Is the Worst Over for Namaste Technologies (NXTTF) Stock?

Namaste Technologies (NXTTF) stock has endured a lot of self-inflicted pain in the past months, as scandals, firings, loss of an auditor, and a plummeting share price has left investors and shareholders wondering if it can survive over the long term.

This is unfortunate because the business model itself, of building an e-commerce platform that sells a variety of accessories into the cannabis market, along with an app that was built to serve medical cannabis patients, had a lot of potential.

Now the company has devolved into battling to regain legitimacy and viability, even as it appears to be continue to struggle to find its way.

While the market is familiar with the negative events surrounding the company, I think the real issue going forward is the uncertainty associated with not knowing anything about the performance of the company since its last earnings release.

Last known numbers

In its last earnings release for the fourth fiscal quarter of 2018, Namaste generated net revenue of $3.9 million, essentially flat year-over-year.

Revenue in its vaporizer business showed no growth in the reporting period. Its CannMart segment generated $32,000 in sales in the quarter, and its NamasteMD generated sales of $61,000.

Gross profit in the quarter was $930,000, with the company losing $8.7 million after its operating expenses were paid.

While on the surface these numbers do look abysmal, there are a couple of things that need to be taken into consideration. For example, with its vape business, it divested of its holdings in the U.S., which was a major reason for the low-growth story that unfolded. That's not to say it has been growing strong, only that the numbers weren't as bad as the appear, once adjusting for the loss of U.S. sales.

As for CannMart, in the quarter of the earnings report it had only started selling several weeks before, so it didn't have an impact on the quarterly numbers. They should improve in the next report, whenever it is released.

CannMart has a lot of potential, based upon a wide production selection, quality customer service, and same-day delivery. It don't think the market is even pricing in CannMart at this time because of the overwhelmingly bad news associated with its prior management. That has changed, and if current management is able to regain confidence of shareholders through trust and performance, it should be a solid catalyst for the company.

Lack of visibility the major issue

The company recently stated the "audit of the 2018 Annual Financial Statements is nearly completed." It said it expects "its Annual Filings and interim financial statements for the three-month period ended February 28, 2019, will be filed on or before May 31, 2019."

It doesn't appear it'll provide by the end of May, but it does point to the real issue Namaste faces: the lack of visibility concerning its performance since mid-2018.

Until it releases its financial statements, it's impossible to know what has happened to the company since it put its major management issues behind it. That will continue to dominate the market sentiment toward the company until they are released.

That suggests to me the company will remain in limbo until there is clarity concerning its performance, and whether or not is has been increasing sales on its e-commerce platforms, and whether or not it has been able to improve margin and earnings while presumably boosting revenue.