Discrepancies in Namaste Technologies 'Bought Deal'

Namaste Technologies Inc. (TSXV: N) announced on October 25, 2018 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…. A total of 17,250,000 units…were sold at a price of $3.00 per Unit… for gross proceeds of $51,750,000….Each Unit was comprised of one common share…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…. In consideration for their services, the Underwriters received a cash commission equal to 6% of the gross proceeds of the Offering and compensation options… equal to 6% of the Units sold pursuant to the Offering. Each Compensation Option entitles the holder thereof to purchase one Unit at the Issue Price until October 25, 2023.”

We found this rather odd because the September 26, 2018 release from Namaste said “…it has entered into a letter of engagement with Eight Capital, under which Eight Capital has agreed to purchase…15,000,000 units…on a “bought deal” basis…at a price per Unit of $3.00…. The Company has agreed to grant the Underwriters an over-allotment option….If this option is exercised in full…the aggregate proceeds of the Offering will be approximately $51,750,000. Each Unit will be comprised of one common share…and one-half of one Common Share purchase warrant….Each Warrant shall entitle the holder thereof to purchase one Common Share at…$3.50, for a period of 48 months following the closing of the Offering.

There are a few discrepancies that need to be explained if the October 25, 2018 release stating Namaste “…has closed its previously announced “bought deal”….” is an accurate statement.

1. The original unit was half a warrant not three-quarters of a warrant as is now the case apparently.

2. The original warrant was exercisable $3.50 per share not $3.15 per share as is now the case apparently.

3. The original warrant had a term of 48 months not 60 months as is now the case apparently.

4. The Underwriters were paid a 6% cash commission that was not mentioned in the original release.

5. The Underwriters were paid a 6% “compensation option” that was not mentioned in the original release.

6. The original release said it was a bought deal. We understand that a bought deal is an underwriting that is guaranteed at the terms and conditions as announced. This “bought deal” appears to have changed.

We believe shareholders deserve an explanation for what appears to be as much as $7.5 million less that Namaste is receiving in closing “…its previously announced “bought deal”….”