VANCOUVER, BC / ACCESSWIRE / November 29, 2019 / Eastwest Bioscience Inc. ('Eastwest' or the 'Corporation') provides this default announcement indicating Eastwest's anticipated failure to file its annual financial statements for the year ended July 31, 2019 and related management discussion and analysis and certifications (collectively, the 'Financial Statements') before the prescribed filing deadlines.
The Corporation's failure to file its Financial Statements on time is due to the following circumstances:
- The Corporation acquired Sangster's Health Centres ('Sangster's') with three subsidiaries on November 30, 2018. Two of the Corporation's existing subsidiaries have a significant volume of sales to Sangster's and there are a significant volume of sales between the Sangster's subsidiaries which need to be eliminated upon consolidation. The consolidation of the three subsidiaries has been an onerous process and has added complexity to the Corporation's audit.
- The Corporation has been in dispute with the seller of Sangster's with respect to the underperformance of Sangster's and issues surrounding the purchase and sale agreement. The ongoing negotiation, financial review of the Corporation by the seller, and preparation for litigation has consumed the time and resources of the CFO of the Corporation and has added complexity to the Corporation's audit. Also, there is a pending settlement agreement with the seller which may have a material impact on the financial statements of the Corporation and may require additional work for the completion of the audit.
- Due to the underperformance of Sangster's, restructuring was required to cut costs and streamline operations and reporting. Changes in staffing, changes to reporting systems, and additional work required to plan and implement the restructuring process has consumed the resources of the Corporation and delayed the work required for completion of the Corporation's audit.
- The Controller and the Office Administrator responsible for accounting clerk duties of the Sangster's group of companies both resigned for personal reasons in June 2019. The departure of these two staff members and training of replacement staff significantly delayed the accounting work for Sangster's year end, the consolidation of the Sangster's financial records, and the completion of the Corporation's audit.
Considering the foregoing factors, it is Eastwest's submission that the present circumstances warrant the imposition of a Management Cease Trade Order ('MCTO'), rather than a Cease Trade Order ('CTO'), as contemplated under National Policy 12-203 - Management Cease Trade Orders ('NP 12-203').
Eastwest's Financial Statements are required to be filed on or before January 29, 2020. Eastwest's failure to file by January 29, 2020 may result in the securities commissions or regulators imposing an Issuer CTO.
Eastwest fully expects to file its Financial Statements on or before January 29, 2020 as prescribed by NP 12-203. Further, Eastwest confirms that it intends to satisfy the requirements to provide Default Status Reports as prescribed by NP 12-203 so long as it remains in default of its requirements to file its Financial Statements within the prescribed period of time. Should Eastwest fail to file the appropriate Default Status Reports as prescribed by NP 12-203, the securities commissions or regulators may, as a result of such failure, impose an Issuer CTO.
Eastwest confirms that there are no insolvency proceedings against the Corporation as of the date herein. Eastwest also confirms that there is no other material information concerning the affairs of Eastwest that have not been generally disclosed as of the date herein.
ON BEHALF OF THE BOARD OF DIRECTORS
EASTWEST BIOSCIENCE GROUP
Chief Executive Officer and Director
Chief Financial Officer
TSXV - Symbol: EAST
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain 'forward-looking statements' under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to the terms and conditions of the Corporation's filing of annual financial statements for the fiscal year ended July 31, 2019 and the related management's discussion and analysis and the MCTO. Forward-looking statements are 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 statements. Such factors include, but are not limited to: management's perceptions of the anticipated timeline in which the Filings can be completed and filed, results of operations, operational matters, historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE: EastWest Bioscience Inc.
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