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HALO takes cannabis concentrates public on the NEO exchange in Canada

Halo Labs (HALO), a cannabis extraction company that manufactures oils and concentrates debuted on Canada’s self-proclaimed next-generation stock exchange, the NEO this week. The exchange was launched in 2015 as a new way to trade Canadian securities and labels itself as offering unique liquidity benefits and an interesting listing platform for companies trying to raise capital.

Investors can now trade shares of Halo through the usual investment channels, from full-service dealers to discount online brokerage platforms.

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“We are very proud to launch on NEO today, granting us access to the public markets as an avenue to raise capital in support of our expansion plans in Nevada, California, and Internationally,” said Kiran Sidhu, Chief Executive Officer and Director of Halo Labs. “We have benefited from the clarity and stability provided by NEO’s listing process, rooted in a disclosure-based approach that allows us to be a public company focused on growing domestically and abroad.”

HALO Investor Presentation 2018

Halo’s 2.5 million grams of cannabis concentrate

Halo Labs, which is based in Oregon currently markets more than 50 different products, a significant number considering Halo is relatively new, having been founded in 2016. To date, they’ve produced more than 2.5 million grams of cannabis concentrate. Halo is led by a management team with deep industry expertise as well as blue-chip pedigree, according to a statement; and continues to develop new proprietary products.

The company has captured over 20 percent of the concentrates wholesale market in Oregon, translating to monthly shipping of over 100,000 grams of cannabis concentrate and $10.3 million of net revenue in 2017. While Halo makes products for other companies on a White Label basis, its own product offering accounts for the majority of its revenue, totaling about 65 percent.

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The company does expect as much as 50 percent of revenues to come from their White Label business in the next two years.

In California, Halo’s facility in Cathedral City is nearing its projected October launch as it awaits final state permits. Together, the two new operations have the potential to generate upwards of $130 million in annual revenue, assuming full production capacity and current market prices.

A welcome move to the NEO

NEO President and CEO Jos Schmitt welcomed HALO to the exchange, congratulating them on being the newest company on NEO.

“We congratulate Halo Labs on their public listing and welcome them as the newest company to call NEO home,” Schmitt said in a statement. “The cannabis sector continues to be one of North America’s growth sectors, and we are excited to partner with Halo who is on the frontlines of this development. We look forward to watching Halo flourish on NEO as they grow and expand their cannabis operations.”

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The cannabis market is experiencing higher demand for concentrates and oils, replacing the demand for smokable products, which are declining in sales. Overall, the marketplace is teeming with many new cannabis products, including topical and beverages, and Halo’s move to could signal a desire to expand.

HALO Investor Presentation 2018

A company prepared for the future

Halo looks to be well-prepared for the future, having mastered the full range of extraction technologies. They use them to create extracts and concentrates for a  wide variety of products including crystals (both THC-A and CBD), dabs, shatters, and oils for edible products.

At the helm of the company is Kiran Sidhu who has a background in mergers and acquisitions. Sidhu founded Transact Network and led the IPO of On-Stage Entertainment. Sidhu is also the Audit Committee Chair for Namaste, Canada’s first producer to receive a sales license. G. Scott Patterson is Halo’s chairman and was the former chair of the Venture stock exchange as well as the former vice chair of the Toronto Stock Exchange.

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Chief Marketing Officer Andreas Met has experience in Walmart marketing as well as cannabis extracts sales and marketing for Golden Leaf, and CFO Philip van den Berg was CFO for Namaste and Golden Leaf.

Finally, many of the company’s sales executives hail from the world of consumer-packaged goods, with experience from companies like PepsiCo, Johnson & Johnson, and Anheuser-Busch.

Halo has strategically partnered with a leading Canadian producer to establish a manufacturing facility on site. This potentially may serve as a platform for global initiatives should the company take advantage of Canada’s ability to import and export cannabis products.

Halo recently did private financing at less than one times 2019E revenues ($50 to $60 million). By comparison, most of Halo’s publicly traded peers in the U.S. were trading at four to five times 2019E revenues. Some believe that Halo’s move to the public market could be the start of a significant stock value increase.

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