GTEC Cannabis Co Reports Second Quarter 2020 Results

Kelowna, BC – July 29, 2020 – GTEC Holdings Ltd. (TSX-V:GTEC) (OTCQB: GGTTF) (FRA: 1BUP) (“GTEC”, the “Company” or “GTEC Cannabis Co.”) announces it has reported its second quarter financial results for the period ended May 31, 2020.Key Financial Highlights of Q2 2020All figures are compared to the Company’s most recent fiscal quarter (Q1 2020)

• Revenue of $1.5 million, compared to $2.4 million, representing a decrease of 36%, from the sale of 183 kilograms (“KG”) of cannabis. The decrease was a result of the Company experiencing packaging bottlenecks as it shifted its focus to consumer packaged goods. The Company is confident that these packaging bottlenecks have now been substantially resolved.
• Gross margin^(A) dollars decreased by 9.5% to $873,000 (net of excise tax), while gross margin^(A) percentage increased from 41% to 70%.
• Recreational cannabis sales accounted for 83% of total sales, compared to 50%.
• Overall weighted average selling price increased by 25% or $1.59 to $7.83 per gram (with recreational cannabis average being $9.01), representing the Company’s third consecutive quarterly increase.
• Cash cost of production decreased by 28% or $0.63 to $1.59 per gram.^(B)
• Production increased by 55% to 776 KG of cannabis, representing the Company’s fifth consecutive quarterly increase.
• Operating expenses increased 21% to $1.28 million, resulting from an increase in professional fees relating to its annual audit, and legal for its financing initiatives.
• Net loss of $197,000, representing a 76% decrease from $815,000.
• Adjusted EBITDA of negative $406,000, compared to adjusted EBITDA of $5,000. ^(C)

“In Q2 the company experienced high demand for its recreational cannabis products, and focused its resources on maximizing harvests and optimizing packaging processes,” said Norton Singhavon, Founder and CEO of GTEC. “The COVID-19 pandemic and packaging bottlenecks created challenges during Q2, which impacted our packaging output. However, we expect that Q3 revenues will restore the Company’s quarterly growth trajectory.” Key Corporate Highlights of Q2 2020

• During the second quarter, the Company focused on the adult-use recreational sales channel and continued to experience significant demand for its products from Provincial buyers. Accordingly, the Company was able to promptly sell the vast majority of its packaged cannabis output.
• The Company received a large purchase order from one of its Provincial buyers, which was only partially filled during the quarter, due to packaging bottlenecks and other measures implemented by the Company to mitigate the risks associated with the COVID-19 pandemic. The balance of this purchase order was fulfilled subsequent to the end of the quarter.
• BLK MKT ™ continues to be one of the top selling brands in B.C., and continues to be the highest priced single gram product offered on BC Cannabis Stores.
• The Company launched a series of new cultivars and package formats including: BLK MKT™ Alien SinMint Cookies; Tenzo™ Watermelon Mojito Zkittlez; Tenzo™ Double Purple Pie; and new 7 gram formats of both BLK MKT™ and Tenzo™.
• 3PL Ventures Inc. (“3PL”) is in the final stages of completing construction and is in the process of preparing the evidence package for a Standard Cultivation licence from Health Canada. The 3PL facility is a purpose-built indoor cultivation facility located in Vernon B.C., and is approximately 60,000 sq. ft.

 Key Subsequent Events of Q2 2020

• Revenues during the first two months of Q3 have already exceeded total revenues for Q2.
• The Company closed a $4 million debt financing with NFS Leasing Canada Ltd and repaid the entire principal amount owing under the Company’s previously outstanding convertible debenture.
• Secured five listings with the Ontario Cannabis Store (OCS), with first purchase orders expected before the end of July.
• Entered into a non-binding agreement to divest its last remaining retail asset for total proceeds of $2 million.
• Established a partnership with a nursery licence holder to facilitate the launch of two strains of Pristine™ branded cannabis seeds.
• Tumbleweed Farms Corp. submitted an ‘Application to Amend a Licence to Add Sale of Classes of Cannabis’ to Health Canada in June in order to facilitate direct sales of dried cannabis to provincial liquor boards.
• Grey Bruce Farms Incorporated (“GBF”) submitted an ‘Application to Amend a Licence to Add Sale of Classes of Cannabis’ to Health Canada in July in order to facilitate direct sales of dried cannabis to provincial liquor boards.

 Quarterly Comparative Analysis 

Three-months ended	May 31, 2020Q2 2020	Feb 29, 2020Q1 2020	Nov 30, 2019Q4 2019	Aug 31, 2019Q3 2019	May 31, 2019Q2 2019
Revenue $ (000'S)	1,507	2,354	1,149	1,031	109
Gross Margin(A), before fair value adjustments $ (000'S)	873	965	290	639	75
Gross Margin(A) %	70%	41%	26%	62%	69%
Operating Expenses $ (000'S)	1,724	1,658	1,872	2,100	2,999
Net loss from operations $ (000'S)	(197)	(815)	(2,571)	(1,567)	(1,804)
Production (KG)	776	502	434	165	118
Sales (KG)	183	391	280	212	18
Cash cost of production(B)	$1.59	$2.22	$2.97	$2.63	$1.89
Average Selling Price	$7.83	$6.24	$5.89	$4.86	$5.85

 A copy of the Management Discussion & Analysis and Financial Statements for the Second Quarter of Fiscal 2020 can be downloaded from GTEC’s SEDAR profile. Grey Bruce Farms Harvest MilestoneThe Company is also pleased to announce that the fifth harvest by subsidiary GBF passed Health Canada testing requirements, satisfying another harvest milestone under the terms and conditions of a share purchase agreement dated September 15, 2017 among GreenTec Holdings Ltd. and the vendors of GBF, as assumed by the Company and subsequently amended by the parties on March 13, 2020 (all together, the “GBF Agreement”).Accordingly, the Company intends to issue an aggregate of 190,909 common shares in the capital of the Company (the “Common Shares”) to the arm’s length vendors of GBF, at a deemed price of $0.55 per Common Share to satisfy required milestone payments which total $105,000 per the terms of the GBF Agreement.The issuance of Common Shares pursuant to the GBF Agreement is subject to approval of the TSX Venture Exchange (“TSXV”). The Common Shares will be subject to a statutory hold period of four months and one day from the date of issuance thereof. Share Issuance for Services ProvidedThe Company also announces that it has entered into an agreement (the "Agreement") with Kaman Capital Corp. (“Kaman”), GTEC’s financial consultant, with respect to accrued fees for services provided to the Company. The Company has agreed to issue 192,308 Common Shares at a deemed price of $0.13 per Common Share in consideration for services totaling $25,000. The issuance of the Common Shares pursuant to the Agreement is subject to the approval of the TSX Venture Exchange. The Common Shares will be subject to a statutory hold period of four months and one day from the date of issuance thereof.Note ^(A)  Gross margin before fair value adjustments. Please refer to the Company’s Q2 2020 Financial Statements and MD&A for definitions and a reconciliation to IFRS.Note ^(B)  Cash cost of production is a financial performance measure used by the Company, which is not defined by and does not have any standardized meaning under IFRS. 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. Please refer to the Company’s Q2 2020 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 Q2 2020 MD&A for definitions and a reconciliation of Adjusted EBITDA to net income (loss) from continuing operations. About GTEC Cannabis CoGTEC Cannabis Co is a specialized cannabis company which produces and distributes 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.GTEC’s exclusive cultivar collection includes rare and unique phenotypes, which are not currently available from other Licenced Producers. GTEC’s premium and ultra-premium product portfolio includes; BLK MKT™, Tenzo™, GreenTec™, Cognōscente™ and Treehugger™.The Company wholly owns operations in BC, Alberta and Ontario, and is licensed by Health Canada for the following: sales into recreational supply chains, direct sales to medical patients, bulk sales to other Licenced Producers, extraction, and analytical testing.GTEC is a publicly traded corporation, listed on the TSX Venture Exchange (GTEC), OTCQB Venture Market (GGTTF) and Frankfurt Stock Exchange (1BUP). The Company’s headquarters is located in Kelowna, British Columbia.To learn more about the company or to access the most recent Corporate Presentation, please visit our website at www.gtec.coFor additional information, please contact:GTEC Cannabis Co.1-800-351-6358contact@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, the risk that the COVID-19 pandemic may disrupt the Company’s operations and those of the Company’s suppliers and distribution channels and negatively impact the use of the Company’s products; and there can be no assurance that the Company will sustain its  growth trajectory; 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); or 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. 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.