Acquisition Allows for Expanded Extraction Capabilities to Support Growth

TORONTO, Feb. 03, 2020 (GLOBE NEWSWIRE) -- Golden Leaf Holdings Ltd. (CSE: GLH) (OTCQB: GLDFF) (“Golden Leaf” or the “Company”), a pioneering cannabis solutions company and dispensary operator built around the recognized brands of Chalice Farms, has signed a definitive agreement (“Agreement”) for its wholly-owned subsidiary, TZ Acquisition, Inc., an Oregon corporation (“Buyer”), to acquire Tozmoz, LLC, an Oregon limited liability company (“Seller”).



Founded in 2015 as one of the first Oregon Liquor Control Commission (“OLCC”) licensed processors in Oregon, Tozmoz established itself as one of the premier cannabis extractors in the state. Tozmoz offers multiple extraction processes including CO2, hydrocarbon and ethanol, and both short path and wiped film distillation. Additionally, Tozmoz provides product manufacturing and formulation, as well as packaging services, providing clients OLCC-approved products ready for wholesale distribution and retail sale.

“We have been working with Tozmoz for years now and this acquisition fits squarely into our product-focused business strategy,” said Jeff Yapp, Golden Leaf Holdings’ CEO. “The core of this business is about the highest quality products on the market, like our Elysium Fields line of live resin cartridges and tinctures and our recently launched Chalice Farms RXO lines. This acquisition will allow us to take what we’ve been doing well, and continue to build and further expand our diverse portfolio of products. In our ‘crawl, walk, run’ model of business development, we believe Tozmoz is at the “run” stage.”

Pursuant to the terms of the Asset Purchase Agreement, Golden Leaf purchased substantially all of the assets of Tozmoz, including the facility located in Clackamas, which serves as the headquarters for multiple extraction options as stated above, for consideration of US$2.8 million consisting of cash and advances totaling US$675,000, an earnout of up to US$400,000 and GLH stock (29,166,667 shares at US$.06 per share). GLH has previously made certain payments to Tozmoz so that only approximately US$227,000 of cash will be due at closing. The earnout of US$400,000 may be paid to Tozmoz quarterly beginning in July 2020, based upon 30% of up to US$1.2 million of third-party revenue generated from the assets acquired by GLH.

Since its founding, Tozmoz generated revenue by toll-processing for clients including GLH. The attractive gross margins on the GLH business will now be earned by GLH. In addition, Tozmoz will continue to serve, and is growing revenue from, third-party white-label processing. Tozmoz has contributed to GLH product development for the Company’s tinctures and Elysium products. Their expertise will integrate with GLH’s existing product research and development abilities.

Co-Founders of Tozmoz Joel Klobas and Jerry Wallis, will continue providing services to GLH after the acquisition closes. Mr. Klobas will be employed by the Company as Vice President, Production and Mr. Wallis will assist the Vice President, Production and Senior Vice President Operations, as a consultant.

“Golden Leaf Holdings and Chalice Farms have become part of the fabric of the Oregon cannabis market, and we are excited to continue to innovate with them and provide the market with amazing new products,” said Mr. Klobas.

The formal closing of the acquisition is conditioned on the approval of the change of ownership of Seller by the OLCC, which is expected imminently.

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About Golden Leaf Holdings

Golden Leaf Holdings Ltd. is a Canadian company with operations in multiple jurisdictions including Oregon, Nevada and California, with cultivation, production and retail operations built around the recognized brands of Chalice Farms. Golden Leaf distributes its products through its branded Chalice Farms retail dispensaries, as well as through third-party dispensaries. Golden Leaf’s cannabis retail operations and products are designed with the customer in mind, focused on superlative in-store experience and quality products. Visit goldenleafholdings.com to learn more.

Investor Relations:

John Varghese

Executive Chairman

Golden Leaf Holdings Ltd.

971-371-2685

ir@goldenxtrx.com

Media Relations:

Anne Donohoe

KCSA Strategic Communications

adonohoe@kcsa.com

212-896-1265

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 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. These risks include but are not limited to general business, economic and competitive uncertainties, regulatory risks, market risks, risks inherent in manufacturing and retail operations such as unforeseen costs and production shutdowns, difficulties in maintaining brand loyalty, 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.