Golden Leaf Holdings Reports Fiscal Third Quarter 2018 Results

TORONTO, Nov. 05, 2018 (GLOBE NEWSWIRE) -- Golden Leaf Holdings Ltd. (“Golden Leaf” or the “Company”) (CSE:GLH) (GLDFF), a cannabis company with cultivation, production and retail operations built around recognized brands, today announced financial results for the fiscal third quarter ended September 30, 2018.

Recent Business and Financial Highlights

• Record quarterly revenues of US$5.1 million for Q3 2018, compared to US$3.1 million for Q3 2017
• Acquired Canadian Sales License from Health Canada via Medical Marijuana Group (“MMG”), its Canadian Subsidiary
• Hired Jeff Yapp as Chief Marketing and Sales Officer

Subsequent Events:

• Announced non-binding letter of intent to merge with Terra Tech Corp.
• Announced launch of Golden Fruit Chews into the Nevada market
• Acquired cultivation license for its Bald Peak, Oregon facility from the Oregon Liquor Control Commission
• Introduced new Green Apple Flavor CBD Infused Fruit Chews into the Oregon market

Mr. William Simpson, Chief Executive Officer of Golden Leaf Holdings, commented, “Our third quarter revenue reached yet another record, achieving US$5.1 million, primarily driven by sale of flower in Canada after we received our Canadian Sales license from Health Canada, and seasonal improvements in our Oregon Retail revenue and the addition of two new Retail stores in Oregon when compared to the third quarter 2017. Adjusted EBITDA for the third quarter of 2018 was a loss of US$2.9 million primarily driven by production costs and operating expenses.

“Combined with the recent legalization of cannabis in Canada and our ever expanding North American footprint in cultivation, wholesale and retail, we have set the stage for a stronger 2019. We continue our efforts to build our wholesale and retail brands, enhancing trust with our customers, and expanding market share. We are also investing in people and processes as we recognize the importance of a strong, dedicated workforce to support the market growth in the jurisdictions in which we operate,” said Mr. Simpson.

Fiscal Third Quarter Ended September 30, 2018 Financial Results

For the quarter ended September 30, 2018 (“Q3 2018”), net revenue was US$5.1 million as compared to US$3.1 million for the same three-month period in 2017 (“Q3 2017”). The 63% year-over-year increase largely reflects the sale of flower from our Canadian operations, seasonal improvements in Oregon retail, and the addition of two new Chalice Farms stores in Oregon, when compared to the same period in 2017.

Gross profit was US$0.4 million or 9% of net revenue for Q3 2018, compared with US$0.7 million or 23% of net revenue for Q3 2017. Q3 2018 gross margins decreased primarily due to non-cash valuation of biological assets. As of September 30, 2018, biological assets were newly planted and on average 13% complete.

Operating expenses were US$4.7 million USD for Q3 2018, consistent with US$4.7 million in Q3 2017.

Adjusted EBITDA loss was US$2.9 million for Q3 2018, a slight improvement compared with a loss of US$3.0 million for Q3 2017, primarily as a result of an increase in product sales volume. Adjusted EBITDA is defined by the Company as earnings before taxes, depreciation and amortization, less certain non-cash equity compensation expenses, including impairments, one-time transaction fees and all other non-cash items. The Company considers Adjusted EBITDA an important operational measure for the business.

Net loss for Q3 2018 was US$5.5 million or US$0.01 per share loss, compared with a net loss of US$3.2 million or US$0.01 per share loss, for Q3 2017. Net loss for Q3 2018 increased primarily attributed to the effect of the changes in fair value of non-cash assets and debt, specifically, biological assets and warrant liability.

As of September 30, 2018, the Company had approximately US$20.1 million in current assets, compared with US$11.6 million in current assets at December 31, 2017. The increase is largely because of the bought deal financing which was completed on January 31, 2018, in addition to proceeds from warrant exercises. Total assets increased to US$84.2 million at September 30, 2018, compared to US$75.8 million at December 31, 2017, also due primarily to the bought deal financing completed in January.

Investor Conference Call

Golden Leaf, led by William Simpson, Chief Executive Officer, will hold a conference call at 4:30 PM ET today, Monday, November 5^th, 2018, to report its financial results for the third quarter ended September 30, 2018.

The dial-in information for the conference call is as follows:

Program Title: Golden Leaf Holdings Third Quarter 2018 Financial Results Call

Canada & U.S.: (877) 423-9813
International: (201) 689-8573

Participants must request the Golden Leaf Holdings Call.

A live audio webcast will be available online on Golden Leaf's website at goldenleafholdings.com, where it will be archived for two weeks.

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