TORONTO--(BUSINESS WIRE)--Halo Labs Inc. ("Halo" or the "Company") (NEO:HALO, OTC:AGEEF, Germany:A9KN) today released its financial results for the fourth quarter and year ended December 31, 2018.

The Company navigated through a very challenging market in Oregon in 2018 where it produced 95% of its revenue for the year. Margins were continually under pressure in the state from falling retail prices which already were among the lowest in the US. However, a renewed focus on higher margin items, the launch of a new edibles product line and DabTabs™ as well as a cost reduction program implemented in the final quarter of 2018 has set the Company up for 2019 gross profit contribution in Oregon. In addition, in the fourth quarter the Company launched profitable operations in Nevada, through its operating partner, Just Quality LLC, and started production in California. For the first two months of 2019, Nevada and California represented approximately 67% of the Company’s revenue.

The primary business objectives for the Company over the next 6 months are:

Expand revenue of higher margin products, including edibles and DabTabs™

Complete the initial phase of construction in the Company’s second California facility

Complete the second phase of construction in the Company’s Nevada facility

Commence cultivation in Lesotho

The Company plans to introduce many of its higher margin Oregon product offerings into the Nevada and California markets by the end of the 2nd quarter of 2019.

In Nevada, Halo expects to complete the second phase of construction at the Company’s production facility within the next six months.

In California, Halo expects to complete its initial phase of construction of its second facility which will have production and distribution capabilities in the second half of 2019.

In Lesotho, Halo is responsible to oversee the cultivation of cannabis at the Bophelo Bioscience site and expects to have first plants in the ground in August 2019. An initial harvest is expected in the 1st quarter of 2020. Costs required to reach this business objective will be incurred by Bophelo Bioscience.

Key Financial Highlights for the year 2018:

Revenues for the twelve months ending December 31, 2018 were $10,898,277 (2017: $10,013,680), an 8.8% increase over the prior year

Gross profits were ($91,801) compared with $1,409,989 in the previous year. This excludes the change in value of biological assets

Operating expenses for the twelve months ending December 31, 2018 were $9,736,590 (2017: $9,626,884)

EBITDA for the year was ($12,152,161) (2017: ($7,466,762)). EBITDA adjusted for IFRS non-cash items was ($7,596,186) (2017: ($3,810,580))

At December 31, 2018, the Company had $722,649 in cash (December 31, 2017: $144,255). Cash used for operations was $12,329,384 (2017: $4,351,717)

The Oregon facility produced a record 361,511 grams of oil for cartridges (2017: 142,592 grams), 692,459 grams of shatter (2017: 648,793 grams) and 256,089 grams of raw oil (2017: nil)

The Nevada operation through the Company’s operating partner, Just Quality LLC, sold 16,367 grams of oil (2017: nil). Revenues were $579,143 (2017: nil) and gross profits were $131,807 (2017: nil)

The Company successfully closed its RTO transaction with Apogee Opportunities, Inc. on September 28, 2018, and began trading on the NEO exchange on October 4, 2018.

As part of the RTO transaction, the Company raised $10 million from the issuance of Pre-RTO notes and C$14.4 million from proceeds of the Apogee offerings of special units and subscription receipts. The proceeds were used to pay off all debt and fund cash used in operations. All convertible promissory notes issued prior to the RTO transaction were converted on the close of the transaction, while certain loans were repaid during October 2018.

At December 31, 2018, the Company had short term loans due to shareholders of $505,137

Management’s Comments:

“In 2018, the Company built businesses in California and Nevada poised for future success. We also introduced new higher margin product lines in Oregon in the 4th quarter of 2018. We expect these investments to help Halo to deliver stronger results in 2019,” said Philip van den Berg, Chief Financial Officer and Director.

Not for Distribution to U.S. Newswire Servicers or For Dissemination in the United States

ABOUT HALO

Halo is a cannabis extraction company that develops and manufactures quality cannabis oils and concentrates, which are the fastest growing segments in the cannabis industry. Halo has expertise in all major cannabis manufacturing processes, leveraging proprietary processes and products, and has produced over 3.0M grams of oils and concentrates since inception. 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 Nevada with our partner Just Quality. The Company has also begun operations in Lesotho Africa through a strategic partnership with Bophelo Bioscience. With a consumer-centric focus, Halo will continue to market innovative branded and private label products across multiple product categories.

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, the Company's business objectives for 2019, management's expectations regarding the Company's performance in Oregon in 2019, intentions to introduce Oregon product offerings in the California and Nevada markets, the expected timing and costs of completion of the Company's second facility, the expected timing and costs of completion of the second phase of construction of the Company's production facility, the expected timing of the Lesotho operations and management's expectations regarding the future success of the Company.

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, level of activity, performance or achievements of Halo 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.

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: adverse changes in applicable laws; adverse changes to suppliers and other third parties with which the Company does business, changes in general economic, business and political conditions, including changes in the financial markets and the other risks disclosed in the most recent management information circular and final short form prospectus (including the documents incorporated by reference therein). 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.

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. Key assumptions used herein are that the development of the Company's facilities will not be subject to any unexpected costs or delays, actual results will not vary to a material degree from the expectations of management, the Company will be able to achieve gross profit in Oregon, the Company's operations will not be subject to any unexpected costs or delays and the introduction of the Company's Oregon products into Nevada and California will achieve market acceptance and not subject to any unexpected delays. 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.