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GTEC Holdings Ltd
Symbol GTEC
Shares Issued 119,337,375
Close 2019-04-24 C$ 0.67
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GTEC talks cannabis demand, estimates 2019 sales

2019-04-24 09:15 ET - News Release

Mr. Norton Singhavon reports

GTEC ANNOUNCES INCREASING DEMAND FOR ITS PREMIUM CANNABIS AND PROVIDES 2019 SALES PROJECTIONS

GTEC Holdings Ltd. has been receiving significant demand for its premium cannabis, and has provided insight into its current sales initiatives and projections.

Summary of sales:

  • $5.86 average selling price of flower shipped in bulk to wholesale buyers;
  • Products are repackaged by certain buyers and sold under GTEC's flagship medical brand, GreenTec;
  • $1.11 per gram current estimated cash cost of production (for business-to-business (B2B) wholesale -- excluding depreciation and amortization);
  • 81-per-cent estimated gross margin on products sold (excluding depreciation and amortization);
  • Secured agreements with confident forward sales outlook for all 2019 production output;
  • Estimating to produce and sell approximately 2.5 million grams of flower in 2019;
  • Estimating $12.5-million in 2019 sales;
  • Estimating to produce and sell 14 million grams of flower in 2020;
  • GreenTec continues to be the No. 1 selling product on CannMart, year to date;
  • Unprecedented strain-specific tetrahydrocannabinol (THC) content up to 24.3 per cent on its indoor flower (for Cold Creek Kush);
  • Currently producing premium-quality indoor flower, with ultrapremium flower to commence harvesting in the third quarter of 2019;
  • In supply negotiations with several of the top five Canadian publicly traded limited partnerships (LPs).

"We set out a mandate and vision to our shareholders, that we are extremely confident targeting the premium segment of the market and that we possess the operational expertise to execute this vision," said Norton Singhavon, founder, chairman and chief executive officer of GTEC. "Within a very short time frame, we have demonstrated our ability to produce, market and distribute a premium cannabis product with a robust sightline into future sales. We look forward to our other facilities and future genetics coming on line in the near future."

With its Alberta Craft Cannabis (ACC) subsidiary in full production mode, GTEC has multiple B2B sales arrangements for its indoor-grown, premium-quality cannabis. The company has experienced significant demand for its cannabis flower products, which has led to favourable selling prices and gross margins.

According to CannMart, the company's flagship medical brand, GreenTec, had previously become No. 1 selling product on the CannMart medical cannabis marketplace, and year to date, it continues to be. CannMart is an on-line medical e-commerce marketplace, wholly owned subsidiary of Namaste Technologies. GTEC has established a similar selling arrangement with CannaFarms (a wholly owned subsidiary of Vivo Cannabis) and Pure Global Cannabis. The company has also been in negotiations with several of the top-five-largest (by market capitalization) Canadian publicly listed cannabis companies on finalizing further supply agreements to increase exposure into various medical and recreational platforms.

GTEC has achieved an average weighted selling price of $5.86 per gram for all the bulk cannabis products it has sold since November, 2018. The company estimates that its cash production costs at ACC are approximately $1.11 per gram (excluding depreciation and amortization). Therefore, GTEC's current wholesale cannabis transactions are providing attractive margins to the company. Based on the company's research into other licensed producers, it believes that it has set an unprecedented record for THC percentages on its Cold Creek Kush cultivar of 24.3 per cent for flower.

Subject to Tumbleweed and Grey Bruce receiving the necessary regulatory approvals to commence cultivation during this calendar quarter (in which the company remains confident of this timeline), the company estimates producing 2.5 million grams of its premium indoor flower (not including trim) over the course of 2019. Based on the company's current average whole selling price of $5.86, and accounting for year-end inventory not ready for sale, GTEC expects to generate over $12.5-million in gross sales for 2019.

With the proceeds of the recently announced $12.5-million financing, the company anticipates that by the fourth quarter of 2019, it will be in full production of 14 million grams of premium indoor flower and achieve a full year of production for 2020, in which it is fully financed to execute on.

The company anticipates that its existing sales relationships, and the planned launch of its own recreational brands, will fully utilize its current and projected cannabis production for the remainder of 2019, including its line of ultrapremium indoor flower, which will commence harvesting in Q3.

GTEC share issuance -- F-20

The company would like to announce that as of March 18, 2019, 3PL Ventures Inc., its joint venture company established together with F-20 Developments Corp., received an aggregate of $5,614,138.12 by way of shareholder loan from F-20. The funds will be used to complete the retrofit of a premium indoor cultivation facility in Vernon, B.C. To date, 3PL has expended approximately $5,020,871 in connection with the construction and retrofit of the production facility.

As previously announced on Oct. 25, 2018, GTEC agreed to issue $1.25-million worth of common shares in the capital of GTEC to F-20 upon F-20 financing 3PL by way of a shareholder loan of at least $5-million and 3PL having expended at least $5-million in respect of the construction of the production facility. Accordingly, the company announces that it has issued 1,953,125 common shares to F-20 at a deemed value of 64 cents per share in satisfaction of the $1.25-million shares for services payment.

GTEC share issuance -- Tumbleweed

The company further announces that it has issued $250,000 of common shares at a deemed value of 68 cents per share to Norton Singhavon, chairman and CEO of the company, and Michael Blady, vice-president of the company, in connection with Tumbleweed Farms Corp. completing construction of a Health Canada-approved cannabis production facility, as previously announced on April 4, 2019. Completion of the Tumbleweed facility resulted in the satisfaction of a milestone pursuant to the share purchase agreement dated Nov. 22, 2017. Accordingly, the company issued 257,353 common shares to Mr. Singhavon and 110,294 common shares to Mr. Blady.

The common shares are subject to a statutory hold period of four months and one day from the date of issuance thereof.

About GTEC Holdings Ltd.

GTEC Holdings is a specialized cannabis company dedicated to cultivating ultrapremium-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, standard processing and analytical testing. The management team comprises a diverse skill set sourced from leading global food and beverage, and premium alcohol companies. GTEC has completed three cultivation facilities, and is currently cultivating and selling cannabis.

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