TORONTO–(BUSINESS WIRE)–Halo Labs Inc. (“Halo” or the “Company”) (NEO: HALO, OTCQX: AGEEF, Germany: A9KN) has entered into a definitive share exchange agreement, dated effective September 22, 2020 (the “Share Exchange Agreement”), with 1265292 B.C. Ltd., doing business as Cannafeels (“Cannafeels”), and the shareholders of Cannafeels (the “Shareholders”), pursuant to which the Company will acquire all the issued and outstanding shares of Cannafeels in exchange for common shares of Halo (the “Acquisition”).

Cannafeels is a software company developing an online application (the “App”) to provide consumers with relevant, web-sourced and curated information about cannabis strains. The App is currently being developed for both the North American recreational market, as well as the UK and select EU medical cannabis markets.

In all markets, Halo plans to use the App to feature content that can support patients and consumers as they research cannabis strains on their computers, tablets, and smartphones. Through the App, patients and consumers will be able to access this strain-related content before, during or after visits to clinics and dispensaries, helping them understand how different strains address a range of health issues, as well as beneficial psychological and bodily effects that recreational users may seek.

Drawing upon the clinical evidence base for medical cannabis, Halo anticipates that the completed App versions for the UK and select EU medical markets will include specific strain recommendations for different ailments, such as chronic pain, nausea, anxiety/depression, sleeplessness or other medical conditions, and information about product preparations, such as plant materials, oils, tinctures, edibles and capsules, as well as suggested dosing.

Andreas Met, Halo’s Co-Founder and COO, who is scheduled to lead the Company’s international operations, explains the rationale behind the Acquisition from an international perspective:

“Halo looks forward to supplying select European cannabis markets, beginning in Malta and the UK. With our Bophelo operation in Lesotho, we expect to meet the demand from those patients looking to obtain medicine on the private market, and those waiting to receive it from the National Health Service in the UK. Educating patients through Cannafeels, we can supplement the knowledge of medical specialists, demystifying the plant.”

In line with The British Medical Journal’s current aim of “developing information and education for patients who wish to conduct their own research on the varieties and effects of medicinal cannabis¹,”Halo anticipates that Cannafeels can serve as an additional resource, helping patients meet their needs for information about different strains.

The planned Canadian and US versions of the App may also contain photographs of strains, comparisons, customer reviews and other content geared toward a range of recreational consumers. For select EU markets, Halo envisions versions of the App–tailored to each country–with content in multiple languages, featuring information about available strains in each market.

In addition, Halo plans for components of the software to collect data that can be used to drive promotional activities, subject to relevant data protection and privacy laws, such as the GDPR in the UK and EU. Halo expects the App to generate additional income for Halo through partnership agreements with other cannabis companies who add their strains to the App’s databases, and through targeted advertising opportunities to consumers and patients, where permissible under applicable law.

By the second quarter of 2021, Halo intends to include a Cannafeels customized QR code on all of its products, that consumers and patients can scan. The Cannafeels QR code will direct them to the App, where they may find more relevant information about the product. The App is expected to become a source of competitive advantage from an informational standpoint, solidifying consumer loyalty to Halo brands and increasing sell-through.

Kiran Sidhu, CEO and Co-Founder of Halo, comments: “Adding Cannafeels to Halo’s portfolio is a promising step toward improving Halo’s competitive advantage. It’s a perfect way to inform and influence choosy consumers in the cluttered and competitive Oregon and California markets.”

Cannafeels and Halo both anticipate that the App will be used more for flower, pre-rolls and cannabis derived concentrates, that are strain specific and require more consumer and patient information than is commonly available. To augment the successful launch of the App, Cannafeels has worked closely with cannabis equipment manufacturers to research and secure proprietary equipment for flower-trimming and pre-rolling, that enhance the visual presentation of flower and pre-rolls, and also make better-tasting pre-rolls by not shaking the cannabis. Halo will acquire all the equipment Cannafeels has procured and customized. This equipment cost Cannafeels approximately $1 million and will be deployed by Halo in Oregon and California.

According to Cannafeels Founder and CEO, Andy Chu: “We invested in this state-of-the-art, capacity-building machinery, because we anticipated that as consumers and patients adopted the App, they would purchase more flower and pre-rolls—particularly strains recommended by the App. The machinery will help Halo meet this new demand for its wide range of flower-based products—including those that will be featured on the App, such as the flower currently being harvested in Oregon, under license from OG DNA Genetics and zSkittlez.”

Transactions Details:

Pursuant to the terms of the Share Exchange Agreement, Halo will acquire 100% of Cannafeels’ outstanding common shares from the Shareholders for a purchase price of $6,510,000, to be satisfied by the issuance of 93 million Halo common shares. Completion of the Acquisition is subject to customary closing conditions, including receipt of approval from the NEO Exchange Inc. The common shares issued by Halo in conjunction with the Acquisition will be subject to certain sale restrictions.

In connection with the Acquisition, Halo also plans to issue an aggregate of 6,975,000 common shares as a transaction fee to an arm’s length consultant of the Company.

Pursuant to the terms of the Share Exchange Agreement, the Shareholders have entered into a pooling agreement with the Company whereby the Shareholders have agreed in the aggregate to not, during any trading day within one year of closing of the Acquisition, sell on a Canadian stock exchange (i) such aggregate number of common shares of the Company that would exceed the larger of 15% of the prior trading day’s total volume of sale orders in common shares of the Company, and (ii) 350,000 common shares of the Company.

Upon closing Cannafeels is expected to enter into the Consulting Agreement with Andy Chu, whereby Andy Chu will be retained as a consultant of the Company to develop the App. The proposed term of the Consulting Agreement is one year. Pursuant to the terms of the Consulting Agreement, the Company will grant Andy Chu options to purchase 100,000 common shares of the Company at an exercise price of $0.10 per share for a period of two years, subject the commercial launch of the App. Andy Chu also will be subject to customary confidentiality and non-competition covenants.

The Acquisition is expected to close on or before October 15, 2020 and is subject to the satisfaction or waiver of customary conditions, including the receipt of all applicable regulatory and NEO stock exchange approvals.

About Halo

Halo is a leading, vertically integrated cannabis company that cultivates, extracts, manufactures and distributes quality cannabis flower, oils, and concentrates, and has sold approximately six million grams of oils and concentrates since inception. Halo continues to scale efficiently, partnering with trustworthy leaders in the industry, who value their operational expertise in bringing top-tier products to market. Current growth includes expansion in key markets in the United States and Africa, with planned geographic expansion into U.K. and Canadian markets. With a consumer-centric focus, Halo markets value-driven, branded, and private-label products across multiple product categories.

Halo is led by a strong, diverse and innovative management team, with deep industry knowledge and blue-chip experience. The Company is currently operating in the United States in California, Oregon, and Nevada. Internationally, the Company is currently cultivating cannabis at Bophelo Bioscience & Wellness (Pty) Ltd, in Lesotho under a 200-hectare license and is planning importation and distribution of CBPM’s into 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”. The forward-looking information and forward-looking statements contained herein may include, but is not limited to, statements regarding the proposed acquisition of Cannafeels and the closing thereof, the development and integration of the Cannafeels software application or equipment, the impact of the Acquisition on the Company and projected sales on cannabis in California and Oregon.

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: changes in general economic, business and political conditions, including changes in the financial markets; 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.

---

¹ As quoted in Prohibition Partners, The UK Cannabis Report, December 2019