Halo Labs Inc (OTCMKTS: AGEEF) has been on a bull run since 2019 started. The stock has rallied from $.20 to over $.60 a share. With momentum building, it looks like AGEEF is on the verge of new highs above $.70 a share. The stock just needs to break out above $.60 and it’s clear sailing to new highs. Taking a closer look and expanding on our coverage initiated last month, there’s a lot to like with Halo Labs Inc.
First up, here’s a little background info for those that are not familiar with AGEEF. Halo is a cannabis extraction company that develops and manufactures quality cannabis oils and concentrates, which are the fastest growing segments in the cannabis industry. Halo has expertise in all major cannabis manufacturing processes, leveraging proprietary processes and products, and has produced over 3.0M grams of oils and concentrates since inception. The Company is currently operating in California and Oregon as well as Nevada with its partner Just Quality. The Company has also begun operations in Lesotho Africa through a strategic partnership.
Halo is already a leader in the extraction of cannabis crude oil, distillates, and resins. The Company’s primary proprietary brands, Hush™, and Gilt™ are available to consumers in California, Nevada, and Oregon. As well, the Company provides its cannabis oils on a white label and business-to-business basis to multiple customers primarily in California.
Hemp CBD Extraction Market
Halo Labs has secured a purpose-built hemp processing facility in Southern Oregon to expand the Company’s production capabilities into manufacturing CBD isolate and distillate. Production at the facility is expected to start in the 3rd quarter of 2019.
At full capacity, Halo will be able to process approximately 10,000 kilograms of hemp per month, which the Company expects will yield 700 to 900 kg of high-grade distillate or isolate and is projected to result in monthly revenue in excess of US$3.5 million at current wholesale prices.
Halo will produce industrial hemp derived distillate from the planned facility in Talent, Oregon. Situated in the Emerald triangle, just 20 miles from the California state line and 10 miles from Halo’s Oregon THC-focused extraction facility, the Talent site enables efficient procurement of hemp biomass from both Oregon and California and will benefit from the pooling of resources between Halo’s existing facility and this new facility.
Strong 2018 Results
After delivering strong results in 2018, Halo Labs is in an even better position to deliver big numbers in 2019. Taking a closer look at 2018 numbers, we see that Halo reported revenues of $10,898,277, an 8.8% increase over the prior year. The Oregon facility produced a record 361,511 grams of oil for cartridges (2017: 142,592 grams), 692,459 grams of shatter (2017: 648,793 grams) and 256,089 grams of raw oil (2017: nil). The Nevada operation through the Company’s operating partner, Just Quality LLC, sold 16,367 grams of oil (2017: nil). Revenues were $579,143 (2017: nil) and gross profits were $131,807 (2017: nil). Philip van den Berg, Chief Financial Officer and Director, said:
“In 2018, the Company built businesses in California and Nevada poised for future success. We also introduced new higher margin product lines in Oregon in the 4th quarter of 2018. We expect these investments to help Halo to deliver stronger results in 2019.”
Halo Labs launched its first product offering in Nevada in the fall of 2018. Halo has primarily focused its activities in 2019 thus far in California while treading slowly in the very competitive Nevada market. In Nevada, Halo has expanded is distribution since its launch by 50% having added 7 additional dispensaries in the first 8 weeks of the year with products now available in 21 of the 64 dispensaries across the state. The Company will be implementing a packaging restage in early April to optimally position and merchandise its Black Hat™ and Mojave™ vaporizer cartridge line-up. Halo Labs will also be expanding its vaporizer cartridge assortment. David Orr, Chief Revenue Officer of Halo Labs said:
“The Nevada market continues to represent exciting opportunities for Halo, particularly in the vaporizer cartridge segment. DabTabs™ has provided us with a truly innovative product to break through the clutter in a crowded market. We expect to double the number of dispensaries our products are in available in Nevada by the end of Q2.”
Currently trading with a market cap of $94 million, AGEEF is one of the most exciting cannabis plays for investors with a market cap less than $100 million. Considering the excitement surrounding the cannabis space and the fact that Halo Labs is already doing over $10 million a year in revenues, AGEEF is a discount entry opportunity at current levels. We expect Halo Labs to command a market cap of several hundred million as the company is well-positioned for growth.
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Disclosure: We have no position in AGEEF and have not been compensated for this article.