(via TheNewswire)
Key Financial Highlights of Q2 2020
All figures are compared to the Company's most recent fiscal quarter (Q1 2020)
- Revenue of
- Gross margin(A)dollarsdecreased by 9.5% to
- Recreational cannabis sales accounted for 83% of total sales, compared to 50%.
- Overall weighted average selling price increased by 25% or
- Cash cost of production decreased by 28% or
- Production increased by 55% to 776 KG of cannabis, representing the Company's fifth consecutive quarterly increase.
- Operating expenses increased 21%to
- Net loss of
- Adjusted EBITDA of negative
"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
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(TM) continues to be one of the top selling brands in B.C., and continues to be the highest priced single gram product offered onBC Cannabis Stores.
- The Company launched a series of newcultivars and package formats including: BLK MKT(TM)Alien SinMint Cookies;Tenzo(TM) Watermelon Mojito Zkittlez;Tenzo(TM) Double Purple Pie; andnew 7 gram formats of both BLK MKT(TM)and Tenzo(TM).
- 3PL
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
- Secured five listings withthe
- Entered into anon-bindingagreement to divest its last remaining retail asset for total proceeds of
- Established a partnership with a nursery licence holder to facilitate the launch of two strains of Pristine(TM) branded cannabis seeds.
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Quarterly Comparative Analysis
--------------------------------------------------------------------------- | Three-months ended |May 31,|Feb 29,|Nov 30,|Aug 31,|May 31,| | |2020 |2020 |2019 |2019 |2019 | | |Q2 2020|Q1 2020|Q4 2019|Q3 2019|Q2 2019| |-------------------------------------------------------------------------| |Revenue $(000'S) |1,507 |2,354 |1,149 |1,031 |109 | |-------------------------------------------------------------------------| |Gross Margin(A), before |873 |965 |290 |639 |75 | |fair value adjustments | | | | | | |$(000'S) | | | | | | |-------------------------------------------------------------------------| |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 Statementsfor theSecondQuarter of Fiscal 2020 can be downloaded from
Grey Bruce Farms Harvest Milestone
The Company is also pleased to announce that the fifth harvest by subsidiary GBF passed
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
The issuance of Common Shares pursuant to the GBF Agreement is subject to approval of the
Share Issuance for Services Provided
The Company also announces that it has entered into an agreement (the "Agreement") with
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 Co
GTEC Cannabis Co is a specialized cannabis company which produces and distributes ultra-premium cannabis products in
The Company wholly owns operations in BC,
To learn more about the company or to access the most recent Corporate Presentation, please visit our website atwww.gtec.co
For additional information, please contact:
1-800-351-6358
contact@gtec.co
Neither the
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
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