(TheNewswire)
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- Significant revenue growth of 267%, resulting inrecord revenues of $8.8 million
- Increased production by 269%
- Substantial reduction of operating expenses by 40% or$ 2.7 million (C)
- Net income from operations of $282,000, compared to anet loss of $8.3 million
- Adjusted EBITDA of -$ 206 ,000 (D) , a 96%improvement from -$ 5.7 million
Kelowna, BC - TheNewswire – March 3, 2021 – GTEC Holdings Ltd. (TSXV:GTEC) (OTC:GGTTF) (FRA:1BUP)(“ GTEC ”, the “ Company ” or “GTEC Cannabis Co.” ) a multi-licensed producer of handcrafted, high qualitycannabis, is pleased to report its fourth quarter and fiscal 2020financial results.
During fiscal 2020, the Company’s core focus was toestablish relevant market share within the premium category throughits BLK MKT TM and Tenzo TM brands, while concurrently reducingcorporate overheads. As a result, Management believes it is wellpositioned to continue driving revenue growth and cost efficienciesgoing forward.
Key Financial Highlights of Fiscal2020
(for the period ended November 30,2020)
All figures are in Canadian dollarsand compared to the Company’s Fiscal 2019 year-end results
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- Gross Revenue of $8.8 million, compared to $2.4million, an increase of $6.4 million or 267% year over year
- Gross margin (A) dollars of $4 million (net of excise tax),compared to $1.07 million, an increase of $2.9 million or 272%, whileoverall gross margin (A) percentage increased from 45% to 50% (including both B2B sales andrecreational sales)
- Recreational cannabis sales accounted for 79% oftotal sales, compared to 4%
- Overall weighted average selling price increased by$2.09 or 43% to $6.90 per gram (with recreational cannabis averagebeing $8.67, including excise tax)
- Cash cost of production (B) was $1.96 pergram, compared to $2.62, a decrease of $0.66 or 25%
- Production increased by 269% to 2,685 KG compared to727 KG in fiscal 2019
- Operating expenses (C) of $4.0million, compared to $6.7 million, a decrease of $2.7 million or 40%,as the Company strives to maximize profitability
- Net income from operations of $282,000 compared to anet loss of $8.3 million, an increase of $8.58 million or 103%
- Adjusted EBITDA loss of $206,000, compared toadjusted EBITDA loss of $5.7 million, an increase of 96%
“ The 2020fiscal year was a transformational year during which we became arelevant and meaningful player within the premium cannabiscategory, ” said Norton Singhavon, Founder andCEO of GTEC. “ Within a relatively short time frame, wehave built and established brands that resonate with our targetconsumers, while concurrently delivering significant reductions incorporate overheads and divesting of non-performing assets. We remain committed toexecuting our strategy of becoming a leading premium cannabis companyin North America, while operating in a fiscally disciplinedmanner.”
Key Highlights of Fiscal 2020
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- Launched recreational brand BLKMKT ™ in the Province of BC at the end of Fiscal2019 with significant follow-on demand in Fiscal 2020, and commenced sales in the Province ofOntario at the end of Q32020.
- Significantly increased its productlistings from two listings in one Province, to over 70 listings acrossfive Provinces
- Established BLK MKT™ as a topselling premium cannabis brand in Canadian Provinces wheresold
- Completed the construction of its 3PL Venturescultivation facility, which is a purpose-built indoor cultivationfacility with approximately 60,000 sq. ft. of operating space. Thefacility will be GTEC’s largest facility and is expected to increaseproduction capacity to approximately 10,000 KG annually
- Grey Bruce Farms Inc. and Tumbleweed Farms Corp.received the necessary approvals from Health Canada for Provincialsales-related licence amendments. As a result, all three of theCompany’s licensed cultivation facilities are now authorized to sellrecreational packaged cannabis into Provinces and Territories
- Amended its unsecured Convertible Promissory Notewith Invictus MD Strategies Corp.
- Made an early principal repayment to NFS LeasingCanada Ltd. of $330,000, reducing the credit facility to $3.6million
- Sold a commercial property, which was not beingutilized by operations for total gross proceeds of $1 million
- Repaid its MMCAP Senior Secured ConvertibleDebentures of $5 million
Key Subsequent Events of Fiscal 2020
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- BLK MKT TM Cherry Punch (3.5 gram) was the #1 sellingpremium product for the month of December 2020 in Ontario
- In December, the Company launched BLK MKT TM and Tenzo TM pre-rolls with significant follow-up demand
- Launched GreenTec TM Medical Cannabis e-commerce website , allowing the Company to sell products directly toregistered patients
- On February 19, 2021, 3PL submitted an application toHealth Canada, in order to obtain a Standard Cultivation Licence, under the CannabisAct & Regulations
- Tumbleweed Farms Corp. (‘TWF’) signed anagreement with Habitat Craft Cannabis Ltd. (‘Habitat’) under whichTWF will provide co-pack and sales services to Habitat, commencing inQ2 F2021
- On March 1, 2021, Grey Bruce Farms Inc. executed anexport deal with an international cannabis company, allowing GTEC toenter the global cannabis market. Additional details will be providedin a news release within the coming days
- The Company previously ran small scale tests of newcultivars (currently not available in the legal Canadian market),which have moved into commercial production and will be availablewithin the retail supply chain over the coming weeks and months
- Announced the launch of the first blunt in theCanadian cannabis market, under the BLK MKT TM brand and BLNTsub-brand
- Divested of its last remaining retail asset for grossproceeds of $500,000.
- Repaid its Unsecured Convertible Promissory Note of$2 million, eliminating its debt with Invictus MD StrategiesCorp.
Annual and Quarterly ComparativeAnalysis
Three-months ended | % Change | Year-End | Year-End | Q4 | Q4 |
2019 - 2020 | 2020 | 2019 | 2020 | 2019 | |
Total Gross Revenue | 270% | 8,804 | 2,382 | 2,542 | 1,149 |
Total Net Revenue | 235% | 7,907 | 2,361 | 2,258 | 1,128 |
Recreational Sales | 7302% | 6,070 | 82 | 1,947 | 82 |
B2B Wholesale Sales | -19% | 1,837 | 2,279 | 311 | 1,046 |
Gross Margin (A) ($) | 272% | 3,969 | 1,068 | 686 | 290 |
Gross Margin (A) % | 11% | 50% | 45% | 30% | 26% |
SG&A | -39% | 5,870 | 9,620 | 1,324 | 1,872 |
Net Income (Loss) from Operations | 103% | 282 | (8,299) | 1,277 | (2,571) |
Adjusted EBITDA (D) | 96% | (206) | (5,698) | (263) | (646) |
Adjusted EBITDA Margin (D) | 99% | -2% | -239% | -10% | -56% |
Sales (KG) | 157% | 1,274 | 495 | 430 | 280 |
Production (KG) | 269% | 2,685 | 727 | 863 | 434 |
Cash cost of Production (B) | -25% | $1.96 | $2.62 | $1.74 | $2.97 |
Average Selling Price | 43% | $6.90 | $4.81 | $6.14 | $4.10 |
Impairment charge of Alberta CraftCannabis (non-cash)
During fiscal 2020, the Company impaired the infinitelife asset and goodwill at Alberta Craft Cannabis (“ACC”) by $8.38million (which is considered a non-cash expense). The impairment wasmade to bring the asset and goodwill to its fair market value basedupon a discounted cash flow model of the associated sales anticipatedto be generated. The Company notes that the original strategicmotivation for the ACC acquisition was to expedite its speed tomarket, via the acquisition of an existing Health Canada-licensedfacility. In this regard, the Company remains confident that thisacquisition played an instrumental role in accelerating itsdevelopment of cultivation systems, B2B sales, brand launches andproduct listings with Provincial liquor boards.
A copy of the Management Discussion & Analysis andFinancial Statements for Q4 2020 and Fiscal 2020 can be downloadedfrom GTEC’s SEDAR profile .
Note (A) Gross margin before fair valueadjustments. Please refer to the Company’s Q4 2020 and Fiscal 2020 Financial Statements and MD&A for definitions and areconciliation to IFRS.
Note (B) Cash cost of production is a financialperformance measure used by the Company, which is not defined by anddoes not have any standardized meaning under IFRS. The Companybelieves that these non-IFRS financial measures, in addition toconventional measures prepared in accordance with IFRS, enableinvestors to evaluate the Company’s operating results, underlyingperformance and prospects in a similar manner to the Company’smanagement. As there are no standardized methods of calculating thesenon-IFRS measures, the Company’s approaches may differ from thoseused by others, and accordingly, the use of these measures may not bedirectly comparable. Accordingly, these non-IFRS measures are intendedto provide additional information and should not be considered inisolation or as a substitute for measures of performance prepared inaccordance with IFRS. Please refer to the Company’s Q4 2020 and Fiscal 2020 MD&A for definitions and areconciliation to IFRS.
Note (C) Operating expenses exclude non-cashitems, such as depreciation and amortization and share based payments.Please refer to the Company’s Q4 2020 and Fiscal 2020Financial Statements and MD&A for definitions and a reconciliationto IFRS.
Note (D) Adjusted EBITDA is a non-IFRS measureand the Company calculates adjusted EBITDA from continuing operationsas net income (loss) before interest expense, income taxes,depreciation and amortization , unrealized gain (loss) on changes infair value of biological assets, equity loss on investment inassociate, loss on sale of assets, investment loss and share basedpayments. Management determined that the exclusion of the fair valueadjustment is an alternative representation of performance. The fairvalue adjustment is a non-cash gain (loss) and is based on fair marketvalue less cost to sell. The most directly comparable measure toadjusted EBITDA (excluding fair value adjustment to biological assetsand inventory) calculated in accordance with IFRS is net income (loss)from continuing operations. Please refer to the Company’s Q4 2020 andFiscal 2020 MD&A fordefinitions and a reconciliation of Adjusted EBITDA to net income(loss) from continuing operations.
About GTEC Cannabis Co
GTEC Cannabis Co cultivates, markets, and distributesthe high-end cannabis products that consumers desire. The Company hasfour operational facilities licenced by Health Canada and is currentlydistributing cannabis through medical and recreational saleschannels.
GTEC’s quality product offering is crafted fromunique cultivars, which are currently not being produced by otherLicenced Producers. GTEC’s recreational cannabis brands includes; BLK MKT ™ , Tenzo ™ ,Cogn?scente™ and Treehugger™, which retails in the Provinces ofB.C., Ontario, Saskatchewan and Manitoba. TheCompany’s medical cannabis brand, GreenTec™, is distributed nationally to qualified patients through its GreenTec Medical website andvarious licensed partners.
GTEC is a publicly traded corporation, listed on theTSX Venture Exchange (GTEC), OTCQB Venture Market (GGTTF) andFrankfurt Stock Exchange (1BUP). The Company’s headquarters islocated in Kelowna, B.C. and has operations in B.C., Alberta andOntario.
To learn more about the Company or to access the mostrecent Corporate Presentation, please visit our website at www.gtec.co
For additional information, please contact:
GTEC Cannabis Co.
1-800-351-6358
contact@gtec.co
Neither the TSX Venture Exchange norits Regulation Services Provider (as that term is defined in thepolicies of the TSX Venture Exchange) accepts responsibility for theadequacy or accuracy of this release.
CAUTIONARY STATEMENT REGARDINGFORWARD-LOOKING INFORMATION:
This news release includes certain“forward-looking statements” and “forward-looking information”under applicable Canadian securities legislation (collectively,“forward -looking statements”). Forward-looking statements predictor describe our future operations, business plans, business andinvestment strategies and the performance of our investments. Theseforward-looking statements are generally identified by their use ofsuch terms and phrases as “intend,” “goal,” “strategy,”“estimate,” “expect,” “project,” “projections,”“forecasts,” “plans,” “seeks,” “anticipates,”“potential,” “proposed,” “will,” “should,”“could,” “would,” “may,” “likely,” “designed to,”“foreseeable future,” “believe,” “scheduled” and othersimilar expressions. Forward-looking statements are necessarily basedupon a number of estimates and assumptions that, while consideredreasonable, are subject to known and unknown risks, uncertainties, andother factors which may cause the actual results and future events todiffer materially from those expressed or implied by suchforward-looking statements. Such factors include, but are not limitedto: general business, economic, competitive, political and socialuncertainties; delay or failure to receive board, shareholder orregulatory approvals, where applicable, and the state of the capitalmarkets. There can be no assurance that such statements will prove tobe accurate, as actual results and future events could differmaterially from those anticipated in such statements. For instance andamong other things, there is a risk that the COVID-19 pandemic maydisrupt the Company’s operations, those of the Company’s suppliersand distribution channels and negatively impact the use of theCompany’s products; there can be no assurance that the Company willmaintain adequate capital resources and liquidity, including but notlimited to, availability of sufficient cash flow, continue to reduceoverhead, execute the Company’s business plan (either within theexpected timeframe or at all); or any assurances regarding thepotential effects of judicial or other proceedings on the Company’sbusiness or financial condition, the results of operations and cashflows; the volatility in and/or degradation of general economic,market, industry or business conditions; or compliance with applicableenvironmental, economic, health and safety, energy and other policiesand regulations and in particular health concerns with respect to theuse of cannabis; the anticipated effects of actions of third partiessuch as competitors, activist investors or federal, provincial,territorial or local regulatory authorities, self-regulatoryorganizations, plaintiffs in litigation or persons threateninglitigation; changes in regulatory requirements in relation to theCompany’s business and products. Accordingly, readers should notplace undue reliance on forward-looking statements, which speak onlyas of the date of this news release. The Company disclaims anyintention or obligation to update or revise any forward-lookingstatements, whether as a result of new information, future events orotherwise, except as required by law.
This news release refers to certainfinancial performance measures that are not defined by and do not havea standardized meaning under International Financial ReportingStandards (“IFRS”) as issued by the International AccountingStandards Board. These non-IFRS financial performance measures aredefined in the MD&A. Non-IFRS financial measures are used bymanagement to assess the financial and operational performance of theCompany. 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 theCompany’s management. As there are no standardized methods of calculating these non-IFRSmeasures, the Company’s approaches may differ from those used byothers, and accordingly, the use of these measures may not be directlycomparable. Accordingly, these non-IFRS measures are intended toprovide additional information and should not be considered inisolation or as a substitute for measures of performance prepared inaccordance with IFRS.
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