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Halo Labs Closes Acquisition of United Kingdom Cannabis Distributor Canmart

·12 min read

This news release constitutes a "designated news release" for the purposes of the Company's prospectus supplement dated September 16, 2020 to its short form base shelf prospectus dated September 2, 2020.

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICERS OR FOR DISSEMINATION IN THE UNITED STATES/

All figures in CAD unless stated otherwise

TORONTO, Nov. 10, 2020 /CNW/ - Halo Labs Inc. ("Halo" or the "Company") (NEO: HALO) (OTC: AGEEF) (Germany: A9KN) has closed its previously announced acquisition (the "Acquisition") of U.K. based cannabis distributor, Canmart Ltd ("Canmart"). As a result of the Acquisition, Halo has acquired 100 percent of Canmart's issued and outstanding common shares and, in doing so, one of the few distribution platforms for cannabis-based products for medicinal use ("CBPMs") in the U.K.

www.halocanna.com (CNW Group/Halo Labs Inc.)
www.halocanna.com (CNW Group/Halo Labs Inc.)

Transaction Highlights

  • Acquisition details:

  • Upon closing the Acquisition, Halo has secured:

  • In addition, the terms of the Acquisition provided for:

The Growing UK Cannabis Market

In a 2019 study, the International Energy Association reported 255 tons of cannabis were sold in the U.K. at a cost of £2.6 billion (CAD$3.4 billion) to three million consumers1. A 2019 publication by Dr. Daniel Couch of the Centre for Medical Cannabis estimated that each year 1.4 million U.K. citizens self-medicate with cannabis illegally.2 It is thus understandable why experts predict as a result of loosening restrictions by 2024, that the legal U.K. medical cannabis market has the potential to reach 400,000 active patients and £1 billion ($1.3 billion) in value. Factoring affordability and easier access, and up to 52 treatable conditions, leading market intelligence firm, Prohibition Partners3, estimates that the total patient base for medical cannabis use in the U.K. could reach four million during the same time period.

Additionally, the Extract Industry advocacy group recently reported the following positive developments in the U.K. cannabis industry that demonstrate the adoption rate of legal medical cannabis:4

  • The number of cannabis clinics has increased by 50 percent in 2020 with over 10 separate locations across the country.

  • Cannabis clinics now have an ever growing waiting list with the biggest chain of 1,000 patients.

  • After a patient has been seen by a provider, prescription rates have grown to 96 percent.

  • The Care Quality Commission has authorized the use of telemedicine consultations to treat patients as a result of the COVID-19 pandemic.

In December 2018, Canmart was one of the first movers to anticipate the growing legalization of medical cannabis in the U.K. With expertise in cannabis education, storage and distribution, Canmart holds all relevant licenses to attain bulk importation, as well as store and distribute CBPMs. Canmart possesses the necessary logistics expertise, storage facilities, solid pharmaceutical and healthcare relationships in order to meet the country's growing patient base and demand for medical cannabis products.

"We are so enthusiastic about the acquisition of Canmart and our growth plan for the United Kingdom," Co-Founder and Chief Executive Officer of Halo Labs, Kiran Sidhu said. "Since the attainment of our cultivation site operated by Bophelo Bioscience & Wellness in Lesotho, South Africa, we've been able to achieve the cultivation and distribution of high-quality cannabis, derived from exclusive, proprietary genetics under license from OG DNA Genetics. The closing of the Canmart acquisition will allow us to further expand our reach of medicinal cannabis to patients looking for individualized treatment in the United Kingdom and create new international avenues for distribution while raising Halo's gross margin."

Halo's Intended Global Vertical Integration

Halo expects the cultivation and manufacturing operations of Bophelo Bioscience & Wellness (Pty) Ltd. ("Bophelo") combined with the importation and distribution capabilities of Canmart to drive growth of a well-positioned business to serve the U.K. market. Initially, cannabis produced by Bophelo is planned to route through Medcan in Malta, where the flower will be manufactured into CBPMs, imported into the UK, and distributed by Canmart to pharmacies and clinics that serve qualified patients.

Furthermore, with cultivation operations currently underway at the Bophelo site, Canmart will be positioned to wholesale products deriving from notable genetics- DNA Genetics and Zkittlez™. Through Halo's vertically integrated global supply chain, U.K. patients will have access to these high-quality, proprietary, branded flower and oil products.

As the need for medicinal cannabis arises, technological advancements play an integral role in disseminating information about cannabis products to the consumer. Earlier this fall, Halo announced the roll-out of "Cannafeels" – an easy-to-use, online application (the "App") featuring content that supports patients and consumers as they research cannabis strains on their computers, tablets, and smartphones. Through the App, patients and consumers will be able to access this strain-related content before, during, or after visits to clinics and dispensaries to help them understand how different strains address a range of health issues; and the effect to which psychological and bodily benefits have on its users. This will differentiate Canmart's products from other distributors in the U.K. and is expected to increase Canmart's market share of CBPMs.

Andreas Met, Co-Founder of Halo and Head of International Operations, comments: "Closing this acquisition is exciting because the U.K.'s cannabis market is projected to be larger than Germany by 2024—and potentially could be the largest single medical cannabis market in the world. This Acquisition—fueled by our Lesotho grow operations—positions Halo to grow rapidly in the U.K. market, a key component of our international growth plan. In 2021, we plan to import product grown at Bophelo to the U.K."

Halo Corporate Update

Halo Labs is pleased to report that the Company intends to release financial records on or before Nov. 13, 2020 for the quarter ended on Sept. 30, 2020. The Company is aware of the recent increase in trading activity in the Company's stock and wishes to confirm that the Company's management is unaware of any material change in the Company's operations that would account for the recent increase in market activity.

About Canmart

Established in December 2018, Canmart was one of the first companies set up in response to the legalization of medical cannabis in the U.K. With expertise in cannabis education, storage and distribution, Canmart holds all relevant licenses to store and distribute CBPMs in the EU.

Located in the southeast of England, Canmart operates in a 30,000-square-foot, third-party logistics warehouse, set up to focus on the pharmaceutical and healthcare industries. Leveraging their vast network to bring innovative and high-quality products to market, Canmart currently imports and distributes licensed CBPMs to specialist doctors and their patients throughout the U.K., a milestone that began in 2020. Canmart has forged strong relationships with specialist couriers, clinics, hospitals and pharmacies, providing smooth, legal access to products through a multitude of channels--always delivering exceptional service to patients and customers.

About Halo

Halo is a leading, vertically-integrated cannabis company that cultivates, extracts, manufactures and distributes quality cannabis flower, oils, and concentrates, and has sold approximately six million grams of oils and concentrates since inception. Halo continues to scale efficiently, partnering with trustworthy leaders in the industry, who value their operational expertise in bringing top-tier products to market. Current growth includes expansion in key markets in the United States and Africa, with planned geographic expansion into U.K. and Canadian markets. With a consumer-centric focus, Halo markets value-driven, branded, and private-label products across multiple product categories. The Company also has acquired a range software development assets, such as the technology platforms CannPOS, Cannalift, and more recently signed a deal to acquire CannaFeels. Halo also owns the inhalation technology Accudab.

Halo is led by a strong, diverse and innovative management team, with deep industry knowledge and blue-chip experience. The Company is currently operating in the United States in California, Oregon, and Nevada. Internationally, the Company is currently cultivating cannabis at Bophelo Bioscience & Wellness (Pty) Ltd, in Lesotho under a 200-hectare license and has acquired CBPM importation and distribution licensing in the United Kingdom via cannabis supplier, 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". The forward-looking information and forward-looking statements contained herein include, but are not limited to, statements regarding the Acquisition, the Company's integration of the Canmart business and prospects and proposed distribution of CBPM's in the UK and the importation of cannabis products to Malta and the UK.

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: delays in obtaining required approvals from regulators, changes in general economic, business and political conditions, including changes in the financial markets; 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.

1

https://iea.org.uk/media/uks-illicit-cannabis-market-worth-2-5bn-a-year-finds-new-report/

2

https://thecmcuk.org/scale-of-illegal-cannabis-used-with-medical-intent

3

https://prohibitionpartners.com/reports/#the-uk-cannabis-report

4

Fernandez, S., Cosgrave, J., Henley, T., Cooper, C., Bonner, J., David, & Yates, K. (2020, November 05). Latest Cannabis, Hemp And CBD News. Retrieved September 27, 2020, from https://www.theextract.co.uk/

Canmart Infographic (CNW Group/Halo Labs Inc.)
Canmart Infographic (CNW Group/Halo Labs Inc.)

SOURCE Halo Labs Inc.

Cision
Cision

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