Loading, Please Wait...
Reported Record Quarterly Revenue of US$3.7 million
TORONTO, Aug. 29, 2018 (GLOBE NEWSWIRE) -- Golden Leaf Holdings Ltd. (“Golden Leaf” or the “Company”) (CSE:GLH) (OTCQB:GLDFF), a cannabis company with cultivation, production and retail operations built around recognized brands, today announced financial results for the fiscal second quarter ended June 30, 2018, and a general business update.
Recent Business and Financial Highlights
Mr. William Simpson, Chief Executive Officer of Golden Leaf Holdings, commented, “We posted strong year-over-year revenue growth of 76% for the second quarter of 2018 to reach record revenues of US$3.7 million, primarily driven by the acquisition of our Chalice Farms retail operations, when compared to the second quarter of 2017. Adjusted EBITDA for the second quarter of 2018 was a loss of US$3.2M, primarily driven by transaction costs and corporate expenses. During the quarter, we opened our sixth Chalice Farms location in Happy Valley, Oregon, which is now our second highest-grossing Chalice Farms location. In addition to retail operations, revenues from the Company’s medical consulting division, as well as its Nevada wholesale operations and sales of our new Fruit Chews line in Oregon, continued to support our top line growth.
“We are strategically increasing our cultivation, wholesale and retail capabilities within our current and target markets to support the growing demand of the industry. With the impending legalization in Canada and the recent announcements to expand our presence in Nevada and enter the California market, we are focused on revenue growth and the responsible management of operating expenses on a per-share basis. Combining these efforts, our goal is to be cash-flow positive by the second half of 2019. Our work to build strong brands in key markets is central to the expansion of Golden Leaf, built on vertical integration where it is economically and operationally rational,” concluded Mr. Simpson.
Q2 2018 Business Overview
Fiscal Second Quarter Ended June 30, 2018 Financial Results
For the quarter ended June 30, 2018 (“Q2 2018”), net revenue was US$3.7 million as compared to US$2.1 million for the same three-month period in 2017 (“Q2 2017”). The 76% year-over-year increase largely reflects the addition of the Chalice Farms retail revenue stream, the addition of the Company’s medical consulting revenues and the Company’s Nevada wholesale operations, offset slightly by declines in wholesale revenues in Oregon.
Gross profit was US$940,000 or 26% of net revenue, for Q2 2018, compared with US$402,000 or 19% of net revenue in Q2 2017. Q2 2018 gross margins increased primarily due to the addition of gains on fair market value of biological assets from the Company’s cultivation subsidiary.
Operating expenses were US$4.6 million USD for Q2 2018, compared with US$2.7 million in Q2 2017, which is largely attributable to the addition of the Chalice Farms retail business which was acquired in July 2017, and higher corporate costs.
Adjusted EBITDA loss was US$3.2 million for Q2 2018, compared with a loss of US$1.9 million for Q2 2017, primarily as a result of increased transaction costs and corporate expenses within G&A. 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 income for Q2 2018 was US$3.2 million or US$0.01 per share, compared with a net loss of US$1.7 million or $0.01 per share loss, for Q2 2017. Net income for Q2 2018 benefited from non-operating income of US$7.3 million related to favorable changes in the fair value of warrant and debt liabilities.
As of June 30, 2018, the Company had approximately US$22.6 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$86.7 million at June 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
GLH’s management, led by William Simpson, Chief Executive Officer, will hold a conference call at 4:30 PM ET today, Wednesday, August 29, 2018, to report its financial results for the second quarter ended June 30, 2018.
The dial-in information for the conference call is as follows:
Program Title: Golden Leaf Holdings Second 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 one year.
An audio replay of the conference call will be available through midnight September 12, 2018 by dialing +1 (844) 512-2921 from the U.S. or Canada, or +1 (412) 317-6671 from international locations, Conference ID: 13682739.
To be added to the Golden Leaf email distribution list, please email GLH@kcsa.com with ‘GLH’ in the subject line.
About Golden Leaf Holdings
Golden Leaf Holdings Ltd. is a Canadian company operating in multiple jurisdictions, including Oregon, Nevada and Canada, with cultivation, production and retail operations built around recognized brands. 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 http://goldenleafholdings.com/ to learn more.
KCSA Strategic Communications
212-896-1220 / 212-896-1233
Chief Executive Officer
Golden Leaf Holdings Ltd.
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 operation, expectations of gross sales, the opinions or beliefs of management and future business goals, statements regarding the timing for opening of the Company’s sixth Chalice Farms dispensary. 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 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 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.
|GOLDEN LEAF HOLDINGS LTD.|
|Interim Condensed Consolidated Statement of Operations and Comprehensive Gain (Loss) (Unaudited)|
|For the three and six months ended June 30, 2018 and 2017|
|(Expressed in U.S. dollars)|
|For the three months ended June 30,||For the six months ended June 30,|
|Product sales||$ 3,671,738||$ 2,089,393||$ 6,854,727||$ 4,348,487|
|Total Revenue||$ 3,681,636||$ 2,089,393||$ 6,881,903||$ 4,348,487|
|Inventory expensed to cost of sales||3,029,795||1,530,212||5,754,508||3,368,899|
|Gross margin before the undernoted||538,088||402,124||716,168||640,523|
|Fair value changes in biological assets included|
|in inventory sold and other inventory charges||10,518||-||129,648||-|
|Gain on changes in fair value of biological assets||Note 7||(412,360||)||-||(706,257||)||-|
|Gross profit||$ 939,930||$ 402,124||$ 1,292,777||$ 640,523|
|General and administration||3,270,258||2,058,257||6,066,052||3,656,530|
|Share based compensation||Note 15||567,969||215,221||1,643,421||376,569|
|Professional fees paid with equity instruments||-||113,071||-||167,491|
|Sales and marketing||440,751||287,289||824,052||566,212|
|Depreciation and amortization||Note 8, 9||358,516||71,128||703,795||133,303|
|Total expenses||$ 4,637,494||$ 2,744,966||$ 9,237,320||$ 4,900,105|
|Loss before undernoted items||$ (3,697,564||)||$ (2,342,842||)||$ (7,944,543||)||$ (4,259,582||)|
|Loss on disposal of assets||5,000||294,200||5,000||294,200|
|Impairment of financing lease receivable||-||27,422||-||54,844|
|Gain on change in fair value of warrant liability||Note 12||(4,415,480||)||(82,694||)||(10,627,702||)||(238,379||)|
|Gain on change in fair value of liabilities||Note 10||(2,841,987||)||(1,541,097||)||(9,970,603||)||(1,585,790||)|
|Gain (loss) before income taxes||$ 3,251,863||$ (1,514,987||)||$ 11,383,690||$ (3,804,717||)|
|Current income tax expense||8,434||200,000||8,434||200,000|
|Net Gain (Loss)||$ 3,243,429||$ (1,714,987||)||$ 11,375,256||$ (4,004,717||)|
|Other comprehensive loss|
|Cumulative translation adjustment||$ 34,146||-||$ 53,263||-|
|Comprehensive Gain (Loss)||$ 3,209,283||$ (1,714,987||)||$ 11,321,993||$ (4,004,717||)|
|Basic and diluted gain (loss) per share||$ 0.01||$ (0.01||)||$ 0.02||-0.03|
|Weighted average number of common shares outstanding||575,776,971||143,604,908||555,451,438||131,045,274|
|GOLDEN LEAF HOLDINGS LTD.|
|Interim Condensed Consolidated Statement of Financial Position (Unaudited)|
|As at June 30, 2018 and December 31, 2017|
|(Expressed in U.S. dollars)|
|June 30, 2018||December 31, 2017|
|Cash||$ 15,702,963||$ 6,009,447|
|Accounts receivable||Note 6||270,919||377,746|
|Income tax recoverable||748,200||432,000|
|Sales tax recoverable||549,449||442,832|
|Biological assets||Note 7||402,675||90,627|
|Prepaid expenses and deposits||720,415||348,176|
|Assets held for sale||35,274||305,274|
|Total current assets||$ 22,626,056||$ 11,629,357|
|Property, plant and equipment||Note 8||6,071,676||5,956,910|
|Intangible assets||Note 9||26,075,826||26,227,116|
|Total assets||$ 86,744,956||$ 75,784,781|
|Accounts payable and accrued liabilities||$ 1,127,110||$ 2,867,735|
|Current portion of long-term debt||Note 11||40,371||131,610|
|Current portion of convertible debentures|
|carried at fair value||Note 10||-||271,245|
|Total current liabilities||$ 1,261,253||$ 3,380,158|
|Long term debt||Note 11||64,455||80,381|
|Note payable||Note 10||313,816||389,916|
|Convertible debentures carried at fair value||Note 10||12,016,126||30,360,225|
|Warrant liability||Note 12||4,406,297||14,300,616|
|Total liabilities||$ 27,589,297||$ 58,038,646|
|Share capital||Note 13||$ 138,002,232||$ 108,552,681|
|Warrant reserve||Note 14||4,078,120||5,083,561|
|Share option reserve||Note 15||2,100,540||1,087,640|
|Accumulated other comprehensive loss||-43,435||9,828|
|Total shareholders' equity||$ 59,155,659||$ 17,746,135|
|Total liabilities and shareholders' equity||$ 86,744,956||$ 75,784,781|
|For the three months ended June 30,||For the six months ended June 30,|
|Income (loss) before income taxes||3,251,863||(1,514,987||)||11,383,690||(3,804,717||)|
|Net impact, fair value of biological assets||(401,842||)||-||(576,609||)||-|
|Depreciation and amortization||358,516||71,128||703,795||133,303|
|Fair value changes on debt and equity instruments||(7,257,467||)||(1,623,791||)||(20,598,305||)||(1,824,169||)|
|Share based compensation||567,969||328,292||1,643,421||544,060|
|Interest expense, net||266,317||312,411||915,575||857,432|
|Impairments and other||36,723||189,325||(122,403||)||217,672|
|Loss on disposal||5,000||294,200||5,000||294,200|
|Adjusted EBITDA operational Gain (Loss)||$ (3,172,921||)||$ (1,943,422||)||$ (6,173,936||)||$ (3,582,219||)|
Adjusted EBITDA Disclaimer: Adjusted EBITDA is defined by the Company as earnings before interest, taxes, depreciation, amortization, less certain non‐cash compensation expenses, including impairments, one‐time transaction fees and all other noncash items. Adjusted EBITDA is a non‐GAAP financial measure which does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. The Company considers this Adjusted EBITDA an important figure to show the true day to day operational picture of the business. It should not be considered in isolation as a substitute for measures of performance prepared in accordance with the IFRS.