TORONTO, May 31, 2019 (GLOBE NEWSWIRE) -- Golden Leaf Holdings Ltd. (“Golden Leaf” or the “Company”) (CSE:GLH) (OTCQB:GLDFF), a pioneer cannabis oil solutions company and dispensary operator built around recognized brands, today announced financial results for the fiscal first quarter ended March 31, 2019, and a general business update.

Strategic Direction

We believe that a trusted, internationally-recognized brand targeting customers new to cannabis products services the coming wave of new users. These new users are expected to seek health and wellness benefits as restrictions on cannabis use relax over the next three years. Building the Chalice Farms brand leverages the Company’s dispensary locations, high-touch customer service approach, and management expertise. Already an established leader in Oregon, Nevada and Canada, the Company intends to expand to California through an innovative approach to consumer-direct sales as well as wholesale sales. The Company intends to achieve national sales of CBD and other non-THC products in 2019 and will search for global opportunities in 2020 and beyond.

Recent Business and Financial Highlights

Sales increased 34% over the prior year period

Operating loss improved 28% to US$3.0 million from US$4.2 million in the prior year period

Launched Elysium Fields brand

Launched Jackpot brand in Oregon

Achieved over 33% increase in Oregon wholesale account base

Retained Renmark Financial to support investor relations

Reduced headcount by 19% and initiated other efficiency measures

Appointed Larry Martin to the Board of Directors

Appointed Karyn Barsa as Chief Financial Officer

Subsequent Events:

Appointed Karyn Barsa as Chief Executive Officer

Appointed Robert Gordon as Director, Human Resources

Ms. Karyn Barsa, Chief Executive Officer of Golden Leaf Holdings, commented, “We saw year-over-year revenue growth of 34% for the first quarter of 2019. We are pleased with the successful launch of two new brands in our Oregon and Nevada markets, Elysium Fields and Jackpot, showing strong customer support and trust.”

“The appointment of Larry Martin to the Board of Directors is another indication of faith in our future. Larry’s unique background and experience as a successful CEO and entrepreneur, particularly his years of experience in FDA regulatory matters and involvement in the CBD industry, has already led to important contributions to the Board and Company.”

“During the quarter, we implemented over $3.7 million in annualized cost reductions and operating efficiencies, while launching new brands. Clearly, we believe that Golden Leaf is positioned to succeed in this marketplace. We have refocused our strategic direction to support our customers and expand our product offerings. I look forward to sharing more about our new direction with our shareholders shortly.”

Fiscal First Quarter Ended March 31, 2019 Financial Results

For the first quarter ended March 31, 2019 (“Q1 2019”), total revenue was US$4.3 million as compared to US$3.2 million for the same three-month period in 2018 (“Q1 2018”). The 34% quarter-over-quarter increase is largely attributable to strong revenue streams from the Chalice Farms stores in Oregon and flower sales from our Canadian operations.

Gross profit was US$1.8 million or 41% of total revenue for Q1 2019, compared with US$0.4 million or 11% of total revenue in Q1 2018. The strong Q1 2019 gross margin is primarily due to significant cost reductions and utilization of an improved recording process that better matches revenue and cost of sales.

Operating expenses were US$4.7 million for Q1 2019 compared with US$4.6 million for Q1 2018. Q1 2019 operating expenses included $0.2M in wages and benefits related to headcount reductions and severance. Operations at three facilities in Oregon were consolidated to one headquarters location.

During Q1 2019, headcount was reduced by 19% throughout the Company, and the reduction in annualized wages and benefits expense is projected at US$3.7 million.

Net loss for Q1 2019 was US$3.0 million or US$0.01 per share, compared with a net gain of US$8.1 million or US$0.02 per share for Q1 2018. Net income for Q1 2018 benefited from favorable changes in the fair value of warrant and debt liabilities of US$13.3 million, compared with $0.5M for Q1 2019. Changes in the fair value of warrant and debt liabilities and other non-cash items are excluded in the Adjusted EBITDA non-GAAP measurement.

Adjusted EBITDA loss was US$2.0 million for Q1 2019, compared with a loss of US$3.1 million for Q1 2018. Adjusted EBITDA is defined by the Company as earnings before interest, taxes, depreciation and amortization, non-cash compensation expenses, one-time transaction fees and other non-cash charges that include impairments. The Company considers Adjusted EBITDA an important operational measure for the business. For a reconciliation of Adjusted EBITDA to income (loss) before income taxes, please see the Company’s management discussion and analysis for Q1 2019 (the “MD&A”).

As of March 31, 2019, the Company had approximately US$8.3 million in cash, compared with US$12.3 million at December 31, 2018.

The Company’s interim condensed consolidated financial statements for Q1 2019, the related notes and Q1 2019 MD&A are filed on SEDAR and are available for review.

About Golden Leaf Holdings

Golden Leaf Holdings Ltd., a Canadian company with operations in multiple jurisdictions including Oregon, Nevada and Canada, is one of the largest cannabis oil and solution providers in North America, and a pioneer cannabis products company built around recognized brands. Golden Leaf cultivates, extracts, manufactures and distributes its products through its branded Chalice Farm retail dispensaries, as well as through third party dispensaries. Golden Leaf leverages a strong management team with cannabis and food industry experience to complement its expertise in extracting, refining and selling cannabis oil. Visit goldenleafholdings.com to learn more.

Company:

Kate Koustareva

Director of Financial Reporting and Treasury

Golden Leaf Holdings Ltd.

ir@goldenxtrx.com

Investor Relations:

Steve Hosein

Renmark Financial Communications

416-644-2020

Media Relations:

Anne Donohoe / Nick Opich

KCSA Strategic Communications

adonohoe@kcsa.com / nopich@kcsa.com

212-896-1265 / 212-896-1206

Disclaimer: This press release contains "forward-looking information" within the meaning of applicable securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the Company’s future business operations, the establishment of, and the future scope and scale of, the Chalice Farms retail system, the level of funding needed to establish the Chalice Farms franchise model, that the Chalice Farms franchise model will be successful and generate positive cash flows, the opinions or beliefs of management and future business goals. Generally, forward looking information 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 state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to general business, economic and competitive uncertainties, regulatory risks including risks related to the expected timing of the Company’s participation in the adult use market, market risks, risks inherent in manufacturing operations, difficulties of establishing a successful franchise model and other risks of the cannabis industry. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking information. Forward-looking information is provided herein for the purpose of presenting information about management’s current expectations relating to the future and readers are cautioned that such information may not be appropriate for other purpose. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws. This press release does not constitute an offer of securities for sale in the United States, and such securities may not be offered or sold in the United States absent registration or an exemption from registration or an exemption from registration.





GOLDEN LEAF HOLDINGS LTD. Interim Condensed Consolidated Statement of Financial Position (Unaudited) As at March 31, 2019 and December 31, 2018 (Expressed in U.S. dollars) March 31, 2019 December 31, 2018 ASSETS CURRENT Cash $ 8,288,168 $ 12,275,372 Accounts receivable 749,066 624,453 Other receivables 212,081 297,737 Income tax recoverable 686,600 686,600 Sales tax recoverable 608,519 661,319 Biological assets 77,113 74,148 Inventory 3,842,026 3,416,906 Prepaid expenses and deposits 1,564,758 1,962,033 Assets held for sale - 35,274 Total current assets $ 16,028,331 $ 20,033,842 Property, plant and equipment 10,244,641 6,188,835 Intangible assets 21,705,844 21,782,949 Goodwill 25,471,399 25,471,399 Deferred tax assets - Total assets $ 73,450,215 $ 73,477,025 LIABILITIES CURRENT Accounts payable and accrued liabilities $ 2,001,419 $ 2,624,967 Interest payable 520,119 92,554 Income taxes payable 69,543 106,808 Sales tax payable 58,980 231,675 Current portion of long-term debt 735,573 25,492 Current portion of convertible debentures carried at fair value 8,782,131 8,888,946 Warrant liability 64,550 369,343 Total current liabilities $ 12,232,315 $ 12,339,785 Long term debt 3,501,119 46,229 Note payable 312,118 312,118 Convertible debentures carried at fair value 5,176,936 4,996,811 Consideration payable 9,123,653 8,956,809 Warrant liability 41,270 236,138 Total liabilities $ 30,387,411 $ 26,887,890 SHAREHOLDERS' EQUITY Share capital $ 138,511,038 $ 138,511,038 Warrant reserve 4,052,164 4,052,164 Share option reserve 5,132,608 4,777,929 Contributed surplus 59,940 59,940 Accumulated other comprehensive loss (1,018,144 ) (125,930 ) Deficit (103,674,802 ) (100,686,006 ) Total shareholders' equity 43,062,804 46,589,135 Total liabilities and shareholders' equity $ 73,450,215 $ 73,477,025

GOLDEN LEAF HOLDINGS LTD. Interim Condensed Consolidated Statements of Operations and Comprehensive Gain (Loss) (Unaudited) For the three months ended March 31, 2019 and 2018 (Expressed in U.S. dollars) For the three months ended March 31, 2019 2018 Revenues Product sales $ 4,076,607 $ 3,200,267 Consulting revenue 206,241 - Total Revenue $ 4,282,848 $ 3,200,267 Inventory expensed to cost of sales 2,518,155 2,843,843 Production costs 138,736 297,474 Gross margin, excluding fair value items 1,625,957 58,950 Fair value changes in biological assets included in inventory sold 161,523 - (Gain) Loss on changes in fair value of biological assets (303,439 ) (293,897 ) Gross profit $ 1,767,873 $ 352,847 Expenses General and administration 2,999,461 2,795,794 Share based compensation 411,926 1,075,452 Sales and marketing 630,962 383,301 Depreciation and amortization 706,146 345,279 Total expenses $ 4,748,495 $ 4,599,826 Loss before items noted below $ (2,980,622 ) $ (4,246,979 ) Interest expense 741,662 649,258 Transaction costs 6,108 471,900 Gain on disposal of assets (16,945 ) - Other income (141,197 ) (159,126 ) Gain on change in fair value of warrant liabilities (499,662 ) (6,212,222 ) Gain on change in fair value of convertible debentures (36,169 ) (7,128,616 ) Gain (loss) before income taxes (3,034,419 ) 8,131,827 Current income tax expense 11,624 - Net gain (loss) $ (3,046,043 ) $ 8,131,827 Other comprehensive loss Items that will be reclassified subsequently to profit or loss: Cumulative translation adjustment 892,214 19,117 Comprehensive gain (loss) $ (3,938,257 ) $ 8,112,710 Basic and diluted gain (loss) per share $ (0.01 ) $ 0.02 Weighted average number of common shares outstanding 589,140,903 534,900,058







