Sproutly Canada Inc. Technology-Powered Cannabis Products Company (CSE: SPR) (OTCQB: SRUTF) (FSE: 38G) Management Presentation October 2019 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 statements). Except for statements of historical fact, information contained herein and future events could differ materially from those anticipated in such statements. 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 looking statements are provided to allow potential investors the opportunity to reliance on forward-looking statements. We seek safe harbor. understand management’s beliefs and opinions in respect of the future so that they may use such beliefs and opinions as one factor in evaluating an investment. This presentation and the material contained herein are confidential and are not to be disclosed to the public. This presentation is for information purposes only and may not The material assumptions upon which forward-looking statements in this presentation be reproduced or distributed to any other person or published, in whole or part, for are based include, among others, assumptions with respect to: the Company's ability any purpose whatsoever. This presentation does not constitute a general to access financing on favorable terms to continue with its expansion plans and advertisement or general solicitation or an offer to sell or a solicitation to buy any develop its business; the Company’s ability to obtain or maintain the required securities in any jurisdiction. Such an offer can only be made by prospectus or other regulatory approvals; the Company's ability to attract and retain customers; the authorized offering document. This presentation and materials or fact of their continuation of executive and operating management or the non-disruptive distribution or communication shall not form the basis of, or be relied on in connection replacement of them on competitive terms; and stable market and general economic with any contract, commitment or investment decision whatsoever in relation thereto. conditions. The Company makes no representation that reasonable business people in The information in this presentation is not intended in any way to qualify, modify or possession of the same information would reach the same conclusions. Although we supplement any prospectus, listing statement, information circular or other believe that the assumptions underlying forward-looking statements are reasonable, information disclosed under the corporate and securities legislation and stock they may prove to be incorrect and we cannot assure that actual results will be exchange policies of any jurisdiction relating to Sproutly, Inc. No securities commission consistent with such statements. Given these risks, uncertainties and assumptions, you or similar authority in Canada or any other jurisdiction has in any way passed upon the should not place undue reliance on these forward-looking statements or the adequacy or accuracy of the information contained in this presentation. information contained in such statements. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or result expressed or implied by such forward-looking statements, including the Company's requirement for additional funding to continue its expansion plans in Canada and the United States; the Company’s failure to obtain and/or maintain the required regulatory licenses for its businesses; the Company's failure to retain key personnel and hire additional personnel needed to develop its business; And the Company's business practice reputation being negatively affected by client or user NOT FOR DISTRIBUTION; NO OFFERING complaints or negative publicity. Sproutly (CSE:SPR) | 2
Sproutly: Technology-Enabled Cannabis Products Infuz 2 O Licensed Production Superior Plant-to- Moosehead Technology Facility Product Economics Joint Venture _______ _______ _______ _______ Exclusive licensee of Fully-operational with annual Up to ~90% total cannabinoid Commercial application Infusion’s patent -pending APP capacity of 1,400 kg high- recovery in Infuz 2 O and Oil validated via partnership with Technology in key regions quality cannabis flower Solution Moosehead to produce cannabis infused beverages Controllable onset of effects APP Technology processing Highly scalable with low cap- within 5 mins and offset of capacity of up to 10,000 kg ex and op-ex requirements Significant development effects within 90 min annually towards launching beverage products post-legalization Sproutly (CSE:SPR) | 3
Key Milestones Since Going Public Received Acquired Infusion Completed $20.7 Million Received Processing/Oils Discovered Breakthrough Execute JV Implementation Commence Sales of Cultivation License Biosciences Canada Bought Deal Financing License by Health Canada Testing Methods to Detect Documentation; Cannabis Oils and Cannabinoids in Water (1) by Health Canada Announce JV Name and Edibles August 2018 October 2018 March 2019 strategy September 2019 June 2018 July 2018 August 2018 February 2019 April 2019 CSE Listing Entered into Exclusive First harvest at THR Facility Signed Definitive JV Docs Receive Flower Commercial Launch Commence Sales of Completed Technology License with MTI Completed with Moosehead Breweries Sales License of Caliber Brand Cannabis Beverages and Commence with Moosehead JV Flower Sales Sproutly (CSE:SPR) | 4 (1) Finalizes Infusion Biosciences Canada Inc. Transaction
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% $12.63 55% 55% $6.49 35% 29% Revenue / $4.19 $ of Production Cost 2014 2018 2019 2022 Concentrates, Edibles, Dried Flower Concentrates Edibles Flower 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. Sproutly (CSE:SPR) | 5 Source: BDS Analytics, RBC, Grizzle, Deloitte
Cannabis Vaping Health Crisis – Future Outlook Uncertain Cannabis Vape Crisis - In the Media Potential Catalysts in Canada 1. Driving more consumers to the legal market (away from the black market) ▪ Consumers will be more aware and incentivized to purchase regulated products to mitigate the chance of consuming harmful chemicals. 2. Current and likely vape users to shifting to proven methods of consumption ▪ Consumers may switch to other consumption methods (flower, edibles, beverages etc.) with more certainty around the effects to their health. 3. More stringent vaping regulations/delay of product rollout/ban on vapes ▪ Government will act in the best interest of citizens’ health; may increase regulations causing delays or ban the use of cannabis vapes completely. By the Numbers – Confirmed Vaping Illnesses in the U.S. (1) 805 Confirmed or probable cases 46 States affected 18 Confirmed deaths of victims under the age of 83% 34 States where deaths have occurred The recent breakout of pulmonary illnesses linked to cannabis vapes in the U.S. raises uncertainty to the future of vaping products in Canada. The negative backlash (health risks, government delays/bans) is expected to increase the popularity of cannabis beverages in the meanwhile. Source: Bloomberg, CIBC, USA Today, Williamette Week, Washington Post Sproutly (CSE:SPR) | 6 (1) As at October 3 rd , 2019
Cannabis Beverage Market Estimate 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. Sproutly (CSE:SPR) | 7 Source: Molson-Coors
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