Namaste (N.V) has $49m in cash, and negligible, shrinking revenue.. are the bones worth picking?

If one has been paying attention to the marihuana market over the past several years, one will have encountered Sean Dollinger, a manbun-adorned reprobate who, at one point, was the Chief Executive Officer of Namaste Technologies (N.V).

Master Dollinger was either, and you can take your pick on this for neither is good, an incompetent boob of astronomic proportions who spent tens of millions of assets that had no inherent worth, or a supervillain evil genius who talked his worthless assets up to an indefensible valuation, engaged in a big financing at the top of that indefensible valuation, and then watched it all go to hell as people slowly figured out the scam.

When Dollinger was cast adrift, he quickly showed his true colours, refusing to leave without slinging public lawsuit threats. Those threats were quickly ceded to by Namaste’s board of directors, who obviously wanted to show they were having no more of this financial jiggeryfuckery, but not to the extent where they’d appreciate an invitation to a courtroom and explain why they let it go on for so long.

As cannabis 2.0 rumbles over the horizon toward us, Namaste 3.0 is a work in progress. Undoing the mess from previous madness is no small task, a Herculean accounting effort required alongside a gargantuan (and ongoing) legal bill. That legal bill isn’t just to pay for the untangling of previous borderline fraudulent deals, but to defend against the class action lawsuits that have been filed against the company and will, mark my words, have teeth.

Indeed, the present financial quarterly news release hints that some, if not all, of those have been settled, and suggests much of this quarterly loss eminated form costs associated with settlement. From this, one can deduce around $8m walked out the door to ensure the company be left alone going forward.

That leaves the company around $49m in the bank which, at this moment in time, is a hell of a thing to have. It’s acquisition fuel, and Namaste needs to acquire something – something REAL – in order to justify its present and still inflated $115m market cap.

There are assets. They just don’t make enough money to bother with, and certainly not enough to warrant $115m in valuation.

“But all of this was yesteryear!” will cry the bagholders from their Facebook investor groups and twitter shitters. “Namaste is going to be the Amazon of Weed, remember?”

It isn’t, you know. It never was but what we see from the company’s own books is it isn’t any such thing now, won’t be in the near future, and if the gods deem us worthy of another century of existence, chances are it won’t through that period either.

Cannmart, Namaste’s online cannabis sales arm, which was going to take over the whole market and Amazon up the joint, sells around $130k of cannabis per quarter, and has seen that number fall in the past several.

To put that friffery in perspective, GTEC Holdings (GTEC.C), last quarter, with only one licensed property and only a short period of sales, earned $108k in revenue. The following quarter, that was up to over a million dollars across three licensed quarters.

Yet Namaste sits at a $115m market cap, while GTEC is on just $27m.

Even if we extracted that $49m in cash out of Namaste’s lint-filled pockets, it’s still a $65m company, and still overvalued, comparable to GTEC.

As a vulture capitalist, I want Namaste’s cash, and I’m eager to see them spend it on accretion. But that’s not what’s happening right now; they’re still in damage control mode, still spending way more than they should be on running their business, and still sitting on a higher valuation than makes sense.

I want to buy Namaste stock, but it doesn’t make sense at $0.37.

At $0.10, you’d take a chance on its ability to buy its way back to relevance. But at $0.37, you’re paying for promise as if it were a gurantee, not an ongoing risk.

While the board contnues to try to ‘fix’ what it has, the real problem is, even in a fixed state, it’s not woreth what it was bought for.

So no, we’re not buying Namaste. Rebuilding a ship as it sinks is never a good plan, and Namaste’s keel is abundantly full of the briny. See you in Davey Jones’ Locker, Memento Morim.

— Dogsworth J. Taint, Esq.

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