Sproutly Canada Inc....Sproutly Canada Inc. Technology-Powered Cannabis Products Company Investor...
Transcript of Sproutly Canada Inc....Sproutly Canada Inc. Technology-Powered Cannabis Products Company Investor...
Sproutly Canada Inc.Technology-Powered Cannabis Products Company
Investor PresentationMay 2020
(CSE: SPR) (OTCQB: SRUTF) (FSE: 38G)
www.sproutly.ca
Notice to ReaderCertain information set forth in this presentation contains “forward-lookinginformation”, including “future oriented financial information” and “financial outlook”,under applicable securities laws (collectively referred to herein as forward-lookingstatements). Except for statements of historical fact, information contained hereinconstitutes forward-looking statements and includes, but is not limited to future M&Aactivity and completion of Sproutly Canada, Inc.’s (“Sproutly”) projects that arecurrently underway, in development or otherwise under consideration. Forward-looking statements are provided to allow potential investors the opportunity tounderstand management’s beliefs and opinions in respect of the future so that theymay use such beliefs and opinions as one factor in evaluating an investment.
The material assumptions upon which forward-looking statements in this presentationare based include, among others, assumptions with respect to: the Company's abilityto access financing on favorable terms to continue with its expansion plans anddevelop its business; the Company’s ability to obtain or maintain the requiredregulatory approvals; the Company's ability to attract and retain customers; thecontinuation of executive and operating management or the non-disruptivereplacement of them on competitive terms; and stable market and general economicconditions. The Company makes no representation that reasonable business people inpossession of the same information would reach the same conclusions. Although webelieve that the assumptions underlying forward-looking statements are reasonable,they may prove to be incorrect and we cannot assure that actual results will beconsistent with such statements. Given these risks, uncertainties and assumptions, youshould not place undue reliance on these forward-looking statements or theinformation contained in such statements.
These statements are not guarantees of future performance and undue reliance shouldnot be placed on them. Such forward-looking statements necessarily involve knownand unknown risks and uncertainties, which may cause actual performance andfinancial results in future periods to differ materially from any projections of futureperformance or result expressed or implied by such forward-looking statements,including the Company's requirement for additional funding to continue its expansionplans in Canada and the United States; the Company’s failure to obtain and/or maintainthe required regulatory licenses for its businesses; the Company's failure to retain keypersonnel and hire additional personnel needed to develop its business; And theCompany's business practice reputation being negatively affected by client or usercomplaints or negative publicity.
Although forward-looking statements contained in this presentation are based uponwhat management of Sproutly believes are reasonable assumptions, there can be noassurance that forward-looking statements will prove to be accurate, as actual resultsand future events could differ materially from those anticipated in such statements.Sproutly undertakes no obligation to update forward-looking statements ifcircumstances or management’s estimates or opinions should change except asrequired by applicable securities laws. The reader is cautioned not to place unduereliance on forward-looking statements. We seek safe harbor.
This presentation and the material contained herein are confidential and are not to bedisclosed to the public. This presentation is for information purposes only and may notbe reproduced or distributed to any other person or published, in whole or part, forany purpose whatsoever. This presentation does not constitute a generaladvertisement or general solicitation or an offer to sell or a solicitation to buy anysecurities in any jurisdiction. Such an offer can only be made by prospectus or otherauthorized offering document. This presentation and materials or fact of theirdistribution or communication shall not form the basis of, or be relied on in connectionwith any contract, commitment or investment decision whatsoever in relation thereto.The information in this presentation is not intended in any way to qualify, modify orsupplement any prospectus, listing statement, information circular or otherinformation disclosed under the corporate and securities legislation and stockexchange policies of any jurisdiction relating to Sproutly, Inc. No securities commissionor similar authority in Canada or any other jurisdiction has in any way passed upon theadequacy or accuracy of the information contained in this presentation.
Sproutly (CSE:SPR) | 2
NOT FOR DISTRIBUTION; NO OFFERING
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.
Sproutly (CSE:SPR) | 3
Sproutly: Technology-Enabled Cannabis Products
Sproutly (CSE:SPR) | 4
Infuz2O Technology
Exclusive licensee of Infusion’s patent-pending APP
Technology in key regions
Controllable onset of effects within 5 mins and offset of
effects within 90 min
_______
Licensed Production Facility
Fully-operational cannabis production and processing
facility located in Scarborough, ONT.
APP Technology installed and operating commercially
_______
Superior Plant-to-Product Economics
Up to ~90% total cannabinoid recovery in Infuz2O and Oil
Solution
Highly scalable with low cap-ex and op-ex requirements
_______
Commercial Applications
Asset-light, technology focused business model for
increased scalability
In discussions with Moosehead & others for
supply agreements for both infuz2O and BNO
_______
Sproutly (CSE:SPR) | 5
TRADITIONAL PRESPECTIVE ON EXTRACTION INFUSION’S DISCOVERY & DEVELOPMENT ON EXTRACTION
Focus on Major Cannabinoids and Terpene Oils
▪ Preferred delivery as vaping liquids for inhalation and edible formulations that use oils.
▪ Artificial chemicals for emulsion and encapsulation are essential for dispersion in water for beverages (“Water-Compatible”).
▪ No experience or health benefits from water soluble nutrients and many other beneficial oils.
Focus on Naturally Water-Soluble Bioactives in Plants to Develop Beverages for Safe and Effective Delivery of Whole Plant Experience and Benefits
▪ Discovered and developed patent pending process to directly recover two whole plant molecular spectrums;
• 1) Naturally water-soluble molecular mix that includes bioactive cannabinoids and terpenes (“Infuz2O”) and;
• 2) Natural oils from cannabis and hemp plants (“BNO”) that provide a complete experience from the full spectrum of oils including the cannabinoids and terpenes.
▪ A variety of stable beverage formulations with a single or mixed cannabis strains that deliver rapid onset/offset for a unique user experience.
APP Extraction Technology is a fundamental paradigm shift within the cannabis industry. Replacing traditional “water-compatible” solutions with true natural water-solubility improves the body’s ability to utilize cannabinoids.
Infusion’s Scientific Discovery: Water-Soluble Cannabinoids
Proprietary APP Technology
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.
“Naturally Water Soluble “ - Infusion Biosciences’ Proprietary APP Technology
2 Step “Soak and Strain” Method: Patent pending process that uses custom GRAS certified reagentsformulated for different plant materials (no artificial chemicals, no harsh physical treatments)
Step 1Soak in proprietary water
reagents; strain/filter to recover naturally water-soluble entourage
Step 2Soak plant material strained from step 1 in
proprietary natural oil reagents; strain/filter to recover free oil entourage
“Water Compatible” – In the Market Today
Co
mp
etit
ors
Sproutly (CSE:SPR) | 6
APP Technology: True Whole Plant Extraction
APP Technology is the only extraction method today which retains the whole plant characteristics of the biomass, including its cannabinoids, terpenes, minerals,
and vitamins.
Sample Extracted Biomass Profile
Source: Infusion Biosciences, ProVerde Labs
Cannabinoids Present
THC, THCV, CBC, CBNTHC, THCV, CBC, CBN
~30% Recovery Rate of Water-Soluble Cannabinoids
THC, THCV, CBC, CBN~60% Recovery Rate of Oil-Based
Cannabinoids
Terpenes Presenta-Pinene, 8-3-Carene, a-Terpinene, Terpineolene, Isopulegol, Guaiol, a-
Bisabolol
a-Pinene, 8-3-Carene, a-Terpinene, Terpineolene, Isopulegol, Guaiol, a-
BisabololAll Terpenes Present
a-Pinene, 8-3-Carene, a-Terpinene, Terpineolene, Isopulegol, Guaiol, a-
BisabololAll Terpenes Present
Vitamins PresentVitamin B1, Vitamin B2, Vitamin B3,
Vitamin B6
Vitamin B1, Vitamin B2, Vitamin B3, Vitamin B6
All Vitamins Present
Vitamin B1, Vitamin B2, Vitamin B3, Vitamin B6
All Vitamins Present
Minerals PresentCalcium, Phosphorus, Sodium,
Potassium, Magnesium
Calcium, Phosphorus, Sodium, Potassium, Magnesium
All Minerals Present
Calcium, Phosphorus, Sodium, Potassium, Magnesium
All Minerals Present
Starting Biomass Profile Extracted Infuz2O Content Profile Extracted BNO Content Profile
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Illustrative Value Creation: APP Extraction
Base High
Input Biomass (kg) 1 1
Cannabinoid Content of Biomass(1) (%) 15% 15%
Total Cannabinoid Content (mg) 150,000 150,000
APP Extraction Recovery Rate(2) (%) 90% 90%
Total Cannabinoids Recovered (mg) 135,000 135,000
Price Per mg of Cannabinoids (C$) $0.11(2) $0.16
Estimated Revenue per kg of Input (C$) $14,850 $21,600
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Illustrative APP Finished Product Revenue Additional Value vs. Traditional Extraction Technologies
APP Technology provides increased revenue opportunity and enhances margin as compared to traditional technologies.
(1) Management Estimates(2) Wholesale price base scenario taken from Harvest Medicine, high scenario applies a premium for APP Technology value
Potential revenue is not reflective of future revenue guidance or management guidance for actual financial resultsAPP Technology does not require additional processing (e.g. emulsion or encapsulation) after extraction. This provides additional technology value as a result of;
▪ Increased finished product cannabinoid yield to increase revenue per gram equivalent of biomass
▪ Reduced labour costs (e.g. processing labour) to arrive at the finished product
▪ Reduced additional ingredient costs (e.g. artificial chemicals) to arrive at the finished product
▪ Reduced capex requirements on processing equipment
▪ Potential value from preserving whole-plant characteristics of the extract (which is lost through traditional processing steps)
35%
55%
65%
45%
2014 2018
29%
55%
71%
45%
2019 2022
C$2.7 billion Cannabis 2.0 Market Opportunity in Canada
Sproutly (CSE:SPR) | 9
84% 92%76%
$4.19
$6.49
$12.63
Dried Flower Concentrates Edibles
Cannabis 2.0 Expected to Surpass Flower Sales Cannabis 2.0 – Increasing Profitability through Value Chain
Source: BDS Analytics, RBC, Grizzle, Deloitte
Colorado – Historical Market Share
Canada – Projected Market Share
FlowerConcentrates, Edibles, Beverages & Other
Revenue /$ of Production
Cost
Profit Margin
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.
& Beverage
Cannabis Beverage Market Estimate
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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
Cannabis Beverages: Industry Challenges
Producers of hemp and cannabis beverages are constrained by incumbent approaches that do not meet consumer preferences today
Unpredictable and Lengthy OnsetProlonged Offset/
Lack of Single Form DosageFlavour and Formulation Challenges1 2 3
“We think onset time is going to be one of the critical factors in the next stage of cannabis-infused beverages “
- New Frontier Data
“Many in the industry believe that the key tomainstream acceptance of cannabis beverages iscreating a “session-able” beverage”
- Bloomberg
“Developing cannabis drinks has been a challenge in part because when the active ingredients are concentrated it forms an oil, which is tough to mix with water into a beverage.”
“When you put CBD or THC into a beverage, it has a tendency to degrade over time... And so we've figured it out, but we didn't figure it out for THC yet.”
- Jorn Socquet, CEO of Fluent Beverage Company (Tilray-AB InBev JV)
“The problem of onset time is one of the biggestchallenges facing makers of cannabis beverages”
- Bloomberg
Source: Bloomberg, CIBC, New Frontier Data Sproutly (CSE:SPR) | 11
Infuz2O - Unique Disruptive TechnologyHemp and Cannabis Impact Over Time: Inhaled vs. Ingested
Infuz20
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
Highly Desired Quick Onset, Quick Offset Profile
Time in Hours
De
sire
d E
ffe
cts
Predictable – less than 5 mins to feel effects, less than 90 to wear off
✓
Experience – Superior effects comparable to smoking and vaping
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,
Infuz2O Characteristics
✓
✓
✓
✓
✓
Sproutly (CSE:SPR) | 12
Select Cannabis Beverages in the U.S. Market
Source: Company Websites, Leafly, management analysis
Product Name Dixie ElixirsRipple
(Stillwater Brands)Cannabis Quencher
Keef Brands(Sparkling Water)
Happy Apple Cider Lagunitas Hi-Fi Hops Infuz20
Onset Time 30-60 minutes 20 minutes 30-60 minutes 30-45 minutes 30 minutes 30 minutes 5 minutes
Offset Time 6 hours 4 hours 6 hours ~3 hours 4-6 hours 4-6 hours 1.5 hours
Technology Emulsified Oil ExtractDehydrated &
Emulsified Oil ExtractEmulsified Oil Extract Emulsified Oil Extract Emulsified Oil Extract Emulsified Oil Extract
Naturally Water-Soluble Cannabinoids
Flavor Profile Multiple (Fruity) Tasteless Multiple (Fruity) Citrus Apple Cider Hoppy Flexible
Calories/Bottle Various 0 cal 20 cal 0 cal 140 cal 0 cal Flexible
Serving Type Multiple ServingPackets
Multiple ServingSingle Serving Single Serving Single Serving Single Serving Flexible
Cannabis Content 100mg THC 100mg THC 25mg THC 10mg THC 10mg THC 10mg THC Flexible
$USD/mg THC $0.23 $0.33 $0.64 $0.60 $0.80 $1.10 TBD
States Available CA, CO, NV CO CA CO, CA, AZ, MI, NV WA CA N/A
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Liquid Cannabis Technology LandscapeEmulsion Microencapsulation Genetic Solubilisation
Infusion(APP)
Product Type Water Compatible Water Compatible Water-Soluble Water-Soluble
Starting MaterialExtracted Oil
(i.e. CO2 or Butane)Extracted Oil
(i.e. CO2 or Butane)GMO PlantCell Culture
Trim or Bud
Whole Plant Experience
No No Potential / No Yes
OnsetVaries
(Similar to existing ingestibles)Varies
(Similar to existing ingestibles)Unknown <5 min
OffsetExtended
(Similar to existing ingestibles)Extended
(Similar to existing ingestibles)Unknown 0.75 – 1.5 hours
Processing Equipment Equipment Laboratory Work Biotech
Economics Capital-intensive Capital-intensive To be determined Not Capital-Intensive
Current Commercialization
Yes Yes No Yes
Potential IssuesArtificial chemicals, uncertain shelf stability under different storage conditions,
potential reformulation for different beverage types (ex. water vs. sparklingwater, juice, flavour etc.)
No assurance that cannabinoids areuniformly changed, entirely new non
natural moleculesN/A
Infusion’s APP is the only water-based technology that uses trim or bud as starting material and provides rapid onset and offset.
Sproutly (CSE:SPR) | 14
Infuz2O vs. Status Quo Formulations
Sproutly (CSE:SPR) | 15
Select Cannabis Beverages in the U.S. Market
Competitor #3
Competitor #2
Competitor #1
Sproutly
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.
Bio-Natural Oil: Plant-to-Product Technology
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▪ Bio-Natural Oil (“BNO”) is an edible cannabis oil recovered using APPTechnology
▪ Retains strain specific characteristics with whole plant experience
▪ Full-spectrum of cannabinoids, terpenes, vitamins, minerals and otherplant phytochemicals
▪ Cannabinoids recovered directly in pre-customized carrier oil and readyfor consumption as a cannabis oil or processed further in products
▪ Broad array of applications to provide strain-specific edible and topicalcannabis oil products
▪ Cannabinoids are homogeneously dissolved in oil
▪ Customized for desired use by client
▪ Can be sold directly as cannabis oil, tinctures, and capsules in Canada
▪ No need for de-waxing / winterization
▪ May be formulated into:
▪ Edibles
▪ Topicals
Pre-Customizable Carrier Oil
Proprietary Oil Recovery Process (APP Technology)
MCT Oil
Tinctures
Capsules
Candies
Jellies
Olive Oil
Baked Goods
Savoury Foods
Nutritional Oils
Baked Goods
Topicals
Coconut Oil
Caramels
Baked Goods
Butter
Wide Array of Product FormulationsBNO Characteristics
BNO Benefits
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
Why ‘Whole-Plant’ Extraction Matters For Cannabis Oil
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APP is a safer, all-natural process that extracts everything from the plant in its natural form. Nothing is removed, nothing is re-engineered.
Multi-Faceted Business Model
Sproutly (CSE:SPR) | 18
Flower
Recreational Beverages
Innovative THC Products
Hemp-Derived Beverages
Medicinal Tonics
Edibles
Health/Wellness
Sprays
Softgels/Tinctures
Moosehead Partnership(1)
Sproutly Brands
Partner Brands
Sproutly Brands
Partner Brands
Infuz2O
BioNatural Oil (BNO)
Wholesale BNO
Proprietary APP Extraction
Purchased Cannabis
Internal Cannabis
Sale
s R
eve
nu
eSa
les
Re
ven
ue
Sproutly Brands Sales Revenue
Wholesale Revenue
(1) The Moosehead Partnership is conditional upon, among other things, completion and execution of the legal documentation necessary to commence operations.
Premium Cannabis Brand: Caliber
Sproutly (CSE:SPR) | 19
CALIBER: High Quality Cannabis Products for Connoisseurs Product and Brand Prototype
Caliber intends to launch in Canada with two initial product offerings;
Indoor Flower: Small-batch grown flower in a controlled, indoor environment toensure for consistent and superior product.
Bio-Natural Oil (BNO): High-quality oil produced by a natural and gentle patentedrecovery process (APP technology) which retains the full strain characteristics fromthe flower which the oil is made from.
Caliber is positioned as premium, high-quality brand amongst experienced cannabis users known as “connoisseurs”.
1st place – 2018
Cannabis Cup
Caliber is Sproutly’s flagship brand for its premium, high-quality cannabis products. The brand is positioned to target the cannabis connoisseur, interested in high quality cannabis products placing emphasis on experience, genetics, and aroma.
4.4 Stars –
Leafly
APP Technology10,000kg Processing Capacity
Sproutly’s Funded Capacity Outlook
Sproutly (CSE:SPR) | 20
Flower Trim Purchased Biomass
Infuz2OBNO
Caliber Flower
Internally Produced Biomass - THR
Capitalization & Trading Performance
Sproutly (CSE:SPR) | 21
Cap Table & Balance Sheet Highlights Historical Trading Performance
Cap Table(1) Sproutly % F.D.
Management and Insiders 106.2 30.1%
Investors 140.9 39.9%
Basic Shares Outstanding 247.1 81.5%
Convertible Debentures 59.5 16.9%
Options(2) 21.1 6.0%
Warrants(3) 8.9 2.5%
Warrants – Equity Special Warrants 7.7 2.2%
Warrants – CD Special Warrants 5.7 1.6%
Broker Convertible Debenture Warrants 1.8 0.5%
Broker Equity Warrants 0.9 0.3%
Fully Diluted Shares Outstanding 352.7 100%
Balance Sheet (11/30/2019) C$ Millions
Cash 0.5
Other Current Assets 3.3
Current Liabilities 8.5
Non-current Liabilities 4.0
(1) As at May 19th, 2020(2) Weighted Average Strike Price of $0.33(3) Weighted Average Strike Price of $0.64(4) HMMJ is an ETF that seeks to replicate, to the extent possible, the performance of the North American Marijuana Index
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2018-07-06 2018-11-06 2019-03-06 2019-07-06 2019-11-06 2020-03-06
Volume Price
For Additional Information Please Contact
Dr. Arup SenChief Executive [email protected]
(CSE: SPR) (OTCQB: SRUTF) (FSE: 38G)
www.sproutly.ca