Dr. Arup Sen reports

MILESTONE ACHIEVED: SPROUTLY AND APOLLON FORMULARIES CONCLUDE DUE DILIGENCE, PAVING THE WAY FOR ASSET PURCHASE AGREEMENT AND TRANSACTION FINALIZATION

In a noteworthy development, Sproutly Canada Inc. and Apollon Formularies PLC have completed their due diligence of key assets of the companies. This marks a significant step forward as the companies set the stage for the finalization of the asset purchase transaction.

Pending the requisite exchange and regulatory approvals, Sproutly is poised to acquire all global assets of Apollon. The diligence and efficiency demonstrated in the due diligence phase underscore the commitment of both companies to a seamless and expeditious transaction.

At the heart of this transaction is the consolidation of indispensable synergistic assets, intellectual property and international intellectual property licences.

Apollon, a United Kingdom-based international natural biologics drug discovery company, has intellectual property assets that are at the forefront of innovation in natural therapeutics, integrating cutting-edge artificial intelligence (AI) technology. Dedicated to patient well-being, Apollon recently unveiled the successful outcomes of third party preclinical testing, affirming the efficacy of its oncology products in combating breast cancer and prostate cancer cells.

Specializing in natural cannabinoids, terpenes and mushroom compounds, Apollon's combinatorial formulations, shielded by robust intellectual property protection, focus on addressing critical medical challenges. These formulations span therapeutics for cancer, inflammatory diseases and chronic pain.

Apollon has strategically extended its reach by granting exclusive, royalty-based intellectual property licences and sales agreements to a number of international partners. This expansion spans key regions, including the United States, Canada, Mexico and the European Union, with recent extensions to Morocco, Israel and South Africa.

Sproutly, a pioneering Canadian enterprise, uniquely addresses the development of natural products with its aqueous phytorecovery process (APP). Specializing in proprietary techniques, Sproutly employs APP to extract premium phytonutrients from cannabis and hemp, capturing their complete and proportional profiles. What sets APP apart is its ability to yield true water-soluble formulations of natural nutrients for medicinal applications and adult-use consumer products without resorting to artificial chemical or physical techniques like nanoencapsulation and/or emulsification of extracted oils.

Terms of the Apollon sale

Under the terms of the binding letter of intent dated Sept. 12, 2023, now that the due diligence has been satisfactorily completed by both companies, Sproutly will acquire the assets of Apollon pursuant to an asset purchase agreement. In exchange, Sproutly will issue to Apollon a sufficient number of Sproutly shares so that Apollon will own 49 per cent of the enlarged share capital of Sproutly, posttransaction. If the transaction takes place with the number of outstanding Sproutly shares as are currently in issue, and at an anticipated deemed price of two cents (the price at which the trading of common shares of Sproutly was suspended), the effective valuation of the disposal of Apollon's assets will be $7-million (approximately 4.2 million pounds sterling). If the number of Sproutly shares increases between now and the date of the transaction, the number of shares to be issued to Apollon will increase accordingly.

Dr. Arup Sen, chief executive officer of Sproutly, stated: "I am delighted to announce the successful completion of this due diligence phase with Apollon, marking a key milestone in our journey towards finalizing the asset purchase agreement. The progress reflects our shared commitment to efficiency and diligence in navigating this transformative transaction. The integration of Apollon's cutting-edge AI-based therapeutic formulations development and Sproutly's APP technology to produce water-soluble phytonutrients presents a unique opportunity. This collaboration signifies not just a milestone but a commitment to global innovation and diversification of our product portfolio. I look forward to working with Dr. Stephen Barnhill and his expert team where together, we aim to pioneer the development of unique water-soluble natural biologic products, setting new standards in enhanced bioavailability, innovative consumer products for adult use, therapeutic products that use reduced dosage and extended product shelf life."

Dr. Barnhill, MD, chairman and CEO of Apollon, expressed: "I am thrilled to move ahead with the transaction, enabling Sproutly to acquire Apollon's assets. The convergence of assets held by both companies is poised to showcase that the collective synergy surpasses the sum of individual components. These combined assets encompass a spectrum of synergistic drug discovery technologies, pending patents and proprietary intellectual property. We bring to the table successful preclinical and clinical testing, cutting-edge manufacturing and production laboratories, and a network of exclusive, royalty-based global licences and sales agreements across a number of countries, promising the potential of substantial royalty revenue. Together, we possess the capability to pioneer the development of novel combinatorial therapeutic products. Collaborating with Dr. Arup Sen, I am enthusiastic about shaping what I believe will be a leading natural biologics drug discovery company, focused on creating innovative therapeutic products for imminent international distribution and sales."

It is important to note that the completion remains contingent upon customary closing conditions, as well as exchange and regulatory approvals, and final due diligence for the period to the date of transaction completion. Further details regarding the transaction and its implications for both companies will be disclosed in subsequent updates.

About Sproutly Canada Inc.

Sproutly is pursuing commercialization of aqueous phytorecovery process (APP) technology through partnerships in Canada, the EU, Australia, Jamaica and Israel -- the territories where Sproutly has licensed the rights from Infusion Biosciences Inc. Whole plant water-soluble Infuz2O and BioNatural Oils produced by using APP deliver unique effects of different cannabis strains to produce differentiated consumer products in beverage, edible and topical formulations.

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