After the recent run up on Sproutly Canada, Inc. (CSE: SPR) (OTCQB: SRUTF), I decided I should hear what was going on with the company brass. It’s not typical that you see a rather bland statement from a company – that has been clear about its aim from the beginning – send a stock on such a nice run.

But as I wrote at the end of last month, that is just what happened. I called CEO Keith Dolo to get the skinny on what exactly happened – and what is happening – in the meantime.

Here’s my talk with him. It’s a long interview, but I urge you to read the entire piece…

Jimmy Mengel: Hello Keith, great to be with you. Congratulations on the recent advances with the company. It looks like things are going according to plan.

Keith Dolo: Yes! It’s a busy time. We’re working on our kind of announcement on our partnership, and then that’s a whole business model amongst itself, right? You’re structuring a new partnership with a company that’s different from your own existing company.

We have that, we’ve got a bunch of European stuff going on, and then, on top of it, we’re trying to run a cannabis company, too.

So it’s busy. Yep busy, busy. But, hey it’s good. Everybody’s excited about what we’ve got going on. It’s nice to start actually having products looking like they’re gonna be ready to go at some point versus being a story. It’s good. People are starting to see all their hard work come together.

Jimmy Mengel: You know, I think that’s excellent. When I first started talking to you, it was like a story. You had the proprietary beverage business, and it looked like you had the ideas, and the science. It’s really fun to watch how things are consolidating and the interests coming in from larger positions.

I guess for today, can you kind of give me the entire rundown? Because, I was pretty shocked when I saw that you had to put out a press announcement about the potential deal.

Keith Dolo: Yeah, for sure. I wanted to say thanks for writing that story as well. I got a chance to have a look at it, so I appreciate you putting pen to paper on us, every time you do. You always speak pretty eloquently, which is good to see as well. So, thank you for that.

Jimmy Mengel: Oh, of course. I just write what I think, and I’ve been very impressed with your company for a while now.

Keith Dolo: Well, to answer your question, I think it was a combination of a number of factors. Our stock had been kind of flat for about four months. It’s not a bad thing. The stocks went up and down and, we kind of stayed flat, which is always a good thing. There’s still support out there and people aren’t selling off.

I think everybody was waiting for us to become a company, unfold that story that we had been telling for so long. I think there was a lot of investors, a lot of US investors, too, that we’d kind of connected with over the last three months, heard our story once, heard it twice, but it takes a catalyst to actually buy stock sometimes.

I think it just lined up, from a technical standpoint, that our stock had a lot of support. There was a little bit of sell-pressure on the stock leading up to that week that it took off, that kind of lifted its foot off of us.

The stock took off, 5 or 10 or 15 percent. I think it just caught the eyes of people that had been watching it on their tickers for a little while, and thought, “There must be something coming.” So, they jumped on and bought. It was just that kind of snowball bandwagon effect that kind of just ran it rampant for about two or three days.

IIROC (Investment Industry Regulatory Organization of Canada) halted our stock, not at our request, and made us put out a release because we had to disclose any kind of material transactions to IIROC. We discussed with them, and they wanted us to come to market indicating that there was a potential beverage deal that was coming down the road.

We certainly didn’t want to put it out there. We don’t feel it got leaked, in terms of news, anywhere. It was a perfect timing and a perfect storm.

We put out that release and tried to keep it as basic as possible so as not to kind of point anybody in the direction of who it may be. As you know, IIROC also don’t allow you to have too many descriptors in any kind of generic press release, as well. They definitely took pen to it, and we got the beverage company to take pen to it, too.

We put it out and, the stock ran another 27% high, on the Friday, 17 million shares traded in Canada and the US and all the exchanges. We were about 500,000 the day before that, so it certainly ran up pretty aggressively.

That’s good. Now, we just actually have to deliver on this story that we’re putting together.

But, we’ve been working pretty hard for the last six months on a number of different deals. I think we’re finally at that point we’re hoping to be able to announce something in the next coming weeks here.

That’s kind of the validation we’ve been waiting for. We knew we were a great story, we knew our technology is incredible. When you put it in front of a beverage company that’s been around for decades and generations that believes it is the best one they’ve seen over two years of due diligence into this space and has looked at 50 different technologies and wanted to jump at ours when they saw it…

It just really proves out everything that Infusion Biosciences has been working on and Dr. Sen and then myself over here at Sproutly. We’re excited to validate the technology and then really kind of launch the company forward.

Jimmy Mengel: I think that was really interesting because I remember reading the press release … You guys were launching the CALIBER brand, and it was really just one sentence at the end, “Oh by the way, we’re still looking at this.”

Keith Dolo: I think we have a lot of licensing … and then the very next day, on Friday that week, we got our oil processing license from Health Canada. That’s something we’d been working very hard on for about eight months to get that license and then all of a sudden, out of the blue, after three days of trading, we get another license granted at 3:00 on a Friday.

So it’s kind of snow-balling right now, which is good. We’ve had a lot of things stacking up, and we’ve probably got three months of solid deliverables back to our shareholders coming that we’re gonna let everyone know about.

We weren’t necessarily the company that wanted to come out with kind of intangible and superficial press releases, like I honestly believe many of the cannabis companies did over the last six months. We wanted them to stack up to be substantial news that people felt “Wow, these guys have actually been working their butts off on the back-end,” versus just putting out a press release to keep everybody happy on a seven day new rotation kind of thing.

Jimmy Mengel: That’s what I liked about you guys. It did seem like it was just bubbling under the surface, and you were picking your moment. That’s just been great news left and right.

So, you’ve got CALIBER, the new cannabis brand – premium flower basically, right?

Keith Dolo: Yep, yep.

Jimmy Mengel: You have the potential … I know you can’t say much, but … the potential beverage deal. You’ve got the oil license. And now I also saw that you have hired Ogilvy, the most famous advertising agency in the world. Like I started to say, I remember when I first started covering you guys, I couldn’t find anything else about you, like no one seemed to be covering you because they just didn’t know the story, not had not heard about you, but … hiring someone like Ogilvy, it seems like that’s a pretty damn good way to get the word out.

Keith Dolo: We really recognized early on that at the end of the day, brands are gonna win out. We didn’t wanna go the white label solution and make our oils and our water soluble solution for other people. We wanna participate in the brand. Because if somebody steps in, like a Coke down the road, or a big beverage company, they buy brands. Like Vitamin Water, it sold for billions on 380 million dollars annual revenue. And that’s because it’s a brand that they wanted to own in their portfolio.

You have to participate in the brand. Branding is literally what is going to win out. With the regulations in Canada that really suppress our ability to truly market and promote your brands the way that you can in the US. It’s even trickier with Health Canada’s regulations here. And then on top of that, as we expand into other countries, in the UK or in Australia or Jamaica, having that brand and marketing architecture that really pulls in Sproutly and our Infuz2O and our water beverages and our other types of beverages and then eventually our CALIBER brand and our edibles and making sure that all coordinate and act like a well-oiled symphony, versus just a bunch of trumpets blasting out their different things and throwing stuff against the wall and hoping it sticks, is gonna be paramount to make sure that your company actually lasts over the next 15 to 20 years.

We are very excited that they were willing to take us on as a client. It’s going to be a great partnership. We’re excited to see what they’re able to put together for us.

Jimmy Mengel: That is exciting. I guess the last thing I was going to ask about … it looks like you’ve added a lot of people to the leadership team … straight out of all of the industries that you need to be hitting.

I saw someone from Pernod, somebody else from Anheuser-Busch InBev. Can you talk briefly about bringing those people on and what that actually does in terms of your exposure to these much larger businesses?

Keith Dolo: It hits a number of issues. So, one, you’re right, it opens us up to conversations through relationships that these people have garnered, like Constantine Constandis, ex CEO of Corby here in Canada and then president of Pernod Europe and CEO of Pernod Asia. The relationships that he’s garnered over the last 25 years are incomparable to anybody that’s never been in that type of position.

The other major attractor was a gentleman that joined our board, Mike Bellas. Mike is the chairman and CEO of Bev Marketing Corp out of New York. Well, Bev Marketing Corp is one of the largest, kind of top three beverage marketing companies on a global scale, supporting every Fortune 500 beverage company around the world.

Just the circle that he runs in gives us the ability … Mike was actually very close with Dr. Sen from Infusion Biosciences and really believed in the technology that we’ve acquired. It was a very good marriage of his background and skillset onto our board of directors. So that was good.

On top of that, not even just opening up the connections those people have, running a cannabis company in the future here, you are gonna need to understand how consumer packaged goods companies operate.

Many of the cannabis companies are built with gentleman like myself, or ladies like myself, that come from a very disciplined in the corporate world, either people that were accountants or people that were lawyers or people that were bankers. In order to run these companies efficiently down the road, you need people that understand consumer packaged goods, margins, distribution, branding, marketing. I think the company that you’ll really see evolve and keep their head above water and really put the best-valued products out there are the people that will build their management teams.

It’s going to be a shift, it’s gonna be a way for the people that built these companies to the people that need to run these companies moving forward, because there’s going to be a lot of tough times as the cannabis industry becomes more commoditized, and you’re going to need people like our president, Bryan Semkuley, from AB InBev and Kimberly-Clark, or my VP of marketing sales who came from SC Johnson as Director of Sales and before that, PepsiCo. Those are the people that are gonna lead this industry to its next level if it’s ever gonna kind of break out of the stigmatism of being kind of in the gray market, which it’s still fighting a little bit.

The teams and the people that look toward management teams being bolstered by those types of individuals are the ones that I feel are gonna win out. It’s already proven over the last kind of four months of having all these people involved in our company.

Jimmy Mengel: I think that was pretty clear, because I’ve talked to a lot of people who are like “Oh, I just wanna buy the big producers.” As it does become commodified, those margins look pretty rough if you’re trying to just sell flower, so I see a lot more people getting into oils, getting into branding beverages, and pharmaceuticals as well.

I think you’re dead-on in terms of branding. It’s just like a beverage company or a liquor company. It’s all about distribution, shelf-space, and brand recognition. It looks like you guys are on the right track.

Keith Dolo: I think companies are going to have to pick and choose their place and time. No organization around the world is as vertically-integrated as or no industry is as vertically-integrated as the cannabis companies claim to be.

There’s not a beer company here in Canada I think that owns the farmers and the land that grows the barley and then buys the hops from their own … You play your piece within the value chain and right now as the industry expands, the guys that are really leading the charge are the guys that have the two million square feet and are capitalized, but at the end of the day, I think they’re gonna have to pick their place within the value chain, and you’ll have people that focus on the extraction piece and then that’ll become commoditized.

What baker ever out there that makes bread actually owns the field that they harvest the wheat in as well? It just doesn’t happen. You gotta start breaking it down in terms of where you’re gonna play in the space.

Jimmy Mengel: Alright, awesome. Well I think that’s a pretty good update, this is exactly what I hoped would happen. It’s actually fun when it actually does happen.

Keith Dolo: Yeah, yeah it’s fun. The next 30 days are gonna be kind of pivotal in the company, so keep an ear to the ground and keep a watch on our stock for kind of announcements that come up on the short term here.

We really are validating everything that we built in 2018, and 2019 is kind of that year of delivery and this is just the start of it, so we’re excited to tell the story too.

Jimmy Mengel: Cool Keith. Well I appreciate the time and I will definitely be in touch. Congrats with everything that’s been going on. It’s very exciting.

Keith Dolo: Yep. Sounds good, Jimmy. Have a wonderful day.

Jimmy Mengel: Alright, likewise, take care.

We’re loading up on Sproutly Canada, Inc. (CSE: SPR) (OTCQB: SRUTF)in anticipation of a big buyout, and a rollout of the new branding.

Godspeed,

Jimmy Mengel

Investment Director, The Crow’s Nest