TORONTO, April 30, 2020 /CNW/ - Namaste
Technologies Inc. ("Namaste" or the "Company") (TSXV: N)
(FRANKFURT: M5BQ) (OTCMKTS: NXTTF), an online platform for
cannabis products, accessories, and responsible education, today
reported its financial results for the year ended November 30, 2019. All financial figures are in
Canadian dollars unless otherwise indicated.
During the year, a strategic realignment was announced by the
Board of Directors which included organization leadership changes
where Mr. Meni Morim was appointed
CEO to lead the organization through this transformation and into
the next phase of its growth. Namaste implemented several corporate
initiatives to transition the Company from its entrepreneurial
roots towards its goal of becoming a leading procurement,
processing and distribution company focusing on the Canadian
cannabis market. The Company took steps to streamline the
organizational structure through the consolidation of certain
divisions and websites while focusing on the business segments that
align with the Company's core strategy. Concurrently, CannMart Inc.
("CannMart"), a wholly owned subsidiary of Namaste, expanded its
business model by entering the business to business ("B2B") sector
in mid-September and establishing sales channels between licensed
producers and provincial cannabis distribution networks. CannMart
continued to increase the number of premium brands and the variety
of products carried on the CannMart website, and available through
its B2B channel and was an early provider of Cannabis 2.0
products.
"We made significant changes to the Company in 2019 which
included key investments in new business segments, settlement of
outstanding class actions, replacement of executive-level positions
with top talent, and restructuring legacy businesses to reposition
the business to compete over the long term," said Meni Morim, CEO of Namaste. "We believe that
we've made tremendous strides in our operations, and have entered
new markets with distribution partners. As we move forward into the
year, we will focus on growing the business profitably, reducing
operational burn and continuing to master the mechanism of moving
cannabis into the market, safely & reliably. We were successful
at launching our B2B business model in the fourth quarter, and now
have supply agreements with five provinces."
"CannMart continues to expand its portfolio offering its
customers quality products from recognized brands. We have spent
the last few years collecting data that we have used to build a
better customer experience from end to end. With these building
blocks in place, our focus is shifting to increasing revenues and
gross margins for our online and B2B channels while reducing costs
and improving efficiencies throughout our divisions."
Summary of Consolidated Financial Results
Net revenue for the twelve months ended November 30, 2019 was $16.3 million, compared to $23.8 million for the fifteen months ended
November 30, 2018. The change in
revenue primarily reflects the sale/closure of non-core assets.
Gross margin as a percentage of net revenue (before inventory
adjustment) for the year ended November 30,
2019 was 17% compared to 22% for the fifteen months ended
November 30, 2018. Included in the
fifteen months ended November 30,
2018 were revenue and gross margin contributions from the
divestitures, and therefore not included in 2019.
Share-based compensation, as part of total compensation, for the
twelve months ended November 30, 2019
decreased by $19.9 million to
$2.0 million compared to the fifteen
months ended November 30, 2018. This
reflects management's efforts to realign and reduce its cost
structure and demonstrate its increased focus on governance and
related shareholder value.
Adjusted EBITDA for the twelve months ended November 30, 2019 was a loss of $23.1 million, compared to a loss of $17.9 million for the fifteen months ended
November 30, 2018. Revaluation of
assets and non-recurring costs associated with restructuring and
legacy issues impacted the current year's results by $32.7 million resulting in a net loss of
$63.2 million compared to
$41.6 million in the prior fiscal
year. The Company's working capital position remains strong
at $39.4 million with no debt
obligations.
For further details, the complete Financial Statement and
Management Discussion & Analysis can be accessed on the
Company's SEDAR profile at www.sedar.com.
Management Update
The Company wishes to announce the appointment of Mr.
Faraaz Jamal to the position of
Chief Operating Officer. Mr. Jamal has been with Namaste since
May 2019. Previously Mr. Jamal served
as the Head of Marketing for Bulletproof Inc., a private consumer
packaged goods company, where he oversaw the doubling of new
customer acquisition and the tripling of revenue, while driving
bottom-line profitability, as well as acting as interim-COO of
Intiveo, a SaaS based company, where he grew EBITDA by optimizing
operations. Mr. Jamal replaces Mr. David
Giardino who is leaving the company to pursue other
interests. Mr. Giardino has agreed to stay on with the Company
until May to assist with operations through the transition
period.
"On behalf of the board and the employees of Namaste, I want to
thank David for his dedication and commitment to our Company as COO
and wish him all the best in his future endeavors," said
Meni Morim, CEO of Namaste. "Faraaz
has been an integral member of the management team and has
experience in successfully building companies and their related
revenue. I am excited about Faraaz's new post and look forward to
seeing the impact of his enthusiasm and track record of
success."
"I have enjoyed working with the talented team at Namaste and
growing the company into what it is today," added David Giardino. "I want to thank everyone and
wish them the best for the future."
Class Action Settlement
Further to the notice filed on March 16,
2020 with respect to the settlement of the Namaste
Securities Class Action lawsuit and its approval by the Ontario
Superior Court of Justice, the class action is formally closed as
courts in Canada and the United States have approved the
settlement.
"The class action was a distraction and weight on our expenses,"
added Mr. Morim. "We were able to settle the outstanding claims
allowing us to refocus our efforts on changing the Company for the
better in the long term."
COVID-19 Regulatory Relief
On March 18, 2020, the Canadian
Securities Administrators issued a notice stating that securities
regulators will be providing coordinated relief consisting of a
45-day extension for certain periodic filings required to be made
on or prior to June 1, 2020. This
blanket relief, as a result of the COVID-19 pandemic, applies to
reporting issuers and applies to financial statements, management's
discussion and analysis, annual information forms, and certain
other ancillary documents normally required to be filed in a timely
manner under securities legislation.
As a result of the pandemic's impact on internal and regulator
resources, Namaste has elected to take advantage of the blanket
relief granted pursuant to BC Instrument 51-515 and Ontario
Instrument 51-502 in respect of the following:
- the requirement to file interim financial statements for the
quarter ended February 29, 2020 (the
"Financial Statements") within 60 days of the Company's quarter end
as required by section 4.2(b) of National Instrument 51-102
(NI"51-102″);
- the requirement to file management discussion and analysis (the
"MD&A") for the period covered by the Financial Statements
within 60 days of the Company's quarter end as required by section
5.1(2) of NI 51-102; and
- the requirement to file certifications of the Financial
Statements (the "Certificates" and together with the Financial
Statements, the "Interim Filings") pursuant to section 4.1 of
National Instrument 52-109.
Namaste currently expects to file its Interim Filings for the
first quarter ended February 29th on
or by May 21, 2020.
Management and certain other insiders of Namaste are subject to
an insider trading blackout which reflects the principles in
Section 9 of National Policy 11-207 for until such time as Namaste
has filed its Interim Filings.
Other than as previously disclosed by the Company, there have
been no material business developments since the date of the
Company's most recent filing of its interim financial reports and
the associate management discussion and analysis.
NON IFRS FINANCIAL MEASURES
Management evaluates the Company's performance using a variety
of measures, including "Net loss before income tax, depreciation
and amortization" and "Adjusted EBITDA". The non-IFRS measures
discussed below should not be considered as an alternative to or to
be more meaningful than revenue or net loss. These measures do not
have a standardized meaning prescribed by IFRS and therefore they
may not be comparable to similarly titled measures presented by
other publicly traded companies and should not be construed as an
alternative to other financial measures determined in accordance
with IFRS.
The Company believes these non-IFRS financial measures provide
useful information to both management and investors in measuring
the financial performance and financial condition of the
Company.
Management uses these and other non-IFRS financial measures to
exclude the impact of certain expenses and income that must be
recognized under IFRS when analyzing consolidated underlying
operating performance, as the excluded items are not necessarily
reflective of the Company's underlying operating performance and
make comparisons of underlying financial performance between
periods difficult. From time to time, the Company may exclude
additional items if it believes doing so would result in a more
effective analysis of underlying operating performance. The
exclusion of certain items does not imply that they are
non-recurring.
|
|
|
|
2019
|
|
2018
|
|
|
Notes
|
|
(12
months)
|
|
(15
months)
|
Net
loss
|
|
|
$
|
(63,230,354)
|
$
|
(41,617,431)
|
Income tax
|
|
(i)
|
|
(365,474)
|
|
(422,062)
|
Depreciation and
amortization
|
|
(i)
|
|
2,501,650
|
|
1,887,361
|
EBITDA
|
|
|
|
(61,094,178)
|
|
(40,152,132)
|
Other
income
|
|
(ii)
|
|
(1,219,575)
|
|
(1,115,533)
|
Transaction,
restructuring and other costs
|
|
(iii)
|
|
15,136,724
|
|
1,441,873
|
Impairment of
goodwill and intangibles
|
|
(iv)
|
|
16,138,602
|
|
-
|
Impairment of loans
receivable
|
|
(v)
|
|
1,391,224
|
|
-
|
Share of associates'
loss, net of tax
|
|
(vi)
|
|
4,520,908
|
|
-
|
Share-based
compensation
|
|
(i)
|
|
2,015,222
|
|
21,928,335
|
Adjusted
EBITDA
|
|
|
$
|
(23,111,073)
|
$
|
(17,897,457)
|
(i) Current and
deferred income taxes, depreciation and amortization, and
share-based compensation were excluded from the Adjusted EBITDA
calculation as they do not represent cash expenditures.
|
|
(ii) Other income
consisting of gain on disposal of subsidiary, interest income,
realized gain on disposition of AFS investments, unrealized gain on
derivatives and other miscellaneous non-recurring income were
excluded from Adjusted EBITDA calculation.
|
|
(iii) Non-recurring costs related to
restructuring and legacy issues were excluded from Adjusted EBITDA
calculation.
|
|
(iv) Impairment
loss relating to goodwill, customer list, domains and brand names
were excluded from Adjusted EBITDA calculation.
|
|
(v) Impairment
loss relating to receivable is a provision for expected credit loss
to an associate and was excluded from Adjusted EBITDA
calculation.
|
|
(vi) Share of
associates loss, net of tax, is excluded due to lack of
control.
|
About Namaste Technologies Inc.
With headquarters in
Toronto, ON, and offices in both
B.C. and around the globe, Namaste Technologies is a leading online
platform for cannabis products, accessories, and responsible
education. The company's 'everything cannabis store', CannMart.com,
provides customers with a diverse selection of hand-picked products
from a multitude of federally-licensed cultivators, all on one
convenient site. Namaste's global technology and continuous
innovation address local needs in a burgeoning cannabis industry
requiring smart solutions.
Information on the Company and its many products can be accessed
through the links below:
NamasteTechnologies.com
NamasteMD.com
Cannmart.com
NamasteVapes.ca
Everyonedoesit.ca
FORWARD-LOOKING INFORMATION – This news release contains
"forward-looking information" within the meaning of applicable
securities laws. All statements contained herein that are not
historical in nature contain forward-looking information.
Forward-looking information can be identified by words or phrases
such as "may", "expect", "likely", "should", "would", "plan",
"anticipate", "intend", "potential", "proposed", "estimate",
"believe" or the negative of these terms, or other similar words,
expressions and grammatical variations thereof, or statements that
certain events or conditions "may" or "will" happen. The
forward-looking information contained herein is made as of the date
of this press release and is based on assumptions management
believed to be reasonable at the time such statements were made,
including management's perceptions of Namaste's standing in the
online marketplace for cannabis products, the Company's transition
into a growth phase with a focus on increasing revenues and gross
margins while reducing costs, the Company's goal of becoming a
leading procurement, processing and distribution company focusing
on the Canadian cannabis market, Namaste's beliefs regarding the
quality of its management, the strides the Company has taken in its
operations and the quality of the brands offered by CannMart, the
Company's focus on growing the business profitably, reducing
operational burn and continuing to master the mechanism of moving
cannabis into the market, safely and reliably, Namaste's beliefs
with respect to the timing of its Interim Filings and the results
of operations, operational matters, historical trends, current
conditions and expected future developments, as well as other
considerations that are believed to be appropriate in the
circumstances. While we consider these assumptions to be reasonable
based on information currently available to management, there is no
assurance that such expectations will prove to be correct. By their
nature, forward-looking information is subject to inherent risks
and uncertainties that may be general or specific and which give
rise to the possibility that expectations, forecasts, predictions,
projections or conclusions will not prove to be accurate, that
assumptions may not be correct and that objectives, strategic goals
and priorities will not be achieved. A variety of factors,
including known and unknown risks, many of which are beyond our
control, could cause actual results to differ materially from the
forward-looking information in this press release. Such factors
include, without limitation: risks relating to the Company's
ability to execute its business strategy and the benefits
realizable therefrom, risks specifically related to the Company's
international operations, and risks relating to the market price of
Namaste common shares. Additional risk factors can also be found in
the Company's current MD&A and annual information form, both of
which have been filed under the Company's SEDAR profile at
www.sedar.com. Readers are cautioned not to put undue reliance on
forward-looking information. The Company undertakes no obligation
to update or revise any forward-looking information, whether as a
result of new information, future events or otherwise, except as
required by applicable law. Forward-looking statements contained in
this news release are expressly qualified by this cautionary
statement.
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 or has in any way approved or disapproved
of the contents of this press release.
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SOURCE Namaste Technologies Inc.