GTEC Provides Updates on Production and Sales

Published: February 13, 2020

GTEC Provides Updates on Production and Sales

GTEC Holdings Ltd., a multi-licence producer of premium indoor cultivated cannabis, is pleased to present the following updates on production and sales:

Production and Sales Update for the Fourth Quarter of fiscal 2019
unaudited ending November 30, 2019

  • Produced 434 kilograms (“KG”) of cannabis
  • Sold 280 KG of cannabis, with estimated weighted average selling prices of:
    • 256 KG of business-to-business (“B2B”) sales at $5.25 per gram for flower and $2.50 per gram for secondary products (trim and popcorn)
    • 24 KG of recreational cannabis sales at $9.25 per gram
  • An estimated cash cost between $2.15 – $2.20 per gram. The increased cash cost was due to labour and packaging relating to recreational sales
  • The final week of Q4 saw an initial recreational product launch of 24 KG, primarily produced at Grey Bruce Farms
  • The Company will report its fiscal 2019 audited results on Tuesday March 17, 2020

In Q4, the Company commenced a transition from selling its cannabis produced from commercial cultivars on a B2B wholesale basis, to selling cannabis produced from its unique cultivars in a consumer packaged good (“CPG”) format via Provincial supply chains. As a result of logistical factors, certain shipments into Provincial sales channels, which were originally anticipated to ship in Q4 2019 occurred early in Q1 2020.

All figures reported above with respect to the quarter ended November 30, 2019 are preliminary and are unaudited and subject to change and adjustment as the Company prepares its consolidated financial statements for the year ended November 30, 2019. Accordingly, investors are cautioned not to place undue reliance on the foregoing information. The Company does not intend to provide preliminary results in the future. The preliminary results provided in this news release constitute “forward-looking information” within the meaning of applicable Canadian securities laws, are based on several assumptions and are subject to a number of risks and uncertainties. Actual results may differ materially. See “Cautionary Statement Regarding Forward-Looking Information”.

Other Production and Sales Updates 

  • Three licensed cultivation facilities, totaling approximately 39,000 square feet, are now operating at full capacity, with Q2 harvests expected to drive increased revenue growth in Q2 and Q3,2020
  • On an ongoing basis, the Company has been selling all cannabis that has been produced; which demonstrates significant demand for GTEC products. The Company also has not experienced any material issues with production, product recalls, quality control, crop loss, or stale dated products
  • BLK MKT products receiving positive reviews on Lift & Co
  • The majority of the Company’s harvests are testing above 20% THC, with several harvests testing in the 26-29% range, resulting in certain GTEC products achieving some of the highest THC content in the sector
  • Due to demand levels for BLK MKT branded products, the BCLDB has implemented an order limit on wholesale purchases by retail stores
  • BLK MKT products rank amongst the highest pricing tiers (on per gram basis) in all retail channels
  • The Company is increasing average selling prices and gross margins by transitioning from bulk B2B cannabis sales to CPG cannabis sales (via Provincial sales channels)
  • Completed the successful transition from commercial cultivars to unique premium cultivars, with the final harvests of the commercial cultivars scheduled for February 2020, which allows the Company to enter Q2 solely producing unique premium cultivars, which is projected to increase the Company’s average selling price and gross margins
  • Launched single gram SKUs for BLK MKT cultivars in B.C. and Saskatchewan, with an increased selling price per gram than its 3.5 gram SKUs
  • Launched Tenzo (Purple Punch 2.0) in B.C. and Saskatchewan
  • Commenced the extraction of secondary products (trim and popcorn) into distillate oil, which has been sold to its wholesale partners
  • Commenced small-scale test harvests of new cultivars which are highly sought-after in other mature markets, to determine viability for commercial CPG production
  • Recently approved as a Licensed Supplier in the Province of Manitoba

“While the overall sector is facing rising inventory, declining selling prices and disappointing consumer reviews, GTEC’s focused business model of high-quality product, expanding distribution channels, and high selling prices are positioning the Company well,” said Norton Singhavon, Founder and CEO of GTEC. “We’re confident that our singular focus on cultivating, selling and marketing premium cannabis products will give us the leading edge in the industry.”

Other Corporate Updates

  • Construction at the 3PL joint venture is currently on schedule to complete during the fiscal 2020 year. The JV has the necessary financial resources to complete its build out, pursue licencing and to fund the operating capital. In aggregate, the JV facility is expected to have the capacity to be able to produce up to 6,000 KG of indoor flower annually
  • Executed a term sheet to divest its last remaining retail asset (located in Vancouver, BC). The transaction remains subject to closing; which is anticipated no later than March 31, 2020
  • Hired a Director of Security & Regulatory Affairs, who will play a key-role in maintaining regulatory compliance as the Company’s increases its production footprint
  • As part of the Company’s mandate to focus on the cultivation of premium indoor flower, it has listed its Spectre Labs warehouse for sale at $1.2 million. The Company has been presented offers and is currently in negotiations with multiple prospective buyers, with the expectation of a completed sale in Q2 2020

GTEC Holdings Ltd. is a specialized cannabis company which produces and distributes highly sought-after ultra-premium cannabis products in Canada. The Company has four licensed and operational assets and is currently distributing cannabis through medical and recreational sales channels.