Namaste Technologies Inc.
- Company Name
- Namaste Technologies Inc.
- Stock Symbol
- Class Period
- November 29, 2017 to October 4, 2018
- Motion Deadline
- December 5, 2018
- Central District of California
The complaint charges Namaste and certain of its officers with violations of the Securities Exchange Act of 1934. Namaste operates the largest global cannabis e-commerce platform with over 30 websites in 20+ countries under various brands. Namaste’s product offerings include vaporizers, glassware, accessories and CBD products. Namaste has developed and acquired innovative technology platforms, including Findify AB, which uses artificial intelligence algorithms to optimize and personalize a consumer’s on-site buying experience. The Company will soon be selling medical cannabis in the Canadian market, subject to approval by Health Canada.
The complaint alleges that during the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding the Company’s business and operations. Specifically, contrary to defendants’ representations during the Class Period that they had sold their U.S. subsidiary in an arm’s-length transaction in order to divest the Company of its U.S. assets to obtain a listing on the NASDAQ, in fact, Namaste had sold its wholly-owned U.S. subsidiary to its own executives. As a result of defendants’ false statements and/or omissions, Namaste securities traded at artificially inflated prices during the Class Period, reaching a high of around $3.00 per share.
Then on October 4, 2018, Citron Research published an article on Namaste alleging that “complete FRAUD” underpins the “’Business’ of Namaste.’” The article stated that Namaste had made a “[f]ake claim of a Nasdaq listing to get investors to buy stock,” and in “the hope of obtaining the NASDAQ listing on Nov 28, 2017, Namaste announced that it divested of its US assets, Dollinger Enterprises US Inc.” The article further stated that, while Namaste allegedly sold these assets to “an arm’s length party,” in fact, a “simple corporate search will illustrate that the purchaser . . . is not a third party, but rather none other than Namaste executive David Hughes.” The article concluded that “Namaste has lied to its shareholders, Canadian Regulators [and] US Regulators[,] and most of all has attempted to hide US assets from the Justice Department in an attempt to obtain a US listing.” Under Citron’s theory, executives could “be stealing money from the company,” which “makes this a criminal offense.” On this news, the price of Namaste shares fell to $1.62 per share over the next two trading days.