TORONTO--(BUSINESS WIRE)--Halo Labs Inc. (“Halo” or the “Company”) (NEO: HALO, OTCQX: AGEEF, Germany: A9KN) is pleased to provide shareholders with an operational update in the context of the ongoing Coronavirus (COVID-19) pandemic as the Company continues to grow dispensary sales revenues in these challenging conditions.
“We continue to see strong operational performance in Oregon, as reflected by our results. Additionally, sales velocity of Halo’s branded products indicates that California may be poised to really take off in the coming months. We are preparing for this growth by re-opening Cathedral City operations, staffing up in Ukiah, and growing our California sales force,” comments Andreas Met, Chief Operating Officer and Director of Halo Labs.
Operating highlights in the first quarter of 2020 for Halo by market include:
Oregon(1)
- Record quarter-over-quarter sales in first 3 months of 2020 up 38% from Q1 2019
- April 2020 ($1.2 million) up 29% from April 2019 ($927,000)
- $5.1 million revenue year to date in 2020 (January 1- April 30) including a record month in March 2020 ($1.5 million)
- Installed two greenhouses at Evans Creek to initiate wholesale clone business to other cultivators and augment current propagation capabilities
- Cultivation underway of award winning OG DNA Genetics cannabis strains
- New product ranges launched
California(1)
- Sales growth accelerating via new products and should grow further after definitive agreement reached on partnership with Feel Better™ and recording artist G-Eazy for the Flowershop™ line of products
- Total Q1 2020 sales of Halo branded products were approximately $376,000
- Total April 2020 sales of Halo branded products alone were approximately $343,000
- Build out of North Hollywood dispensary to commence once local approval received
International operations
- 5 hectare planned greenhouse harvest continues at Bophelo
- Transformation of 200 hectare growing space from conditional to permanent approval is underway in Lesotho
- Acquisition of Canmart in the United Kingdom expected by the end of Q2 2020
Oregon(1)
In Oregon, Halo has managed to maintain a strong growth rate. Halo’s quarter-on-quarter sales for the first 3 months of 2020 compared to 2019 are up by 38%. Total 2020 sales were $5.1 million from January to April of 2020.
Halo is now able to offer customers a wider assortment of cartridges, comprising three distinct types. These include a Mojave™ live resin product, an Exhale™ cannabis derived terpene formulation (with an 80% minimum of THC concentration), and a Hush™ branded botanical terpene offering. Halo now sells over 30 varieties per distillate cartridge brand.
Halo also intends to expand its facility to encompass a commercial kitchen and add capacity via another edibles supplier. In doing so the Company will sustainably increase its capacity, range and consistency of edibles production including the launch of a new 1:1 THC to CBD formulation in multiple flavors both as a gummy and a tincture known as Sizzurp.™
Also, Halo has added greenhouses to its East Evans Creek Facility in Oregon. As a result, Halo can provide a more consistent supply of flower and will add clone sales, as a new revenue stream to its wholesale product mix. The Company expects this expansion will contribute to sales growth over the course of 2020.
California(1)
Sales of Halo’s branded products in California continue to grow at an accelerated rate. Halo has just recorded its best month’s sales of Hush™ and Gilt™ products in the state. In April 2020 the Company achieved total sales of $342,410 across its product ranges, nearly as much as was sold in all of Q1 2020 ($375,854).
Halo’s anticipates the FlowerShop™ product range promoted by G-Eazy will only fuel growth at the dispensary level in California. Additionally the Company plans to retain the award-winning Feel Better™ team behind FlowerShop™ to amplify Halo’s product set and in the coming months will launch new products across its Californian operations. These will include edibles (such as gummies, tinctures & chocolates under Emerald Cup™ winning Outer Galactic Chocolates™), as well as the portable nasal inhaler Nasalbinoid product line that Company intends to launch by the third quarter of 2020.
In addition, Halo plans to roll out an entire new line of business tolling and remediating distillate, as well as reclaiming written off inventory leveraging its Superfilteration™ program in Cathedral City. The Company expects these new business lines will become revenue contributors and increase overall gross margin.
Initiating build out of the recently acquired North Hollywood dispensary is another promising step. Permitting continues to be delayed as a result of the COVID-19 pandemic, but Halo expects this will prove to be temporary as Los Angeles city workers are expected to resume work in the near term. On April 29, Governor Newsom announced a plan for the state to re-open following the pandemic.
International Operations
In Lesotho, harvesting of cannabis plants continues in the greenhouses in the Company’s Mafeteng cultivation zone. Permanent approval of the total 200-hectare outdoor grow space has been temporarily delayed as a result of the ongoing Covid-19 situation, but the Company is optimistic this can be resolved in the near future as Lesotho begins easing restrictions on May 6, 2020. Halo expects to make significant progress in unlocking the total outdoor grow space at Bophelo in the second half of 2020.
Meanwhile, in the United Kingdom Halo continues to advance its acquisition of Canmart. Halo recently extended the Letter of Intent to June 21, 2020 to accommodate COVID-19 delays. Halo views the Canmart acquisition as providing the Company with a strategic foothold into the European medicinal cannabis market. Halo will provide further updates on this upon completion of the transaction. The Company is envisioning a seed-to-sale business that starts in Lesotho at Bophelo and ends in the United Kingdom with Cannabis Based Medicinal Products (CBMP’s) distributed to patients through Canmart in the United Kingdom.
Kiran Sidhu Chief Executive Officer and Director of Halo Labs comments, “During this difficult time our primary concern is the safety of our staff and customers. We have taken every precaution we can to protect public health, while maintaining ongoing operations across the Company. This has been challenging and Halo has experienced delays in regulatory approvals for our North Hollywood dispensary and Bophelo, nevertheless I am pleased to report continued sales growth across our operating business units. We continue to introduce new cannabis strains and expand our product ranges. We remain optimistic about Halo’s future.”
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 entered into binding agreements to acquire one dispensary in Los Angeles, three KushBar branded dispensaries, five development permits in Alberta Canada, and 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.
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".
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 ongoing acquisitions; negative results experienced by the Company or potential acquisition targets as a result of general economic conditions or the ongoing COVID-19 pandemic; delays in the ability of the Company or Bophelo to obtain certain regulatory approvals, including, the GACP certification, local licenses or the necessary import and export permits; unforeseen delays or costs in the completion of the Company's construction projects; unwillingness of employees or consultants to accept shares in lieu of cash consideration; an inability to identify suitable brands for acquisition; 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 and in particular in the ability of the Company to raise debt and equity capital in the amounts and at the costs that it expects; 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; risks inherent in the agricultural and retail business; intellectual property risks; risks related to litigation; dependence upon senior management; 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.
Financial Outlook
This press release contains a financial outlook within the meaning of applicable Canadian securities laws. The financial outlook has been prepared by management of the Company to provide an outlook for the first four months of 2020 and may not be appropriate for any other purpose. The financial outlook has been prepared based on a number of assumptions including the assumptions discussed under the heading “Cautionary Note Regarding Forward-Looking Information and Statements” above and assumptions with respect to market conditions, pricing, and demand. The actual results of the Company’s operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. The Company and its management believe that the financial outlook has been prepared on a reasonable basis. However, because this information is highly subjective and subject to numerous risks, including the risks discussed under the heading " Cautionary Note Regarding Forward-Looking Information and Statements”" above, it should not be relied on as necessarily indicative of future results.
Notes:
- These preliminary and unaudited financial results are subject to customary financial statement procedures by the Company and its auditors. Actual results could be affected by subsequent events or determinations. While the Company believes there is a reasonable basis for these preliminary financial results, the results involve known and unknown risks and uncertainties that may cause actual results to differ materially. These preliminary fiscal results represent forward-looking information. See "Cautionary Note Regarding Forward-Looking Information and Statements."
