TORONTO--(BUSINESS WIRE)--Halo Labs Inc. (“Halo” or the “Company”) (NEO: HALO, OTCQX: AGEEF, Germany: A9KN) announces that further to the press releases dated December 24, 2019 and March 3, 2020, and April 27, 2020, the Company has agreed to another extension of the binding letter of intent (the “LOI”) to acquire all of the common shares of Canmart Limited (“Canmart”), a licensed importer and distributor of cannabis based products for medicinal use (“CBPM’s”). Due to the ongoing global COVID-19 pandemic, the Company has agreed to the extension to allow both parties adequate time to complete due diligence and negotiate the definitive agreements while under shelter-in-place restrictions. While the extension grants until August 21, 2020 to finalize, the Company anticipates signing the final SPA and closing the transaction on or about July 15, 2020.
The total purchase price of the Canmart acquisition is anticipated to be C$6 million, payable in Halo common shares (“Halo Shares”) and at a deemed price of C$0.35 per share, which is based on the 30-day VWAP of the Halo Shares on the NEO Exchange as of December 23, 2019, the day the LOI was originally executed (“the Consideration”). The Consideration will be paid periodically as Canmart achieves critical business milestones.
Transaction Highlights
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Halo to acquire 100% of Canmart Limited, a fully licensed operator
- Canmart is one of the UK’s few late stage applicants for a Controlled Drugs License to import and distribute licensed Cannabis-Based Products for Medicinal use (“CBPMs”)
- This intended acquisition of Canmart will position Halo as a seed to sale importer and distributor of medical cannabis in the United Kingdom
- Canmart operates a Medicines and Healthcare Products Regulatory Agency (“MHRA”) certified 30,000 square foot third party logistics warehouse in the southeast of England
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Canmart already holds wholesale distribution and special licenses, issued by the MHRA
- It also has applied for a Controlled Drugs License from the Home Office, to import and distribute licensed CBPMs
- The Home Office is the government department responsible for the enforcement of cannabis legislation in the UK and completed an initial site visit to Canmart’s warehouse facility to assess its suitability and security arrangements which Canmart has successfully passed
- Halo still anticipates commencing export of CBPMs to the UK in 2020 from Bophelo Bioscience & Wellness (PTY) Ltd. (“Bophelo”), subject to approval from the MHRA and any other necessary regulatory approvals
The UK cannabis market is poised to accelerate in 2020. In 2019 there was marginal growth as prescriptions increased to 6,883 and 4 clinic chains were open and operating part time. At the same time 1.3 million medical users were being supplied through unregulated channels1. In 2020, the total number of prescriptions has already grown to 12,000 and 7 total clinic chains will be open by the summer of 2020. Project 21 will launch in the fall and it is anticipated prescriptions will increase by 20,000 to over 30,000. By 2024, the UK medical cannabis market is predicted to be worth nearly £1bn (US$1.3bn), servicing nearly 340,000 active patients.2
CBD products and recreational use are other potential drivers of growth in the UK market. According to Prohibition Partners, there are approximately 7.3 million people in the UK who buy CBD products each year from online retailers and high-street stores. Further the country has 4.7 million recreational cannabis users.3
Kiran Sidhu, CEO and Co-Founder of Halo Labs, comments, “Now that markets have started to re-open we anticipate discussions and closing of our proposed acquisition of Canmart to accelerate. Once closed we look forward to expanding Halo’s operations into the UK. Increasing Halo’s global presence remains at the forefront of Halo’s growth strategy.”
Completion of the proposed acquisition of Canmart is subject to, among other things, the negotiation and execution of a definitive acquisition agreement and related documents and the satisfaction or waiver of any conditions precedent to the consummation of such acquisition (including the receipt of any requisite regulatory and third-party approvals).
About Canmart Limited (UK)
Established in December 2018, Canmart was one of the first companies set up in response to the legalization of medical cannabis in the UK. Located in the southeast of England, Canmart operates in a 30,000 square foot third party logistics warehouse. Canmart anticipates being able to commence the import and distribution of licensed CBPMs to specialist doctors and their patients in the UK during 2020.
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". The forward-looking information and forward-looking statements contained herein may include, but are not limited to, statements with respect to Halo’s proposed acquisition of Canmart, Halo’s potential import and export activities and the growth of the cannabis and CBD market in 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: 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; 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 for the year ended December 31, 2019. 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.
1 Source Yougov poll.
2 Prohibition Partners Report, December 2019. https://prohibitionpartners.com/reports/#the-uk-cannabis-report
3 Prohibition Partners Report, December 2019. https://prohibitionpartners.com/reports/#the-uk-cannabis-report.
