TORONTO, Oct. 29, 2019 /PRNewswire/ - Namaste Technologies Inc. ("Namaste" or the "Company") (TSXV:N.V) (M5BQ.F) (NXTTF), a leading online platform for cannabis products, accessories, and responsible education, today announced its interim financial results for the third quarter ended August 31, 2019. All financial figures are in Canadian dollars unless otherwise indicated.
Third Quarter Highlights:
- Consolidated revenue of $3.8 million compared with $3.9 million for the same period last year reflecting the Company's ability to rebuild revenue, from other sources, after discontinuing certain web properties,
- Gross margin increased to 26% compared to 24% in the third quarter of 2018,
- The Company finished the third quarter with positive working capital of $54.2 million, including $49.1 million in cash and cash equivalents,
- The board of directors named Mr. Meni Morim as chief executive officer and appointed him to the Company's board of directors,
- CannMart continued to add products to the everything cannabis online marketplace with a distribution and marketing sales agreement signed with Seedo Corp subsidiary Eroll Grow Tech Ltd, and
- The Company reached settlements, in principle, of the securities class actions that were commenced against it in Canada and the United States in 2018.
"We're seeing the positive effects of rebuilding our revenue stream in our drive to replace discontinued businesses," said Meni Morim, CEO of Namaste. "Highlighting this internal shift is how we've successfully increased our end-to-end customer conversion rate on Namaste MD patients to CannMart customers from less than 1% in January to over 6% today and we expect this growth to continue. We are diversifying our revenue and see a great market opportunity in front of us both in B2B and B2C. As an example, 49% of all Namaste MD patients this year have been prescribed oils, which we can now service with the recent Health Canada license amendment approval. Additionally, we have 14,000 patient prescriptions that are pending renewal between now and December 31st, and will be receiving a renewal notice shortly. Appreciably, this is a significant increase in our addressable market, and with the work on increasing our conversion rates, we expect to see the positive impact on revenue growth."
"Other areas of our business continue to expand. We continue to build our government revenue channel and expect to make further progress and related announcements during the current quarter. On the expense side, we have incurred one-time costs, including professional fees related to the class action lawsuit, reflected in our selling, general and administrative expenses. As a result of reaching settlements, in principle, we expect to see these professional and related one-time costs to decrease moving forward. We have made some tough decisions to improve the Company's outlook and expect to make further changes. I look forward to keeping our shareholders up to date as we increase our focus and attention on our bottom line."
SUMMARY OF CONSOLIDATED FINANCIAL RESULTS
Revenue for the quarter ended August 31, 2019 was $3.8 million, compared to $3.9 million in the comparable quarter in the prior year reflecting the Company's ability to rebuild revenue after discontinuing certain web properties and select businesses. Gross margin for the quarter ended August 31, 2019 was 26%, a 2% increase versus the same quarter last year primarily due to the year-over-year decrease of cost of good sold.
Selling, general and administration expenses for the quarter ended August 31, 2019 was $11.0 million, compared to $10.3 million in the comparable quarter in the prior year. The change in expenses primarily reflect the Company's professional expenses related to the class action lawsuits and subsequent settlement in principle, offset by a decrease in share-based compensation expenses.
Net loss for the quarter ended August 31, 2019 was $14.7 million (or loss per share of $0.05), compared to $8.7 million (or loss per share of $0.03) in the comparable quarter in the prior year. The change in net loss reflects the increase of professional or legal fees related to the class action settlement and an impairment charge to goodwill.
For further details, the complete Interim Filings can be accessed on the Company's SEDAR profile at www.sedar.com.
CannMart - 'Everything Cannabis' Online Marketplace
Namaste has refocused its business plan to expand the user experiences online and facilitate the delivery of specialized products once the purchase is made. Segmented revenue attributed to CannMart increased four times in the third quarter 2019 compared to the same period last year. CannMart's key performance indicators are also moving in a positive direction: CannMart's online customer conversion rate from Namaste MD increased to more than 6% today from less than 1% in the same period last year.
Subsequent to the end of the third quarter 2019, CannMart:
- Welcomed several new product lines including its own cannabis oil concentrates to the CannMart Everything Cannabis online marketplace,
- Received approval from Health Canada for an amendment to its license allowing CannMart to offer cannabis oil concentrates on its online marketplace,
- Signed sales and marketing agreements with CannTx Life Sciences Inc. to launch and sell their flagship medical brand, BOWER, under CannMart's consignment sales model,
- As an additional value-added service, CannMart will process and package BOWER products through its Health Canada-licenced processing facility, allowing direct consumer medical sales through CannMart.com and leveraging its licence and approved facility to partner with licenced producers ("LPs") in a more meaningful way,
- Signed a distribution and marketing agreement with Cultivated Beauty, a subsidiary of leading skin care retailer Swisspharme Inc and Elizabeth Grant International, to offer a line of its specially formulated hemp-based skin care products, and
- Received a purchase order for pre-rolled cannabis products from the BC Liquor Distribution Branch ("LDB") to cater to the Province of British Columbia. The LDB is the sole wholesale distribution and public retailer of non-medical cannabis in B.C. Namaste's pre-roll products will be available to purchase at licensed private retail stores, and online and in-store at government-run B.C. Cannabis Stores. Management sees great potential working with provincial governments across Canada and is directing resources to win more of this important business.
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. For further information about Namaste, please visit Namastetechnologies.com
Information on the Company and its many products can be accessed through the links below:
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 in this press release, includes, but is not limited to, statements related to: the expectation for continued growth in end-to-end customer conversion of Namaste MD patients to CannMart customers and the anticipated positive revenue growth associated with such conversion; the renewal of Namaste's license by Health Canada; availability of Namaste's pre-roll products at licensed private retailers as well as online and in-store government-run B.C. cannabis retail stores; the ability of Namaste to secure licensing with other provincial government agencies; the expected progress in government revenue channels and any future announcements relating to such revenue channels; the potential expansion in Namaste's customer base in the event Namaste secures licensing with other provincial government agencies; the opportunities available to Namaste in the business-to-business and business-to-consumer markets; and the ability of Namaste to address needs in the cannabis industry, including through the continued ability to offer a diverse product selection. 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, Namaste's ability to negotiate agreements with other provincial government agencies, Namaste's ability to drive conversion of Namaste MD patients to CannMart customers, the ability of Namaste to diversify revenue sources, 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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