Halo Collective Inc. (“Halo” or the “Company“) (NEO: HALO) (OTCQX: HCANF formerly AGEEF) (Germany: A9KN) is pleased to announce that on February 15, 2021, the Company acquired a 44% ownership interest in Triangle Canna Corp. (“Triangle Canna”) the parent company of Farm Opco (as defined herein). As previously announced in September 2020, the Company partnered with Green Matter Holding Inc. (“Green Matter”) to purchase 1,600 acres of farm property in Lake County, California (the “Farm”). The Farm was purchased by Lake County Natural Health LLC (“LCNH”), which is owned 50% by the Company’s wholly-owned indirect subsidiary, PSG Coastal Holdings LLC and 50% by Green Matter.
Triangle Canna and the Farm OpCo are in the process of submitting applications to the California Department of Food and Agriculture for up to 330 California state cannabis cultivation licenses, and have already submitted an application to Lake County, California, for an “early activation” cannabis cultivation permit which, upon receipt, would entitle Triangle Canna to cultivate cannabis on up to 80 acres of the Farm.
Triangle intends to complete a financing by filing an offering statement under Regulation A+ to raise up to $75M, subject to qualification by the U.S. Securities and Exchange Commission. Triangle also intends to pursue a listing of its common stock on a recognized North American stock exchange following the completion of its proposed Regulation A+ financing.
Kiran Sidhu, CEO of Halo Collective commented: “When fully operational the Farm will be the largest mixed use cannabis growing operation in California1. We expect that Triangle will become a significant cultivation player in the United States.” Sidhu continued, “Halo will benefit from its relationship with Triangle as it will provide the Company with additional access to high quality cannabis for our expansion plans in California, to ensure a full, steady supply for the FlowerShop* product line and Halo’s planned three Los Angeles dispensaries. The Company expects to also derive meaningful value from its ownership of Triangle common stock, the rents paid to LCNH, and land appreciation as the Farm is developed and permitted.”
|1 Based on current active licenses in California as reported by the Bureau of Cannabis Control|
Subject to the receipt of the early activation license, Triangle Canna plans to cultivate two harvests of 60 acres of premium outdoor cannabis flower per calendar year. In 2021, Triangle Canna plans to initially harvest 10 acres in the summer, followed by a re-plant of 60 acres of full-term premium outdoor plants. The expected yields of the summer harvest are in the range of 800-1,000 pounds of finished flower per acre, while the full-term harvest yields are expected to range between 1,800-2,200 pounds per acre. Triangle expects to harvest over 100,000 pounds of high-grade flower in 2021. Cannabis Benchmarks reported that the average spot price for outdoor grown flower in the US was $800/lb in the week ending February 12, 2021.2
In 2022, Triangle Canna plans to add 20 acres of state-of-the-art greenhouses which will have the anticipated capacity to harvest an additional 64,000 pounds of finished flower annually on a perpetual basis. Cannabis Benchmarks reported that the average spot price for greenhouse grown flower in the US was $1,306/lb in the week ending February 12, 2021.3
In addition to the finished flower outputs described above, Triangle Canna plans to produce trim that could be used for concentrates or pre-rolls, which could add up to an additional 10,000 lbs and 80,000 lbs of biomass respectively in 2021 and 2022.
Additional Transaction Details
Triangle plans to file an offering statement under Regulation A+, subject to qualification by the U.S. Securities and Exchange Commission. Triangle has engaged the law firm of Kaufman McGowan PLLC, highly experienced U.S. securities attorneys with extensive cannabis industry and Regulation A+ experience, as its U.S. securities counsel, and has engaged Grassi & Co., a PCAOB-registered accounting firm, as its independent auditors.
Halo and Green Matter have provided start-up funding to Triangle and the Farm OpCo through their initial $44,000capital contributions and through an unsecured Line of Credit Agreement pursuant to which they each agreed to lend up to $600,000 to Triangle and the Farm OpCo. PSG and Green Matter have also each loaned $424,322.50 to Triangle Canna pursuant to a line of credit. Europa has also funded these activities through its initial $12,000 capital contribution and by advancing $168,000 of $300,000 available to Triangle and Farm OpCo pursuant to an unsecured promissory note. These funds will be used for permit and license applications, consulting fees, drilling water wells, and building roads on the Farm.
|3 See previous footnote 2|
The Farm OpCo has entered into product purchase agreements (the “Product Purchase Agreements”) with both Capital City Healthcare LLC, an affiliate of Green Matter, and Mendocino Distribution and Transportation, LLC, a subsidiary of the Company, for the 2021 and 2022 seasons. Each Product Purchase Agreement provides that the purchaser will purchase a minimum of 25% of all cannabis produced by the Farm OpCo during the term of the agreement.
LCNH and a wholly-owned subsidiary of Triangle Canna (the “Farm OpCo”) have also entered into a commercial lease agreement (the “Lease”) pursuant to which LCNH will lease to the Farm OpCo four separate parcels of property comprising the Farm, as well as certain buildings, structures, and improvements, in exchange for base rent of $55,000per month, subject to escalation to $210,000 per month and $280,000 per month following the issuance of certain permits and the achievement of other milestones. Farm OpCo is also required to pay success fees to LCNH of $5,000,000 on achievement of licensing milestones, as well as lease term renewals.
In addition to the Company, the initial shareholders of Triangle Canna are Green Matter, which also owns 44% of the issued and outstanding shares of Triangle Canna, as well as Europa Group USA, LLC (“Europa”) and Anil Beri, who own 9% and 3%, respectively, of the initial issued and outstanding shares of Triangle Canna, all unrelated parties to the Company.