Halo Archives - Green Market Report

Adam JacksonAugust 16, 2022
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Halo Collective Inc.  (NEO: HALO) (OTCQB: HCANF) posted mostly positive results with revenues ticking up over the quarter — illustrating the west-coast operator’s pursuit to shave losses and pay down debt. The company announced its financial results for the first quarter ending June 30, 2022.

Halo reported approximately $6.9 million in revenue during the period, a 24.9% gain versus the same period last year; and a gain of 9.7% sequentially.

The company also reported a second-quarter net loss of $11.4 million, down from $13.8 million sequentially; and a net income of $11.3 million in the same period last year. The earnings were a loss of $1.64 per share versus a loss of $0.28 cents per share in the previous quarter, according to SEDAR filings.

“During the quarter, we ramped up efforts in our brand sales business, specifically Hush and Budega which are resonating with West Coast consumers and continued the retail rollout in Los Angeles where we opened the second of three planned dispensaries,” said CEO Katie Field. “Meanwhile, we de-emphasized other areas such as bulk wholesale flower and trim sales which generated good revenue but yielded lower profitability. And, we have made the decision to walk away from other parts of the plan altogether such as the Ukiah Ventures buildout and Canadian retail.”

Total second-quarter sales were 2.0 million grams versus 5.0 million grams in the same period last year — a 59.4% decrease. Year-over-year, flower sales fell by 6.2%, sales of pre-rolls rose by 11.5%, oils and extract sales slumped by 68.3% and edibles sales fell by 88.8%.

Halo reported a gross profit of $2.1 million, or 31.9% gross margin, versus a gross profit of $2.2 million, or 24.1% gross margin, in the same period last year. Adjusted EBITDA loss of $4.1 million versus an adjusted EBITDA loss of $4.4 million in the same period last year.

The company said it repaid $7.7 million in debt financing and raised $8.0 million from convertible debentures. It had unrestricted cash available in the amount of $1.6 million at the end of the period.

“Our efforts to do more with less are already paying off,” Field said. “In the second quarter, we maintained steady gross margins despite the downward pressure on wholesale pricing and volumes across our markets. We have also made progress reducing Halo’s indebtedness through debt paydowns.”

“Importantly, we are transforming the Company into a focused West Coast operator amidst market conditions in California and Oregon that continue to be very challenging,” she added, “but longer-term, are expected to be fertile grounds for significant growth and profitability for well-positioned companies such as Halo. I am highly confident that Halo is on the right path as a leader in these attractive markets. The initiatives we are undertaking, including those in the second quarter, will strengthen the Company and ultimately enhance shareholder value.”


Debra BorchardtSeptember 24, 2020
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Halo Labs Inc.(OTCQX: AGEEF) is acquiring 1265292 B.C. Ltd., otherwise known as Cannafeels, in exchange for common shares of Halo. The deal is valued at $6.5 million and is expected to close on or about October 15. Cannafeels is a software company developing an online application to provide consumers with relevant, web-sourced, and curated information about cannabis strains. The App is currently being developed for both the North American recreational market, as well as the UK and select EU medical cannabis markets.

Halo said it plans to use the App to feature content that can support patients and consumers as they research cannabis strains on their computers, tablets, and smartphones. Through the App, patients and consumers will be able to access this strain-related content before, during or after visits to clinics and dispensaries, helping them understand how different strains address a range of health issues, as well as the beneficial psychological and bodily effects that recreational users may seek.

Andreas Met, Halo’s Co-Founder and COO said, “Halo looks forward to supplying select European cannabis markets, beginning in Malta and the UK. With our Bophelo operation in Lesotho, we expect to meet the demand from those patients looking to obtain medicine on the private market, and those waiting to receive it from the National Health Service in the UK. Educating patients through Cannafeels, we can supplement the knowledge of medical specialists, demystifying the plant.”

The company said it expects that the completed App versions for the UK and select EU medical markets will include specific strain recommendations for different ailments, such as chronic pain, nausea, anxiety/depression, sleeplessness, or other medical conditions, and information about product preparations, such as plant materials, oils, tinctures, edibles, and capsules, as well as suggested dosing.

Halo intends to include a Cannafeels customized QR code on all of its products, that consumers and patients can scan by the second quarter of 2021. The Cannafeels QR code will direct them to the App, where they may find more relevant information about the product. The App is expected to become a source of competitive advantage from an informational standpoint, solidifying consumer loyalty to Halo brands, and increasing sell-through.

Cannafeels and Halo both anticipate that the App will be used more for flower, pre-rolls and cannabis-derived concentrates, that are strain-specific and require more consumer and patient information than is commonly available. Halo will acquire all the equipment Cannafeels has procured and customized. This equipment cost Cannafeels approximately $1 million and will be deployed by Halo in Oregon and California.

Cannafeels Founder and CEO, Andy Chus said, “We invested in this state-of-the-art, capacity-building machinery because we anticipated that as consumers and patients adopted the App, they would purchase more flower and pre-rolls—particularly strains recommended by the App. The machinery will help Halo meet this new demand for its wide range of flower-based products—including those that will be featured on the App, such as the flower currently being harvested in Oregon, under license from OG DNA Genetics and zSkittlez.”


Debra BorchardtMarch 4, 2020
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Halo Labs Inc. (NEO: HALO)(OTCQX: AGEEF) is acquiring Cannalift Delivery Inc. in exchange for C$3.41M common shares of Halo at a deemed price of C$0.11 per share. The Cannalift vendor is also helping Halo secure a non-brokered private placement of up to C$700,000. Both the acquisition and private placement are expected to close on or before March 10, 2020.

Cannalift is a software company that is developing an application to introduce a new and convenient method for obtaining cannabis products. The company said in a statement that the application will deliver any products from local dispensaries to consumers through an intuitive application and website, subject to regulatory approvals.

“Adding Cannalift to Halo’s portfolio is a promising step in building our operations in North America,” said Halo President Katharyn Field. “With ongoing supply constraints in North America and the lack of delivery options, being an early operator in a demanding space for direct to consumer delivery will put Halo ahead of the competition. With the recently announced planned acquisitions of the KushBar Brand, the NOHO dispensary and intended acquisitions of future retail cannabis locations, Halo will be in a position to deliver high-quality cannabis products to consumers both in-store and at home, subject to regulatory approvals and local laws.”

Cannalift will only be a delivery platform for consumers and will not carry any cannabis supply, but rather mediating between consumers and dispensaries. The platform also offers up-to-date supply inventory from partnering dispensaries, allowing consumers an intuitive way to navigate finding the product they want. Cannalift’s buildout is ahead of schedule and is projected to be completed with initial sales and partnerships by the end of Q2 2020.

Transaction Highlights

  • Provides platform for planned delivery and distribution where allowed in North America
  • May be initially leveraged in Saskatchewan and Manitoba as home deliveries are permitted as well as in California where Halo operates
  • Acquisition paid fully in shares to preserve Halo’s cash position
  • Concurrent private placement of C$700,000 at C$0.11 per share (“Concurrent Financing”)

The acquisition is expected to be completed through a three-cornered amalgamation whereby Halo will acquire 100% of Cannalift Delivery Inc.’s outstanding common shares from its shareholders in exchange for 31,000,000 of common shares of Halo at C$0.11 per share. The Agreement requires the existing developers to work with the Company to develop the application and provide for a smooth transition. The common shares issued by Halo in conjunction with the Acquisition will be subject to a pooling agreement with volume restrictions.

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.

Recently, Halo entered into binding agreements to acquire a dispensary in Los Angeles, 3 KushBar 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.


Debra BorchardtJanuary 16, 2020
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Halo Labs Inc. (NEO: HALO)(OTCQX: AGEEF) has exercised its Mendo Distribution and Transportation’s (MDT) option to purchase Outer Galactic Chocolates, which is a holder of a Type N manufacturing license. MDT was recently acquired by Halo through a merger on January 9, 2020.

Kiran Sidhu, Halo CEO and Co-Founder said, “Obtaining a Type N manufacturing license in California for the production of infused and edible products is a step in diversifying Halo’s product offering in this growth category. Not only are we building new lines around award-winning expertise in OGC, we will support expanded distribution of OGC-branded chocolates to Southern California.”

The acquisition will give Halo a license to produce infused and edible cannabis products adjacent to the MDT facility in Ukiah, California. A Type N license permits manufacturers to conduct most activities including packaging and labeling, however, it does not allow for extraction. For extraction in California, Halo utilizes its Type 7 licensed facility in Cathedral City, California.

In addition to obtaining the Type N license in California, Halo said it plans to execute a management agreement with the current management of OGC to aid in the transition and buildout of the business, which will include the introduction of both Halo-branded and other white label infused products. A strategic partnership with existing management will provide a strong base for the development of new edible cannabis products in California under the Hush® brand through channels and clientele already established by OGC.

Eaze

Earlier this week the company also stated that it was expanding its offering on the leading online cannabis marketplace Eaze, to include the Hush product line. Halo already successfully sells its premium GILT branded DabTabs on Eaze and will now introduce the Hush line of vape cartridges, shatter, concentrate, edibles and tinctures. The Hush brand is synonymous with high-quality cannabis products at an affordable price and is now available for delivery throughout California and Oregon. Following this second rollout of products on Eaze, Halo said expects to release more product lines on the marketplace in the future.

Eaze Director of Brand Development Owen Ruh said, “In concept and execution Halo has proven to be an innovative and dependable partner to Eaze, with products that are very popular with our customers. It’s a great time to expand the relationship and we’re excited to see what it brings.

Africa

The company also said that Bophelo Bioscience & Wellness has started the certification process required to achieve European Good Agricultural and Collection Practices accreditation for cannabis grown at the Company’s 205-hectare cultivation site at Bophelo in Lesotho, Africa.

Obtaining EU GACP certification would allow Halo to export medicinal cannabis and Cannabis-Based Products for Medicinal use to the United Kingdom as well as countries in the European Union. According to Prohibition Partners, the CBPM market in the UK is comprised of 1.4 million consumers who use CBPMs for health treatments with an additional 4.7 million recreational cannabis users. This translate to a medical cannabis market that is predicted to be worth roughly $1.3 billion by 2024.

To achieve EU GACP accreditation, Halo said it has engaged Pharmaconsulta Limited, an independent firm based out of Malta in Europe, that specializes in pharmaceutical regulatory affairs.

Sidhu added, “We are extremely pleased at the speed at which we are realizing our strategic vision for Bophelo. By the time the maiden harvest is complete the facility is expected to be fully certified and ready to export legal cannabis. International exportation is currently an untapped opportunity for Halo and will add sizeable, incremental topline revenue. We also look forward to delivering innovative strains with the DNA genetics partnership to future harvests. With three grow seasons a year anticipated at Bophelo, we expect to establish ourselves quickly as one of the leading suppliers of consistently high-quality cannabis to regulated international markets.”


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