TORONTO--(BUSINESS WIRE)--Halo Labs Inc. (“Halo” or the “Company”) (NEO: HALO, OTCQX: AGEEF, Germany: A9KN) is pleased to announce that it has closed its previously announced acquisition (the “Acquisition”) of Bophelo Bioscience & Wellness (Pty) Ltd. (“Bophelo”). Concurrently with closing, Ms. Louisa Mojela was appointed as a director and Chairman of Halo’s board of directors (the “Board”) and Mr. Philip Van Den Berg has resigned from the Board and remains Chief Financial Officer of the Company. Additional information in respect of the Acquisition is available in Halo’s press releases dated November 27, 2019 and July 10, 2020.
- Acquisition of Bophelo completed and paid for issuing an aggregate of 43,712,667 Halo common shares (“Halo Shares”) which, based on the closing price of the Halo Shares of C$0.13 on July 16, 2020, implies a fair value acquisition price of C$5,682,646.71. Halo has also issued an additional 2,039,334 Halo Shares to GMG Financial Services Ltd. (“GMG”) as an arrangement fee.
- Halo now controls 100% of the issued and outstanding shares of Bophelo (“Bophelo Shares”)
- Following closing of the Acquisition, Halo will acquire certain debt obligations of Middleton Gardens Ltd. (“Middleton”) for an aggregate of 28,586,807 Halo Shares
With closing of the Acquisition, Halo has secured:
- A fully licensed 5-hectare (12.4 acre) cultivation site, with an operating nursery, flowering hoop houses, and preparation is underway for the construction of five 1-hectare state of the art forced air greenhouses
- A further 200 hectares (494 acres) of conditionally approved canopy (including the possibility of outdoor growing) under a lease option for the mass cultivation of medicinal grade cannabis
- End product expected to be compliant with European Good Agricultural and Collecting Practices as well as the exclusive right to grow DNA Genetics strains in Lesotho and conduct R&D to develop new DNA Genetics strains in Lesotho crossed with local genetics
- A nascent export business with potential access to United Kingdom, European, Israeli and Australian cannabis markets as well as South Africa’s CBD market
Louisa Mojela Appointed Chairman
- Ms. Louisa Mojela is Halo’s new Chairman of the Board, replacing Fred Leigh who will remain on Halo’s Board as a director
- Mr. Philip Van Den Berg has resigned from the Board and will remain Halo’s Chief Financial Officer
Bophelo is in advanced discussions with several large commercial banks and local private equity funds in the South African region to fund the Phase 1 Growth Plan
Based in the Kingdom of Lesotho within South Africa, in the Mafeteng Region, Bophelo is the holder of one of a limited number of operational licenses issued in Lesotho for the production and export of medicinal cannabis products. As the largest licensed landholder in Lesotho, Bophelo’s 9-year license allows it to cultivate, manufacture, import and export cannabis products.
With over 200 days of annual sunshine, Bophelo can support as many as 3 full growing seasons a year. The Phase 1 expansion of Bophelo has launched and as planned will feature a 1.1 hectare build to include 4 hoop houses and 1 Cravo greenhouse. The extra capacity will allow growing of multiple strains of medicinal cannabis for export. The build out is expected to be complete before the South African winter ends. Once fully operational it will house 3 acres of canopy.
Upon receipt of the EU GACP certification for Bophelo grown product, Halo anticipates utilizing Canmart Limited a holder of wholesale distribution and special cannabis licenses in the United Kingdom, to import Cannabis Based Products for Medicinal use (“CBPMs”). This would expose the Company to the UK market which is expected to surpass $3 billion by 2024.1 Additionally, the Company intends to use Lesotho as a platform to sell product where possible in neighboring countries and on the African continent. Africa’s legal cannabis industry could be worth more than $US 7.1 billion annually by 2023 if legislation is introduced in a number of the continent’s major markets.2 Halo will explore other markets for export including Malta, Israel, and Australia.
Additionally, Halo has appointed Ms. Mojela as Chairman of Halo’s Board. Ms. Mojela is one of Africa’s most prominent businesswomen, having successfully founded and listed Women Investment Portfolio Holding Limited on the Johannesburg Stock Exchange which has grown to be worth over USD $250M today. She has led capital raises and held directorships at companies such as Sasol Mining (NYSE: SSL), Ixia Coal, South African Airways, Ericsson SA, Adcorp (SJ: ADR), and Sun International (SJ: SUI) amongst others.
Kiran Sidhu, CEO and Co-Founder of Halo, comments, “I am extremely excited to see the closing of our acquisition of Bophelo finally come to fruition. Halo has been developing this acquisition since late 2018 and this is the culmination of the Halo team’s tireless efforts. By completing our first major step into international markets while also adding incredible talent such as Louisa Mojela to Halo’s Board, Halo is becoming a leader in the cannabis space.”
Pursuant to a purchase and sale agreement dated November 27, 2019 (the “Bophelo Purchase Agreement”), Halo has issued an aggregate of 43,712,667 Halo Shares to acquire, directly and indirectly, 100% of the issued and outstanding Bophelo Shares. Following closing of the Acquisition, Halo owns 45% of the issued and outstanding Bophelo Shares directly and also owns 100% of the issued and outstanding shares of Middleton Gardens Ltd. (“Middleton”) (which holds 55% of the issued and outstanding Bophelo Shares). Halo has also issued an additional 2,039,334 Halo Shares to GMG as an arrangement fee. Pursuant to the Bophelo Purchase Agreement, the parties have entered into an escrow agreement pursuant to which an aggregate of 2,161,121 Halo Shares have been placed in escrow until March 1, 2021 and which may be used by Halo to satisfy any indemnification claim made by Halo pursuant to the Bophelo Purchase Agreement.
Halo has also entered into an agreement (the “Middleton Debt Agreement”) with GMG pursuant to which Halo will acquire from GMG certain debt obligations of Middleton (the “Middleton Debt”) outstanding pursuant to a debt facility agreement dated May 10, 2019, as amended on June 27, 2019 and September 19, 2019 between Middleton and GMG (the “Middleton Facility Agreement”). Pursuant to the terms of the Middleton Debt Agreement, Halo will acquire the Middleton Debt (with the benefit of the Middleton Facility Agreement and any security granted in connection therewith) for the issuance of 28,586,807 Halo Shares (the “Middleton Debt Shares”) which have a fair value of C$3,716,284.91 based on the closing price of the Halo Shares on July 16, 2020. The Middleton Debt Shares will be subject to a statutory hold period in Canada of four months and one day from the date of issuance in accordance with applicable securities laws.
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 a binding agreement to acquire Canmart Limited which holds wholesale distribution and special licenses allowing the import and distribution of cannabis based products for medicinal use (CBPMs) 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 205-hectare cultivation zone via Bophelo Bioscience & Wellness (PTY) Ltd. as well as planned importation and distribution in the United Kingdom via Canmart Limited.
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 regarding the development of Bophelo’s cultivation zone, discussions with commercial lenders and the distribution and export of cannabis products produced by Bophelo.
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.