Mr. Kiran Sidhu reports
HALO ANNOUNCES CLOSING OF THE PREVIOUSLY ANNOUNCED ACQUISITION OF MENDO DISTRIBUTION AND TRANSPORTATION ("MDT")
Halo Labs Inc., further to the press release dated Nov. 25, 2019, has closed its acquisition of Mendo Distribution and Transportation LLC (MDT).
$4.95-million (U.S.) acquisition of MDT to be paid for using Halo common shares, preserving the company's strong cash position;
$5.75-million (U.S.) of unaudited gross revenues by MDT in 2019;
- Vertically integrating MDT into Halo is expected to enable the company to:
Increase revenue and gross margins across all Californian operations;
Extend distribution capability in northern California;
- Launch new edible and white label product lines with Type N licence on site;
- Reduce overall distribution costs and potentially manufacturing and distribution tax rate.
Based in Ukiah, Calif., MDT has been operating as a cannabis distributor since June, 2018. Located in a two-story, approximately 4,500-square-kilometre facility, MDT holds a Type 11 cannabis distribution licence, as well as manages a Type N licence on site. In addition, Outer Galactic Chocolates LLC (OGC), the Type N licensee, has granted MDT the option to purchase all outstanding equity interest of OGC in exchange for Halo common shares.
Kiran Sidhu, chief executive officer and co-founder of Halo, commented, "Halo is executing on its California verticalization strategy by obtaining this operational and revenue-generating distribution licence, large-scale facility, and option to purchase an existing edibles business to expand Halo's portfolio." He continued, "We expect MDT will be a meaningful contributor to Halo's growth in 2020 and beyond, as we build on our position as one of California's leading cannabis companies."
Pursuant to the terms of the transaction, the sole member of MDT has been issued an aggregate of 20,907,553 Halo shares priced at 31.5 cents (approximately 23.7 U.S. cents), being the volume-weighted average trading price of the Halo shares for the period ending on the close of markets on Nov. 19, 2019, and representing the aggregate consideration of $4,950,300 (U.S.) ($6,585,879 (Canadian)). This represents an increase of $200,300 (U.S.) ($266,479 (Canadian)) from the purchase price announced in the company's press release dated Nov. 25, 2019, due to positive changes in MDT's balance sheet between the execution of the agreement and plan of merger and reorganization and closing. Of Halo's shares, $2-million (U.S.) ($2,660,800 (Canadian)) will be issued to the sole member of MDT at closing, while the remainder ($2,950,300 (U.S.), or $3,925,079 (Canadian)) will be held in escrow. Of the escrowed Halo shares, the $1-million (U.S.) ($1,330,400 (Canadian)) million of Halo shares will be held for a period of 12 months and subject to a claw back provision to protect from any unforeseen or undisclosed liabilities, while the other escrowed Halo shares will be released in equal monthly instalments over the next 12 months. To effectuate the transaction, MDT merged with Halo's Northern Harvest Inc. and MDT remains the surviving entity and will be wholly owned by PSG Coastal Holdings LLC, an indirect wholly owned subsidiary of Halo.
About Halo Labs Inc.
Halo is a global cannabis extraction company that develops and manufactures quality cannabis oils and concentrates, which are the fastest-growing segments in the cannabis industry. Halo is a global leader in cannabis oil and concentrates, having produced over 4.5 million grams of oils and concentrates since inception. The company has expertise across all major cannabis manufacturing processes, leveraging a variety of proprietary processes and products. The forward-thinking company is led by a strong management team with deep industry knowledge and blue-chip experience.
We seek Safe Harbor.
© 2020 Canjex Publishing Ltd. All rights reserved.