TORONTO–(BUSINESS WIRE)–Halo Labs Inc. (“Halo” or the “Company”) (NEO: HALO, OTCQX: AGEEF, Germany: A9KN) is pleased to announce it has entered into two Letters of Intent (the “Agreements”), concerning the proposed acquisition of a controlling interest in a North Hollywood (“NOLA”) cannabis dispensary applicant and 100% interest in a retail management company and leasehold for a total combined consideration of $11.5 million (the “Acquisition”).

The Acquisition will be paid on the completion of designated performance milestones using common shares of Halo (the “Acquisition Shares”). Completion of the Acquisition will see Halo one step closer to a ‘Seed to Sale’ model and full vertical integration in California.

Transaction Highlights

  • $11.5 million acquisition includes a controlling interest in planned flagship dispensary LKJ11 LLC (“LKJ”).
    • The NOLA Store will feature nearly 4,000 square feet, sizeable onsite parking, and a prime location at the northwest corner of Lankershim Blvd. and Hesby Ave.
    • Potential to build a delivery service for Studio City, North Hollywood, Hollywood Burbank and the Eastern San Fernando Valley
    • Cannabis retail management company Crimson & Black LLC (“Crimson & Black”) includes experienced executive team
  • Acquisition to be paid in full using Halo stock with a majority paid upon the completion of designated milestones.
    • Preserves Halo’s cash position
    • Will enhance the Company’s statewide high-growth plan

Los Angeles is a limited license market and one of California’s largest markets for cannabis products.

LKJ is expected to commence retail sales in the first half of 2020. Halo anticipates this vertical integration will increase revenue and gross margins across all Californian operations. LKJ also provides a foundation to build on for future acquisitions of scalable dispensaries. The Company expects to sign and close the acquisition in Q1 2020.

Commenting, Halo CEO and Co-Founder Kiran Sidhu said, “With the planned acquisition of LKJ and Crimson & Black, Halo will accomplish an important step in its ‘Seed to Sale’ vertical integration strategy. Once the NOLA dispensary is licensed and operational, California will mark the first sales territory in which Halo achieves this goal. Our aim is to adopt this same commercial approach in other regions, across North America and internationally.”

LKJ LLC and Crimson & Black Acquisition

Based in Henderson, Nevada, and operating in Los Angeles County, LKJ is building one of North Hollywood´s largest retail dispensary locations with nearly 4,000 square feet and significant onsite parking. Located in the heart of North Hollywood, the dispensary is situated on Lankershim Blvd. and Hesby Ave., which are heavily transited streets with significant vehicle and pedestrian traffic.

On closing of the acquisition, Halo will own Crimson & Black which features an experienced retail management team and additional employees to staff the North Hollywood dispensary.

Upon the dispensary’s opening, Halo expects to commence direct retail sales of its own branded and white-labeled cannabis products, fueling LKJ’s sales. Halo will leverage manufacturing in Southern California at Cathedral City, and cultivation procurement, manufacturing, and distribution operations in Northern California, to scale up this direct to dispensary business swiftly.

Halo’s ‘Seed to Sale’ Strategy

The dispensary’s opening will mark Halo’s achievement of its previously announced ‘Seed to Sale’ business plan in California. By controlling cannabis cultivation, manufacturing, distribution, a retail dispensary and management company, Halo expects to achieve greater economies of scale and higher profit margins through vertically integrated operations. The dispensary’s sales are expected to be a meaningful contributor to Halo’s revenue and EBITDA growth in 2020 and beyond, as the Company builds on its position as an industry leading cannabis company.

Further afield, Halo plans to pursue similar ‘Seed to Sale’ strategies in other sales territories, both in North America and internationally. To this end, Halo announced on 24 December 2019 a binding Letter of Intent to acquire Canmart Limited, a UK licensed importer and distributor of medicinal cannabis products.

Transaction Detail

Under the Acquisition, Halo will acquire 66.67% of outstanding membership interests of LKJ and 100% of the outstanding membership interest of Crimson & Black.

Shares will be priced at the 30-day VWAP and the majority will be released from escrow in milestone-based payments subsequent to closing.

Upon closing, $2,000,000 of Halo Common Shares will be issued directly, subject to trading restrictions:

  • $1,000,000 will be freely tradeable in accordance with securities laws;
  • $1,000,000 will be subject to a customary pooling agreement whereby for one year the aggregate shares sold may not exceed 10% of the prior trading day’s total volume.
  • $9,500,000 of Halo Common Shares will be issued and held in escrow and issued to the applicable vendors as milestones are achieved:
    • $4,750,000 will be released once the dispensary is licensed by all applicable state and local regulatory authorities and the first legal sale of cannabis is made;
    • and $4,750,000 will be released upon securing a lease for the dispensary on a term of at least 5 years.

The sellers are responsible for all build out / site transfer costs and shares held in escrow will back-stop the sellers’ indemnification obligations.

Completion of the Acquisition is subject to, among other things, the negotiation and execution of mutually agreeable definitive acquisition agreements and related documents and the satisfaction or waiver of any conditions precedent to the consummation of the Acquisition (including the receipt of any requisite regulatory, stock exchange approvals and third-party approvals).

About Halo

Halo is a global cannabis extraction company that develops and manufactures quality cannabis oils and concentrates, which are the fastest growing segments in the cannabis industry. Halo is a global leader in cannabis oil and concentrates, having produced over 4.5 million grams of oils and concentrates since inception. The Company has expertise across all major cannabis manufacturing processes, leveraging a variety of proprietary processes and products. The forward-thinking company is led by a strong management team with deep industry knowledge and blue-chip experience. The Company is currently operating in California and Oregon, as well as in Nevada with our partner Just Quality, LLC, and in Lesotho with the 205-hectare Bophelo cultivation zone.

With a consumer-centric focus, Halo will continue to market innovative, branded, and private label products across multiple product categories. Halo recently acquired Dispensary Track platform which will alleviate customer flow constraints experienced by dispensaries and enable direct consumer interaction.

For further information regarding Halo, see Halo’s disclosure documents on SEDAR at

Cautionary Note Regarding Forward-Looking Information and Statements

This press release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only Halo’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of Halo’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. The forward-looking information and forward-looking statements contained herein may include, but is not limited to, the acquisition and merger into Halo of LKJ11 LLC and Crimson and Black, LLC.

By identifying such information and statements in this manner, Halo is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from those expressed or implied by such information and statements. In addition, in connection with the forward-looking information and forward-looking statements contained in this press release, Halo has made certain assumptions. Although Halo believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and Halo does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to Halo or persons acting on its behalf is expressly qualified in its entirety by this notice.


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