We have been looking for signs from the market on Namaste Technologies Inc (OTCMKTS:NXTTF), given that the company continues to battle against the circling sharks we have discussed here. One good sign is the stock’s behavior on Thursday, rising over 20% on strong volume to retake the 200-day simple moving average despite dipping into the market for more cash to backstop risks to operations.
Part of the boost was likely the fact that the bought deal offering priced above current levels in units with shares and warrants exercisable for more shares all at or above $3. Specifically, according to the release, “A total of 17,250,000 units of the Company were sold at a price of $3.00 per Unit for gross proceeds of $51,750,000. The Offering was completed by a syndicate of underwriters led by Eight Capital and Canaccord Genuity Corp. as co-lead underwriters and joint bookrunners, and including Laurentian Bank Securities Inc. Each Unit was comprised of one common share in the capital of the Company and three-quarters of one Common Share purchase warrant. Each Warrant entitles the holder thereof to purchase one Common Share at a price of $3.15 until October 25, 2023.”
Namaste Technologies Inc (OTCMKTS:NXTTF) promulgates itself an emerging leader in vaporizer and accessories space. Namaste has 30 e-commerce retail stores in 20 countries, offers the largest range of brand name vaporizers products on the market and is actively manufacturing and launching multiple unique proprietary products for retail and wholesale distribution.
NXTTF is currently focused on expanding its product offering, acquisitions, and strategic partnerships, and entering new markets globally.
According to company materials, “Namaste Technologies is Your Everything Cannabis Store. Namaste operates the largest global cannabis e-commerce platform with over 30 websites in 20+ countries under various brands. Namaste’s product offering through its subsidiaries includes vaporizers, glassware, accessories, CBD products, and the company will soon be selling medical cannabis in the Canadian market, subject to approval by Health Canada. Namaste has developed and acquired innovative technology platforms including NamasteMD.com, Canada’s first Health Canada compliant telemedicine application, and in May 2018 the Company acquired a leading e-commerce AI and Machine Learning Company, Findify AB. Findify uses artificial intelligence algorithms to optimize and personalize a consumer’s on-site buying experience. Namaste is focused on leveraging its cutting-edge technology to enhance the user experience throughout its platforms. Namaste will continue to develop and acquire innovative technologies which will provide value to the Company and to its shareholders as well as to the broader cannabis market.”
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As noted above, NXTTF just announced that it has closed today its previously announced “bought deal” short form prospectus offering of units, including the exercise in full of the over-allotment option.
The guts of the deal appear to suggest the company is not a fraud, as stated by Citron. How would this company raise over $50M in new capital with warrants priced at new all-time highs if it is about to be forced to reveal through the discovery process of a host of lawsuits that it has materially misled the market about its operations and its deal-making?
That’s suddenly a very tough question to answer for Namaste bears.
According to the release, “The net proceeds of the Offering are expected to be used by the Company for inventory and supplies, capital improvements, personnel and facility operations, integration and expansion of e-commerce platforms and customer bases, and for working capital and general corporate purposes, as more particularly described in the Company’s final prospectus.”
Currently trading at a market capitalization of $431.09M, NXTTF has a bankroll ($471K) of cash on the books, which is balanced by about $1.1M in total current liabilities. One should also note that debt has been growing over recent quarters. NXTTF is pulling in trailing 12-month revenues of $5.6M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 173.1%. You can bet we will update this one again as new information comes into view. Sign-up for continuing coverage on shares of $NXTTF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $NXTTF, either long or short, and we have not been compensated for this article.