Golden Leaf Acquires Oregon's Tozmoz For $2.8 Million

Golden Leaf Holdings Ltd. (CSE: GLH) (OTCQB: GLDFF) signed a definitive agreement to acquire Oregon-based Tozmoz, which is a wholly-owned subsidiary, TZ Acquisition, Inc. for roughly $2.8 million. Tozmoz is a cannabis extractor that was founded in 2015 as one of the first Oregon Liquor Control Commission licensed processors in the state.

“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.”

Terms

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

Last Friday, the company announced that its President Stanley (“Stan”) Grissinger would become the Interim CFO while it ontinues its search for a permanent CFO. Grissinger replaces the prior Interim CFO, Kate Koustareva.

The Tozmoz Business

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 sales. Tozmoz has generated revenue by toll-processing for clients including GLH. The gross margins on the GLH business will now be earned by GLH. Tozmoz will continue to do third-party white-label processing.

“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.

Golden Leaf Sues BMF Washington

Last week Golden Leaf said it filed a lawsuit against BMF Washington LLC and Peter Saladino in Multnomah County (Oregon) Circuit Court, seeking to recover $‎6,916,580 in damages. Golden Leaf is claiming breach of contract, arising out of the parties’ equipment leasing and intellectual property licensing agreements and is seeking damages of $676,580 and $2,080,000, respectively. There is also a claim for unjust enrichment related to their improper use of the Plaintiffs’ equipment and intellectual property. Golden Leaf is also claiming that both Defendants misappropriated trade secrets under Oregon and Washington law and is seeking additional damages of $4,160,000.

Debra Borchardt

Debra BorchardtDebra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Masters degree in Business Journalism from New York University.


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