Not for Distribution to U.S. Newswire Servicers or For Dissemination in the United States
All figures in USD unless stated otherwise
Toronto, Ontario—July 27, 2020 – Halo Labs Inc. (“Halo” or the “Company“) (NEO: HALO, OTCQX: AGEEF, Germany: A9KN) is pleased to provide an operational and business update on Bophelo Bioscience.
Leadership and Experience
Leading the Phase 1 build out and operationalization is Bophelo’s General Manager, Roderick Teague, a veteran owner operator in the African continent’s agricultural industry. Born in Mutare, Zimbabwe and raised on a Zimbabwean coffee farm, Mr. Teague initially spent his career farming coffee in his home country. He attended the University of Natal in South Africa where he studied Industrial Chemistry and Botany with a focus in Horticulture and Ecology. His notable commercial scale agricultural projects and achievements include: building out multiple coffee farms and processing facilities as well as fruit juice, essential oils, and timber mill manufacturing. He further honed his construction and large equipment management expertise as a partner at Mansura Contracting where he received training in Germany and subsequently implemented equipment and dealerships in South Africa. Mr. Teague rejoined the agricultural sector at Lonrho Fresh where he oversaw fleet and asset management as well as the build out and operation of large scale tobacco and berry farms. Over a 40 year career in commercial agriculture, Mr. Teague has built 25,240 hectares and operated 25,340 hectares of agricultural projects including a 300+ hectare precision horticultural greenhouse grow.
Ms. Louisa Mojela, Chairman of the Board of Halo Labs commented, “I am extremely pleased Roderick is spearheading the commercial build out of our cannabis facilities as well as overseeing the day to day operations. He is well positioned to manage the planned 200 hectare grow and under his leadership we are also on pace to achieve GACP credentials by Q3 2020. Rod continues to inspire and motivate the Bophelo team to progress towards and execute our first full harvest that we expect to occur in April 2021.”
In order to export internationally, Bophelo Bioscience will need to demonstrate GACP compliance of its harvested flower and trim. This credentialing process is now nearly complete as all SOPs and policies have been written and are in the process of being reviewed and adopted by Halo management and the Board of Directors at Bophelo Bioscience. Management is planning for Pharmaconsulta’s final GACP audit to be completed by the third quarter of 2020. The current target inspection date is September 2020 although it may shift due to COVID related travel restrictions. Before the audit, several remaining components must be installed and completed. The most significant GACP-related structure, the pack house, has already been designed however and is ready to be inspected.
Mr. Teague commented, “We have designed the packhouse with GACP standards in mind and are preparing for a September inspection by our auditors. Bophelo has undoubtedly been the most exciting project of my career however all the team’s efforts will amount to nothing if we do not have a quality management system and the GACP certification to prove it. Thankfully I anticipate passing the September audit and receiving our stamp of approval well in advance of the first full harvest.”
Since closing the transaction, key Finance executives at Halo and Bophelo collaborated on a post merger integration plan and budgetary forecast. From this exercise Halo now expects Lesotho to generate $8.5M USD by Q2 2021 at above 90% gross margin. The projected cost per gram ($0.12) is about half of the East Evans Creek (Oregon) cost per gram. Management estimates revenue to be $2.50 per gram based on offtake agreements currently under negotiation. The first large harvest is expected to be completed by April 2021.
Halo leadership believes Bophelo operating expenses, currently projected to be approximately 25% of revenues, may decrease once post-merger integration is complete and additional synergies are experienced. Kiran Sidhu Co-Founder and Chief Executive Officer of Halo Labs stated, “We are conservatively estimating one full harvest in 2021 from the Phase 1 build out and anticipate the results from Bophelo operations will drive Halo’s gross margin overall. We continue to look for opportunities to streamline both in the US and Lesotho to achieve additional cost synergies from the transaction. We have exclusively licensed OG DNA genetics for Lesotho and plan to add other premium genetics over the next six months which will enhance our offtake opportunities. Bophelo to our knowledge is one of the largest planned cannabis grows in the world and we plan to use it as a platform to export premium genetics to every market possible.”
Halo is a leading cannabis cultivation, manufacturing, and distribution company that grows and extracts and processes quality cannabis flower, oils, and concentrates and has sold over 5 million grams of oils and concentrates since inception. Additionally, Halo has continued to evolve its business through delivering value with its products and now via verticalization in key markets in the United States and Africa with planned expansion into European and Canadian markets. With a consumer-centric focus, Halo markets innovative, branded, and private label products across multiple product categories.
Recently, the Company entered into binding agreements to acquire a dispensary in Los Angeles, 3 KushBar branded dispensaries, 5 development permits in Alberta Canada, and Canmart Limited which holds wholesale distribution and special licenses allowing the import and distribution of cannabis based products for medicinal use (CBPM’s) in the United Kingdom. Halo is led by a strong, diverse management team with deep industry knowledge and blue-chip experience. The Company is currently operating in the United States in California, Oregon, and Nevada while having an international presence in Lesotho within a planned 200-hectare cultivation zone via Bophelo Bioscience & Wellness (Pty) Ltd. as well as planned importation and distribution in the United Kingdom via Canmart.
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 are not limited to, statements about the sale and distribution of Halo’s products in California.
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 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.
Third Party Information
This press release includes market and industry data that has been obtained from third party sources, including industry publications. The Company believes that the industry data is accurate and that its estimates and assumptions are reasonable, but there is no assurance as to the accuracy or completeness of this data. Third party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance as to the accuracy or completeness of included information. Although the data is believed to be reliable, the Company has not independently verified any of the data from third party sources referred to in this press release or ascertained the underlying economic assumptions relied upon by such sources.
This press release contains a financial outlook within the meaning of applicable Canadian securities laws. The financial outlook has been prepared by management of the Company to provide an outlook for the first four months of 2020 and may not be appropriate for any other purpose. The financial outlook has been prepared based on a number of assumptions including the assumptions discussed under the heading “Cautionary Note Regarding Forward-Looking Information and Statements” above and assumptions with respect to market conditions, pricing, and demand. The actual results of the Company’s operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. The Company and its management believe that the financial outlook has been prepared on a reasonable basis. However, because this information is highly subjective and subject to numerous risks, including the risks discussed under the heading ” Cautionary Note Regarding Forward-Looking Information and Statements”” above, it should not be relied on as necessarily indicative of future results.