Halo Collective Enters into Unsecured Loan for up to $14 Million

All Figures in Canadian Dollars unless otherwise stated

TORONTO, Jan. 6, 2022 /CNW/ - Halo Collective Inc. ("Halo" or the "Company") (NEO: HALO) (OTCQB: HCANF) (Germany: A9KN) today announced that it has entered into a loan agreement (the "Loan Agreement") with Global Tech Opportunities 6 (the "Lender"), pursuant to which the Lender will loan up to $14,000,000 (the "Loan Amount") to Halo in two tranches of $7,000,000 each, subject to certain terms and conditions. Amounts advanced under the Loan Agreement are expected to be used to support Halo's expansion into nutraceutical products (including Hushrooms™), the completion of Halo's Budega™ retail stores in North Hollywood, Hollywood, and Westwood, California and for general corporate purposes. The Loan Amount is unsecured and will bear interest at 8.0% per annum, and each tranche will be repayable in six equal monthly instalments (of blended principal and interest) of $1,194,039.62 per instalment (each, a "Payment Instalment"). The first Payment Instalment is to be made 30 days after the first advance is made under the Loan Amount and each subsequent Payment Instalment is due 30 days after the previous Payment Instalment. In the event that the Company elects not make a Payment Instalment in cash, the applicable Payment Instalment will be made through the issuance of a Convertible Debenture (as defined below), pursuant to the Subscription Agreement (as defined below).

In connection with the Loan Agreement, Halo: (i) paid the Lender a commitment fee of $350,000; and (ii) issued and committed to issue to the Lender 2,625,000 Common Share (as defined below) purchase warrants (the "Warrants"), each exercisable at a price of $1.60 for a period of five years from the date of the Loan Agreement. The Warrants will be issued in three equal tranches, with: (i) one-third of the Warrants being issued on the date of the Loan Agreement; (ii) one-third of the Warrants issuable 30 days following the date of the Loan Agreement; and (iii) one-third of the Warrants issuable 60 days following the date of the Loan Agreement. The Warrants do not include a cashless exercise provision.

The Lender is an investment fund managed by Alpha Blue Ocean ("ABO") which was created in 2017 by Pierre Vannineuse, Hugo Pingray and Amaury Mamou-Mani. ABO is a young and dynamic investment fund manager with the mission of revolutionizing the financial industry by offering innovative financing solutions. ABO implements a direct, rational and efficient approach by offering alternative financing solutions. In other words, flexible solutions for listed companies also referred to as PIPEs (Private Investment in Public Equity). ABO has executed more than 75 transactions since its inception with financial engagements of more than €1.5bn. "We are pleased to announce our first bespoke financing deal with a North American senior exchange listed company that is one of the fastest growing vertically-integrated cannabis companies", said Amine Nedjai, Chief Executive Officer of ABO. "Our innovative and tailored financing solution will provide Halo with the necessary capital to expand its already diversified portfolio for stellar growth in 2022. We are proud that Halo has chosen ABO as a partner given our experience with more than €1.5bn in financing commitments executed for companies across the globe since 2018."

In addition, concurrently with the execution of the Loan Agreement, Halo and the Lender entered into a subscription agreement (the "Subscription Agreement") that provides for the issuance of convertible debentures (each, a "Convertible Debenture") to provide additional funding to the Company and to satisfy Payment Instalments. The Subscription Agreement provides for the issuance of up to 15 Convertible Debentures each with a principal amount of $1,230,968.68, subject to certain terms and conditions, representing an aggregate principal amount of up to approximately $19.3 million (including the Debenture Commitment Fee (as defined below)). Each Convertible Debenture will be issued at 97% of the face value principal amount. The Convertible Debentures will mature on the date that is 24 months from the date of issuance and are convertible: (i) at any time at the option of the holder; and (ii) automatically at maturity. The conversion price of the Convertible Debentures (the "Conversion Price") is equal to the lower of: (i) $1.25; and (ii) the closing price of the common shares in the capital of the Company ("Common Shares") on the NEO Exchange on the date immediately preceding the date on which a conversion notice is delivered to the Company (or, in the event of the automatic conversion of the outstanding principal upon the maturity of the Convertible Debenture, the maturity date). The Company shall be entitled to force the conversion of a Convertible Debenture each time the five-day volume weighted average price of the Common Shares exceeds $2.60, subject to the ability of the Company to force the conversion of additional Convertible Debentures in certain other circumstances.

In the event that the Conversion Price is greater than the lowest closing daily volume weighted average price observed over a period of fifteen (15) trading days immediately preceding the date of the relevant conversion notice (or, where no conversion notice is given, the relevant maturity date of the Convertible Debentures) (the "Theoretical Conversion Price"), the Company will be required to pay the Lender a make whole amount to compensate the Lender for the difference between the actual conversion price and the Theoretical Conversion Price (each, a "Make-Whole Amount").

In connection with the Subscription Agreement, the Company has also paid the Lender a commitment fee of $650,000 and has agreed to pay the Lender an additional $200,000 in connection with the seventh tranche of Convertible Debentures (collectively, the "Debenture Commitment Fee").

Upon the occurrence of certain events of default or a change of control, as set forth in the Subscription Agreement, the Convertible Debentures may, at the discretion of the Lender, be redeemed in cash prior to the maturity at price equal to 105% of the principal amount then outstanding.

Further information regarding the financing can be found in the Loan Agreement and the Subscription Agreement, each of which will be posted to Halo's SEDAR profile on www.sedar.com.

About Halo Collective Inc.

Halo is a leading, vertically integrated cannabis company that cultivates, extracts, manufactures, and distributes quality cannabis flower, oils, and concentrates and has sold approximately eleven million grams of oils and concentrates since inception. The Company continues to expand its business and scale efficiently, partnering with trustworthy leaders in the industry who value Halo's operational expertise in bringing top-tier products to market.

Halo currently operates in the United States in Oregon and California. The Company sells cannabis products principally to dispensaries in the U.S. under its brands Hush, Mojave, and Exhale, and under license agreements with Papa's Herb®, DNA Genetics, Terphogz, and FlowerShop*, a cannabis lifestyle and conceptual wellness brand that includes G-Eazy as a partner and key member.

As part of continued expansion and vertical integration in the U.S., Halo boasts several grow operations throughout Oregon and two planned in California. In Oregon, the Company has a combined 11 acres of owned and contracted outdoor and green house cultivation, including East Evans Creek, a six-acre grow site in Jackson County with four licenses owned and operated by Halo and two third-party licenses under contract to sell all of their product to Halo; Winberry Farms, a one-acre grow site located 30 miles outside of Eugene in Lane County with a license owned and operated by Halo; and William's Wonder Farms, a three-acre grow site in Applegate Valley, under contract to sell all of its product to Halo pending the closing of Halo's acquisition of its licenses and business assets. Halo has recently acquired Food Concepts LLC, a master tenant of a 55,000 square foot indoor cannabis cultivation, processing, and wholesaling facility in Portland, Oregon operated by the Pistil Point entities.

In California, the Company is building out Ukiah Ventures, a planned 30,000 square foot indoor cannabis grow and processing facility, which aims to include up to an additional five acres of industrial land to expand the site. Recently, Halo partnered with Green Matter in California to purchase the Farm in Lake County, developing up to 63 acres of cultivation, comprising one of the largest licensed single site grows in California. Halo also plans to expand its operations in California by opening three dispensaries under the Budega™ brand in North Hollywood, Hollywood, and Westwood.

In Canada, Halo acquired three KushBar retail cannabis stores located in Alberta as a first in its planned entry into the Canadian market, leveraging its Oregon and California brands. With the KushBar retail stores as a foundation, the Company plans to expand its foothold in Canada.

Halo has also acquired a range of software development assets, including CannPOS, Cannalift, and, more recently, CannaFeels. In addition, Halo owns the discrete sublingual dosing technology, Accudab. The Company intends to spin-off these assets and its intellectual property and patent applications into its subsidiary Halo Tek Inc. and expects to complete a distribution to shareholders on a record date to be determined by Halo.

Halo recently completed the sale of certain of its non-U.S. operations to Akanda Corp. ("Akanda"), whose mission is to provide high-quality and ethically sourced medical cannabis products to patients worldwide. As an independent company, Akanda is seeking to deliver on this promise while driving positive change in wellness, empowering individuals in Lesotho, and uplifting the quality of the lives of employees and the local communities where it operates, all while limiting its carbon footprint. Akanda combines the scaled production capabilities of Bophelo Bioscience & Wellness Pty. Ltd., a Lesotho-based cultivation and processing campus located in the world's first Special Economic Zone (SEZ) containing a cannabis cultivation operation, with distribution and route-to-market efficiency of CanMart Ltd., UK-based fully approved pharmaceutical importer, and distributor that supplies pharmacies and clinics within the UK. With a potential maximum licensed canopy area of 200 hectares (495 acres), Bophelo has scalability that is arguably unmatched in the world today. Following the sale, Halo is Akanda's largest shareholder.

For further information regarding Halo, see Halo's disclosure documents on SEDAR at www.sedar.com

Connect with Halo Collective: Email | Website | LinkedIn | Twitter | Instagram

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". Forward-looking information may relate to anticipated events or results including, but not limited to the repayment of the Loan Amount, the expected use of proceeds from the Loan Amount, the payment of any make-whole amount, the future payment of a portion of the Debenture Commitment Fee, the filing of the Loan Agreement and the Subscription Agreement, management's plans regarding its portfolio of cannabis businesses, the Company's expansion plans regarding Canada, the expected size and capabilities of the final facility planned at Ukiah Ventures, the size of Halo's planned cultivation facility in Northern California, and the ability of Bophelo and Canmart to serve the UK market and the proposed spin-off by Halo Tek Inc.

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: inability of management to successfully integrate the operations of acquired businesses, changes in the consumer market for cannabis products, changes in the expected outcomes of the proposed changes to Halo's operations, delays in obtaining required licenses or approvals necessary for the build-out of Oregon operations, dispensaries or Canadian operations, the proposed spin-out with Halo Tek Inc., delays or unforeseen costs incurred in connection with construction, the ability of competitors to scale operations in Northern California, delays or unforeseen difficulties in connection with the cultivation and harvest of Halo's raw material, 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 March 31, 2021 and other disclosure documents  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.

Non-Solicitation

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

SOURCE Halo Collective Inc.

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