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VANCOUVER, BC, April 30, 2019 –Sproutly Canada, Inc. (CSE: SPR) (OTCQB: SRUTF) (FSE: 38G) (“Sproutly" or the “Company”), and OCC Holdings Ltd., an affiliate of Moosehead Breweries Limited (“Moosehead”), are pleased to announce that they have entered into a definitive agreement (the “Joint Venture Agreement”) to form an exclusive joint venture (the “Joint Venture” or the “JV”) to develop, produce, and market non‐alcoholic cannabis-infused beverages in Canada using Sproutly’s proprietary, naturally produced water soluble cannabinoids known as ‘Infuz2O’. Both companies will bring their respective strengths to the joint venture to develop a line of great tasting cannabis beverages featuring a rapid onset and offset effect unique to the category. Sproutly will host a conference call with Keith Dolo, CEO, Sproutly Canada and Matthew Oland, Moosehead executive and incoming CEO of the JV, at 9:30am Eastern Time on May 1, 2019.

Joint Venture Highlights:

  • Partnership with the Oldest and Largest Independent Brewery in Canada
    • Over 152 years of brewing experience through six generations of family ownership
    • More than 140 million cans/bottles of beer sold annually throughout Canada, the United States and in 15 other countries around the world
    • Oland family’s proven ability in building, marketing and selling industry leading beers such as Moosehead Lager, Moosehead Radler, Alpine, and Hop City Barking Squirrel

 

  • Competitive Advantage Driven by Infuz2O
    • The JV beverages can deliver the cannabis effect as early as 5 minutes and last up to 90 minutes, providing an edible cannabis experience similar to traditional flower cannabis without the need to inhale smoke
    • Ability to address the industry challenges of overconsumption of oil-based edibles and beverages
    • Capability to produce a clear cannabis beverage that is much easier and faster to formulate than its competitors who will be using emulsifiers, encapsulation or chemical modification techniques
    • Ability to deliver functional beverages that address a “need state” by producing cannabis strain specific experiences
    • Natural Infuz2O process allows for a premium consumption experience and taste profile

 

  • JV Well Positioned to Enter Cannabis Beverages Upon Legalization
    • Moosehead’s beverage experience and R&D formulation capabilities will ensure that the cannabis beverages produced will be premium in quality and have a great taste profile
    • Moosehead’s established operational infrastructure will allow the Joint Venture to fast track its go-to-market strategy
    • Sproutly’s cultivation facility and processing license will advance the formulation work that has been completed to date as well as production scale up

 

  • Alignment of Interests
    • The Joint Venture is structured as a 50/50 equity ownership
    • Matthew Oland, one of Moosehead’s senior executives and Oland Family member, to lead the Joint Venture as Chief Executive Officer
    • Moosehead to provide infrastructure support such as R&D, operations, procurement,   finance, and distribution
    • Sproutly to provide proprietary custom compositions using Infuz2O for cannabis beverages in Canada
    • JV will have exclusive rights to utilize Infuz2O for cannabis beverages for a period of 5 years with a possible 2-year extension
    • Ability for the JV to enter the European market once recreational cannabis use is legalized

 

“With the anticipated legalization of edibles in Canada later this year, Moosehead has made the strategic decision to enter the cannabis beverage market. As one of the oldest brands in Canada and a leader in the beer category, we believe we are uniquely positioned to be a leader in the cannabis beverage category.” said Andrew Oland, Chief Executive Officer of Moosehead. “As a 152 year old company spanning six generations, we are very selective about new business opportunities. After a significant amount of due diligence on Sproutly’s APP technology and Infuz2O water soluble cannabinoids vs other competitive technologies, we are excited to announce this joint venture. With their advanced technology and our long-standing product development experience, we expect to bring to Canadian consumers cannabis beverages that address the major issues currently limiting appeal of this category in other markets; a beverage that: 1) actually tastes good; and 2) provides an immediate and controllable cannabis experience lasting up to 90 minutes.”

“Moosehead is a truly iconic brand and we are very excited to partner with a company that possesses such deep-rooted Canadian heritage and over 152 years of history in the beer industry. Partnering with a company of this caliber is a strong validation of APP Technology and Infuz20.” commented Keith Dolo, Chief Executive Officer and Director of Sproutly. “This partnership with Moosehead marks an important milestone in Sproutly’s mission of delivering a safe and consistent whole plant experience from cannabis, with a lead position in the beverage market. We have developed a relationship with Moosehead built on trust and our shared vision of creating safe, responsible and high-quality cannabis beverages and we look forward to making this a reality for Canadian consumers”, added Dolo.

“After careful analysis of the cannabis industry and the cannabis beverage opportunity in Canada, we believe that Moosehead and Sproutly together are well positioned to become a significant player in the category.” said Matthew Oland, incoming Chief Executive Officer of the Joint Venture. “The JV’s ability to leverage Moosehead’s rich history of building adult-beverage brands, and its established R&D and operational infrastructure, will enable the JV to bring great tasting cannabis beverages to Canadian consumers. The Infuz20 technology delivers a natural cannabis beverage experience, with an onset and offset time similar to traditional flower cannabis, without the need for chemical modification. We believe this will be a game changer for the sector.”

Terms of the Joint Venture

The Joint Venture will be structured as a standalone company with its own board of directors and management team. Sproutly and Moosehead will each hold a 50% interest in the JV and have the right to nominate 3 directors. Moosehead shall appoint the Chief Executive Officer and Sproutly shall appoint the Chairperson of the board of directors of the JV.

Sproutly will provide Infuz20 exclusively to the Joint Venture in Canada for the purpose of producing cannabis beverages (excluding hemp) for a period of 5 years (the “Exclusivity Period”), such Exclusivity Period being subject to a potential extension based on the Joint Venture reaching certain revenue targets.

The formation of the Joint Venture is subject to the satisfaction of certain conditions, including the execution and delivery of various transaction agreements, governance documents and supply agreements. The parties expect to form the Joint Venture on or before May 31, 2019.

Financial Advisor

Novus Merchant Partners Inc. acted as the exclusive financial advisor to Sproutly in connection with the Joint Venture.

Conference Call Information

Sproutly will host a conference call with Keith Dolo, CEO, Sproutly Canada and Matthew Oland, Moosehead executive and incoming CEO of the JV, at 9:30am Eastern Time on April 30th, 2019. Please dial in 5 – 10 min prior to the scheduled start time.

Calling Information:

Canada/USA TF: 1-800-319-4610

International Toll: +1-604-638-5340

Presentation:

A presentation related to the Joint Venture is available of Sproutly’s website www.sproutly.ca as well as at the download link below.

Download link: <a href="http://bit.ly/2IQg1Y5">bit.ly/2IQg1Y5