Sproutly (OTCQB: SRUTF) reported its first-quarter results and also noted in its filings that it was a going concern due to an accumulated deficit of C$78 million and a working capital deficit of C$7.1 million. The company reported (in Canadian dollars) a net loss of $1.9 million for the quarter ending May 31 and revenue of $25,875 versus zero for the same time period in 2019. Expenses were $869,079 for the quarter versus $2.8 million for the same time period last year. The company said it cut staffing by 75%.
On May 31, 2020, the company said it had current assets of C$1,341,555 to settle current liabilities of C$8,497,843. The company wrote that it “May need to reschedule its current debt obligations or obtain further financing in the form of debt, equity or a combination thereof for the next twelve months. There can be no assurance that the existing debt obligations will be rescheduled or that additional funding will be available to the Company, or, if available, that this financing will be on acceptable terms.”
“We have continued to make progress with our Business Transformation Plan through the first quarter of this year despite the ongoing impact of the COVID-19 pandemic,” said Dr. Arup Sen, Chief Executive Officer of Sproutly. “We are now able to leverage the success of Infusion BioSciences Inc. who has launched beverages using hemp Infuz2O in the US market with Kalo sparkling beverage and RI JUICE fresh fruit juices, to focus on using cannabis Infuz2O and BioNatural oils in unique Cannabis 2.0 products in Canada followed by other international markets.”
Infusion Biosciences has provided a letter of intent to invest up to an additional $855,000. The investment will be made by way of issuance of convertible debentures with a 15% interest rate. The company also completed a non-brokered private placement of 1,500,000 units of the company at a price of $0.07 per Equity Unit to raise gross proceeds of $105,000. The company amended the maturity date of its previously issued convertible debentures from October 24, 2020, to April 24, 2021 and reduced the conversion price from $0.105 to $0.06 per share.
The company stated that THR entered into cannabis supply agreements with the provinces of Manitoba and Saskatchewan, through the Manitoba Liquor and Lotteries Corporation and the Saskatchewan Liquor and Gaming Authority, respectively. These are the 3rd and 4th provinces in Canada to carry the company’s CALIBER branded indoor-grown dried flower products. It also entered into a cannabis supply agreement with the province of British Columbia through the British Columbia Liquor Distribution Branch as well as completing initial sales into the province. This is the 5th province in Canada to carry its CALIBER branded indoor-grown dried flower products.