Halo Provides Operational Update
TORONTO
All Figures in USD Unless Stated Otherwise
Not for Distribution to U.S. Newswire Servicers or For Dissemination in the United States
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.”
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