Halo Closes Ukiah Ventures Acquisition

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'TORONTO -- Halo Labs Inc. (“Halo” or the "Company") (NEO: HALO; OTCQX: AGEEF, Germany: A9KN) is pleased to announce, further to the press release dated August 6, 2020, it has completed the acquisition of all of the common shares of Ukiah Ventures Inc. (“UVI”).

Halo will now have UVI’s cannabis processing and distribution facilities in Ukiah, California to increase production; and in addition the Company plans to execute a large, indoor cultivation operation in collaboration with Terphogz, LLC, doing business as Zkittlez (“Zkittlez”). The proposed joint venture will combine Zkittlez’s world-famous genetic strains and growing acumen with Halo’s processing, manufacturing and distribution strengths to bring a range of top-shelf products to the California market.

The Company acquired all of the shares in the capital of UVI it did not already own for a consideration of 71,881,607 shares in the Company at fair market value (“FMV”) of C$0.12 (the “Transaction”) as described and pursuant to a share exchange agreement, dated August 5, 2020, among the Company, Ukiah, the shareholders of Ukiah, the holder of the outstanding warrants of Ukiah (the “Warrantholder”) and Origins-Cali, Inc. (the “Share Exchange Agreement”).

The Warrantholder exchanged its outstanding common share purchase warrants of Ukiah (the “Ukiah Warrants”) for replacement warrants of the Company, and the Ukiah Warrants so exchanged was immediately cancelled. In consideration for the exchange by the Warrantholder of each right to acquire one common share of Ukiah under a Ukiah Warrant, the Warrantholder received from the Company a warrant (each a “Replacement Warrant”) to acquire from the Company, a common share of Halo at USD$0.1892 (CAD$0.25) per share until July 19, 2021. In connection with the Share Exchange Agreement, the Company entered into an escrow agreement (an “Escrow Agreement”) with Odyssey Trust Company and certain shareholders of Ukiah pursuant to which 20% of the Payment Shares are held in escrow for twelve months subject to the terms of the Escrow Agreement.

Pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”), the Transaction constitutes a “related party transaction” as Philip Van Den Berg, Chief Financial Officer of the Company, and Andrew Turman, a Director of the Company, were shareholders of Ukiah and received 581,395 Payment Shares and 287,791 Payment Shares pursuant to the Transaction, respectively. The Company is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101, as the fair market value of the Transaction does not exceed 25% of the market capitalization of the Company, as determined in accordance with MI 61-101. The Transaction was approved unanimously by all non-interested directors of the Company.

The Company has also entered into a consulting agreement with Mendo Holdings, LLC (the “Consultant”) to assist with the integration of UVI into the Company, and with the design, compliance, regulatory and material sourcing of the UVI operation. The Consultant will be paid an annual fee of US$275,000, whereby 50% of the fee will be paid upon completion of a final work plan detailing the phases and services that will be completed during the term of the consulting agreement and the remaining 50% will be issued upon completion of the services outlined in the work plan. The fee will be settled with common shares of the Company, based on the market price of the common shares the day prior to issuance.

About Halo

Halo is a leading cannabis cultivation, manufacturing, and distribution company that grows, extracts and processes quality cannabis flower, oils, and concentrates, and has sold over five million grams of oils and concentrates since inception. Halo continues to evolve its business by delivering value with its products. Current growth includes 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 acquired a dispensary permit in Los Angeles, and UVI, both in California. The Company plans to acquire three KushBar branded dispensaries and five 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, with an international presence in Lesotho within a planned 200-hectare cultivation zone via Bophelo Bioscience & Wellness (Pty) Ltd., as well as planned importation and distribution in the United Kingdom via Canmart.

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".

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. Among others, the key factors that could cause actual results to differ materially from those projected in the forward-looking information and statements are the following: unexpected costs or delays in the completion of the Company's proposed dispensaries and other operation; negative results experienced by the Company as a result of general economic conditions or the ongoing COVID-19 pandemic; delays in the ability of the Company to obtain certain regulatory approvals; unforeseen delays or costs in the completion of the Company's construction projects; adverse changes to demand for cannabis products; ongoing projects by competitors that may impact the relative size of the Company’s growing operation; adverse changes in applicable laws; adverse changes in the application or enforcement of current laws, including those related to taxation; increasing costs of compliance with extensive government regulation; changes in general economic, business and political conditions, including changes in the financial markets; risks related to licensing, including the ability to obtain the requisite licenses or renew existing licenses for the Company's proposed operations; dependence upon third-party service providers, skilled-labor and other key inputs; and the other risks disclosed in the Company's annual information form dated April 16, 2020 and available on the Company’s profile at www.sedar.com. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.

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.


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