YourWay Cannabis Brands Inc., 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.