Halo Labs Inc. (“Halo” or the “Company”) (NEO: HALO, OTCQX: AGEEF, Germany: A9KN) is pleased to announce that, further to the press release dated November 25, 2019, it has closed its acquisition of Mendo Distribution and Transportation, LLC (“MDT”).
- US$4.95 million acquisition of MDT to be paid for using Halo common shares (“Halo Shares”), preserving the Company’s strong cash position
- US$5.75 million of unaudited gross revenues by MDT in 2019
- Vertically integrating MDT into Halo is expected to enable the Company to:
- Increase revenue and gross margins across all Californian operations
- Extend distribution capability in Northern California
- Launch new edible and white label product lines with Type N license onsite
- Reduce overall distribution costs and potentially manufacturing & distribution tax rate
Based in Ukiah, California, MDT has been operating as a cannabis distributor since June 2018. Located in a two story, approximately 4,500 sq. ft. facility, MDT holds a Type 11 cannabis distribution license as well as manages a Type N license on site. In addition, Outer Galactic Chocolates LLC (“OGC”), the Type N licensee, has granted MDT the option to purchase all outstanding equity interest of OGC in exchange for Halo common shares.
Kiran Sidhu, CEO and Co-Founder of Halo, commented, “Halo is executing on its California verticalization strategy by obtaining this operational and revenue generating distribution license, large scale facility, and option to purchase an existing edibles business to expand Halo’s portfolio.” He continued, “We expect MDT will be a meaningful contributor to Halo’s growth in 2020 and beyond, as we build on our position as one of California’s leading cannabis companies.”
Pursuant to the terms of the transaction, the sole member of MDT has been issued an aggregate of 20,907,553 Halo Shares priced at CAD$0.315 (approx. US$0.237), being the volume weighted average trading price of the Halo Shares for the period ending on the close of markets on November 19, 2019 and representing the aggregate consideration of US$4,950,300 (CAD$6,585,879). This represents an increase of US$200,300 (CAD$266,479) from the purchase price announced in the Company’s press release dated November 25, 2019 due to positive changes in MDT’s balance sheet between the execution of the Agreement and Plan of Merger and Reorganization, and closing. US$2,000,000 (CAD$2,660,800) of Halo Shares will be issued to the sole member of MDT at closing, while the remainder (US$2,950,300 or CAD$3,925,079) will be held in escrow. Of the escrowed Halo Shares, the US$1,000,000 (CAD$1,330,400) million of Halo Shares will be held for a period of 12 months and subject to a claw back provision to protect from any unforeseen or undisclosed liabilities, while the other escrowed Halo Shares will be released in equal monthly installments over the next 12 months. To effectuate the transaction, MDT merged with Halo’s Northern Harvest, Inc. and MDT remains the surviving entity and will be wholly-owned by PSG Coastal Holdings LLC, an indirect wholly owned subsidiary of Halo.
Halo is a global cannabis extraction company that develops and manufactures quality cannabis oils and concentrates, which are the fastest growing segments in the cannabis industry. Halo is a global leader in cannabis oil and concentrates, having produced over 4.5 million grams of oils and concentrates since inception. The Company has expertise across all major cannabis manufacturing processes, leveraging a variety of proprietary processes and products. 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 in Nevada with our partner Just Quality, LLC, and in Lesotho with the 205-hectare Bophelo cultivation zone.
With a consumer-centric focus, Halo will continue to market innovative, branded, and private label products across multiple product categories. Halo recently acquired Dispensary Track platform which will alleviate customer flow constraints experienced by dispensaries and enable direct consumer interaction.
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, statements regarding the Transaction and the integration of MDT and impacts thereof.
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.
Copyright Business Wire 2020
Published at Fri, 10 Jan 2020 13:36:35 +0000