TORONTO--(BUSINESS WIRE)--Halo Labs Inc. (“Halo” or the “Company”) (NEO: HALO, OTCQX: AGEEF, Germany: A9KN) is pleased to announce that, further to its press release dated January 16, 2020, it has signed a definitive agreement to acquire a Company with a controlling interest in a North Hollywood (“NOHO”) cannabis dispensary applicant (the “Acquisition”).

The Acquisition consideration will be paid with common shares of Halo, a majority of which are issuable on the completion of pre-determined performance milestones.

Transaction Highlights

42,881,646 shares with a deemed value of approximately $3.2 million 1 ($4.3 million CAD) for a 66 2/3% interest in a planned NOHO flagship dispensary. The NOHO dispensary will feature nearly 4,000 square feet, sizeable onsite parking, and a prime location at the northwest corner of Lankershim Blvd. and Hesby Ave. Potential to build a delivery service for Studio City, North Hollywood, Hollywood Burbank, and the Eastern San Fernando Valley.

($4.3 million CAD) for a 66 2/3% interest in a planned NOHO flagship dispensary. Acquisition consideration to be paid in full with common shares of Halo, a majority of which are issuable upon the completion of pre-determined performance milestones. Preserves Halo’s cash position Will enhance the Company’s statewide high-growth plan



As one of California’s largest cannabis markets, Los Angeles is a limited license market. This prime location is an opportunity to enter the LA dispensary market and will result in Halo being vertically integrated and will take Halo one step closer to “Seed-to-Sale” in the state when this transaction closes. The all-stock merger transaction will preserve Halo’s cash position while adding a high margin revenue stream to the Company’s portfolio. This NOHO dispensary provides a foundation to build on for future acquisitions of dispensaries in the state of California. We plan to commence construction of the dispensary upon closing and open to the public upon issuance of final state and city licenses.

Kiran Sidhu, CEO and Co-Founder of Halo, comments, “Signing this definitive agreement to acquire LKJ11 LLC is an exciting step for Halo’s future. Entering into the California dispensary market will add to Halo’s portfolio of manufacturing and distribution assets. We expect to replicate California operations in other territories as the Company continues to grow and develop towards verticalization.”

LKJ11 LLC

LKJ11 LLC (“LKJ”) is planning to build out one of North Hollywood´s largest retail dispensary locations, boasting nearly 4,000 square feet and significant onsite parking. Located in the heart of North Hollywood, the dispensary will be situated on Lankershim Blvd. and Hesby Ave., which are heavily transited streets with significant vehicle and pedestrian traffic.

Upon the NOHO dispensary’s opening, Halo expects to commence direct retail sales of its own branded and white-labeled cannabis products, in turn fueling HKJ’s sales and reducing starting inventory costs. Halo will leverage manufacturing in Southern California at Cathedral City and cultivation procurement, manufacturing, and distribution operations in Northern California to scale up its direct-to-dispensary business.

Dave Cho, Chief Marketing Officer of LKJ and prior marketing executive at Nike and Adidas stated, “We are thrilled to join forces with Halo Labs to run a leading dispensary in Los Angeles. This is one of the most premium locations in LA and we are leaving it in the hands of the Halo team because we believe they have the skill and experience to make it a successful entity under their corporate umbrella. We still are moving forward with the originally negotiated deal, despite the market correction, because we believe in Halo’s vision as a vertically integrated and global cannabis operator.”

The Transaction

Pursuant to the Acquisition, Halo will acquire 66 2/3% of the outstanding membership interests in LKJ in an all-stock transaction, with the number of Halo common shares to be issued being initially calculated using a deemed price per share of CAD 0.3116. Halo is obligated to issue a majority of the merger consideration after the closing upon the achievement of pre-determined performance milestones.

Upon closing, approximately 8.6M of Halo Common Shares will be issued directly, subject to trading restrictions:

4.3M will be freely tradeable in accordance with applicable securities laws; and

4.3M will be subject to trading restrictions whereby, for one year following the closing as follows: the aggregate shares sold may not exceed: (a) 10% of the prior trading day’s total volume if the closing price of common shares of Halo is less than CAD 0.30; or (b) 15% of the prior trading day’s total volume if the closing price of common shares of Halo is greater than or equal to CAD 0.30.

Approximately 34.4M shares of Halo will be issued, subject to certain reduction or cancellation rights, to the applicable vendors as performance milestones are achieved:

17.2M will be released once the dispensary is licensed by all applicable state and local regulatory authorities and the first legal sale of cannabis is made; and

17.2M will be released upon securing a lease for the dispensary on a term of at least 5 years from the closing date.

These approximate 34.4M shares of Halo, if and when issued, will be subject to trading restrictions whereby, for one year following the closing as follows: the aggregate shares sold may not exceed: (a) 10% of the prior trading day’s total volume if the closing price of common shares of Halo is less than CAD 0.30; or (b) 15% of the prior trading day’s total volume if the closing price of common shares of Halo is greater than or equal to CAD 0.30.

Completion of the Acquisition is subject to the satisfaction or waiver of customary conditions precedent to the parties’ obligation to close the transaction, including the receipt of requisite regulatory and stock exchange approvals. Halo expects the transaction to close by the end of the first quarter of 2020.

About Halo

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 binding agreements to acquire a dispensary in Los Angeles, 3 Kush Bar branded dispensaries, 5 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 205-hectare cultivation zone as well as planned distribution in the United Kingdom.

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, statements regarding the acquisition and merger into Halo of LKJ11 LLC.

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. 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 Based on HALO NEO closing price on February 28, 2020