Sproutly Canada Inc. Technology-Powered Cannabis Products Company - Corporate Presentation October 2020
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Sproutly Canada Inc. Technology-Powered Cannabis Products Company (CSE: SPR) (OTCQB: SRUTF) (FSE: 38G) Corporate Presentation October 2020 www.sproutly.ca
Notice to Reader
Certain information set forth in this presentation contains “forward-looking Although forward-looking statements contained in this presentation are based upon
information”, including “future oriented financial information” and “financial outlook”, what management of Sproutly believes are reasonable assumptions, there can be no
under applicable securities laws (collectively referred to herein as forward-looking assurance that forward-looking statements will prove to be accurate, as actual results
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constitutes forward-looking statements and includes, but is not limited to future M&A Sproutly undertakes no obligation to update forward-looking statements if
activity and completion of Sproutly Canada, Inc.’s (“Sproutly”) projects that are circumstances or management’s estimates or opinions should change except as
currently underway, in development or otherwise under consideration. Forward- required by applicable securities laws. The reader is cautioned not to place undue
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including the Company's requirement for additional funding to continue its expansion
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Sproutly (CSE:SPR) | 2
Technology company focused on discovering and commercializing innovative,
science-based cannabis and hemp technologies.
Exclusive licensee of Infusion Biosciences patent pending APP Technology in Canada, Europe,
Australia, Israel & Jamaica.
Developing a new paradigm in the cannabis industry
Sproutly (CSE:SPR) | 3
Technology-Enabled Cannabis Products Company
Truly Whole-Plant Naturally Water- Fully-Licensed Cannabis 2.0
2.0 Products Soluble Technology Production Facility Product Roll-Out
_______ _______ _______ _______
Only technology able to Exclusive licensee of 16,600 sq.ft. facility with Asset-light, technology
deliver truly strain-specific Infusion’s patent-pending APP cannabis cultivation, focused business model for
effects available without Technology in key regions processing, and flower and increased scalability
smoking 2.0 product sales licenses.
Controllable onset of effects Sales license for Cannabis 2.0
enabling launch of
Significant advantage in within 5 mins and offset of APP Technology installed and differentiated products
delivering novel Cannabis 2.0 effects within 90 min operating commercially at providing greater margins and
Products scale unit economics
Sproutly (CSE:SPR) | 4
Developing a New Paradigm in the Cannabis Industry
Traditional
Extraction
Methodology Proprietary APP
Extraction
Ability to deliver whole plant/strain effects Unable to deliver strain specific experience Effectively deliver whole plant/strain effects
Full spectrum of phytochemicals? Limited to selected cannabinoid & terpene oils Not limited to selected cannabinoid & terpene oils
Strain-specific effects availability Only available by smoking dried bud Available without smoking
Ability for accurately controlled dosages None Available
Solvent base Artificial chemical formulations All-natural solvents
Delivery format Multiple delivery formats in artificial products Multiple delivery formats in all-natural products
APP extraction technology provide enhanced end-product benefits as compared to traditional supercritical & other methodologies
Sproutly (CSE:SPR) | 5
Focused Product Strategy
Cannabis 1.0 Cannabis 2.0 Cannabis 2.0
Flower Product Edible Products Beverage Products
_______ _______ _______
Leverage current output capacity of licensed Completed R&D APP runs and derivative product Formulation and product development complete
facility, THR to produce high-quality cannabis manufacturing
flower Completed analytical testing development for
Developing sales launch plan Infuz2O
Continue to develop sales channels and brand
equity for ultimate launch of derivative products Sales license for Cannabis 2.0 Products Received In discussions with co-packing options
Oct 2020
Sales license for Cannabis 2.0 Products Received
Continued development of Q4 2020 Q1 2021
flower sales channels Commercial Launch Commercial Launch
Sproutly is executing on a three-pronged approach to providing superior cannabis and derivative products to the Canadian market
Sproutly (CSE:SPR) | 6
C$2.7 billion Cannabis 2.0 Market Opportunity in Canada
Cannabis 2.0 Expected to Surpass Flower Sales Cannabis 2.0 – Increasing Profitability through Value Chain
Colorado – Historical Canada – Projected
Market Share Market Share
45% 45%
65%
71% Profit Margin
76% 84% 92%
55% $12.63
55%
35% 29% $6.49
Revenue /
$ of Production $4.19
2014 2018 2019 2022 Cost
Concentrates, Edibles,
Flower Dried Flower Concentrates Edibles
Beverages & Other & Beverage
Cannabis derivatives products projected to surpass flower market share and grow to C$2.7bn annually as the Canadian legal market matures. This opens up the
untapped market for higher-margin cannabis derivative products.
Source: BDS Analytics, RBC, Grizzle, Deloitte Sproutly (CSE:SPR) | 7
Large and Growing Canadian Cannabis Market Opportunity
Potential Canadian Cannabis Beverage Market:
$1.4 – $3.0 bn
“With regard to the potential size of the cannabis market in Canada,
if you take an average, then it suggests that this market may be
somewhere between $7 billion and $10 billion in market value, with
beverages somewhere between 20% and 30%”
Mark Hunter, President and CEO
Potential Canadian cannabis beverage market estimated at up to $3.0 billion at maturity. This does not account for additional market growth created
by naturally water-soluble based cannabis beverages and the recent vaping illnesses.
Source: Molson-Coors Sproutly (CSE:SPR) | 8
Cannabis Strains Deliver a Wide Array of Unique Effects
Grandaddy Purple Berry White Blue Dream
Calming Balanced Energizing
Each strain carries a unique profile that is otherwise lost during traditional extraction methods.
APP’s water-soluble and BioNatural Oils retain the characteristics of the mother plant in its natural form
Sproutly (CSE:SPR) | 9
Whole Plant Extraction - Only way to Capture Strain Experience
✓ ✓ ✓
Starting Biomass Profile Extracted Infuz2O Content Profile Extracted BNO Content Profile
✓ ✓ ✓
THC
Cannabinoids
✓ ✓ ✓
THCV
✓ ✓ ✓
CBN
✓ ✓ ✓
CBD
✓ ✓ ✓
CBG
✓ ✓ ✓
a-Pinene
✓ ✓ ✓
8-3-Carene
✓ ✓ ✓
Terpenes
a-Terpine
✓ ✓ ✓
Terpineolene
✓ ✓ ✓
Isopulegol
✓ ✓ ✓
Guaiol
✓ ✓ ✓
A-Bisabolol
✓ ✓ ✓
Vitamin B1
Vitamins
✓ ✓ ✓
Vitamin B2
✓ ✓ ✓
Vitamin B3
✓ ✓ ✓
Vitamin B6
✓ ✓ ✓
Calcium
✓ ✓ ✓
Phosphorus
Minerals
✓ ✓ ✓
Sodium
✓ ✓ ✓
Potassium
Magnesium
~30% Recovery Rate of ~60% Recovery Rate of
Water-Soluble Cannabinoids Oil-Based Cannabinoids
APP Technology retains the full spectrum of cannabinoids and phytochemicals found in the cannabis starting material
Sproutly (CSE:SPR) | 10Cannabis 2.0 Products: Industry Challenges
Prolonged Offset/
1 Unpredictable and Lengthy Onset 2 Lack of Single Form Dosage 3 Flavour and Formulation Challenges
“We think onset time is going to be one of the critical “Many in the industry believe that the key to “Developing cannabis drinks has been a challenge in
factors in the next stage of cannabis-infused mainstream acceptance of cannabis beverages is part because when the active ingredients are
beverages “ creating a “session-able” beverage” concentrated it forms an oil, which is tough to mix
with water into a beverage.”
- New Frontier Data - Bloomberg
“When you put CBD or THC into a beverage, it has a
tendency to degrade over time... And so we've
“The problem of onset time is one of the biggest
figured it out, but we didn't figure it out for THC yet.”
challenges facing makers of cannabis beverages”
- Jorn Socquet, CEO of Fluent Beverage Company
- Bloomberg
(Tilray-AB InBev JV)
Producers of hemp and cannabis beverages are constrained by incumbent approaches that do not meet consumer preferences today
Source: Bloomberg, CIBC, New Frontier Data Sproutly (CSE:SPR) | 11Infuz2O – Solving the Onset and Offset Challenge
Infuz2O Characteristics Hemp and Cannabis Impact Over Time: Inhaled vs. Ingested
✓ Predictable – less than 5 mins to feel effects, less
than 90 to wear off
✓ Experience – Superior effects comparable to
smoking and vaping
✓
Desired Effects
Safe Discrete Consumption – odorless and
smokeless without adverse effects of
smoking/vaping
✓ Formulation Versatility – numerous end-user
applications including ‘functional’ beverages
✓ Precise Dosing – ability to deliver a measurable
amount of cannabis
✓ Strain Specific – APP Extractions retains the full
suite of cannabinoids and terpenes in the biomass, Highly Desired Quick Onset,
Infuz20
Time in Hours
Quick Offset Profile
Technology delivers a truly natural water-soluble liquid with fast onset and offset, without the need for formulation techniques such as emulsification or
encapsulation, that mimic those of inhaled hemp or cannabis
Source: Aphria Inc, Management Estimates based on 100+ user feedback Sproutly (CSE:SPR) | 12Infuz2O vs. Status Quo Formulations
Sproutly Select Cannabis Beverages in the Canadian Market
Competitor
B
Competitor
A
Infuz2O’s true water-solubility allows the solution to fully-dissolve in water, creating a clear finished product. ‘Water-compatible’ cannabis beverages
currently in the market show obvious signs of clouding and residue.
Sproutly (CSE:SPR) | 13Premium Cannabis Brand: Caliber
CALIBER: High Quality Cannabis Products for Connoisseurs Product and Brand Prototype
Caliber is Sproutly’s flagship brand for its premium, high-quality cannabis products.
1st place
4.4 Stars
– 2018
–
Cannabis
Leafly
Brand leveraged across flower and Cannabis 2.0 Products Cup
Premium Flower Edibles Beverage Topicals
Caliber is positioned as premium, high-quality brand amongst experienced cannabis users known as “connoisseurs”.
Sproutly (CSE:SPR) | 14Diverse Set of Revenue Streams
Sproutly Brands Sales Revenue Flower
Recreational
Internal Cannabis Beverages
Sales Revenue
Innovative THC
Sproutly Brands Products
Infuz2O
Hemp-Derived
Partner Brands Beverages
Medicinal Tonics
Proprietary APP Edibles
Extraction
Sales Revenue
Sproutly Brands Health/Wellness
BioNatural Oil (BNO)
Partner Brands Sprays
Purchased Cannabis Wholesale Revenue Wholesale BNO Softgels/Tinctures
Sproutly (CSE:SPR) | 15Sproutly Capitalization
Cap Table & Balance Sheet Highlights
Cap Table(1) Sproutly % F.D.
Basic Shares Outstanding 267.7 62%
Options(2) 20.8 5%
Warrants(3) 15.6 4%
Convertible Debenture Warrants 87.3 20%
Broker Convertible Debenture Units 1.2 0%
Broker Equity Warrant Units 1.6 0%
Infusion Biosciences Loan 31.1 7%
Infusion Biosciences Debenture 8.1 2%
Fully Diluted Shares Outstanding 433.4 100%
Balance Sheet(2) C$ Millions
Cash 0.2
Other Current Assets 1.1
Current Liabilities 8.5
Non-current Liabilities 3.1
(1) As at September 28th, 2020
(2) As at May 31st, 2020
Sproutly (CSE:SPR) | 16Appendix
Sproutly (CSE:SPR) | 17Why ‘Whole-Plant’ Extraction Matters For Cannabis Oil
CO2 Ethanol APP Technology
Examples Distillate/Crude Distillate/Crude BNO
Minimally Processed
No High Pressure
Uses GRAS Food Grade Ingredients
No Chemical Solvent
All Natural Process
Retains Natural Terpene Profile
Retains Natural Vitamins
Retains Natural Cannabinoid Profile
Retains Beneficial Plant Oils
Maintains Strain Specificity
Minimal Heat
Homogeneous
Complete Spectrum
No Alcohol & Chemicals Used
Whole Plant/All Natural Products
Similar Experience to Smoking
APP is a safer, all-natural process that extracts everything from the plant in its natural form. Nothing is removed, nothing is re-engineered.
Sproutly (CSE:SPR) | 18Proprietary APP Technology
“Naturally Water Soluble “ - Infusion Biosciences’ Proprietary APP Technology
2 Step “Soak and Strain” Method: Patent pending process that uses custom GRAS certified reagents
formulated for different plant materials (no artificial chemicals, no harsh physical treatments)
Step 1 Step 2
Soak in proprietary water Soak plant material strained from step 1 in
reagents; strain/filter to recover proprietary natural oil reagents; strain/filter
naturally water-soluble entourage to recover free oil entourage
“Water Compatible” – In the Market Today
Competitors
APP yields two truly unique cannabis extract products, including the world’s only naturally water-soluble cannabis liquid without the use of artificial
chemicals and harsh physical treatments.
Sproutly (CSE:SPR) | 19For Additional Information Please Contact Dr. Arup Sen Chief Executive Officer investors@sproutly.ca (CSE: SPR) (OTCQB: SRUTF) (FSE: 38G) www.sproutly.ca
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