On November 26, 2019 Absolem Health announced that it has entered into an L.O.I with Arev Brands (AREV.C) to “develop and produce mushroom extracts”, and potentially to collaborate to sell “mushroom-based products.”
“Absolem Health is the parent company of One Up Pure Energy, which packages snacks infused with mushrooms like Reishi, Cordyceps and Lion’s Mane as dietary supplements,” wrote Equity Guru’s Ethan Reyes. “Lion’s mane can provide noticeable improvements in focus and concentration, reishi can provide anti-anxiety properties and cordyceps can enhance physical performance and libido.”
According to the Journal of Restoritive Medicine; lion’s mane, is abundant in bioactive compounds and anti-inflmatory properties. These properties promote nerve growth factor gene expression and neurite outgrowth, providing promise for the treatment of Alzheimer’s and Parkinson’s diseases.
“One Up Pure Energy is currently focused on functional mushrooms, and working to supply wild BC mushrooms” continued Reyes, ‘psilocybin, a psychedelic compound found in ‘magic mushrooms’ also looms heavily over our discussion.”
A press release by Fortune Business Insights on October 21, 2019 entitled, “Why the Functional Mushrooms Market is set to explode…” states that it has released a report predicting that the global functional mushrooms market is expected to gain momentum from growing awareness regarding the health benefits of mushrooms. According to the report summary, “Functional mushrooms due to their several functional properties can be utilized in the production of functional food products, medicines, and cosmetic products. The product is rich in antioxidants hence can offer skin-enhancing benefits, aid immune and digestive function, and can balance the energy level. Anticipated growth in consumption of dietary supplements to remain healthy and disease-free is projected to propel the demand for functional mushrooms during the forecast years. Rapid urbanization, changing lifestyles, and increasing per capita income of people is anticipated to aid the growth of the global functional mushrooms market in the upcoming years.”
“As the cannabis market booms, another drug may soon follow in its footsteps — psilocybin mushrooms.” Researchers at New York University found psilocybin mushrooms caused a ‘rapid and sustained’ reduction in anxiety and depression in patients with cancer.
According to The New York Times, on September 4, 2019 Johns Hopkins Medicine announced the launch of the Center for Psychedelic and Consciousness Research to study compounds like LSD and psilocybin to treat a range of mental health problems, including anorexia, addiction and depression. The center was established with $17 million in commitments from wealthy private donors and foundations. CNBC says that investors are starting to bet big on psychedelic medicine with ATAI Life Sciences completing a $40 million round in March 2019 at a $240,000,000 valuation.
The Transaction between Absolem and Arev involves two stages.
- Absolem will pay $100,000 to Arev; $20,000 in cash and $80,000 by issuing Arev of common shares of Absolem at $0.075.
- Arev will spend $40,000 on mushroom-specific extraction equipment (kicking in $20,000 of its own money).
- Arev will conduct legal mushroom extraction research
- Extraction Research costs will be paid by Arev up $100,000
- Absolem will own the intellectual property derived from the research
- Best efforts by both parties to complete extraction research by April 30, 2020.
Following the Extraction Methods Research executed in Stage #1, “at Absolem’s option, Absolem and Arev may form a joint venture for the production, development and sale of mushroom extracts and mushroom products.”
“We are excited about the global growing interest in functional mushrooms,” confirmed Ken Kuiper, CEO of One Up, “and intend to become leaders in commercial extraction. We believe with AREVs expertise in extractions we will be successful in doing so.”
Absolem Health is not currently publicly traded.
The share structure (which we will drill down into in another article) does not provide “quick exits” for seed investors. The shares are locked down tight.
So Absolem’s pitch is, “Believe in our long-term strategy, or don’t invest. Looking at the “Project Time-Line” – a summer IPO seems likely.
“My passion and goal is to improve access to the health benefits of functional mushrooms by scaling up One Up Pure Energy into an international brand,” Kuiper recently told Reyes. “As these mushroom extracts gain popularity, they are mainly available as powdered extracts, capsules and drink mixes. We are providing a convenient, to-go, ready to eat snack product, as well as our own unique line of performance enhancing supplements.”
According to One Up Pure Energy’s investor deck, the company is eye-balling using mushrooms as a gateway into the exploding “alternative meat” market. Utilizing the mycelium of the mushroom, which is essentially the root structure of the mushroom, the goal is to create a meat alternative. Mycelium’s long strands of fibre are similar to muscle strands in meat products. In addition, some mushrooms are naturally high in protein content.
The global edible mushrooms market is expected to grow at a CAGR of 7.95% to grow to US$62 billion by 2023, increasing from US$42 billion in 2018, according to a report by Research and Markets.
“The team at Absolem has identified the next big trend in natural medicines and we are delighted to be part of this innovation,” stated Michael Withrow, CEO of Arev, “This collaboration will lead to another line of branded ingredients.”
Further details on the transaction will be provided as soon as all terms of the Agreement have been finalized between Arev and Absolem.
– Lukas Kane
Full Disclosure: Absolem Health is a Shroom Stocks marketing client.