Vancouver, BC, December 20, 2022 – YourWay Cannabis Brands Inc. (CSE:YOUR)(OTC:YOURF)(FSE:HOB) (the “Company” or “YourWay“), a consumer-centric House of Brands committed to redefining the way consumers and cannabis brands interact, announced today that its auditor, Macias Gini & O’Connell LLP (“MGO”) has resigned, effective December 6, 2022. As of the date hereof, YourWay has not yet appointed a successor auditor.
In a letter provided to the Company on December 6, 2022, MGO indicated its reason for resigning was based on its inability to determine the source of cash deposited by the previous Chief Executive Officer of YourWay (the “CEO”) on three separate occasions. As per MGO’s letter, there were concerns over the inability to corroborate “that the cash came from the proceeds he received when the CEO’s former company, Labtronix, was acquired by the company.”
As part of a review of internal controls, financial reporting and governance matters in the second quarter of 2022, the Company’s new management identified certain concerns. The Company’s Audit Committee created a special committee (the “Special Committee”), led by Acting Chief Executive Officer of the Company, Jakob Ripshtein, and board member and chair of the Company’s Audit Committee, Lily Dash, to review and investigate these matters and retained Polley Faith LLP and B Riley Advisory Services (collectively, the “Investigators”)to conduct a review and independent investigation (the “Investigation”). Concurrently, the Company took steps to bolster internal controls, particularly with respect to banking, cash transactions and related party matters, including the implementation across the organization of the corporate governance policies that had been approved by the board of directors in October 2021.
The Investigators delivered multiple reports to the Special Committee, the Audit Committee and the board and despite changes in internal procedures, the development of new policies and a supplemented authorization and approval matrix, MGO determined that it was unwilling to remain as the Company’s auditor as the Investigation could not conclude if certain of the matters identified impacted the Company’s financial statements. The Special Committee and the Company’s current management team is actively seeking a new auditor for the Company.
“It is unfortunate that after months of performing an exhaustive and comprehensive review of the Company’s financial statements, MGO has chosen to resign,” said Jakob Ripshtein. “MGO’s resignation has now set back our efforts to finalize and release our audited annual financial statements for the year ended December 31, 2021.”
As indicated in YourWay’s operational update dated November 4, 2022, the business has undergone significant change and evolution over the past twelve months, including the appointment of a new Chief Financial Officer of YourWay in March 2022, Jacob Cohen’s resignation as CEO on September 12, 2022, and the concurrent appointment of Mr. Cohen to his new role of President of Arizona Operations.
The Company’s inability to determine the source of the cash deposited by the previous CEO on three separate occasions, including the inability to corroborate the previous CEO’s claims, constitutes a “reportable event” (as defined under Section 4.11(1) of National Instrument 51-102 Continuous Disclosure Obligations (“NI 51-102”)) for the year ended December 31, 2021 for an “unresolved issue” (as defined under Section 4.11(1) of NI 51-102).
“The Company’s board of directors has reviewed MGO’s findings to date and will act in the best interests of the Company’s shareholders” Mr. Ripshtein continued. “While this is indeed a setback in our timeline to release our financial statements, it has not impeded our ongoing operations, sales teams and our ability to satisfy the needs of our retail partners.”
No financial statements have expressed a modified opinion during the period that MGO was first appointed by the Company and the date of this notice. As soon as a successor auditor has been appointed, the Company will file a further press release confirming such appointment.
About YourWay Cannabis Brands
YourWay is a publicly traded, consumer-centric House of Brands committed to redefining the way consumers and cannabis brands interact. By building their own brands, partnering with others, and supporting retail partners control brand strategy, they are dedicated to expanding their reach; remolding the cannabis industry and ultimately redefining consumers and cannabis brands interact.
YourWay aims to connect with the cannabis consumer on a deeper level, utilizing decades of brand-building expertise and an integral understanding of the customer experience to create an intuitive suite of branded products that closely aligns with consumer need states. The YourWay portfolio is an all-encompassing House of Brands designed to create a sense of belonging for every cannabis consumer regardless of their relationship with the plant. Please visit www.yourwaycannabis.com or follow on Twitter at @yourwaycannabis for the latest news and information about YourWay and its brands.
Your Way Contacts:
For media inquiries, please contact: [email protected]
For investor inquiries, please contact: [email protected]
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION:
This news release includes certain “forward-looking information” as defined under applicable Canadian securities legislation, including statements regarding the plans, intentions, beliefs, and current expectations of the Company with respect to future business activities and operating performance. Forward-looking information is often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions and includes information regarding: the results of the Investigation; the Company’s efforts to finalize and release its annual financial statement for the year ended December 31, 2021; the Company’s commitment to act in the best interests of its shareholders; the Company’s continued pursuit for a successor audittor; and expectations for other economic, business, and/or competitive factors. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information.
Investors are cautioned that forward-looking information is not based on historical fact but instead reflects management’s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance, or achievements of the Company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: the timing for filing the Company’s financial statements; regulatory and licensing risks; changes in consumer demand and preferences; changes in general economic, business and political conditions, including changes in the financial markets; the global regulatory landscape and enforcement related to cannabis, including political risks and risks relating to regulatory change; compliance with extensive government regulation; public opinion and perception of the cannabis industry; the impact of COVID-19; and the risk factors set out in the Company’s annual information form dated August 28, 2020, filed with Canadian securities regulators and available on the Company’s profile on SEDAR at www.sedar.com.
The Company, through several of its subsidiaries, is indirectly involved in the manufacture, possession, use, sale, and distribution of cannabis in the recreational and medicinal cannabis marketplace in the United States. Local state laws where the Company operates permit such activities however, investors should note that there are significant legal restrictions and regulations that govern the cannabis industry in the United States. Cannabis remains a Schedule I drug under the US Controlled Substances Act, making it illegal under federal law in the United States to, among other things, cultivate, distribute or possess cannabis in the United States. Financial transactions involving proceeds generated by, or intended to promote, cannabis-related business activities in the United States may form the basis for prosecution under applicable United States federal money laundering legislation.
While the approach to enforcement of such laws by the federal government in the United States has trended toward nonenforcement against individuals and businesses that comply with recreational and medicinal cannabis programs in states where such programs are legal, strict compliance with state laws with respect to cannabis will neither absolve the Company of liability under United States federal law, nor will it provide a defense to any federal proceeding which may be brought against the Company. The enforcement of federal laws in the United States is a significant risk to the business of the Company and any proceedings brought against the Company thereunder may adversely affect the Company’s operations and financial performance.
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated, or expected. Although the Company has attempted to identify important risks, uncertainties and factors that could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information, which speak only as of the date of this news release. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.