Mr. Kiran Sidhu reports

HALO LABS PROVIDES UPDATE ON BOPHELO POST ACQUISITION

Halo Labs Inc. has provided an operational and business update on Bophelo Bioscience.

Leadership and experience

Leading the phase 1 buildout and operationalization is Bophelo's general manager, Roderick Teague, a veteran owner operator in the African continent's agricultural industry. Born in Mutare, Zimbabwe, and raised on a Zimbabwean coffee farm, Mr. Teague initially spent his career farming coffee in his home country. He attended the University of Natal in South Africa where he studied industrial chemistry and botany with a focus in horticulture and ecology. His notable commercial-scale agricultural projects and achievements include: building out multiple coffee farms and processing facilities as well as fruit juice, essential oils and timber mill manufacturing. He further honed his construction and large equipment management expertise as a partner at Mansura Contracting where he received training in Germany and subsequently implemented equipment and dealerships in South Africa. Mr. Teague rejoined the agricultural sector at Lonrho Fresh where he oversaw fleet and asset management as well as the buildout and operation of large-scale tobacco and berry farms. Over a 40-year career in commercial agriculture, Mr. Teague has built 25,240 hectares and operated 25,340 hectares of agricultural projects including an over-300-hectare precision horticultural greenhouse grow.

Louisa Mojela, chairman of the board of Halo Labs, commented: "I am extremely pleased Roderick is spearheading the commercial buildout of our cannabis facilities as well as overseeing the day-to-day operations. He is well positioned to manage the planned 200-hectare grow and under his leadership we are also on pace to achieve GACP credentials by Q3 2020. Rod continues to inspire and motivate the Bophelo team to progress towards and execute our first full harvest that we expect to occur in April, 2021."

GACP (good agricultural and collection practices) credentials

In order to export internationally, Bophelo Bioscience will need to demonstrate GACP compliance of its harvested flower and trim. This credentialling process is now nearly complete as all SOPs (standard operating procedures) and policies have been written and are in the process of being reviewed and adopted by Halo management and the board of directors at Bophelo Bioscience. Management is planning for Pharmaconsulta's final GACP audit to be completed by the third quarter of 2020. The current target inspection date is September, 2020, although it may shift due to COVID-19-related travel restrictions. Before the audit, several remaining components must be installed and completed. The most significant GACP-related structure, the packhouse, has already been designed however and is ready to be inspected.

Mr. Teague commented: "We have designed the packhouse with GACP standards in mind and are preparing for a September inspection by our auditors. Bophelo has undoubtedly been the most exciting project of my career however all the team's efforts will amount to nothing if we do not have a quality management system and the GACP certification to prove it. Thankfully I anticipate passing the September audit and receiving our stamp of approval well in advance of the first full harvest."

Financial estimates

Since closing the transaction, key finance executives at Halo and Bophelo collaborated on a postmerger integration plan and budgetary forecast. From this exercise Halo now expects Lesotho to generate $8.5-million (U.S.) by Q2 2021 at above 90-per-cent gross margin. The projected cost per gram (12 cents) is about half of the East Evans Creek (Oregon) cost per gram. Management estimates revenue to be $2.50 per gram based on offtake agreements currently under negotiation. The first large harvest is expected to be completed by April, 2021.

Halo leadership believes Bophelo operating expenses, currently projected to be approximately 25 per cent of revenues, may decrease once postmerger integration is complete and additional synergies are experienced. Kiran Sidhu, co-founder and chief executive officer of Halo Labs, stated: "We are conservatively estimating one full harvest in 2021 from the phase 1 buildout and anticipate the results from Bophelo operations will drive Halo's gross margin over all. We continue to look for opportunities to streamline both in the U.S. and Lesotho to achieve additional cost synergies from the transaction. We have exclusively licensed OG DNA genetics for Lesotho and plan to add other premium genetics over the next six months which will enhance our offtake opportunities. Bophelo to our knowledge is one of the largest planned cannabis grows in the world and we plan to use it as a platform to export premium genetics to every market possible."

About Halo Labs Inc.

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 five 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.

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