Halo Labs Inc. (“Halo” or the “Company”) (NEO:HALO, OTC:AGEEF, Germany:A9KN) is pleased to announce that it has entered into a binding Letter of Intent to secure a purpose built hemp processing facility in Southern Oregon (the “Transaction”) to expand the Company’s production capabilities into manufacturing CBD isolate and distillate. Production at the facility is expected to start in the 3rd quarter of 2019.
”This is a great opportunity in a rapidly-growing market which is complimentary to our core extraction competencies – manufacturing cannabis isolates and distillates. Coupled with our current and developing business-to-business and white label customer relationships, the Talent facility could potentially unlock significant revenue in the hemp-derived CBD segment for Halo.
At full capacity, Halo will be able to process approximately 10,000 kilograms of hemp per month, which the Company expects will yield 700 to 900 kg of high-grade distillate or isolate and is projected to result in monthly revenue in excess of US$3.5 million at current wholesale prices.
Halo is already a leader in the extraction of cannabis crude oil, distillates, and resins. The Company’s primary proprietary brands, Hush™ and Gilt™, are available to consumers in California, Nevada and Oregon. As well, the Company provides its cannabis oils on a white label and business-to-business basis to multiple customers primarily in California. This proposed entry into the CBD hemp market positions Halo to leverage current manufacturing and distribution capabilities to expand the Company’s own Hush™ and Gilt™ product suites as well as pursue additional white label opportunities.
Halo is poised to capitalize on significant growth in the CBD products space. The recent passage of the US Farm Bill that excludes hemp from the Controlled Substances Act, permits CBD derived from hemp products to be imported and exported across U.S. state lines. In addition, drug chain retailers are entering the CBD category. According to Forbes, CVS and Walgreens are two notable retailers on the forefront of this trend currently rolling out CBD products to 800 and 1500 stores respectively. Brightfield Group projects CBD products to grow rapidly from US$594 million in 2018 to US$22 billion by 2022 representing a 147% CAGR during the time period.
Halo will produce industrial hemp derived distillate from the planned facility in Talent, Oregon. Situated in the Emerald triangle, just 20 miles from the California state line and 10 miles from Halo’s Oregon THC-focused extraction facility, the Talent site enables efficient procurement of hemp biomass from both Oregon and California and will benefit from the pooling of resources between Halo’s existing facility and this new facility.
Kiran Sidhu, Chief Executive Officer of Halo Labs, commented: “As a result of anticipated growth in CBD products, we have received numerous inquiries from current and prospective customers about processing hemp into bulk CBD distillate and isolate. Given the favorable tax and regulatory regimes in Oregon as well as proximity to many large farms that require toll processing, we believe that a hemp processing facility in Southern Oregon close to California is an ideal location.”
David Orr, Chief Revenue Officer of Halo Labs, added: “This is a great opportunity in a rapidly-growing market which is complimentary to our core extraction competencies – manufacturing cannabis isolates and distillates. Coupled with our current and developing business-to-business and white label customer relationships, the Talent facility could potentially unlock significant revenue in the hemp-derived CBD segment for Halo.”
A summary of the binding LOI follows:
- The initial build out will be at least 7,500 square feet purpose-built for processing hemp with adequate power, water and other utilities for the intended use and will be delivered on or before July 31, 2019.
- Halo can expand the facility up to 10,000 square feet, subject to agreement on a budget and development plan and receipt of any governmental approvals from Jackson County.
- The facility owner will deliver the facility with all necessary permits and approvals from the state of Oregon and Jackson County.
- Halo will obtain licenses from the Oregon Department of Agriculture required to commence hemp processing at the facility and further permitting required to remain compliant.
- Lease terms reflect those of leases for similarly situated facilities with similarly intended uses, such as remedies for default and the following key terms: (a) an initial term of 5 years; (b) two options for renewal of the five-year term; (c) base rent that increases by each year; (d) triple net; and (e) a right for the Company to terminate at any time upon six-months’ notice.
- The Company will pay the owner a refundable deposit of $150,000. The deposit will be immediately returned if the facility is not delivered by July 31, 2019. Upon delivery and satisfaction of the closing conditions, the Company will pay the owner an additional C$1,200,000 in shares of Halo’s common stock priced at C$0.67 per share subject to a four month hold from the date of issuance and approval by the NEO Exchange Inc.
The final terms and closing of the Transaction are subject to the negotiation and execution of a definitive agreement and certain other customary conditions including the receipt of all necessary regulatory approvals. The Transaction is expected to close in the third quarter of 2019.
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 and Oregon as well as Nevada with our partner Just Quality. The Company has also begun operations in 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, terms and conditions of the Transaction, the entering into of definitive documentation in respect of the Transaction, the closing of the Transaction, the establishment of a hemp manufacturing facility and Halo’s business generally.
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.