Namaste Technologies Inc.’s revenue fell and its net loss more than tripled in the three-month period ended Feb. 28, due to the sale of its U.S. subsidiary, lower gross margin and increased expenses after the cannabis accessory and technology company underwent a management overhaul and cease trade order.
In its first-quarter 2019, Vancouver-headquartered Namaste reported revenue of nearly $4.6 million versus $5.6 million in the same period one year prior. The lower revenue came after recreational cannabis was legalized in Canada in October 2018.
The financial report was delayed after Namaste’s board terminated CEO and director Sean Dollinger following an internal investigation that found he allegedly breached his fiduciary duty to the company and improperly enriched himself. Additionally, the company’s auditor PricewaterhouseCoopers resigned in March.
Namaste reported a net loss of $10.3 million, in contrast to a net loss of $3.3 million in first-quarter 2018.
“The decrease of $1.3 million was in Namaste Vapes as a result of the divestiture of the U.S. business in December 2017,” the company stated.
“This decrease was offset by Findify and Namaste MD as these segments were either not yet incorporated or were not yet acquired in the same quarter last year.”
The company’s selling, general and administration expenses for the quarter soared to $11.8 million, more than double the $5.5 million the company spent during the same three month period last year.
Namaste’s share price fell by around 16 per cent on Monday to roughly 74 cents.