Namaste Technologies Reports Second Quarter 2019 Financial Results

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.

SOURCE Namaste Technologies Inc.

Incite Capital Markets: Eric Negraeff/Darren Seed, Ph: 604.493.2004; Meni Morim, Interim CEO, Namaste Technologies, Email: [email protected]