Both Halo Labs Inc (OTCMKTS:AGEEF) and High Tide Inc (OTCMKTS:HITIF) agreed to amend the terms of sale of KushBar retail cannabis assets. Accordingly, they will incorporate changes to the asset purchase accord signed on February 14, 2020.
Both Halo and High Tide engage in obtaining approvals and regulatory licenses from AGLC (Alberta Gaming, Liquor, and Cannabis) and expect to conclude the deal in Q4 2020.
Sells KushBar assets for $5.7 million to Halo Labs
As per the terms of the amended pact Halo’s subsidiary, Halo Labs, will acquire three KushBar retail cannabis stores from High Tide for $5.7 million. Halo issued 13.461 million common shares each at $0.26, amounting to $3.5 million to High Tide. The company will issue a convertible promissory note for $1.8 million on closing the deal.
Halo will pay monthly for managing the assets
On closing the deal, High Tide will involve in managing the operations of KushBar retail assets and receives royalties for the advisory services. High Tide will also receive monthly payments for retail management.
The amended purchase agreement reduces the Capex for both the parties, and Halo also gets an option to acquire additional retail assets of High Tide. Payments are lowered from $12 million to $5.7 million by reducing the assets in the sale scope. The amended accord excludes certain retail cannabis stores because of development permits and development.
Halo establishes a presence in retail cannabis
Halo intends to establish its presence in Canada’s cannabis retail industry by taking over operational cannabis retail stores. By acquiring already operational cannabis retail stores, Halo can focus on developing its brand – Canna Cabana. Accordingly, the company paid for the deal in shares instead of outright cash.
Halo Labs records robust sales of Hush branded products
Halo Labs posted record sales of its Hush Branded products in California in May and April 2020. Its wholesale revenues of Vape products are $298,000 in April 2020. In May 2020, the company reported $417,000 in revenues from Wholesale Hush branded products.
Lack of retail stores established black markets, and prevailing high prices, the licensed delivery services, and retailers of cannabis reported a decline of 9% MoM in California sales in April 2020.
Halo expects to enjoy robust sales from its retail stores in California and introduce innovative gummies in multiple flavors before the end of Q3 2020.