2019-09-10 07:21 ET - News Release

Mr. Keith Dolo reports

INFUSION BIOSCIENCES DEVELOPS BREAKTHROUGH TESTING METHODS TO DETECT CANNABINOIDS IN WATER SOLUTIONS TO MEET FOOD AND SAFETY STANDARDS

Sproutly Canada Inc.'s Infusion Biosciences Inc. and BNO Holdings Inc. have developed and verified analytical methods that detect, identify and measure cannabinoid molecules in water soluble (Infuz2O) and oil preparations (bionatural oil) derived from cannabis and hemp using APP technology. APP technology is a patent-pending process that uses proprietary reagents to recover naturally occurring water-soluble cannabinoids as well as the cannabis oils.

The proprietary methods for the developed analytics were created and refined during the past year through the work of Sproutly's chief science officer and director Dr. Arup Sen in collaboration with state-certified U.S. testing laboratories. The delivery of the developed analytics satisfies Sproutly's earn out milestones (defined below) in the acquisition agreements (defined below) dated Aug. 1, 2018, for the purchase of Infusion Biosciences Canada Inc. and SSM Partners Inc.

The cannabis industry has faced challenges in testing and measuring cannabinoid content in water formulations fortified with marijuana ingredients. Standard analytical methods used today for the detection and quantitation of cannabinoids had been designed for isolated oils and lack the ability to reliably measure cannabinoid contents in finished edible and beverage products. Correctly and reproducibly measuring the potency of bioactive cannabinoids in recreational, health and wellness, and medicinal beverage products is critical for successful marketing of these products in compliance with applicable food safety standards.

Dr. Sen and Infusion have been successful in developing a proprietary method for processing Infuz2O preparations in order to detect tetrahydrocannabinol (THC), cannabidiol (CBD) and several other cannabinoids. The proprietary process allows for independent third party testing laboratories to prepare the cannabis and hemp samples of Infuz2O so that analytical methods used by these laboratories can then detect and measure the natural water-soluble cannabinoids. The results obtained in collaboration with third party laboratories utilized for this research verify the predicted levels of cannabinoids recovered by APP technology in Infuz2O.

Furthermore, lab result comparisons of cannabinoid profiles of the cannabis biomass before and after each step of APP technology have revealed no detectable change in composition of the major cannabinoids and no indication of selective separation of cannabinoids from biomass in either Infuz2O or bionatural oil. Additional chemical tests carried out during this research further confirmed the molecular identity of cannabinoids in Infuz2O and bionatural oils to be the same as standard cannabinoid molecules.

Sproutly intends to provide technical guidance to qualified third party testing laboratories in order to enable them to analyze Infuz2O products to meet applicable regulatory authority requirements for commercial sale of Sproutly's products.

"The ability to test for cannabinoids in water formulations has been unreliable for cannabis beverages globally due to the existing testing standards and practices," said Dr. Sen. "With ever increasing food safety standards that need to be met for cannabis beverage and edible products, the completion of our research and the developed analytics are significant milestones in the commercialization of APP technology; this is another step forward towards reliable and accurate testing for ingestible cannabis products."

Earn out

Further to its news release dated Aug. 1, 2018, and in accordance with the acquisition agreements whereby the company acquired all of the issued and outstanding shares of Infusion Biosciences Canada Inc. (a wholly owned subsidiary of Infusion Biosciences Inc.) and SSM Partners Inc., the earnout milestones (defined herein) were completed as of Sept. 7, 2019. The earn-out milestones being the receipt of results for analysis of cannabinoids for water soluble and oil preparations derived with APP technology, which results encompass analytical data that meet the regulatory requirements for the commercial sale of products in a Sproutly acquired jurisdiction. In accordance with the provisions of the acquisition agreements Infusion Biosciences Inc. received 14,743,070 common shares and BNO Holdings (the former shareholder of SSM Partners Inc.) received 22,114,605 common shares of the company. The earn out shares are subject to the same escrow restrictions as the shares held by the company management.

About APP technology

APP technology is a patent-pending process that uses proprietary reagents to recover naturally occurring water-soluble cannabinoids as well as the free cannabinoid lipids in two separate products. Psychoactive effects of naturally water-soluble cannabinoids, known as Infuz20, start within approximately five minutes and dissipate within approximately 90 minutes; this pattern is more similar to drinking a glass of wine or a beer than consuming traditional cannabis oils. Similar to Infuz2O, free complete spectrum cannabinoid oils called bionatural oil deliver the effects of the strain of cannabis from which it is made.

About Sproutly Canada Inc.

Sproutly is a vertically integrated cannabis products company, powered by proprietary technology and licensed to cultivate and manufacture cannabis-derived products under the Cannabis Act. Utilizing the proprietary APP technology, the company is able to produce Infuz 2O, the first naturally water-soluble cannabinoids in water solutions, and bionatural oil, a natural strain-specific cannabis oil. Sproutly's indoor cultivation and processing facility is strategically located in Greater Toronto Area. The facility is designed to produce high-quality cannabis and house the initial APP technology extraction operations. The company's mission is to advance the cannabis beverage and edibles market and become a leader in the category with its breakthrough products, in-house brand portfolio and partnerships with leading established consumer product brands.

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