Benzinga Interview with Norton Singhavon Founder and CEO of GTEC Holdings

Evan Veryard interviews Norton Singhavon, Founder and CEO of GTEC Holdings[stock_market_widget type="inline" template="generic" color="default" assets="GTEC.V" markup="(CVE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] and discusses their vertically integrated cannabis business.

Capital 10x: Why don’t we start by just getting you to tell our viewers a little
bit about GTEC?
Norton Singhavon: We’re a vertically integrated premium focused cannabis company. Our core competencies are cultivating and producing, marketing and selling an ultra premium flower.
Now I know a lot of people are saying this is what they do but something that most people don’t know is that on our initial test crop that we were planning to destroy it was supposed to test out 17 to 18% THC content at most. So when we ran it through the lab it came back 21.5 to 23 and then we decided to sell that wholesale to CannMart. Even though our Ops guys did not want to and instantly overnight that became the number one selling product.
So a lot of people can tell premium but on a crop we were going to destroy we became the number one selling product on Cannmart.
Capital 10x: So you attribute that to the THC level? What truly makes the premium product because I mean everyone is touting it like you said, so what is a consumer going to take this product and actually say ‘wow this is premium I want more’?
Norton Singhavon: In our opinion, it’s going to be obviously aesthetic appeal, it’s going to be taste, aroma, terpene profile, and also the amount of THC at least in the demographic that we’re going after.
Capital 10x: Who do you have working on crafting that product?
Norton Singhavon: Our VP of Operations actually has a dual citizenship US and Canadian. Outside of GTEC we actually deployed a significant amount of capital personally into the U.S. and we own assets in the U.S. So we’ve been operating in the U.S. for quite a few years now and we’re bringing that expertise to Canada.
Capital 10x: So are those different companies or are they under the GTEC brand?
Norton Singhavon: No, these are just personal investments that we’ve done but it highlights our team’s experience that they’ve come from operating in U.S. markets.
Capital 10x: You bring up the hot topic right now: the U.S. market growing. Concerns that the Canadian market is going to be slowing down quite significantly. So do you have plans to branch in with GTEC into the U.S. market?
Norton Singhavon: As of right now I would say no because we can’t, we’re on the venture, but we have things in the works for if and when legalization occurs we have some things in the works.
Capital 10x: I noticed at the end of the last year cash was running down and you’ve done some raises since then. What are the plans?
Norton Singhavon: With that capital our intention is to build out our 2019 plans. That’ll get us to about 11,000 kg of production capacity, full run rate for next year. It gets our extraction lab built out and also gets us anywhere between 20 to 30 retail locations.
Capital 10x: In terms of diving in a bit more on the numbers again what is the timeline for profitability and as you see it for this year?
Norton Singhavon: Assuming we get a full year in Alberta, which we will, and we get a half year in Grey Bruce and Tumbleweed, we should be able to produce and sell 2,500 kg this year, which is not a lot but let’s say we use $5 a gram, which we’re selling for way above that currently $12.5m gross revenue and I think we could do about 6-6.5 of EBITDA
off of that.
Capital 10x: You can look pretty good by the end of 2019. You know what’s going to make 2019 a successful year? If there’s one or two things that’s going to make it stand out and you know maybe along with that what are some of the biggest challenges that you think you’re going to face like something that’s potentially holding you back?
Norton Singhavon: For us the biggest thing for 2019 is we need to execute on building out, on ramping up. Where I see some risk is if the black market isn’t properly mitigated and product isn’t flowing through the retail distribution channels like it should be. Then we have a problem.
Capital 10x: That makes sense. So you know what makes good execution like good product being produced, you’re talking about getting the sales that you’d like. If there’s one thing that you really want to see happen in 2019 what would that be.
Norton Singhavon: Execution is a widely used term, but for us what’s important is just to deliver on what we promise. Everything that we say like I’m sitting here telling you what I think is going to be built out for this year and by the end of the year I want to look back and say ‘remember what I told you, we’ve done it’. And to be able to sell the product obviously.
Capital 10x: I was flipping through your presentation and I noticed you have a lot of different brands so just one final question on what the strategy for GTEC will be with branding?
Norton Singhavon: We actually believe in the 80/20 rule, which we believe at least in the demographic we’re going after, that 20% of your clientele will be responsible for 80% of your sales. So I would say our quote unquote bread-and-butter is the current black market consumer that has not switched over into the legal framework because the strains and the quality and the THC content that they’re seeking is not yet available. That is I would say our core consumer base. Hence our black market brand.
Capital 10x: Are you able to build that awareness though in such a dark market here in Canada compared especially to some brands in the U.S. or you know what Ignite is doing?
Norton Singhavon: We’re handcuffed just like everybody else but I think it makes it a level playing field compared to the guys like Canopy that have $6 billion dollars. This makes it a level playing field no matter how much money you have.
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Evan Veryard
Evan Veryard has a Bachelor's of Chemical Engineering from McGill University and a MaSc. of Chemical Engineering from RMC. He has over 6 years of research experience focusing on industrial materials. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.
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