TORONTO, July 18, 2019 /CNW/ - Namaste Technologies Inc.
("Namaste" or the "Company") (TSXV: N) (FRANKFURT:
M5BQ) (OTCMKTS: NXTTF) today announced its interim financial
results for the second quarter ended May 31,
2019. All financial figures are in Canadian dollars unless
otherwise indicated.
SECOND QUARTER 2019 HIGHLIGHTS
- Consolidated revenue remains consistent at $4.0 million compared with $4.1 million for the same period last year
reflecting the Company's resilience in light of exiting certain
businesses and markets
- Gross margin of 21%, consistent with the second quarter of
2018
- Finished the quarter with positive working capital of
$63.3 million, including $55.8 million in cash and cash equivalents
- Acquired an additional 34% of Pineapple Express
Delivery Inc. ("Pineapple Express"), for a total equity position of
49% of the issued and outstanding common shares of Pineapple
Express
- Entered into a share purchase agreement to acquire 49% of
the issued and outstanding shares of Choklat Inc. ("Choklat") for
$1.75 million (cash consideration of
$1.5 million; $0.25 million in stock options)
- Appointed independent directors Kenneth
Jones and Andrew Wilczynski
to the company's Board of Directors, strengthening its
composition
- Established an Advisory Board with inaugural member,
Andrew Buckman, bringing extensive
industry experience and leadership skills
- Increased data-driven sales and marketing efforts through
the strategic hire of Faraaz Jamal
to Vice President, Marketing & Strategy
- Made technology advancements to NamasteMD, further streamlining
the patient approval process and improved operational execution at
CannMart
- Completed and submitted CannMart Labz Health Canada application
for oil extracting and processing
"We have improved the Company's foundations to build the world's
most customer focused cannabis marketplace", stated Meni Morim, Interim CEO of Namaste. "From here,
we are reprioritizing and refining our investments towards
scalability, gaining marketshare and working capital management. We
expect to see these results take shape over the next three to six
months with a balanced approach between working capital
optimization and the right investments to help the Company grow.
This is an exciting time in the cannabis market overall and we want
to make sure that we're maximizing our opportunities."
"During the quarter, we made technological improvements in our
online platform, acquisitions in Pineapple Express and Choklat, and
expanded our list of licensed producers on CannMart. As recently
announced, we have increased our access to medical cannabis
patients through our relationship with ARBR. As part of our
strategy to improve the access to and interactivity with license
producers, we expect to announce additional producers under our new
fee-based or consignment model. This new model allows licensed
producers to see Namaste's online marketplace as complementary to
their business versus competition. We believe this shift with help
drive future expansion of our product categories and related SKU's
and highlight our commitment to enhancing the customer experience
from education to consumption. From a financial standpoint, this
system helps reduce the burden on working capital too."
SUMMARY OF CONSOLIDATED FINANCIAL RESULTS
Results from Operations
Revenue for the quarter
ended May 31, 2019 was $4.0 million, compared to $4.1 million in the comparable quarter in the
prior year. The Company was able to achieve Q2 2019 revenue despite
the exit of business from certain markets and products. Gross
margin for the quarter ended May 31,
2019 was 21%, consistent with the comparable quarter in the
prior year.
Selling, general and administration expenses for the quarter
ended May 31, 2019 was $9.8 million, compared to $9.3 million in the comparable quarter in the
prior year. The change in expenses reflect the Company's
investments in key personnel and increase in professional fees,
offset by decrease in share-based compensation expenses.
Net loss for the quarter ended May 31,
2019 was $8.6 million (or loss
per share of $0.03), compared to
$8.1 million (or loss per share of
$0.03) in the comparable quarter in
the prior year. The change in net loss reflects the share of
Namaste's loss in our equity interest in Pineapple Express and
Choklat Inc.
Adjusted EBITDA (see "Non-IFRS Financial Measures" section
below) for the quarter ended May 31,
2019 was a loss of $6.1
million, compared to a loss of $3.4
million in the comparable quarter in the prior year. The
change in adjusted EBITDA reflects the Company's changes to certain
businesses, including exits, and higher selling, general and
administration expenses primarily reflecting the investments in key
personnel and legal expenses noted above.
Complete Financials
Interim Filings can be accessed on
the Company's SEDAR profile at www.sedar.com.
NON-IFRS FINANCIAL MEASURES
Management evaluates the
Group'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-GAAP 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 Group's underlying operating performance and make
comparisons of underlying financial performance between periods
difficult. From time to time, the Group 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.
The following table reconciles net loss to Adjusted EBITDA for
the periods presented:
|
|
|
|
|
|
Three
months
ended
May 31,
2019
|
Three
months
ended
May 31,
2018
|
|
|
|
|
Net loss
|
$
|
(8,632,771)
|
(8,097,146)
|
Current income tax
expenses (i)
|
|
6,141
|
12,789
|
Deferred income tax
recovery (i)
|
|
(78,620)
|
(128,504)
|
Depreciation and
amortisation (i)
|
|
508,342
|
387,098
|
Share-based
compensation (i)
|
|
1,178,673
|
3,992,016
|
Special investigation
costs (ii)
|
|
1,915,375
|
-
|
Other income
(iii)
|
|
(331,458)
|
165,828
|
Foreign exchange
(gain)/loss (iv)
|
|
(670,114)
|
228,948
|
Adjusted
EBITDA
|
$
|
(6,104,432)
|
(3,438,971)
|
|
|
(i)
|
Current and deferred
income taxes, depreciation and amortisation and share-based
compensation were excluded from the Adjusted EBITDA calculation as
they do not represent cash expenditures.
|
|
|
(ii)
|
Non-recurring costs
related to work initiated by the Special Committee were excluded
from Adjusted EBITDA calculation.
|
|
|
(iii)
|
Other income
consisting of gain on disposal of subsidiary, interest income,
unrealised gain on derivatives and other miscellaneous
non-recurring income were excluded from Adjusted EBITDA
calculation.
|
|
|
(iv)
|
Foreign exchange
(gain)/loss is excluded from Adjusted EBITDA
calculation.
|
About Namaste Technologies
Namaste Technologies powers the ultimate online customer
experience for medicinal cannabis and related products. Beginning
with NamasteMD.com, the Company's integrated telemedicine
application, Namaste connects medical clients with health care
practitioners to more readily issue and renew cannabis
prescriptions online. Featuring the first Canadian Medical
Sales-Only Licence, the Company's own Cannmart.com is your
'everything cannabis store' offering clients a large variety of
strains to fill their prescription needs. Namaste's unique
artificial intelligence (AI) engine incorporated in its platforms
and related Uppy App, completes our ecosystem by identifying the
right product and pairing to address specific medical cannabis
requirements. Namaste also provides vaporizers and accessories
across several platforms operating in multiple countries. Namaste's
global technology addresses local needs in a burgeoning cannabis
industry requiring smart solutions. For further information about
Namaste, please log onto www.Namastetechnologies.com
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 future growth, 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
the 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.