GTEC Cannabis Co Reports First Quarter of Fiscal 2021 Results

Kelowna, BC – April 28, 2021 – GTEC Holdings Ltd. d/b/a GTEC Cannabis Co. (TSXV: GTEC) (OTCQB: GGTTF) (FRA: 1BUP) (“GTEC”, the “Company” or “GTEC Cannabis Co.”) a multi-licensed producer of handcrafted, high quality cannabis products, is pleased to announce that it has reported its First Quarter financial results of fiscal 2021.

Key Financial Highlights of Q1 2021
(for the period ended February 28, 2021)
All figures are compared to the Company’s most recent fiscal quarter (Q4 2020)

• Gross revenue of $2.2 million, compared to $2.5 million, a decrease of $313,000 or 12%, from the sale of 342 kilograms (“KG”) of cannabis, as the Company withheld inventory to fulfill certain obligations in the subsequent quarter for its Israeli export Agreement, and the launch of the BLNT by BLK MKT
• Gross margin^(A) dollars of $811,000 million (net of excise tax), compared to $686,000, an increase of $125,000 or 18%, while gross margin^(A) percentage increased from 30% to 41%
• Recreational cannabis sales accounted for 82% of total sales, compared to 87%
• Overall weighted average selling price increased by 4% or $0.27 to $6.41
• Recreational weighted average selling price decreased 9% to $7.48 per gram, as the Company initiated a national repricing strategy on certain products, to better align with its competitive set
• Operating expenses^(B) of $1.0 million, compared to $831,000, an increase of $179,000  or 22%, as the Company reallocated various expenses in Q4 2020, relating to 3PL
• Net income from operations of $368,000 compared to $1.27 million, a decrease of $908,000 or 71%, due to non-cash fair value changes
• Net income and comprehensive income of $815,000, compared to a $7.9 million loss
• Adjusted EBITDA^(C) loss of $199,000 compared to a loss of $263,000, a loss reduction of $64,000 or 24%.

“During the first quarter of fiscal 2021, our team focused on building a solid foundation in order to deliver incremental growth for the remainder of the fiscal year.” said Norton Singhavon, Founder and CEO at GTEC. “These efforts have resulted in Q2 revenues already exceeding Q1.  In addition to improvement on revenues, we recently strengthened our balance sheet substantially and are now completely debt-free. We look forward to continuing to execute our strategy of bringing top tier products to consumers.”

Key Corporate Highlights of Q1 2021

• Fully repaid its $2 million Convertible Promissory Note with Invictus MD Strategies Corp.
• Divested of its last remaining retail asset for total cash proceeds of $500,000, which was paid upon closing.
• Tumbleweed Farms Corp. (“TWF”) executed an agreement with Habitat Craft Cannabis Ltd. (“Habitat”) under which TWF will provide co-pack and sales services to Habitat.
• 3PL Ventures Inc. (“3PL”) completed construction of its purpose-built indoor cultivation facility and subsequently submitted an evidence package to Health Canada on February 19, 2021. The 3PL facility is a purpose-built indoor cultivation facility located in Vernon, B.C., and is approximately 60,000 sq. ft.

Key Sales and Market Highlights of Q1 2021

• BLK MKT^TM Cherry Punch was the #1 selling premium product in Ontario for the month of December^(D).
• Increased SKU listings in British Columbia (to 22 products) and Ontario (to 16 products).
• Launched pre-rolls under the BLK MKT™ and Tenzo™ brands on December 16, 2020, selling out in the first day.
• Launched exclusive cultivars; Alien Sin Mint Cookies and Peanut Butter MAC, with an overwhelmingly positive response resulting in substantial re-orders to supply growth.
• Launched the first blunt in the legal Canadian cannabis market, under the BLK MKT ^TM brand and BLNT sub-brand, with an exclusive cultivar, Candy Rain.
• Launched its GreenTec Medical Cannabis E-Commerce Website and subsequently commenced acquiring medical cannabis patients and fulfilling orders. The Company has experienced a steady increase in medical clients since that time, and is optimistic about the potential to drive significant sales and earnings through its medical channel.
• Secured substantial orders of PRISTINE ^TM seeds for the upcoming growing season in Ontario, surpassing last year's total sales.

Key Subsequent Events of Q1 2021

• Q2 revenues (including Purchase Orders for May delivery) have already exceeded Q1 revenues, with the expectation to restore the Company’s growth trajectory.
• Closed a bought deal public offering (the “Offering”) of units for gross proceeds of $23,000,000, issuing 28,750,000 units at a price of $0.80 per unit. The Offering was co-led by Desjardins Capital Markets and Eight Capital as co-lead underwriters and joint book runners.
• Repaid its two Senior Secured Promissory Notes (the “Notes”) with NFS Leasing Canada Ltd. in full. The Notes, which carried an aggregate principal balance of $6 million, were fully repaid on April 9, 2021.  As a result, the Company is now free of all debt liabilities, with all security interests removed and the Company’s assets fully unencumbered.
• Subsequent to the repayment of the NFS Notes, the Company maintains a strong working capital position and balance sheet, with a current cash balance of approximately $19 million.
• Executed an agreement with Focus Medical Herbs Ltd., an Israeli medical cannabis company. Under the terms of this agreement, the Company’s initial shipments of cannabis will be produced by Grey Bruce, with the expectation to export 500 to 1,000 KG per year.

Three-months ended	Q1 2021	Q4 2020	Q4’20–Q1’21 % Change	Q1 2020	Q1’20-Q1’21 % Change
Total Gross Revenue	2,229	2,542	-12%	2,354	-5%
Total Net Revenue	1,970	2,258	-13%	2,331	-15%
Recreational Sales	1,570	1,947	-19%	1,119	40%
B2B Wholesale	400	311	29%	1,212	-67%
Gross Margin(A) ($)	811	686	18%	965	-16%
Gross Margin(A) (%)	41%	30%	36%	41%	0%
SG&A	1,370	1,324	3%	1,658	-17%
Net Income (loss) from Ops	368	1,277	-71%	-815	145%
Adjusted EBITDA (C)	-199	-263	24%	5	-4080%
Adjusted EBITDA margin	-9%	-10%	14%	0%	-4303%
Sales (KG) - flower	342	430	-20%	391	-13%
Total Average Selling Price	$6.41	$6.14	4%	$6.24	3%

A copy of the Management Discussion & Analysis and Financial Statements for Q1 2021 can be downloaded from GTEC’s SEDAR profile.

Note ^(A)  Gross margin before fair value adjustments. Management determined that the exclusion of the fair value adjustment is an alternative representation of performance. The fair value adjustment is a non-cash gain (loss) and is based on fair market value less cost to sell. Please refer to the Company’s Q1 2021 Financial Statements and MD&A for definitions and a reconciliation to IFRS.

Note ^(B)  Operating expenses exclude non-cash items, such as depreciation and amortization and share based payments. Please refer to the Company’s Q1 2021 Financial Statements and MD&A for definitions and a reconciliation to IFRS.

Note ^(C)  Adjusted EBITDA is a non-IFRS measure and the Company calculates adjusted EBITDA from continuing operations as net income (loss) before interest expense, income taxes, depreciation and amortization , unrealized gain (loss) on changes in fair value of biological assets, equity loss on investment in associate, loss on sale of assets, investment loss and share based payments. Management determined that the exclusion of the fair value adjustment is an alternative representation of performance. The fair value adjustment is a non-cash gain (loss) and is based on fair market value less cost to sell. The most directly comparable measure to adjusted EBITDA (excluding fair value adjustment to biological assets and inventory) calculated in accordance with IFRS is net income (loss) from continuing operations. Please refer to the Company’s Q1 2021 MD&A for definitions and a reconciliation of Adjusted EBITDA to net income (loss) from continuing operations

Note ^(D)  Per Ontario Cannabis Store data.

About GTEC Cannabis Co. 

GTEC Cannabis Co. cultivates, markets, and distributes handcrafted, high-quality cannabis products. The Company has three fully licensed and operational facilities and is currently distributing cannabis through medical and recreational sales channels. 

GTEC’s premium quality recreational cannabis brands includes; BLK MKT™, Tenzo™, Cognōscente™ and Treehugger™, which are crafted from unique cultivars, and sold in British Columbia, Ontario, Saskatchewan, Manitoba and Yukon. The Company’s medical cannabis brand, GreenTec™, is distributed nationwide to qualified patients through its GreenTec Medical website and various licensed partners. 

GTEC is a publicly traded corporation, listed on the TSXV (GTEC), OTCQB Venture Market (GGTTF) and Frankfurt Stock Exchange (1BUP). The Company’s headquarters is located in Kelowna, British Columbia and has operations in British Columbia, Alberta and Ontario. 

To learn more about the Company or to access the most recent 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 TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release. 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: 

This news release includes certain “forward-looking information” as defined under applicable Canadian securities legislation, including with respect to its optimism related to the GreenTec Medical Cannabis E-Commerce Website’s potential to drive significant sales and earnings through its medical channel and its expectation that it will export 500 to 1,000 KG of cannabis per year pursuant to its agreement with Focus Medical Herbs Ltd. Forward-looking information is 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 information. Examples include statements that the Company will operate in a fiscally disciplined manner, build long-term shareholder value, reduce operational expenses, or increase its revenue and gross margins. 

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, such risks include that the Company will maintain adequate capital resources and liquidity, including but not limited to, availability of sufficient cash flow, to execute the Company’s business plan (either within the expected timeframe or at all); there can be no assurances regarding potential effects of judicial or other proceedings on the Company’s business, financial condition, results of operations and cash flows; volatility in and/or degradation of general economic, market, industry or business conditions; compliance with applicable environmental, economic, health and safety, energy and other policies and regulations and in particular health concerns with respect to the use of cannabis; the anticipated effects of actions of third parties such as competitors, activist investors or federal, provincial, territorial or local regulatory authorities, self-regulatory organizations, plaintiffs in litigation or persons threatening litigation; changes in regulatory requirements in relation to the Company’s business and products; 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.  

Accordingly, readers should not place undue reliance on forward-looking information, 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 information, 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.