TICKERS: SPR

Source: Streetwise Reports (7/8/18)

Canada has passed legislation that will allow the sale of marijuana for recreational use beginning in October, and a Canadian cannabis company with access to a disruptive technology that creates water soluble cannabinoids is about to complete a reverse takeover and begin trading on the Canadian Securities Exchange on July 9.



Set to RTO on the Canadian Securities Exchange July 9

Ticker symbol will be SPR

Patent-pending infusion technology could be an industry game-changer

Sproutly Inc. (SPR:CSE) is due to become publicly traded via a Reverse Takeover (RTO) with Stone Ridge Exploration Corp. on Monday, July 9 on the Canadian Securities Exchange. Prior to reaching this milestone, the emerging cannabis company first entered the market in 2016 trying to be like everyone else, selling and growing high quality cannabis to consumers and opening a dispensary in Eugene, Oregon.

When any new market is created it has a tendency to move in stages. The first stage of the legalized marijuana industry encompassed large scale producers delivering the highest quality product. The marketplace has since matured and companies with 1-5 million square foot grow capacities have a strong foothold in the legalized marijuana market for the foreseeable future. Keith Dolo, the CEO of Sproutly, stepped in 15 months ago, and didn't want to do what everyone else was doing. Instead, he surveyed the landscape and tried to envision what the second wave or next evolution in the cannabis space would be and how Sproutly could stay ahead of the curve.

Sproutly is positioned to take advantage of the upcoming widespread commercialization of marijuana. Its wholly owned subsidiary, Toronto Herbal Remedies, has a 16,600 sq. ft. state of the art production facility that was recently granted an ACMPR License to cultivate. What sets this production facility apart from the competition is its appearance as a pharmaceutical grade production house. The interior resembles more of a modern clean room than a warehouse with lights and wires hanging from the ceiling. The company is currently planning to grow high-quality pharmaceutical-grade cannabis.

Sproutly's newly acquired asset, Infusion Biosciences Canada, (set to close by mid-July) fits in the context of the next wave. Infusion Biosciences Canada is an innovative bio-pharma company that has uncovered a proprietaryprocess called APP Technology that recovers naturally water-soluble cannabinoids that deliver the effects of cannabis within five minutes and dissipate within 90 minutes. Making onboarding and off boarding of cannabinoids predictable and without significant side effects is a major evolution in the cannabis industry.

Sproutly also has entered into a letter of intent to acquire SSM Partners Inc., which is engaged in the commercialization of products and formulation services for APP technology.

Being Different the Key to Surviving the Competitive Cannabis Landscape

The legalization of cannabis has created an influx of new business opportunity over the last few years, where opportunistic entrepreneurs dove into the industry with their wallets first without even looking at profitability or even considering that there might be competition. Everyone thought there would be unlimited demand and they were going to make wheelbarrows full of money. This sudden flood of both public and private companies into this sector has created an oversaturated environment. New businesses looking to enter the space need to identify their market niche, and this is how Sproutly plans to maintain its competitive edge. Sproutly is not like other cannabis companies; it is unique and surgical in its focus.

The cannabis sector has evolved beyond the growers to include other subgroups. The rise in demand for CBD oils created extractors. Legalization of recreational use gave rise to the wholesaler business and retail shops. The licensing and compliance requirements created the need for quick and reliable lab testing facilities. The widespread adoption led to an increase in ingested products which in turn gave rise to the edible shops. The beneficial effect of cannabis has led to the rise of beverages infused with cannabis. Sproutly is positioned to disrupt this next evolution with it patent-pending infusion technology.

Sproutly, priced at the $0.60 level, post-acquisition, will be valued at around $95 million, well positioned with its industry competitors such as Cannabix Technologies (CNSX:BLO) at $161 million, Harvest One Cannabis (TSXV:HVT) $122 million, Benchmark Botanics (CNSX:BBT) $149 million, Delta 9 Cannabis (TSXV:NINE) $115 million and Beleave Inc. (CNSX:BE) at $81 million.

Focus on Patent Pending Infusion Technology

According to the company, Infusion Biosciences' disruptive APP Technology is able to recover water soluble cannabinoids as well as the plant's oil-based bioactive materials using a patent pending process, proprietary reagents and trade secrets.

Access to APP Technology, and, in particular, Infuz2O could position Sproutly, subject to the Government of Canada's authorization of the legal sale of cannabis edible products and concentrates, as a leader in cannabis beverages for regulated markets with a solution to the traditional onset, offset and formulation challenges of cannabis oils in beverage and edibles.

This "water soluble" technology is different from "water compatible" that is out in the market today. On a molecular level, no matter how small you break down the cannabis oils, the old adage "water and oil don't mix" is proven science. The company's technology makes it possible to not only capture the unique taste and effect of particular strains, but mirror the effects of inhaling, without the potential health hazards to an individual user's lungs.

The addition of Dr. Arup Sen, CEO of Infusion Biosciences who will serve as Sproutly's chief science officer and director, and Paul Marcellino, who will serve as VP Business Development, will provide additional experience to the team, especially in scientific research and the commercialization of disruptive technologies.

The acquisition of Infusion Biosciences Canada will also grant Sproutly an exclusive License for Key Regulated Jurisdictions such as Canada, Australia, Israel, Jamaica, Germany and the European Union.

Possible Licensing and Joint Venture Partners

The water-soluble cannabinoid market represents large potential to bottlers that want in on the legalized marijuana market. The technology that produces cannabinoids in this manner could be invaluable to a bottler because the effects of these water-soluble cannabinoids could be quantified. Oils take anywhere from 24 to 48 hours to leave the body and that just isn't desirable. Edibles face the same issues that bottlers face in that it is relatively impossible to measure the effect and get the exact taste. This technology could also be part of a joint venture to make a wide array of edibles.

Sproutly has caught the attention of Jimmy Mengel, the investment director of The Marijuana Manifesto, who wrote on June 15 that "what excites me about the company is the patent they have pending for water-soluble cannabis ingredients. . .Oil is not soluble and is difficult to properly infuse into edible products."

Mengel notes that Dr. Arup Sen has "over 35 years of experience in research and executive management positions at biotechnology and pharmaceutical companies including J&J, Biomet, GCC and Tokuyama Soda of Japan and Sandoz/Novartis. He also was a faculty member at the National Cancer Institute and at the Scripps Research Institute focused on cancer research. . ."

"This is a speculative play with massive upsideespecially as an acquisition target down the line," Mengel concluded.

About Sproutly Inc.

Sproutly is an ACMPR Licensed Producer of cannabis that strives to meet the evolving needs of cannabis consumers across Canada. Its mission is to become a vertically integrated cannabis consumer products company, bringing together pharma-grade cultivation, secured distribution solutions, and advanced technologies to redefine the cannabis industry. Sproutly currently owns and operates a 16,600 sq. ft. production facility located centrally in the greater Toronto area utilizing state-of-the-art production technology and methods designed to pharma-grade standards. Sproutly's strategy is focused on developing and deploying novel technologies to formulate and market unique cannabis products in a rapidly evolving consumer market.

Want to read more Streetwise Reports articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.



1) Dana Salzarulo compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.

2) The following company mentioned in this article is a billboard sponsor of Streetwise Reports: Sproutly Inc. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Sproutly Inc. Please click here for more information.

3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons or their companies interviewed for or quoted in articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this interview, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Sproutly Inc., a company mentioned in this article.