Kelowna, BC – July 30, 2019 – GTEC Holdings Ltd. (TSX-V:GTEC) (OTCQB: GGTTF) (FRA: 1BUP) (“GTEC” or the “Company”) is pleased to report its financial results for the second quarter, period ended May 31, 2019:

Key Financial Highlights

  • Alberta Craft Cannabis (“ACC”) sold 18,569 grams of cannabis at an average price of $5.85 per gram for total revenue of $108,000;
  • Gross margin increased to $75,000 before fair value adjustments and $1.2 million including fair value adjustments;
  • Net operating loss of $1.5 million and net loss of $2.3 million;
  • Strong balance sheet with $48 million in assets and net working capital of $4.8 million; including $2.2 million in cash and cash equivalents; and
  • Closed a $6.4 million second tranche, of a $12.5 million brokered private placement (The Company announced due to increased demand, it has upsized the brokered syndicated private placement offering led by Sprott Capital Partners LP (the “Agent”), from $5 million, to $8 million, to $10 million. The Agent had the option to increase the size of the Offering by up to 25%, therefore, closing the financing at $12.5 million).

Key Operating Highlights

  • Three completed production facilities of which, ACC and Grey Bruce Farms (Standard Cultivation License issued by Health Canada on July 5, 2019 to Grey Bruce) now have cultivation licenses and Tumbleweed is in process of obtaining its cultivation license;
  • ACC received its Standard Processing License and Medical Sales License, issued by Health Canada on July 26, 2019. The Standard Processing License authorizes the sale of cannabis plants, cannabis plant seeds, fresh cannabis and dried cannabis products. The Medical Sales License authorizes the sale of cannabis for medical purposes. This provides ACC with the ability to sell into provincial recreational supply chains and facilitates direct sales to medical cannabis clients;
  • ACC completed infrastructure changes and received approval to operate at its expected capacity of 1.3 million grams;
  • ACC produced 117,634 grams of cannabis at an average cash cost of production of $1.83 per gram;
  • ACC ramped up operations and is now operating at full production capacity;
  • Acquired a Cannabis retail store located in Vancouver, BC, to serve as the Company’s flagship retail location, operated as Cake Cannabis. The Company has submitted its application, where provincial licensing is pending;
  • Entered into a purchase and sale agreement with Canopy Growth Corporation (“Canopy Growth”) to acquire a cultivation facility that is near completion, with estimated production capacity of 4 million grams; and
  • Jürgen Schreiber, the former CEO of Shoppers Drug Mart and former Chairman of ALDO, was appointed to the Board of Directors on June 10, 2019.

“The second quarter of 2019 provided a number of significant achievements for the Company, as the team continued to successfully execute on its operational strategy,” said Norton Singhavon, GTEC Founder, Chairman and CEO. “We anticipate the recent milestones of Grey Bruce Farms being licensed and Alberta Craft Cannabis receiving additional sales licenses, as well as, operating at full production capacity, will significantly increase the Company’s operating performance for the remainder of the fiscal year.”

The Company’s recent financing provided the funds for the following initiatives:

  • Completed construction of Grey Bruce Farms, to be cultivation ready. As a result, Grey Bruce Farms is now licensed and will increase the Company’s annualized output by more than 120%;
  • Completed construction of Tumbleweed, to be cultivation ready. Tumbleweed is now awaiting the issuance of its Standard Cultivation License;
  • Continued construction of GreenTec Bio Pharmaceuticals (“GBP”) purpose-built building. Construction to complete will now focus on the interior elements of the facility;
  • Investment commitment into Cannabis Cowboy, which currently holds 23 development permits in Alberta;
  • Completed build-out of the retail cannabis store and e-commerce warehouse in Saskatchewan, issuance of Provincial licensing is pending;
  • Purchase of equipment to facilitate Zenalytic Laboratories (“Zen Labs”) being fully operational and revenue generating for cannabis analytical testing; and
  • Commenced construction on the extraction rooms at Zen Labs.


Outlook and Strategy

The Company’s initiative to produce, market and distribute premium indoor cannabis is being achieved through the determination and execution of the GTEC team. The Company commenced with the development of five cultivation facilities across Canada, of which three have now been completed, with two facilities licensed by Health Canada for Standard Cultivation, one for Standard Processing and Medical Sales and one is in process of obtaining its Standard Cultivation license.  As a result, the Company is now revenue-generating with significant production growth in the near future.

The Company will continue to build-out and execute on its objectives to increase shareholder value, with the following outlook:

  • Currently producing premium quality indoor flower, with ultra-premium flower to commence harvesting in the third quarter of 2019;
  • Estimated cannabis production for fiscal 2019 by operation:
    • ACC to produce between 500,000 to 700,000 grams at a cash cost range between $1.40 to $1.60 per gram; and
    • Grey Bruce Farms to produce between 150,000 to 300,000 grams at a cash cost range between $1.50 to $1.80 per gram.
  • Estimated sales for fiscal 2019 by operation:
    • ACC estimating sales between $2.5 to $3.3 million; and
    • Grey Bruce Farms estimating sales between $0.9 to $1.3 million (sales expected to commence in October 2019).
  • Commence sales into the Provincial supply chain, as ACC received its Standard Processing License and Medical Sales License. This will increase the Company’s overall average selling price and overall gross margin;
  • Increase customer base, where the Company currently has ongoing sales discussions with other Licensed Producers (previously have sold cannabis to six Canadian Licensed Producers);
  • Maximize the economic value of harvested plants, by optimizing the ratio of marketable components; such as the sale of flower, popcorn, and trim; as well as, converting its trim for alternative use within the market (i.e. oil or pre-roll).

The Company is expecting to achieve the following milestones throughout the remainder of fiscal 2019:

  • Standard Cultivation License at Tumbleweed within the coming weeks, resulting in an additional 1 million grams of production, once operating at full capacity;
  • Complete construction at GBP and 3PL in the fourth quarter of 2019;
  • License of GTEC Sask retail cannabis store and e-commerce warehouse in the third quarter of 2019
  • License of Vancouver retail cannabis store in the fourth quarter of 2019;
  • Zen Labs analytical testing business to be revenue generating in the third quarter of 2019; and
  • Launch its ultra-premium genetic portfolio in the fourth quarter of 2019.

The management’s discussion and analysis for the period and the accompanying financial statements and notes are available under the Company’s profile on SEDAR at www.sedar.com.

 

About GTEC

GTEC Holdings is a specialized cannabis company dedicated to cultivating ultra-premium quality cannabis in purpose-built indoor facilities. The company is vertically integrated across all major sectors of the Canadian cannabis industry and is currently licensed by Health Canada for Standard Cultivation at two facilities, Standard Processing (extraction), Standard Processing (provincial sales), medical sales and Analytical testing. The management team is comprised of a diverse skill set sourced from leading global food & beverage and premium alcohol companies. GTEC has completed three cultivation facilities and is currently cultivating and selling cannabis.

GTEC’s retail division is pursuing licensing for recreational cannabis stores across Western Canada. GTEC’s ultra-premium indoor flower will be marketed and sold under its flagship trademarked brands; BLK MKT™, Tenzo™, GreenTec™, Cognōscente™ and Treehugger™.

GTEC is actively pursuing sales and distribution opportunities across all major business channels: medical, recreational, B2B and export. GTEC is a publicly traded corporation, listed on the TSX Venture Exchange, OTCQB Venture Market and Frankfurt Stock Exchange. The Company is headquartered in Kelowna, British Columbia.

To view more about the company or to request our most recent corporate presentation, please visit our website at www.gtec.co

 

On behalf of the board,

Norton Singhavon
Founder, Chairman & CEO

Michael Blady
Co-Founder & Vice President

For additional information, please contact:
GTEC Holdings Ltd.
1-800-351-6358
contact@gtec.co

 

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION:
This news release includes certain “forward-looking statements” under applicable Canadian securities legislation. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals, where applicable and the state of the capital markets. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. For instance and among other things, there can be no assurance that all applicable Health Canada licenses, permits and approvals will be satisfied; that applicable municipal permits will be obtained; that production estimates or sales projections will be met; that the Company’s selling price and gross margin will increase; that unforeseen construction or delivery delays will not occur; that the Company will be satisfied with its due diligence investigation in respect of the Transaction; that all Transactions will be approved by the TSX Venture Exchange; that there will be continued demand for the Company’s flower; and that the Company can continue production for demand – that could cause actual results to differ materially from the Company’s expectations are disclosed in the Company’s documents filed under the Company’s issuer profile on the Canadian Securities Administrators’ System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com. Accordingly, readers should not place undue reliance on forward-looking statements, which speak only as of the date of this news release. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

This news release refers to certain financial performance measures that are not defined by and do not have a standardized meaning under International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. These non-IFRS financial performance measures are defined in the MD&A. Non-IFRS financial measures are used by management to assess the financial and operational performance of the Company. The Company believes that these non-IFRS financial measures, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company’s operating results, underlying performance and prospects in a similar manner to the Company’s management. As there are no standardized methods of calculating these non-IFRS measures, the Company’s approaches may differ from those used by others, and accordingly, the use of these measures may not be directly comparable. Accordingly, these non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.