> <u>5(a)</u>, <u>Section</u> <u>5(f)</u>, <u>Section</u> <u>6(a)(ii)(B)</u>, <u>Section</u> <u>6(b)</u>, <u>Section</u> <u>6(c)</u>, <u>Section</u> <u>8(b)</u>, <u>Section</u> <u>16</u>, <u>Section</u> <u>17</u>, or <u>Section</u> <u>21</u>, in each case, shall require the consent of MSEC; (x) amendment, modification, waiver, discharge or termination of clause (viii) of the definition of "Permitted Transfer," or <u>Section</u> <u>21</u>, in each case, in a manner adverse to NurturMe Holdings, shall require the consent of NurturMe Holdings; (y) amendment, modification, waiver, discharge or termination of the definition of "NCP Entities" or "Affiliate", clause (vi) of the definition of "Permitted Transfer", <u>Section</u> <u>8(b)</u>, <u>Section</u> <u>21</u> or any other provision which specifically refers to any NCP Entity, in each case, in a manner adverse to any NCP Entity, shall require the consent of the NCP Entities, and (z) any Modification of <u>Section</u> <u>4</u>, <u>Section</u> <u>8(a)</u> or <u>Section</u> <u>15</u> which reduces the rights of the Original Stockholder thereunder shall require the consent of the Original Stockholder; and <u>provided</u>, <u>further</u>, that (A) no Modification shall be effective to reduce the consents required under this <u>Section</u> <u>23(a)</u>, unless consented to by all Stockholders and (B) for the avoidance of doubt, no Modification to clause (w), (x), (y) or (z) of the immediately preceding sentence shall be made without the consent of MSEC, NurturMe Holdings, the NCP Entities or the Original Stockholder, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) No course of dealing and no delay or failure on the part of any party hereto in exercising any right, power or remedy conferred by this Agreement shall operate or be construed as a waiver thereof or otherwise affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. No single or partial exercise of any rights, powers or remedies conferred by this Agreement shall preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

**SECTION 24. *<u>Custodian</u>.*** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company (in such capacity, the "***Custodian***") shall be authorized to hold one or more certificates, in negotiable and proper deliverable form (i.e. accompanied by a deed of transfer/stock power or powers, in blank) representing the number of issued and outstanding Shares set forth thereon issued to any Stockholder other than any NCP Entity. The certificates for the Shares are to be held by Custodian for the account of such Stockholders and are to be disposed of by Custodian in accordance with this Agreement. Custodian accepts such appointment and agrees subject to the terms of this Agreement that it shall have general responsibility for the safekeeping of all Shares so delivered for custody.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The certificates deposited with the Custodian hereunder and the Custodian's authority hereunder are subject to the interests of each such depositing Stockholder and the Custodian's authority hereunder is irrevocable and is not subject to termination, except as set forth in this Agreement, by such Stockholder or by operation of law, whether by the death or incapacity of such Stockholder (if such Stockholder is an individual), by the death or incapacity of any trustee or executor or the termination of any trust or estate (if such Stockholder is a trust or an estate), or by the dissolution or liquidation of any corporation or partnership (if such Stockholder is a corporation or partnership) or the occurrence of any other event.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Until such time as a Transfer of such Stockholder's Shares is effected pursuant to this Agreement, such Stockholder shall remain the owner of the Shares delivered to Custodian and shall have the right to (i) vote such Shares represented by the certificates deposited with Custodian hereunder, (ii) exercise any rights held by the owner of such Shares (including such Stockholder's rights pursuant to Section 3) and (iii) receive any and all dividends and distributions thereon.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Custodian shall be entitled to act and rely upon any statement, request, notice or instruction respecting this Agreement given to Custodian by such Stockholder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) It is understood that Custodian assumes no responsibility or liability to any Person other than to deal with the certificates deposited with Custodian hereunder in accordance with the provisions of this Agreement. Each Stockholder shall be liable for and shall reimburse and indemnify the Custodian and hold the Custodian harmless from and against any and all claims, losses, liabilities, costs, damages or expenses (including reasonable attorneys' fees and expenses) (collectively, "***Losses***") arising from or in connection with or related to serving as Custodian with respect to such Stockholder's Shares hereunder (including but not limited to Losses incurred by the Custodian in connection with its successful defense, in whole or in part, of any claim of gross negligence or willful misconduct on its part), provided, however, that nothing contained herein shall require the Custodian to be indemnified for Losses caused by its gross negligence or willful misconduct. Except as otherwise expressly provided herein, the Custodian shall not be liable for any Losses incurred by or asserted against such Stockholder, except those Losses arising out of the gross negligence or willful misconduct of the Custodian, its affiliates, or the officers or employees of the Custodian or its affiliates. The Custodian shall have no liability whatsoever for the action or inaction of any depository. In no event shall the Custodian be liable to such Stockholder or any third party for special, indirect, punitive or consequential damages, or lost profits or loss of business, arising in connection with its serving as Custodian hereunder. The provisions of this paragraph shall survive any termination of this Agreement or the resignation or removal of the Custodian.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Custodian shall have no duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth in this Section 24, and no other covenant, duty or obligation shall be implied or inferred against the Custodian in connection with its service as Custodian under this Agreement. The Custodian shall have no duty or responsibility to inquire into, make recommendations, supervise, or determine the suitability of any transaction affecting the Shares.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The Custodian may terminate its service as Custodian by giving to each such Stockholder a notice in writing specifying the date of such termination, which shall be not less than fifteen (15) days after the date of such notice. The Custodian shall follow such reasonable written instructions concerning the transfer of custody of records as such Stockholder shall give.

**SECTION 25. *<u>Entire Agreement</u>.*** This Agreement, including the Call Option Terms (the terms and conditions of which are hereby incorporated in this Agreement by reference) constitute the entire agreement among the undersigned with respect to the subject matter contained herein and supersede any and all prior agreements or understandings, oral or written, among any or all of the undersigned relating to such subject matter including, without limitation, the Prior Agreements, and any and all stockholders agreements, subscription agreements, investors' rights agreements and any other prior governance documents of the Company. In the event of any conflict or inconsistency between the terms of this Agreement and any other agreement entered into by and between the Company and any Stockholder (including, without limitation, any stock purchase agreement) other than the Purchase Agreement, the terms of this Agreement shall govern and control. In the event of any conflict or inconsistency between the terms of this Agreement (other than the Call Option Terms) and the Call Option Terms, the Call Option Terms shall govern and control.

**SECTION 26. *<u>Construction</u>*.** Any reference in this Agreement to an "Article," "Section" or "Schedule" refers to the corresponding Article, Section or Schedule of or to this Agreement, unless the context indicates otherwise. The headings of Articles and Sections are provided for convenience only and should not affect the construction or interpretation of this Agreement. All words used in this Agreement should be construed to be of such gender or number as the circumstances require. The terms "include" and "including" indicate examples of a foregoing general statement and are not a limitation on that general statement. Any reference to a statute refers to the statute, any amendments or successor legislation, and all regulations promulgated under or implementing the statute, as in effect at the relevant time. Any reference to a contract, instrument or other document as of a given date means the contract, instrument or other document as amended, supplemented and modified from time to time through such date.

**SECTION 27. *<u>Signatures; Counterparts</u>.*** Facsimile and other electronic transmissions of any executed original document and/or retransmission of any executed facsimile and other electronic transmission shall be deemed to be the same as the delivery of an executed original. At the request of any party hereto, the other parties hereto shall confirm facsimile and other electronic transmissions by executing duplicate original documents and delivering the same to the requesting party or parties. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

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**SECTION 28. *<u>Remedies</u>***. Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs caused by any breach or threatened breach of any provision of this Agreement and to exercise all other rights existing in such party's favor. Without limiting the foregoing, if any dispute arises concerning the Transfer of any of the Shares subject to this Agreement or concerning any other provisions of the Agreement, then the parties to this Agreement agree that an injunction may be issued in connection therewith and that the reasonable attorneys' fees and costs of the prevailing party will be reimbursed by the opposing party or parties in such dispute within 14 days following a judgment by a court or tribunal of competent jurisdiction over such exercise or enforcement. Such remedies shall be cumulative and non-exclusive and shall be in addition to any other rights and remedies the parties may have under this Agreement or otherwise.

**SECTION 29. *<u>Severability</u>***. If any one or more of the provisions contained in this Agreement, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions of this Agreement. The parties hereto further agree to replace such invalid, illegal or unenforceable provision of this Agreement with a valid, legal and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid, illegal or unenforceable provision.

**SECTION 30. *<u>No Effect Upon Lending Relationship</u>***. Notwithstanding anything herein to the contrary, nothing contained in this Agreement shall affect, limit or impair the rights and remedies of any Stockholder in its capacity as a lender to the Company or any of its subsidiaries pursuant to any agreement under which the Company or any of its subsidiaries has borrowed money. Without limiting the generality of the foregoing, any such Person, in exercising its rights as a lender, including making its decision on whether to foreclose on any collateral security, will have no duty to consider (i) its status or the status of any of its Affiliates as a direct or indirect equityholder of the Company, (ii) the interests of the Company or (iii) any duty it may have to any other direct or indirect equityholder of the Company, except as may be required under the applicable loan documents or by commercial law applicable to creditors generally.

[*Remainder of page intentionally left blank; signature pages and attachments follow.*]

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**IN WITNESS WHEREOF**, the parties hereto have executed this Third Amended and Restated Stockholders' Agreement on the date first above written.

---

| | |
|:---|:---|
| <u>**REQUIRED HOLDERS:**</u> | <u>**REQUIRED HOLDERS:**</u> |
| **NEPTUNE:** | **NEPTUNE:** |
| NEPTUNE GROWTH VENTURES, INC. | NEPTUNE GROWTH VENTURES, INC. |
| By: | /s/ Toni Rinow |
|  | Name: Toni Rinow |
|  | Title: Chief Financial Officer and Global Operating Officer |

---

---

| | |
|:---|:---|
| **AGREED AND ACKNOWLEDGED:** | **AGREED AND ACKNOWLEDGED:** |
| **COMPANY:** | **COMPANY:** |
| SPROUT FOODS, INC. | SPROUT FOODS, INC. |
| By: | /s/ Capp Culver |
|  | Name: Capp Culver |
|  | Title: Chief Executive Officer |

---

[SIGNATURE PAGE TO THIRD AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT]

------

---

| |
|:---|
| **<u>OTHER STOCKHOLDERS:</u>** |
| **MSEC:** |
| NH EXPANSION CREDIT FUND HOLDINGS LP |
| By: MS Expansion Credit GP L.P., its general partner |
| By: MS Expansion Credit GP Inc., its general partner |
| /s/ William T. Reiland |
| Name:William T. Reiland |
| Title: Managing Director |
| **NURTURME HOLDINGS:** |
| NURTURME HOLDINGS LLC |
| Name: Scott Stevens |
| Title: Managing Member |
| **STOCKHOLDER:** |
| Name:<u> </u> (*sign*) |
| Name:<u> </u> (*print*) |
| Entity:<u> </u> (*if applicable*) |
| Title:<u> </u> (*if applicable*) |

---

------

**<u>APPENDIX A</u>**

**FORM OF JOINDER AGREEMENT** 

The undersigned hereby agrees, effective as of the date of this Joinder Agreement, to become a party to that certain Third Amended and Restated Stockholders' Agreement (the "***Stockholders' Agreement***") dated as of February 10, 2021 and as may be further amended and/or restated from time to time by and among Sprout Foods, Inc. (the ***"Company"***), and the other parties named therein, including the Call Option Terms (as defined in the Stockholders' Agreement) as a Call Option Grantor (as defined in the Stockholders' Agreement). Capitalized terms used but not defined in this Joinder Agreement shall have the meanings ascribed to such terms in the Stockholders' Agreement. The undersigned acknowledges and agrees that (a) the Equity Equivalent issued or Transferred to the undersigned shall continue to be subject to the Stockholders' Agreement, including the Call Option Terms, (b) as to such Equity Equivalents the undersigned shall be bound by the restrictions of the Stockholders' Agreement, including the Call Option Terms, and shall take such other actions and execute such other documents as the Company reasonably requests, and (c) for all purposes of the Stockholders' Agreement, the undersigned shall be included within the term "Stockholder" and for all purposes of the Call Option Terms, the undersigned shall be included within the term "Call Option Grantor".

Date: __________________ ___, 20___

---

| | |
|:---|:---|
| **STOCKHOLDER:** | **STOCKHOLDER:** |
| Print Name: |  |
|  | (Note: If the Stockholder is an entity, print entity name.) |
| Sign Name: |  |
| Print Title: |  |
|  | (Note: If the Stockholder is an entity, print signatory title. If the Stockholder is an individual, leave this line blank.) |
| Address: |  |
| Email: |  |
| Facsimile No: |  |

---

------

**<u>EXHIBIT A</u>**

**<u>CALL OPTION TERMS</u>**

These call option terms (these "<u>Call Option Terms</u>") are incorporated by reference into, and made an integral part of, the Third Amended and Restated Stockholders' Agreement to which these Call Option Terms are attached (the "<u>Agreement</u>"). All capitalized terms used but not defined on this **Exhibit A** shall have the meaning given to them in the Agreement. Each Stockholder other than Neptune is sometimes referred to herein as a "<u>Grantor</u>". MSEC is sometimes referred to herein as the "<u>Grantors' Representative</u>".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Grant of Call Option</u>. Each Grantor hereby grants to Neptune, by virtue of the amendment and restatement of the 2<sup>nd</sup> A&R Stockholders' Agreement with the Agreement, an irrevocable option to purchase from that Grantor, and to cause the Grantor to sell to Neptune, the Shares owned by the Grantor (as to all Grantors, the "<u>Call Option</u>"). Upon Neptune's exercise of the Call Option with respect to all Shares of the Grantors, each Grantor shall sell, assign, and transfer to Neptune all of that Grantor's right, title, and interest in and to the Shares owned by that Grantor in accordance with the provisions of these Call Option Terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Call Option Period</u>. Neptune may exercise the Call Option in its sole discretion at any time during the period commencing on (and including) January 1, 2023 and ending on (and including) December 31, 2023; provided that Neptune may extend such period until March 31, 2024 (the "<u>Call Option Period</u>") by providing written notice of extension to MSEC, in its capacity as "<u>Grantors' Representative</u>", no later than December 31, 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Exercise of Call Option</u>. The Call Option is exercisable by Neptune by providing written notice of exercise to Grantors' Representative at any time during the Call Option Period (the "<u>Call Exercise Notice</u>"). The Call Exercise Notice shall set forth (i) the remaining outstanding Shares not then owned by Neptune, which as of the Effective Date constitute 49.9% of all outstanding Shares (the percentage of outstanding Shares of the Company that Neptune elects to purchase, the "<u>Applicable Percentage</u>") and (ii) the proposed Call Closing Date (as defined herein). Neptune has the right and option, but not the obligation, to exercise the Call Option in its sole discretion, and therefore may forgo the Call Option without penalty. For clarity, the Call Option may only be exercised with respect to all of the Shares. For the avoidance of doubt, the Call Option shall automatically expire at the end of the Call Option Period without any further action by Neptune or Grantors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Call Price</u>. The purchase price per Share (the "<u>Call Price</u>") to be paid by Neptune to each Grantor for all of its Shares (upon Neptune's exercise of the Call Option, such Shares are referred to herein as the "<u>Called Shares</u>") purchased by Neptune on the Call Closing Date will be equal to (i) the TEQV, divided by (ii) the Common Stock Deemed Outstanding as of the Call Closing Date. For purposes hereof, the following terms have the following meanings:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "<u>Common Stock Deemed Outstanding</u>" means, at any given time, the sum of (i) the number of shares of Common Stock actually outstanding at such time; (ii) the number of shares of Common Stock subject to outstanding warrants or other rights or options to subscribe for or purchase Common Stock or Convertible Securities at such time, in each case, solely with respect to the portion of such shares which are "in the money" and/or have vested, subject to any applicable

------

accelerated vesting terms which may be triggered upon Neptune's exercise of the Call Option (collectively, all "<u>Options</u>"); and (iii) the number of shares of Common Stock issuable upon conversion or exchange of any securities (directly or indirectly) convertible into or exchangeable for Common Stock (but excluding Options) ("<u>Convertible</u>**<u> </u>**<u>Securities</u>") actually outstanding at such time (treating as actually outstanding any Convertible Securities issuable upon exercise of Options actually outstanding at such time), in each case, only to the extent the Options or Convertible Securities are actually exercisable at such time, vested (subject to any applicable accelerated vesting terms which may be triggered upon Neptune's exercise of the Call Option) and are "in the money", as applicable. For clarity, all Options and Convertible Securities (whether or not "in the money" or vested) of each Grantor will be deemed, at Neptune's option, either cancelled or acquired by Neptune upon its acquisition of such Grantor's Shares at the Call Closing (as defined herein) such that following the Call Closing no Grantor owns any Shares or other securities of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "<u>EBITDA</u>" means, with respect to any period, the net income of the Company before interest, income taxes, depreciation, amortization, and the Management Fee for such period, determined in accordance with United States generally accepted accounting principles as consistently applied by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "<u>Indebtedness</u>" has the meaning assigned to it in the Purchase Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "<u>Management Fee</u>" means the management fee payable by the Company to Neptune under the Management Fee Agreement (as defined in the Purchase Agreement).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) "<u>Net Revenue</u>" means the gross sales revenue of the Company less discounts, chargebacks, returns, and allowances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) "<u>Note</u>" means that certain promissory note in the principal amount of Ten Million Dollars ($10,000,000) issued pursuant to the Purchase Agreement by the Company, as maker, to MSEC, as payee, and guaranteed by Neptune.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) "<u>TEQV</u>" means an amount equal to the following, in each case determined as of the Call Closing Date:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the TEV, <u>minus</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Indebtedness of the Company (excluding Indebtedness under the Note), <u>plus</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Cash of the Company lawfully available for distribution to its Stockholders, <u>multiplied by</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) the Applicable Percentage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) "<u>TEV</u>" means an amount equal to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) three times (3x) TTM Net Revenue, multiplied by 50%; <u>plus</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) fifteen times (15x) TTM EBITDA, multiplied by 50%.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) "<u>TTM EBITDA</u>" means, as of the Call Closing Date, EBITDA for the trailing twelve months ending on the Call Closing Date (which under no circumstances shall be less than zero (0) dollars).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) "<u>TTM Net Revenue</u>" means, as of the Call Closing Date, Net Revenue for the trailing twelve months ending on that Call Closing Date, subject to the following. If the Call Closing Date falls on or after the 15th day of the month, the TTM Net Revenue will be based on the Net Revenue of that month, extrapolated to the last day of that month, and the eleven months prior to the Call Closing Date. If the Call Closing Date falls on any day prior to the 15th of the month ("X" days), the TTM Net Revenue will be based on the first X days of the 12th month, plus the eleven trailing months, plus prorated Net Revenue for "N" days of the month preceding the first month, where N equals the number of days in the month preceding the first month minus X days.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Form of payment</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The aggregate Call Price for all Called Shares of the Grantors (the "<u>Aggregate Call Price</u>") will be paid twenty-five percent (25%) in cash or such higher percentage as otherwise agreed by Neptune and Grantors' Representative, and the portion not paid in cash will be paid in common shares, no par value per share, of Neptune ("<u>Neptune Common Shares</u>"); provided that, in the event the Neptune Common Shares are no longer trading on any public stock exchange on the date Neptune exercises the Call Option, then the aggregate Call Price for all Called Shares of the Grantors will be paid one hundred percent (100%) in cash.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) With respect to any portion of the Aggregate Call Price payable in Neptune Common Shares, the number of Neptune Common Shares to be issued will be equal to the quotient of (i) the Aggregate Call Price, divided by (ii) the Neptune Common Share Value.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) As used in these Call Option Terms, the term "<u>Neptune Common Share Value</u>" means the volume weighted average price of a Neptune Common Share on NASDAQ for the twenty (20) trading days ending two (2) trading days immediately prior to the Call Closing Date, as reported by Bloomberg.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Call Closing</u>. Neptune and each Grantor shall consummate the purchase and sale of the Called Shares, including Neptune's delivery of payment of the Call Price to each Grantor and each Grantor's delivery of all of its Shares to Neptune (the "<u>Call Closing</u>") on the date (which shall be within thirty (30) days after Neptune's delivery of the Call Exercise Notice), at the time, and at the place designated in the Call Exercise Notice. The date on which the Call Closing occurs is referred to herein as the "<u>Call Closing Date</u>."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Deliveries at Call Closing</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) At the Call Closing, each Grantor shall deliver to Neptune the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) an Assignment of Shares in a form reasonably acceptable to Neptune and Grantors' Representative ("<u>Assignment</u>") pursuant to which Grantor shall assign and transfer to Neptune or its designee the Called Shares free and clear of any and all Liens (as defined below);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) a release in a form reasonably acceptable to Neptune and Grantors' Representative ("<u>Release</u>"), releasing the Company and its officers, directors, Stockholders, and affiliates (collectively, "<u>Releasees</u>") from all claims, obligations, and liabilities relating to or arising in connection with the Grantor's ownership of the Called Shares and rights or status as a Stockholder by virtue of its ownership of the Called Shares and the performance or non-performance or exercise or non-exercise of any rights or obligations by any of the Releasees in connection therewith; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) if Neptune Common Shares are being delivered as part of the Aggregate Call Price, a lock-up agreement substantially in the form of the Lock-Up Agreement (as defined in the Purchase Agreement) and an agreement which includes representations and warranties substantially similar to those set forth in the Issuance Direction Letter (as defined in the Purchase Agreement).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) At the Call Closing, in consideration of the execution and delivery to Neptune by Grantor of the items set forth in Section 7(a), Neptune shall tender to Grantor, in accordance with Section 5, payment of the Aggregate Call Price for the Called Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Representations and Warranties</u>. By virtue of the amendment and restatement of the 2<sup>nd</sup> A&R Stockholders' Agreement with the Agreement, each Grantor shall be deemed to have represented and warranted to Neptune, severally and not jointly, with respect to itself and its Shares as set forth below in this Section 8, in each case, as of the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) This Agreement is a legal, valid, and binding obligation of such Grantor, enforceable against such Grantor in accordance with its terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Such Grantor is the sole legal and beneficial owner of the Shares set forth opposite its name on <u>Schedule A</u> hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Such Grantor owns its Shares free and clear of any and all restrictions on transfer, taxes, security interests, liens, pledges, or other encumbrances, options, warrants, purchase rights, call rights, rights of first refusal, contracts, commitments, equities, claims, and demands (collectively, "<u>Liens</u>"), other than restrictions on transfer set forth in this Agreement or the Agreement (none of which prevents or restricts transfer of the Shares to Neptune hereunder).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Shares set forth opposite its name on <u>Schedule A</u> hereto represent Grantor's entire ownership interest in the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Grantor was, at the time Grantor acquired the Shares, an "accredited investor", as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) No oral or written representations have been made to Grantor in connection with this Agreement by or on behalf of Neptune or its affiliates or the Company or any of its officers, directors, or representatives or any other person or entity, and in making a decision to grant the Call Option and enter into this Agreement and consummate the transactions contemplated hereby, Grantor has relied solely on its own examination and knowledge of the Company and its business, assets, liabilities, financial condition, results of operation, plans, and prospects.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Restriction on Transfer</u>. Notwithstanding anything to the contrary herein or in the Agreement, during the period commencing on the Effective Date and ending on the date that is forty-five (45) days after the end of the Call Option Period, each Grantor shall not, directly or indirectly, voluntarily or involuntarily, sell, transfer, assign, pledge, hypothecate, encumber, or otherwise dispose of (each, a "<u>Transfer</u>") the Shares without the prior written consent of the Board of Directors of the Company, except to Neptune, and the Company shall not recognize any such Transfer or purported Transfer on its books and records; provided that the foregoing restriction on Transfer shall not apply to any Transfers made to a "Permitted Transferee," as such term is defined in the Agreement, in accordance with the terms and conditions of the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <u>Adjustments</u>. If the Shares are changed into or exchanged for a different number or kind of securities of the Company, or other securities or assets of the Company or any other entity by reason of merger, consolidation, conversion, recapitalization, reclassification, split, dividend, combination, or other transaction, then the Shares subject to the Call Option will be deemed to include such securities. The "Shares" are deemed to include all shares of capital stock and other equity securities of the Company (including Shares, as such term is defined in the Agreement) now owned or hereafter acquired by each Grantor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <u>Specific Performance</u>. Each Grantor agrees and acknowledges that irreparable damage could occur to Neptune in the event that any of the provisions of these Call Option Terms were not performed by that Grantor in accordance with their specific terms or were otherwise breached and that Neptune would not have an adequate remedy at law. Accordingly, Neptune is entitled to seek an injunction or injunctions to prevent breaches of these Call Option Terms and to enforce specifically the terms and provisions of these Call Option Terms, including any Grantor's obligation to the close the transactions contemplated by these Call Option Terms in accordance with these Call Option Terms, in addition to any other remedy that Neptune may have at law or in equity. Each Grantor shall not unreasonably oppose (a) the granting of an injunction or specific performance as provided herein on the basis that Neptune has an adequate remedy at law or that an award of specific performance is not an appropriate remedy for any reason at law or equity or (b) the specific performance of the terms and provisions of these Call Option Terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. <u>Power of Attorney</u>. The power of attorney in Section 7 of the Agreement applies with respect to the transfer of Shares of Grantors as if such transaction were an "Approved Sale."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. <u>Further Assurances</u>. Neptune and each Grantor shall use their commercially reasonable efforts to execute and deliver, or cause to be executed and delivered, all additional documents, instruments, conveyances, and assurances and take, or cause to be taken, all further actions as may be reasonably required to consummate and make effective the transactions contemplated by these Call Option Terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. <u>Notices</u>. Neptune or any Grantor giving or making any notice, request, consent, approval, claim, waiver, demand, or other communication under these Call Option Terms shall give such notice in writing in accordance with Section 21 of the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. <u>Modifications and Waivers</u>. Neptune and Grantors may amend or waive these Call Option Terms only in accordance with Section 23 of the Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. <u>Miscellaneous</u>. For clarification, these Call Option Terms shall be governed by all other terms of the Agreement, including, without limitation, as related to jurisdiction, governing law, construction, etc.

[*Remainder of page intentionally left blank; attachments follow*.]

## Exhibit 23.1

**Exhibit 23.1**![LOGO](g338720g1104232216292.jpg)

KPMG LLP

600 de Maisonneuve Blvd West

Suite 1500, Tour KPMG

Montréal (Québec) H3A 0A3

Tel. 514-840-2100

Fax. 514-840-2187

www.kpmg.ca

**Consent of Independent Registered Public Accounting Firm** 

We consent to the use of our report dated July 7, 2022 with respect to the consolidated balance sheet as at March 31, 2022, the related consolidated statements of loss and comprehensive loss, changes in equity and cash flows for the year ended March 31, 2022, and the related notes of Neptune Wellness Solutions Inc., which report indicates that there is substantial doubt about Neptune Wellness Solutions Inc.'s ability to continue as a going concern, including that it requires funding in the very near term in order to continue its operations and if it is unable to obtain funding in the upcoming days, it may have to liquidate its assets, which report is included herein, and to the reference to our firm under the heading "Experts" in the prospectus.

/s/ KPMG LLP

Montréal, Canada

January 30, 2023

<sup>©</sup> 2022 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent

member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

## Exhibit 23.2

**Exhibit 23.2** 

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption "Experts" and to the use of our report dated July 7, 2022, with respect to the consolidated financial statements of Neptune Wellness Solutions Inc. as of and for the year ended March 31, 2021, in Amendment No. 2 to the Registration Statement (Form S-1) and related Prospectus of Neptune Wellness Solutions Inc. for the registration of up to 7,267,114 shares of its common stock.

/s/ Ernst & Young LLP

Montreal, Canada

January 30, 2023

## Ex-Filing

**<u>EXHIBIT 107</u>**

**Calculation of Filing Fee Tables** 

**Form S-1** 

**(Form Type)** 

**NEPTUNE WELLNESS SOLUTIONS INC.** 

**(Exact Name of Registrant as Specified in its Charter)** 

**Table 1: Newly Registered and Carry Forward Securities** 

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;**Security Type** | **Security<br>Class**<br> **Title** | **Fee<br>Calculation<br>Rule** | **Maximum<br>Aggregate<br>Offering**<br> **Price** | **Fee**<br> **Rate** | **Amount of<br>Registration<br>Fee** |
| &nbsp;&nbsp;&nbsp;Equity | Common Shares, no par value, issuable upon exercise of Warrants | 457(g)6417114<sup>(2)</sup>$1.62<sup>(3)</sup> | $10395725 | (0.00011020) | $1145.61 |
| &nbsp;&nbsp;&nbsp; Equity | Common Shares, no par value, issuable upon exercise of Warrants  | 457(g)850000<sup>(2)</sup>$0.53<sup>(4)</sup> | $450000 | (0.00011020) | $49.65 |
| &nbsp;&nbsp;&nbsp;**Total Offering Amounts** | &nbsp;&nbsp;&nbsp;**Total Offering Amounts** | &nbsp;&nbsp;&nbsp;**Total Offering Amounts** | $10846225 |  | $1195.26 |
| &nbsp;&nbsp;&nbsp;**Total Fees Previously Paid** | &nbsp;&nbsp;&nbsp;**Total Fees Previously Paid** | &nbsp;&nbsp;&nbsp;**Total Fees Previously Paid** |  |  | $1145.61 |
| &nbsp;&nbsp;&nbsp;**Total Fee Offsets** | &nbsp;&nbsp;&nbsp;**Total Fee Offsets** | &nbsp;&nbsp;&nbsp;**Total Fee Offsets** |  |  | $0 |
| &nbsp;&nbsp;&nbsp;**Net Fee Due** | &nbsp;&nbsp;&nbsp;**Net Fee Due** | &nbsp;&nbsp;&nbsp;**Net Fee Due** |  |  | $49.65 |

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(1) Pursuant to Rule 416(a) under the Securities Act of 1933, as amended (the "**Securities Act** "), the Registration Statement also covers an indeterminate number of additional Common Shares that may be offered and issued to prevent dilution resulting from share dividends, share splits, reverse share splits, combinations of shares,
spin-offs, recapitalizations, mergers or similar capital adjustments.

(2) The number of common shares registered represents Common Shares of the Registrant issuable upon exercise of
Warrants.

(3) Calculated pursuant to Rule 457(g) under the Securities Act, based on the exercise price of the
warrants ($1.62).

(4) Calculated pursuant to Rule 457(g) under the Securities Act, based on the exercise price of the warrants
($0.53).