Halo Announces Extension of the Binding LOI with Canmart Limited And Provides Update on Positive UK Market Developments
Halo Labs Inc. (“Halo” or the “Company”) (NEO: HALO, OTCQX: AGEEF, Germany: A9KN) announces that further to the press releases dated December 24, 2019 and March 3, 2020, and April 27, 2020, the Company has agreed to another extension of the binding letter of intent (the “LOI”) to acquire all of the common shares of Canmart Limited (“Canmart”), a licensed importer and distributor of cannabis based products for medicinal use (“CBPM’s”). Due to the ongoing global COVID-19 pandemic, the Company has agreed to the extension to allow both parties adequate time to complete due diligence and negotiate the definitive agreements while under shelter-in-place restrictions. While the extension grants until August 21, 2020 to finalize, the Company anticipates signing the final SPA and closing the transaction on or about July 15, 2020.
The total purchase price of the Canmart acquisition is anticipated to be C$6 million, payable in Halo common shares (“Halo Shares”) and at a deemed price of C$0.35 per share, which is based on the 30-day VWAP of the Halo Shares on the NEO Exchange as of December 23, 2019, the day the LOI was originally executed (“the Consideration”). The Consideration will be paid periodically as Canmart achieves critical business milestones.
- Halo to acquire 100% of Canmart Limited, a fully licensed operator
- Canmart is one of the UK’s few late stage applicants for a Controlled Drugs License to import and distribute licensed Cannabis-Based Products for Medicinal use (“CBPMs”)
- This intended acquisition of Canmart will position Halo as a seed to sale importer and distributor of medical cannabis in the United Kingdom
- Canmart operates a Medicines and Healthcare Products Regulatory Agency (“MHRA”) certified 30,000 square foot third party logistics warehouse in the southeast of England
- Canmart already holds wholesale distribution and special licenses, issued by the MHRA
- It also has applied for a Controlled Drugs License from the Home Office, to import and distribute licensed CBPMs
- The Home Office is the government department responsible for the enforcement of cannabis legislation in the UK and completed an initial site visit to Canmart’s warehouse facility to assess its suitability and security arrangements which Canmart has successfully passed
- Halo still anticipates commencing export of CBPMs to the UK in 2020 from Bophelo Bioscience & Wellness (PTY) Ltd. (“Bophelo”), subject to approval from the MHRA and any other necessary regulatory approvals
The UK cannabis market is poised to accelerate in 2020. In 2019 there was marginal growth as prescriptions increased to 6,883 and 4 clinic chains were open and operating part time. At the same time 1.3 million medical users were being supplied through unregulated channels1. In 2020, the total number of prescriptions has already grown to 12,000 and 7 total clinic chains will be open by the summer of 2020. Project 21 will launch in the fall and it is anticipated prescriptions will increase by 20,000 to over 30,000. By 2024, the UK medical cannabis market is predicted to be worth nearly £1bn (US$1.3bn), servicing nearly 340,000 active patients.2