Not for Distribution to U.S. Newswire Servicers or For Dissemination in the United States
All figures in USD and market data according to BDS Analytics unless otherwise noted
Toronto, Ontario – August 18, 2020 – Halo Labs Inc. (“Halo” or the “Company“) (NEO: HALO; OTCQX: AGEEF, Germany: A9KN) is pleased to announce the Company’s financial results for the three months ended June 30, 2020 (“Q2 2020”). Since the fourth quarter of 2019 (“Q4 2019”), Company revenues have increased quarter over quarter and Q2 2020 revenues increased 17.8% when compared with the three months ended March 31, 2020 (“Q1 2020”). Gross margins show a similar improving trend from -3.9% in Q1 2020 to 19.6% in Q2 2020. The operating loss, defined as earnings before interest taxes depreciation and amortization (“EBITDA”), decreased. In Q2 2020, the Company had negative EBITDA of $3,962,116 (Q1 2020 negative EBITDA $7,387,049). Adjusted for specific items that are significant but not reflective of the Company’s underlying operations, adjusted negative EBITDA was $2,616,719 in Q2 2020 (Q1 2020: negative adjusted EBITDA $5,778,968).
At the end of the three months ended March 31, 2020 (“Q3 2019”), a decision was made by the Company to shut down bulk distillate operations at Coastal Harvest, Inc. in Cathedral City, California (“CH”) to preserve working capital and cash until market conditions improved. This decision adversely impacted revenues, but preserved cash over the past three quarters. In Q2 2020 the Company reopened bulk distillate operations in Cathedral City focused on remediation of distillate. This distillate was exclusively used by Mendocino Distribution and Transportation(“MDT”), the Company’s California distribution division to fill vaporizer cartridges that are being sold to California dispensaries. In July 2020, the Company also re-initiated bulk distillate sales directly from CH to other California licensed distributors and manufacturers which is expected to have both a positive impact on revenues and gross margin in the quarter which will end September 30, 2020 (“Q3 2020”).
As at June 30, 2020, the Company had a working capital surplus of $6,950,513. As at June 30, 2020, the Company had $2,776,066 in cash, of which $1,238,542 is restricted. The cash burn was reduced significantly during Q2 2020. In Q2 2020, cash used in operations was $1,099,271 (Q1 2020: $2,439,269) and total cash outflow was $1,041,688 (Q1 2020: cash outflow $2,250,660).
Revenues in Q2 2020 were $5,242,961 compared to $4,449,098 in Q1 2020, a 17.8% increase.
In Q2 2020, the Company’s subsidiary ANM, Inc. (“ANM”) sold 963,090 grams of oil equivalent (Q1 2020: 1,438,451 grams). The average mix price was $4.25 per gram (Q1 2020: $2.76). The change in mix price is explained by the lower selling prices of flower ($1.07 per gram) and pre-rolls ($1.36 per gram) in ANM’s product-mix in comparison with $6.38 for extracts and edibles (Q1 2020: $5.84). Flower sales were 270,357 grams (Q1 2020: 833,037 grams) and pre-roll sales were 121,345 grams (Q1 2020: 69,689 grams). The impact of lower flower and pre-roll sales in Q2 2020 compared with Q1 2020 had a positive impact on the mix-price.
Extract sales increased 6.7% to 571,389 grams (Q1 2020: 535,725 grams). In Q2 2020, ANM sold 238,438 grams of shatter (Q1 2020: 267,807 grams), 119,332 grams of cartridge oil (Q1 2020: 72,475 grams), 70,207 grams of live resin (Q1 2020: 76,215 grams), 270,357 grams of flower (Q1 2020: 833,037 grams), 143,412 grams of oil equivalent of tinctures and gummies (Q1 2020: 119,228 grams) and 121,345 grams equivalent of pre-rolls (Q1 2020: 69,689 grams).
The conversion yield of trim into oil was 8.1% in Q2 2020 (Q1 2020: 7.4%). 5,403,813 grams of trim were converted into oil in Q2 2020 (Q1 2020: 6,011,231 grams). The trim price declined to $28 per pound (Q1 2020: $32), which has helped to reduce raw material costs and increase margins.
In Q2 2020, MDT in California sold 72,855 grams of distillate, at an average price of $10.61 per gram. In addition, MDT sold 46,610 grams of live resin at an average price of $9.29 per gram. Total grams sold was 119,464 at an average mix-price of $10.09 per gram (Q1 2020: 37,263 grams sold at $10.38).
Gross Margin Breakdown
The cost of finished cannabis inventory sold was $4,091,160 in Q2 2020 (Q1 2020: $4,331,725). The loss in the value of biological assets was $124,926 in Q2 2020 (Q1 2020: loss $289,553).
The gross profit for Q2 2020 was $1,026,875 including a loss on biological assets of $124,926. The reported gross margin was 19.6% (Q1 2020: -3.9%). Excluding the loss on biological assets, the gross profit was $1,151,801. The gross margin was 22.0%. (Q1 2020: 24.0%). The improvement in gross margins followed from an increase of the gross margin to 29.1% at ANM (Q1 2020: 23.8%). Excluding the loss on the value of biological assets, ANM’s gross margin was 32.1% (Q1 2020: 31.1%). The increase of gross margin at ANM more than offset the loss of margin at CH and HLO Ventures, Halo’s Nevada operations. [Q1 2020, included a $951,813 impairment of inventory at MDT. Adjusted for the impairment the gross margin at MDT was -1.1% in Q1 2020, compared with 2.4% in Q2 2020. This margin is expected to increase as more products are added to the mix and MDT gains economies of scale from increased production levels.
EBITDA and Adjusted EBITDA
In Q2 2020, the Company had negative EBITDA of $3,962,116 (Q1 2020: negative EBITDA $7,387,049). Adjusted for specific items that are significant but not reflective of the Company’s underlying operations, adjusted negative EBITDA was $2,593,845 (Q1 2020: negative EBITDA $5,778,968).
EBITDA and Adjusted EBITDA are non-IFRS financial measures that the Company uses to assess its operating performance and do not have any standardized meaning prescribed by IFRS. EBITDA is defined as net earnings (loss) before net finance costs, income tax expense (benefit) and depreciation and amortization expense. Management defines Adjusted EBITDA as EBITDA adjusted for share based compensation and payment, foreign exchange loss, share based payments for goods and services, accretion expense, transaction expense in relation to RTO, fair value on intangible, values on biological assets and marketable securities. EBITDA and Adjusted EBITDA are provided to assist management and investors in determining the Company’s operating performance. The Company also believes that securities analysts, investors and other interested parties frequently use these non-IFRS measures in the evaluation of companies, many of which present similar metrics when reporting their results. As other companies may calculate these non-IFRS measures differently than the Company, these metrics may not be comparable to similarly titled measures reported by other companies. For a reconciliation of EBITDA and Adjusted EBITDA please refer to “Non-IFRS Measures” in the Company’s management discussion and analysis for the three and six months ended June 30, 2020.
For Q2 2020, cash used in operating activities was $1,099,271 (Q1 2020: $2,439,269). The decrease in cash used in operating activities was due to a net loss of $6,268,465 (Q1 2020: net loss $8,609,704), the reversal of non-cash items in the amount of $5,671,677 (Q1 2020: $4,918,254) and an increase in working capital of $502,483 (Q1 2020: decrease $1,252,181).
For Q2 2020, cash generated from financing activities was $240,375 (Q1 2020: $188,609). The cash flow from financing activities in Q2 2020 was comprised of net proceeds from issuance of Common Shares in the amount of $200,375 (Q1 2020: $510,856), loans in the amount of $61,891 (Q1 2020: decrease in loans $129,078), lease payments of $17,080 (Q1 2020: $181,481) and $4,811 paid as share issuance costs (Q1 2020: $11,688).
For Q2 2020, cash used in investing activities was $182,791 (Q1 2020: $Nil).
Q2 Corporate Highlights
On April 19, 2020, the Company announced it completed the acquisition of all of the common shares of Nasalbinoid Natural Devices Corp. The Company, through its wholly owned subsidiary, 1245316 B.C. Ltd. acquired all of the issued and outstanding shares in the capital of Nasalbinoid in exchange for 34,000,000 Common Shares. As a condition to closing, Halo closed a concurrent non-brokered private placement of Common Shares at a price of CAD $0.11 per share for aggregate gross proceeds of approximately CAD $425,000. The Company expects to launch this product line in early 2021 as the Company’s primary focus for the later part of this year is to launch its edibles business in California and expand its edibles business in Oregon. The edibles market in both states is growing partially as result of the Covid-19 pandemic as cannabis consumers are shifting consumption patterns from smoking to eating.
On April 24, 2020, the Company announced that it made its first sale of distillate that was cleaned using the Company’s proprietary Superfiltration Pilot Program at CH. Halo Labs intends to scale this process up to one hundred liters per week, which triples current capacity. The Company is currently able to process up to thirty liters per week and is seeking to add equipment and floor space (in part through the proposed acquisition of Ukiah Ventures Inc. (“UVI”)) to achieve its one hundred liter per week goal.
On July 6, 2020, the Company announced that it closed the following acquisitions:
66 2/3% controlling membership interest in LKJ11 LLC (“LKJ”) a winning Los Angeles dispensary applicant in exchange for 42,881,646 Common Shares of which 8,576,329 shares were issued at closing , and 34,305,317 shares are to be issued upon the achievement of certain milestones.
100% of the outstanding membership interest in LKJ11’s retail management company Crimson & Black LLC (“C&B”) in exchange for 6,432,247 Common Shares to be issued upon the achievement of certain milestones. The acquisitions of LKJ and C&B provide the Company with a flagship dispensary license in the NOHO section of Los Angeles.
On July 16, 2020, the Company announced the completion of the acquisition of Bophelo and issued an aggregate of 43,712,667 Common Shares.
Overall the Company believes it is well positioned for the next phase of the cannabis industry which some analysts theorize will be marked in the United States by consolidation. With many assets for sale and even multi-state operators looking to selectively focus their markets, the Company anticipates opportunities to further consolidate its core markets, particularly Oregon and California.
Another trend that may shape US cannabis include further passage of the SAFE act/ access to financial institutions. The legal US cannabis sector is experiencing increased per capita spending at a 31% Compound Annual Growth Rate (CAGR) from 2013 to 2019. This growth has continued during COVID-19 as legal markets such as California and Oregon are up YOY in 2020 from 2019. Across the 3 legal cannabis markets the Company has exposure to $4.6B revenue annually.
In addition to selective acquisition opportunities to verticalize and increase market share in core markets, to continue growth the Company intends to focus improving share of non-concentrate categories such as flower, pre-rolls and edibles which should increase both revenues and gross profit contribution.
Flower and Pre-Rolls
Flower and pre-rolls constitute a significant share of consumed cannabis product in California and Oregon. According to BDS Analytics (“BDS”). In California overall share of the two combined segments is 56% and in Oregon overall share is 49%. Compared to June 2019, flower and pre-rolls were up 74% and 75% respectively in Oregon and 42% and 28% respectively in California. In contrast, vapes were flat in Oregon YOY and down 9% in California YOY.
The inception of East Evans Creek farm (“EECF”) in 2018 marked Halo’s expansion from its core capability of concentrates manufacturing into cultivation and demonstrated proficiency in 2019 with the Company’s largest harvest yet. In 2020 the Company anticipates continued revenue growth in flower sales bolstered by EECF and resulting from exclusive genetics partnerships with OG DNA and TerpHogz in Oregon.
According to BDS Analytics, as a product category, ingestibles experienced growth year over year and were up + 10% in California and +23% in Oregon between June 2019 and June 2020. Edibles constitute ~83% of ingestibles (sublinguals 17%). Candy (~64% of edible sales) is the fastest growing segment and grew 39% YOY in California and 28% YOY in Oregon between June 2019 and June 2020. Gummies comprise approximately 90% of this segment and over 60% of existing edibles consumers report consuming gummies.
In line with these trends, over the next 90 days Halo plans to launch gummy and elixir products in California and expand its edibles product line up in Oregon. Through the acquisition of OGC in California and the addition of a commercial kitchen at ANM, the Company has expanded its ingestibles manufacturing capabilities which should have a positive impact on revenues (the ability to sell more product) and margin while reducing the Company’s dependence on 3rd party suppliers.
The Company views its portfolio of businesses in three categories: operating, developing, and intellectual property. In the near term, US operating businesses will drive 2020 performance while the Company anticipates developing assets (both US and international) and intellectual property assets to create value in 2021 and years to come.
In California the Company intends to continue building its manufacturing footprint, expanding lines to encompass incremental products, and increase its sales to existing dispensary clients. The Company also intends to verticalize into owning, operating and managing dispensaries which could increase revenues. The Company also is planning to verticalize into cultivation with its acquisition of UVI. Additionally, the re-opened CH operation will continue to remediate distillate and drive bulk distillate sales.
Coastal Harvest. Home to the Company’s proprietary Superfiltration Pilot, this facility will continue to remediate distillate as well as constitute blasting capacity for live resin and in-house distillate production. The Company has reinitiated bulk distillate sales to other manufacturers and distributors.
MDT. The Ukiah facility has become a central point of manufacturing and fulfillment of packaged cannabis products. Currently producing distillate cartridges as well as live resin cartridges and pucks, the Company anticipates launching gummies in Q3 2020 and elixirs, pre-rolls, infused pre-rolls, and packaged flower products in Q4 2020. With the added capacity at the newly acquired type N licensed facility, OGC, and ready access to recipes, the Company anticipates selling these incremental product categories across Halo’s 85+ dispensary customer footprint.
In Oregon, the Company expects both EECF and ANM to drive revenue growth in Q3 and Q4 2020 specifically by bolstering the flower, pre-roll and edibles product category sales.
EECF. The Company anticipates harvesting more flower in 2020 than in 2019 from the farm and that higher priced products will result from specialized licensed genetics being grown, including genetics licensed from Zkittelz and OG DNA Genetics. The Company anticipates a higher price per gram of flower due both to increased sales of packaged flower products: branded pounds, pre-rolls and infused pre-rolls, as well as diminished pre-sales that garner a lower price per pound.
ANM. The Company anticipates adding multi-piece gummy SKUs in both standard dose (10mg) and micro dose (5 mg) formats in new vegan and gluten free formulations as well as launching all gummies in new packaging. In Medford, the Company is building out a commercial kitchen which will allow for selective manufacturing of certain gummies and elixirs. Both projects are anticipated to grow edibles sales and increase gross margins due to reduced manufacturing costs and better product mix.
According to BDS Analytics, sales of legal cannabis products in Nevada dipped down in April 2020 to $38M in revenue due to COVID-19. The market has bounced back in June posting $67M in revenue. In Nevada, the Company maintains a reduced operating footprint and selectively contract manufactures for a few dispensaries. The Company believes that both the cultivation and production license under contract for purchase hold value. The Company is also in discussions with several brands that are looking to launch in Nevada to joint venture.
Halo has acquired businesses both domestic and international that are in the process of being operationalized. These assets are developing and require more time before contributing to the Company’s revenue growth. In 2021, Halo expects the Mendocino campus to be expanded via Halo’s planned acquisition of UVI and retail licenses to be granted .
Halo’s international business is also developing. Bophelo has signed a significant offtake agreement with Medcan for distribution into the EU via Malta and plans to receive GACP credentials later this year. Meanwhile the Company intends to close its planned purchase of Canmart, a licensed distributor and manufacturer of medical cannabis in the United Kingdom, to gain distribution into the which will further verticalize the export and distribution of Lesotho grown product.
UVI. In Q3 2020 the Company intends to close the acquisition of all issued and outstanding shares of UVI. Situated in Ukiah close to MDT, UVI expands the Company’s production capabilities and capacity in California. Located in the Emerald Triangle on a parcel licensed for multiple uses distribution, processing, the site is properly zoned for planned additional uses: type 6 and/or type 7 manufacturing and indoor cultivation. Halo intends to expand pre-roll and packaged flower lines in Q1 of 2021 and has already started planning the buildout of an indoor 10,000 square foot grow on site as well.
NOHO / California Retail. In Q2 2020 Halo consummated the LKJ ands C&B transactions and now plans to optimize its retail footprint in the City of Los Angeles and Los Angeles County. The Company plans to complete construction and open its doors in early 2021.
The Company seeks to build a limited store network throughout California in unsaturated regional markets as well as maximize the number of doors in Los Angeles County. The Halo business development team continues to evaluate acquisition opportunities of both operational and pre-operational dispensary licenses. The Company anticipates adding more stores in 2021.
In Q3 2020 Halo intends to complete its acquisition of a 25% membership interest in FlowerShop*
and by closing will have executed a licensing, manufacturing, and distribution agreement for FlowerShop* branded products. FlowerShop* is a sensory care consumer products company encouraging acts of giving, spontaneity, and love. American rapper and producer G-Eazy is a partner and key member of the company and will also promote the brand. Halo and FlowerShop* founders are currently working together to commercialize formulations in cartridges, flower, and edibles products. The Company expects FlowerShop* products to launch in early 2021.
While Halo has a mature presence in Oregon, the Company anticipates continued consolidation and will pursue opportunities to grow via rolling up competitor brands, manufacturers, and farms as well as achieve cost synergies.
2020 marked Halo’s foray into international cannabis markets with the closing of the acquisition of Bophelo, the largest planned grow in Lesotho and once of the largest planned legal cannabis grows known. Prohibitions Partners estimates the European market growing to USD $39.1billion and the legal African market to USD $2.6 billion by 2024. In June 2020, the International Narcotics Control Board convened the Commission on Narcotic Drugs to discuss and prepare member states for a December 2020 vote on the World Health Organization’s recommendations on cannabis including descheduling CBD and rescheduling THC to a less restrictive category. Amidst loosening cannabis policies, Halo believes a foothold in the international market is critical.
Bophelo in Lesotho. Given the liberalizing views and policy on cannabis worldwide, Halo believes a global cannabis market with competitors around the world to predominate in 2021 and in the future. In this environment, cost of production will determine the optimal manufacturing footprint. The Company anticipates Bophelo will be a low-cost platform to grow cannabis and package it for sale. Halo is actively working on completing Bophelo’s Good Agricultural Practices certification which the Company anticipates will occur before the next full summer harvest in April of 2021. In addition, Bophelo has licensed genetics from OG DNA which as a result of low production costs in Lesotho will enable the Company to deliver quality, premium flower at value prices to consumers.
Medcan off take agreement. On August 10, 2020 Bophelo entered into $30 Million offtake agreement with Medcan a Malta based company. The contract specifies initial deliveries of up to 10,000 kilograms. Initial shipments are expected to commence in the 4th quarter of 2020. Based on current European demand, Medcan anticipates taking delivery of the initial 10,000 kilograms by the end of 2021.
Canmart in the United Kingdom. The Extract Industry advocacy group recently reported positive developments in the UK cannabis industry.
- The number of Cannabis Clinics has increased by 50% in 2020 with over separate 10 locations across the country.
- The number of Cannabis prescriptions are rising; there were 100 in all of 2019 and have seen numbers of over 200 a month in 2020 and is increasing.
- Cannabis Clinics now have a waiting list with the biggest chain having 1000 patients waiting.
- Once a patient has been seen there is a 96% prescription rate.
- The Care Quality Commission (“CQC”) has authorized the use of Telemedicine in consultations and is being used now due to impacts of the pandemic.
Halo has been in discussions to close its acquisition of Canmart throughout 2020. The Company believes there is no better time to be entering the United Kingdom. Prohibition Partners estimates the UK cannabis market alone will be over 2 billion pounds by 2024.The Company expects to close the acquisition of Canmart in Q3 of 2020 and anticipates Canmart will contribute revenue by early 2021.
KushBar in Canada. Halo has been working towards closure of High Tide’s Alberta dispensary chain, KushBar. Three are already open and have been operating throughout the Covid-19 pandemic.
Halo’s IP portfolio was enhanced with the acquisition of Nasalbinoid, Precisa, and Dispensary Track. Both Nasalbinoid and Precisa capitalize on product attributes the Company believes are important to the current day cannabis consumer such as the product being discrete and convenient. The Company plans to continue building out each technology and launch these novel products in 2021. The Company’s IP portfolio currently consists of two licenses and two software and e-commerce platforms that will be rolled out.
Halo will host a conference call on Wednesday August 19, 2020 to discuss Q2 2020 financial and operational results. Investors can register for the discussion and Q&A with Kiran Sidhu, the Chief Executive Officer, and Philip Van Den Berg, the Chief Financial Officer, at 4:15 p.m. EST / 1:15 p.m. PDT below:
About Halo Labs
Halo is a leading cannabis cultivation, manufacturing, and distribution company that grows, extracts, and processes quality cannabis flower, oils, and concentrates. Halo sold over 5 million grams of oils and concentrates since inception and has continued to evolve its business through delivering value with its products. Via verticalization, Halo has expanded 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, Halo has acquired one dispensary in Los Angeles, and has an agreements to acquire three KushBar branded dispensaries in Alberta Canada, as well as 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 as well as planned importation and distribution in the United Kingdom via Canmart.
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”.
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.