Golden Leaf Holdings Ltd. (CSE: GLH) (OTCQB: GLDFF)

Golden Leaf Holdings Ltd. (CSE: GLH) (OTCQB: GLDFF), operating as Chalice Brands, is a premier consumer-driven cannabis company powered by the Chalice retail and consumer brands. GLH takes a diversified approach to growth through innovation, strategic partnerships and retail expansion, as well as a brand portfolio focusing on health and wellness. The company features best in class retail cannabis experiences backed by cultivation, processing and developing wholesale distribution. With over 160 employees, GLH is one of the largest cannabis operators in Oregon. The company holds licensing in Oregon, as well as partnerships for manufacturing and distribution in California. Its current product portfolio includes recognizable brands such as Chalice(TM), Elysium Fields(TM), GOLDEN(TM), Jackpot(TM) and RXO(TM).

Brands

Golden Leaf Holdings offers an innovative product line that addresses current market needs and looks forward to meet emerging trends. The company's goal is to offer something for everyone through the wholesale and retail marketplaces. Its current product offerings include:

Chalice(TM)

The Chalice Farms(TM) brand is focused on how cannabis enhances lives and ignites purpose. By offering the highest quality of cannabis in an array of flower, extracts, oils, edibles and full-body care products, the brand provides full efficacy in both the retail and wholesale markets. The Chalice Farms team has over 100 years of combined cannabis experience and continues to be an industry leader for both medical and recreational cannabis use – providing state-of-the-art farming practices, excellent retail and complete product innovation.

Elysium Fields(TM)

Elysium Fields(TM) is a "soil-to-oil" craft cannabis brand intended for cannabis connoisseurs who want the highest quality THC and boldest terpene flavors. Made from small-batch live resin, Elysium Fields creates an experience described as a remarkable entourage effect. The C-Cell cartridge has a 30% strain specific HTE with a 70% high THC distillate. The resin is created from a sustainable, organic garden flower that is flash-frozen upon harvest to preserve the terpenes for a heavenly experience.

RXO(TM)

RXO(TM) features Chalice Farms' purest and most versatile Rick Simpson Oil products. RXO was developed by the Steele brothers in collaboration with medical professionals and is a potent, strain-specific Ethanol Hash Oil (EHO) purified through a proprietary process. Through this process, various consumption methods can be accommodated, including edible, topical, sublingual and smoking (shatter and vape).

GOLDEN(TM)

GOLDEN(TM) offers a wide variety of craft cannabis products for a diverse population of cannabis users. Sourced from the finest raw materials from local growers, GOLDEN products are high-quality and innovative. Premium cannabis distillate vaporizer cartridges and fruit chew edibles made from organic ingredients are made using the most flavorful terpenes for enhanced health, wellness and enjoyment. Products are distributed online and through Chalice Farms or other dispensary partners.

Jackpot(TM)

Jackpot(TM) products offer a powerful combination of flavor and potency. With 70% THC content in each cartridge, Jackpot adds full-spectrum cannabinoids and flavorful infused terpenes in short-run limited strains for on-the-go fun seekers. The quality hardware of the cartridges makes them easily recyclable and guarantees to produce a large volume draw each time.

Financial Results

On April 27, 2021, Golden Leaf Holdings announced its financial results for the fourth quarter and fiscal year ended December 31, 2020. Among the highlights, the company reported:

• Record total revenue of $21.9 million for FY2020, marking a 39% year-over-year increase compared to $15.8 million for FY2019.
• Record revenues for the fourth quarter of 2020 totaling $5.5 million, a 53% year-over-year increase.
• Its first quarter with positive adjusted EBITDA, reporting approximately $342,000.
• Adjusted EBITDA of approximately $170,000 for the six months ended December 31, 2020, and cash flow from operations of approximately $420,000 for the same period.
• Gross profit of $6.8 million for FY2020 with 31% gross margin, as compared to $4.3 million at a 27% gross margin in FY2019.

In announcing the results, Jeff Yapp, CEO of Golden Leaf Holdings, stated, "2020 was the culmination of the transition we began in 2019. We set a course for positive cash flow and achieved that goal with support from vendors, commitment of our staff, executives and directors. We achieved positive cash flow in Q3 and Q4 and positive adjusted EBITDA in Q4, and, with the inclusion of its recently announced retail acquisition, management expects that the company can financially support operations moving forward."

Cannabis Market Outlook

In 2020, the legal cannabis market was valued at approximately $23 billion, and it is expected to top $73.6 billion in revenue by 2027, growing at a CAGR of 18.1% during the forecast period (https://ibn.fm/LdkhG). One of the biggest factors driving the cannabis market's growth is legalization around the world.

As cannabis sales generally increased during the pandemic, Golden Leaf Holdings achieved record financials for Q3 2020, reporting quarterly revenue of $6.2 million, a year-over-year increase of 42%. For the first time in its history, the company also reported positive cash flow in excess of $417,000 (https://ibn.fm/LY1b2).

Golden Leaf Holdings is uniquely positioned to capitalize on the growth of both the medicinal and recreational marijuana market segments through a rich product offering that successfully addresses current consumer needs.

Management Team

Jeff Yapp is the CEO and President of Golden Leaf Holdings Ltd. He has created a culture at GLH that operates under his mantra of 'Crawl, Walk, Run'. He is an accomplished entrepreneur and corporate executive who has built a successful career through his ability to recognize opportunity, even when it isn't obvious. Mr. Yapp has an extensive background in retail, marketing and entertainment. In the past, he has been committed to bringing innovation to Fortune 25 companies such as Microsoft, Kraft Foods, PepsiCo and more. As a strategic partner for Microsoft, he is an integral driver of growth for online and retail operations. He graduated with honors from the University of Michigan, majoring in Business Administration. He also graduated with honors from JL Kellogg School of Management at Northwestern University.

John Varghese is the Executive Chair of Golden Leaf Holdings and is responsible for all capital markets initiatives at GLH. His background is in mergers and acquisitions, investing, operations and capital markets, with professional experience that ranges from private equity, venture capital and investment banking to senior management positions and director roles in both private and public companies. He has served on over 20 boards, acting as the chairman of six of them.

Andrew Marchington is the company's CFO. His public accounting career experience includes time with start-up, high-growth and enterprise-level organizations, including five years of prior cannabis industry experience. He has a rich understanding of the priorities and best practices within accounting, finance and management. Mr. Marchington's past experience includes time with companies like Deloitte, Moss Adams, Cambia Health Solutions and C21 Investments.

John Ford, Golden Leaf Holdings' Chief Revenue Officer and VP of Retail, is a seasoned and dynamic retail leader with extensive experience in the retail industry who has led the launch of major retail brands such as Apple and Microsoft in China and Australia. His goal is to help retailers transition their businesses to modern experiential locations where customers can engage with products and brands in new ways. At Apple, Mr. Ford was the only field expat sent to launch Apple Retail in China. He set several records for Apple while in China, not just in sales but also in inventory management and employee turnover. Mr. Ford left Apple to lead Microsoft's international retail expansion, where he also managed its e-commerce presence.