GTEC Holdings Ltd. (TSX-V:GTEC) (OTC:GGTTF) (FRA:1BUP)
(“
GTEC” or the “
Company”) is pleased to announce that
Norton Singhavon, Founder, Chairman and CEO, has agreed to waive a
portion of his entitlement to further payments (the “
Payments
Waiver”) in connection with GTEC’s acquisition of 1118157 B.C.
Ltd. (“
1118”), GreenTec Bio-Pharmaeuticals Corp.
(“
GBP”) and Grey Bruce Farms Incorporated (“
GBF”).
The Company has also secured agreements with certain other
vendors of 1118, GBP and GBF to reduce their milestone entitlements
and all vendors have agreed to increase the floor price of common
shares in the capital of the Company (the “
Common Shares”)
to be issued in connection with milestone payments still
payable.This Payments Waiver and various amending agreements will
not only reduce shareholder dilution, it will improve the Company’s
balance sheet while aligning with shareholders’ interests during
the current sector downturn. The Company is focused on
maximizing shareholders returns by strengthening the balance sheet,
achieving its production and sales targets, and growing the Company
through internal investment.
Amendment to 1118157 B.C. Ltd. Share
Purchase AgreementThe Company entered into an amending
agreement on March 13, 2020 (the “
1118 Amending
Agreement”) with the vendors of 1118 amending certain terms and
conditions of a share purchase agreement dated November 22, 2017
among GreenTec Holdings Ltd. and the vendors of 1118, as assumed by
the Company (the “
1118 SPA”).Pursuant to the 1118 Amending
Agreement, the 1118 vendors, being Norton Singhavon and Michael
Blady, have agreed to waive all entitlement to the remaining
milestone payments otherwise due under the 1118 SPA. Mr. Singhavon
waived his entitlement to $350,000 (payable in Common Shares) of
remaining milestone payments and Mr. Blady waived his entitlement
to $150,000 (payable in Common Shares) of remaining milestone
payments. As a result of the 1118 Amending Agreement, the
Company owes no further payments in respect of the acquisition of
1118.Since Mr. Singhavon and Mr. Blady were vendors of 1118, the
1118 Amending Agreement is considered a related party transaction
within the meaning of Multilateral Instrument 61-101 – Protection
of Minority Security Holders in Special Transactions (“
MI –
61-101”). However, the 1118 Amending Agreement is exempt from
minority approval, information circular and formal valuation
requirements pursuant to Sections 5.5(a) and 5.7(1)(a) of MI
61-101, as neither the fair market value nor the consideration paid
in connection with the 1118 Amending Agreement exceeds 25% of the
Company’s market capitalization.
Amendment to GreenTec
Bio-Pharmaceuticals Share Purchase AgreementThe Company also
entered into an amending agreement on March 13, 2020 (the
“
GBP Amending Agreement”) with the vendors of GBP
amending certain terms and conditions of a share purchase agreement
dated November 15, 2017 among GreenTec Holdings Ltd. and the
vendors of GBP, as assumed by the Company (the “
GBP SPA” and
together with the GBP Amending Agreement, the “
GBP
Agreement”). Norton Singhavon, the CEO of the Company,
was one of the GBP vendors.Pursuant to the GBP Amending Agreement,
the GBP vendors have agreed to reduce their entitlement to a
portion of the purchase price such that the remaining payment
obligations (payable in Common Shares) of the Company in
connection with the GBP acquisition are reduced by
$5,750,000. In addition to reducing the purchase price, the
GBP vendors have agreed to restructure the remaining milestones and
raise the floor price of the Common Shares to be issued in
connection with the new milestones to a deemed price per share
equal to the greater of (A) the 10-day volume-weighted average
trading price of the Common Shares, and (B) $1.00.
Since Mr. Singhavon was a vendor of GBP, the GBP
Amending Agreement is considered a related party transaction within
the meaning of Multilateral Instrument 61-101 – Protection of
Minority Security Holders in Special Transactions (“
MI –
61-101”). However, the GBP Amending Agreement is exempt from
minority approval, information circular and formal valuation
requirements pursuant to Sections 5.5(a) and 5.7(1)(a) of MI
61-101, as neither the fair market value nor the consideration paid
in connection with the GBP Amending Agreement exceeds 25% of the
Company’s market capitalization.
Amendment to Grey Bruce Farms
Share Purchase AgreementThe Company also entered into an
amending agreement on March 13, 2020 (the “
GBF Amending
Agreement”) with the vendors of GBF amending certain 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 (together with the GBF Amending Agreement, the “
GBF
Agreement”).Among other things, the GBF Amending Agreement
raised the floor price of the Common Shares to be issued to the
vendors of GBF (excluding Mr. Singhavon) in connection with the
completion of the first five harvests and upon GBF obtaining either
a medical sales or processing licence from Health Canada (the
“
Remaining Milestones”), to a deemed price per share equal
to the greater of (A) the 10-day volume-weighted average trading
price of the Common Shares, and (B) the last commercial financing
undertaken by GTEC (currently, $0.55).In lieu of an entitlement to
$1,787,500 (payable in Common Shares) of the purchase price payable
in connection with the remaining milestones under the GBF
Agreement, Mr. Signhavon will now accept a reduced milestone
payment of $1,000,000 in Common Shares upon GBF achieving 1,500kg
in aggregate cannabis sales (the “
Cannabis Sales
Milestone”). The Cannabis Sales Milestone represents a
$787,500 reduction of Mr. Singhavon’s pro rata entitlement to any
outstanding milestone payments. Mr. Singhavon has also agreed
to raise the floor price of the Common Shares to be issued in
connection with the Cannabis Sales Milestone to a deemed price per
share equal to the greater of (A) the 10-day volume-weighted
average trading price of the Common Shares, and (B) $1.00. As
a result, Mr. Singhavon will be issued 1,000,000 Common Shares in
connection with the Cannabis Sales Milestone. In
consideration for entering into the GBF Amending Agreement the
Company has agreed to pay to the vendors of GBF a one-time cash
payment of an aggregate of $25,010, of which Mr. Singhavon will
receive $10.00 in total.Since Mr. Singhavon was a vendor of GBF,
the GBF Amending Agreement is considered a related party
transaction within the meaning of Multilateral Instrument 61-101 –
Protection of Minority Security Holders in Special Transactions
(“
MI – 61-101”). However, the GBF Amending Agreement is
exempt from minority approval, information circular and formal
valuation requirements pursuant to Sections 5.5(a) and 5.7(1)(a) of
MI 61-101, as neither the fair market value nor the consideration
paid in connection with the GBF Amending Agreement exceeds 25% of
the Company’s market capitalization.
Satisfaction of Grey Bruce
Farms Harvest MilestonesOn November 4, 2019 and December 23,
2019 GBF completed its first and second harvests, respectively,
satisfying two harvest milestones under the GBF Agreement. The
Company intends to issue an aggregate of $210,000 of Common Shares
to satisfy required milestone payments. Accordingly, the Company
intends to issue an aggregate of 381,818 Common Shares to the arm’s
length vendors of GBF, at a deemed price of $0.55 per share.The GBF
Amending Agreement and the issuance of Common Shares pursuant
thereto are subject to final 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.
Extending Investor Relations ServicesGTEC has
extended its engagement with Oak Hill Financial (“
Oak Hill”)
by way of a renewal agreement (the “
Renewal Agreement”)
dated February 20, 2020, to provide business advisory and investor
relations services (the “
Services”). The parties
originally entered into a consulting agreement dated February 28,
2019 (the “
Agreement”) and all services are provided in
accordance with TSXV policies and applicable securities laws and
regulations.Pursuant to the Agreement, Oak Hill will continue to
provide the Services to the Company for another 6 months. As
consideration for the Services, the Company will issue to Oak Hill
60,000 options (“
Options”) to purchase Common Shares. The
Options will be exercisable at a price of $0.16 per share for a
term of two years and will vest quarterly in four equal
instalments, with the first instalment vesting on the date of
grant. Oak Hill currently holds 100,000 Options of the Company. Oak
Hill reserves the right to acquire any additional securities of the
Company. The Renewal Agreement is subject to approval of the
TSXV.
About GTECGTEC Holdings Ltd. is a specialized cannabis
company which produces and distributes highly sought-after
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
products are currently achieving amongst the highest gross margins
and retail pricing within its sector in Canada (A).GTEC’s exclusive
cultivar collection includes rare and unique cultivars, which are
not currently available from other Licenced Producers. GTEC’s
premium and ultra-premium product portfolio include: 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, 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
based out of Kelowna, British Columbia. To learn more about the
company or to request our most recent corporate presentation,
please visit our website at www.gtec.coNeither 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
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. For instance, there can be no
assurance that: shareholders returns will be maximized, that the
balance sheet will continue to strengthen, that production and
sales targets will be achieved; that the Company’s products will
continue achieving amongst the highest gross margins and retail
pricing within its sector in Canada; or that the TSXV will approve
any of the Amending Agreements referenced above, or the Renewal
Agreement, or the issuance of shares to the arm’s length vendors of
GBF;. Accordingly, readers should not place undue reliance on
forward-looking statements. 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.Note (A): This analysis is based on the
most recently available Financial Statements on SEDAR from publicly
listed Licenced Producers (including GTEC), as of November 19,
2019. Companies included, were those listed on New Cannabis
Ventures Canadian Cannabis LP Index, that currently produce in a;
greenhouse, indoor operation, or a combination of both, with
quarterly sales greater than $1 million. Those with outdoor
operations were excluded from the analysis. Based on the analysis
GTEC had the third highest gross margin in the sector, and the no.1
highest based on those solely with indoor operations.
For additional information, please contact:
GTEC Holdings Ltd.
1-800-351-6358
contact@gtec.co
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