Halo Labs Inc. (“Halo” or the “Company“) (NEO:HALO, OTC:AGEEF) is pleased to provide an operational update given the recent developments at the Company in the past few months and announces the closing of a promissory note financing.
Halo’s CEO, Kiran Sidhu, stated: “As we start the new year off, I would like to provide our investors with an update on Halo as the end of 2018 was an incredibly busy time for the Company. In 2019, we expect to see the results of all that work come to fruition as the Company has transformed from a single state operator to a multi-state operator with California quickly become the driving force of the business. We are very excited with the outlook for 2019 and look forward to capitalizing on the opportunity ahead.”
Halo successfully launched operations in its initial Cathedral City facility in late November 2018, commencing with the production of raw extracts and has now began to manufacture distillate in January. The initial facility is designed to be capable of producing 120,000 grams of distillate per week at full capacity and has commenced servicing the Company’s contract with Falcon International of 50,000 and 70,000 grams of distillate per week. The Company is in active discussion with a number of other customers for long term contracts. The Company has commenced planning of a second larger facility located in Cathedral City and anticipates production to commence at such facility in middle of 2019. The Company expects that the addition of this second Cathedral City facility will triple its production capacity in the state of California.
The Company’s view is that the current supply of biomass remains limited in Nevada; however, Halo has identified locations for larger grow operations for its cultivation license and is exploring various opportunities. The Company is currently manufacturing its products on a limited basis and to date, Halo has penetrated 13 out of 65 dispensaries throughout Nevada with the sales team pushing to grow that number each week. We anticipate adding DabTabs™ to our Nevada menu in February which we expect will help increase dispensary penetration.
The Company’s operations in Oregon have maintained steady monthly revenues. In November the Company introduced a line of edibles into the market which helped drive additional revenues. This month we introduced DabTabs™ that in the first two weeks have already stocked approximately 70 dispensaries in the state and we have already received re-orders. The Company has also begun to shift its product mix towards higher margin and more profitable products. The Oregon market continues to slowly improve as the number of competitors decrease.
Canada and International Markets
Halo signed its first international partnership in Lesotho, Africa with Bophelo Bioscience and Wellness Pty Ltd., one of the largest licensed land holders in the country. Halo will provide the operational expertise in exchange for an equity stake in the business in addition to a royalty and an off-take agreement for all of the extracted products. The Company has sent their master grower to begin planting the first plants to create extractable biomass. The Company is also in active discussions with a number of European and Canadian companies for similar partnerships and will update shareholders in the event that those discussions progress.
Halo is focused on being a leader in cannabis extraction utilizing proprietary science-based techniques and developing innovative products. The Company has entered in an exclusive distribution agreement with Ilo Vapor to launch the DabTab™ in California, Nevada, and Oregon. DabTabs™ are vaping technology that allows for the consumption of full spectrum concentrates with no mess. Halo expects to launch DabTabs™ in Oregon in January and California and Nevada in February. DabTabs™ have been favorably received and reviewed, including a feature in a leading mainstream technology publication Engadget. The Company is currently working on licensing deals for nano-emulsification technology for flavored drinks and shots. Lastly Halo is currently examining the use of biosynthesis technology for manufacturing of oils and concentrates which the Company believes could be a significant improvement over existing technologies in commercial use today.
Promissory Note Financing
Halo is pleased to announce that it has raised an aggregate of $1,400,000 (the “Debt Financing“) through the issuance of unsecured promissory notes (each, a “Promissory Note“). Each Promissory Note bears interest at a rate of 15% per annum and matures on the earlier of: (i) December 31, 2019, (ii) the date the Company commits an act of insolvency, and (iii) upon demand from the holder following an event of default under the terms of the Promissory Note. The Promissory Notes are not convertible into securities of the Company. The net proceeds from the Debt Financing will be used to fund the Company’s general working capital requirements.
Philip van den Berg, a director and the Chief Financial Officer of the Company, participated in the Debt Financing and was issued a Promissory Note in the principal amount of USD$100,000.00 and is considered to be a “related party” for the purposes of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“) and Mr. van den Berg’s participation in the Debt Financing is considered to be a “related party transaction” for the purposes of MI 61-101. The Company is exempt from the minority shareholder approval requirement in section 5.6 of MI 61-101 in reliance on section 5.7(a) as the fair market value of the transaction, insofar as it involves related parties, is not more than 25% of the Company’s market capitalization.
ABOUT HALO LABS
Halo is a cannabis extraction company that develops and manufactures quality cannabis oils and concentrates, which are the fastest growing segments in the cannabis industry. Halo has expertise in all major cannabis manufacturing processes, leveraging proprietary processes and products, and has produced over 3.0M grams of oils and concentrates since inception. 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, Nevada and Oregon as well as Lesotho Africa through a strategic partnership. With a consumer-centric focus, Halo will continue to market innovative branded and private label products across multiple product categories.
For further information regarding Halo, see Halo’s disclosure documents on SEDAR at www.sedar.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 may include, but is not limited to, information concerning the Company’s second facility in Cathedral City, the future prospects of the Company, the production capacity of the Company’s current facility in Cathedral City, the Company’s prospects for future partnerships with Canadian and European entities and the expected timing of the launch of DabTabs™ in various markets.
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, level of activity, performance or achievements of Halo 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.
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: adverse changes in applicable laws; adverse changes to suppliers and other third parties with which the Company does business, changes in general economic, business and political conditions, including changes in the financial markets and the other risks disclosed in the most recent management information circular (including the documents incorporated by reference therein). 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.
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. Key assumptions used herein are that the development of the Company’s second facility in Cathedral City will not be subject to any unexpected costs or delays, that the current facility in Cathedral City will be able to operate at full capacity, that the Company’s discussions with potential partners, both domestic and international, will progress as expected and that the launch of the DabTab™ product line will not be subject to any unexpected costs or delays. 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.