Toronto, Canada, March 5, 2019 – Namaste Technologies Inc. (TSXV: N) (FRANKFURT: M5BQ) (OTCMKTS: NXTTF) confirmed today that PricewaterhouseCoopers, LLP will no longer be acting as the Company’s auditor. The Company’s audit committee and board have accepted PwC’s resignation and are in advanced discussions with potential successor auditors, one of whom is in the final stages of its client acceptance process. The filings required under Section 4.11(5) of National Instrument 51-102- Continuous Disclosure Obligations will be made publicly available at www.sedar.com. The Company’s annual financial statements are due to be filed by March 31, 2019. The Company currently believes that it is unlikely that it will be able to meet such filing deadline. The Company will continue to assess this and will update the market in due course.
The Company’s financial reporting team has continued to work diligently during the last several weeks on finalization of the Company’s annual financial statements. The resignation of PwC has not impacted management’s confidence in its financial results, and it remains committed to assisting new auditors to complete the year-end audit.
Corporate Update and Strategic Review
Following recent changes in management, Namaste’s executive team has undertaken an in-depth strategic review of its current and future operations globally in an effort to streamline the business and ensure compliance throughout the organization. As part of this process, management has been reviewing the entire business in an effort to focus the organization on the highest value opportunities to maximize future growth.
In connection with this review, the Company is examining its global e-commerce activities to ensure compliance with various local tax and other requirements involving the import, sale, and distribution of its products. The Company has expanded the mandate of Norton Rose Fulbright Canada LLP, special independent legal counsel to the Company, to assist with the Company’s review of its compliance throughout its global business and operations, conducted primarily through its Bahamian subsidiary.
During this review period, the Company has elected to suspend certain initiatives that no longer align with the Company’s mission and strategic direction, such as the introduction of Namaste Café, a cookbook and H.E.A.L. product line in relation to its previously announced franchise distribution model. In addition, the Company has also provided formal written notice of the termination of its agreement with ORH Marketing Ltd., in accordance with its terms. Management believes that the termination of these marketing and related initiatives can be achieved with minimal business disruption, and is expected to result in annual cash savings of approximately $3 million, which is net of expected transition costs.
Brazilian Sales Update
The Company has been advised that the National Health Surveillance Agency (Anvisa) in Brazil have identified irregular online advertising of certain tobacco products on a website operated by Namaste and have advised that they are proposing to commence administrative proceedings in relation to same. In light of this, and to ensure ongoing compliance and operational efficiency, the Company has decided to temporarily suspend the sale of all of its products in Brazil pending a full compliance review with external counsel and other advisors. Sales of such products in Brazil are expected to represent approximately 8% of the Company’s estimated revenue globally for the 15 months ended November 30, 2018.
The Company will provide further updates on these matters as more information becomes available. The Company’s focus on the regulatory compliance of its international operations, operational efficiency and the growth of its global business is aligned with management’s intention to develop a best-in-class domestic and global strategy to attract reputable business opportunities. While the Company is engaged in this review, it continues to operate in the normal course of business and continues to evaluate all options in connection with its previously announced strategic review.