Halo Closes Acquisition of Winberry Farms - Halo Collective

Halo Closes Acquisition of Winberry Farms

Not for Distribution to U.S. Newswire Services or For Dissemination in the United States

All figures in USD unless otherwise noted

Toronto, Ontario – December 18, 2020 – Halo Labs Inc. (“Halo” or the “Company“) (NEO: HALO; OTC: AGEEF, Germany: A9KN) is pleased to announce that, further to a definitive agreement effective November 18, 2020 (the “Debt Purchase Agreement”) with Halo Winberry Holdings, LLC (“Halo Winberry”), Evolution Trustees Limited, as sole trustee of SP1 Credit Fund (“Seller”), Herban Industries OR LLC, (“Herban OR” or “Winberry”), and Herban Industries, Inc., the Company, through its indirect wholly-owned subsidiary Halo Winberry, has closed its acquisition of certain secured debt of DionyMed Brands Inc. owed to Seller and guaranteed by Herban OR in an aggregate outstanding amount of approximately $18,739,588 (the “Purchased Debt”), which is in default.


Figure 1: Nestled in the foothills of the Cascades along Winberry Creek, Winberry Farms is the ideal location to produce top-quality cannabis. View full video: https://youtu.be/ZBWo6pPuL9I

Transaction Details

  • As a result of the acquisition of the Purchased Debt, Halo Winberry, became a senior secured creditor of Herban OR. Pursuant to the Debt Purchase Agreement, Halo issued 169,916,339 common shares of the Company (“Halo Shares”) to the Seller in exchange for the Purchased Debt.
  • The Company entered into an escrow agreement (an “Escrow Agreement”) with Odyssey Trust Company and the Seller pursuant to which 12,916,339 of the Halo Shares issued at closing will be held in escrow for eighteen months to satisfy any indemnification obligations of the Seller, as well as any purchase price adjustments pursuant to the terms of the Debt Purchase Agreement.
  • In addition, the Seller and the Founder and President of Winberry, Dustin Jessup, have become insiders of the Corporation. The Seller is considered an insider as, following the issuance of the Halo Shares, the Seller will hold over 10% of the issued and outstanding common shares of the Company. Mr. Jessup is considered an insider in his capacity as the Chief Revenue Officer of the Company.
  • The Halo Shares issued pursuant to the Debt Purchase Agreement are subject to a statutory hold period in Canada of four months and one day following the closing of the transaction in accordance with applicable securities laws. The Halo Shares are also subject to volume trading restrictions under which the Seller may not, during any trading day, sell a number of Halo Shares that is greater than 10% of the total daily volume of the Halo common shares traded on any exchange during the previous trading day. Additional resale restrictions may be applicable under the laws of other jurisdictions.
  • Immediately following the closing of the acquisition of the Purchased Debt, Halo Winberry entered into an asset purchase agreement (the “APA”) pursuant to which it will acquire substantially all of the assets of Herban OR (collectively the “Winberry Assets”) in exchange for the cancellation of a portion of the Purchased Debt.  While the balance of the Purchased Debt will remain outstanding, Halo does not anticipate receiving any further payment or recovery on account of the Purchased Debt, other than the Winberry Assets.  The Winberry Assets include, but are not limited to, a turnkey outdoor Tier 2 cannabis production (cultivation) facility; an operational cannabis wholesaler in Eugene, Oregon; the Winberry Farms trademark; and six delivery vehicles.
  • From and after the acquisition of the Purchased Debt and before closing the acquisition of the Winberry Assets under the APA, Halo will provide operational services to assist with the day-to-day operations of its production facility and distribution facility. Halo will also purchase and distribute Winberry’s inventory, all pursuant to a services agreement, offtake agreement, and intellectual property licensing agreement.
  • Completion of the acquisition of the Winberry Assets under the APA is subject to satisfaction or  waiver  of  customary closing conditions,  including receipt of regulatory approval from the Oregon Liquor Control Commission, and is expected to close within three to six months.

About Winberry

Founded in 2015 and based in Eugene, Oregon, Winberry Farms is a premium brand for distillate oil and holds a Tier 2 Producer License and Wholesaler License. Winberry represents an attractive brand and distribution platform in Oregon with over 75%+ dispensary penetration; a growing product line; and operational strength in raw material sourcing, manufacturing, and processing operations.

In 2016, Winberry was one of the first nine companies in Oregon, and the second in Lane County, Oregon, to receive a Recreational Marijuana Producer License.  Sitting on ten acres total, Winberry’s cultivation site is comprised of 1 acre of licensed cultivation;  an 1,800 sq. ft. drying facility; a 1,000 sq. ft. cloning facility; and a 1,600 sq. ft. greenhouse. The farm is located 30 miles southeast of Eugene, Oregon and is named after Winberry Creek, a water source that flows through the property and naturally nourishes its fields.  Winberry uses quality genetics and cultivates a variety of sun-grown flower strains that supply the materials necessary to make its premium products.

The outdoor farm began operations with a Tier 1 Producer License, but has since expanded to a Tier 2 Producer License as of June 2017. Then later in 2017, Winberry obtained its Wholesaler License, which allowed the company to launch its first cannabis vape cartridge line.  In 2018, Winberry continued to grow across the state of Oregon  establishing its own in-house sales and distribution teams.   Winberry currently operates its wholesale business from a 2,500 sq. ft. warehouse, located in Eugene, Oregon.  This site houses its pre-roll production, and serves as a hub for its distribution business.

What started as single line of distillate cartridges for vape pens has now grown to a full suite of Winberry products that includes multiple varieties of award-winning THC and CBD cartridges; infused pre-rolls; gummies and cold-pressed, full-spectrum oil cartridges. Leafly named Winberry’s ‘Tropical Trainwreck’ one-gram cartridge the ‘Fastest-Trending Cannabis Product for Oregon’ in 2017, and the same product won the award for ‘Best Distillate Cartridge’ in the 2018 Dope Cup in Oregon.

For more information about Winberry, please visit www.winberryfarms.com

About Halo Labs

Halo is a leading, vertically-integrated cannabis company that cultivates, extracts, manufactures, and distributes quality cannabis flower, oils, and concentrates, and has sold approximately six million grams of oils and concentrates since inception. Halo continues to scale efficiently, partnering with trustworthy leaders in the industry, who value their operational expertise in bringing top-tier products to market. Current growth includes expansion in key markets in the United States, the United Kingdom, and Africa, with planned  expansion into the Canadian retail market.

Halo is led by a strong, diverse, and innovative management team, with deep industry knowledge and blue-chip experience. The Company is currently operating in the United States in California, Oregon, and Nevada.   The Company sells cannabis products principally to dispensaries under its own brands Hush, Mojave, Exhale and under partnership or license with OG DNA Genetics (“DNA Genetics”), Terphogz, doing business as Zkittlez™ (Zkittlez”)

and FlowerShop* (“Flowershop”), a cannabis lifestyle and conceptual wellness brand, in which G-Eazy is a partner and key member of Flowershop*.

As part of the continuous expansion of a Halo in the United States, the company has several grow operations throughout Oregon and California including a six-acre outdoor East Evans Creek grow site in Jackson County, Oregon; the one-acre Winberry Farms cultivation site located 30 miles outside of Eugene, Oregon; Bar X – which is expected to be the largest cannabis grow site in Southern Oregon and Northern California, consisting of up to 80 acres; and Ukiah Ventures, a 30,000-square-foot processing and manufacturing facility including up to five acres of indoor grow operations.

Internationally, the Company is currently cultivating cannabis at Bophelo Bioscience & Wellness (Pty) Ltd (“Bophelo”) in Lesotho which holds one of the largest marijuana cultivation license in Africa with a future capacity of up to 495 acres. To further Halo’s global presence, the Company  has recently acquired CBPM importation and distribution licensing in the United Kingdom via cannabis supplier, Canmart Ltd (“Canmart”). Halo expects the cultivation and manufacturing operations of Bophelo combined with the importation and distribution capabilities of Canmart to drive growth of a well-positioned  business to serve the U.K. market.

The Company also has acquired a range of software development assets, including the technology platforms CannPOS, Cannalift, and more recently signed a deal to acquire CannaFeels. Halo also owns the discrete sublingual dosing technology, Accudab.

For further information regarding Halo, see Halo’s disclosure documents on SEDAR at www.sedar.com

CONTACT INFORMATION

Halo Labs

Investor Relations

info@halocanna.com

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 include, but are not limited to, statements regarding the Company’s acquisition of the Winberry Assets and the provision of operational services by the Company to Winberry.

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. Among others, the key factors that could cause actual results to differ materially from those projected in the forward-looking information and statements are the following: unexpected delays in receiving the approval of the OLCC; the inability of Halo’s management to successfully integrate the operations of Winberry with the Company; unexpected costs or delays in the completion of the Company’s proposed dispensaries and other operation; negative results experienced by the Company as a result of general economic conditions or the ongoing COVID-19 pandemic; delays in the ability of the Company to obtain certain regulatory approvals; unforeseen delays or costs in the completion of the Company’s construction projects; adverse changes to demand for cannabis products; ongoing projects by competitors that may impact the relative size of the Company’s growing operation; adverse changes in applicable laws; adverse changes in the application or enforcement of current laws, including those related to taxation; increasing costs of compliance with extensive government regulation; changes in general economic, business and political conditions, including changes in

the financial markets; risks related to licensing, including the ability to obtain the requisite licenses or renew existing licenses for the Company’s proposed operations; dependence upon third-party service providers, skilled-labor and other key inputs; and the other risks disclosed in the Company’s annual information form dated April 16, 2020 and available on the Company’s profile at www.sedar.com. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.

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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