Feud between Namaste Technologies and short-seller Andrew Left of Citron Research escalates

In the war of words between Namaste Technologies Inc (CVE:N) (OTCQB:NXTTF) and short-seller Andrew Left of Citron Research, one thing is clear: It isn’t over yet.

Over the weekend, Left spoke to Proactive Investors about his recent accusations against Namaste and its CEO, Sean Dollinger, and why Left believes the cannabis e-commerce platform is a “fraud.”

“He loves the sound of his voice. He doesn’t realize he’s a walking securities violation,” says Left, as explained his research report in further detail. “If he was in the United States, it would be different,” he says, adding that he has “never seen anything like it.”

READ: Short-seller Andrew Left’s Citron Research doubles down on Namaste Technologies, calls it a ‘fraud’

So here’s what we know: Namaste, which currently trades on the Canadian Venture Exchange and on the OTC Market in the US, has said it has plans to uplist to Nasdaq.

But Left alleges that the listing claim is “fake,” with a goal to lure investors into buying Namaste stock.

In November 2017, Namaste announced it had signed a $400,000 agreement with ESC Hughes Holdings Ltd to sell its wholly owned US subsidiary, Dollinger Enterprises US Inc.

According to Citron, Namaste sold itself to a US counterpart and that Namaste executive David Hughes bought Dollinger Enterprises, not a European group, as the company has stated.

Citron’s recent report focuses on Namaste’s losses and alleges that the company paid money to undisclosed parties, referring to “$2.6 million in inexplicable consulting fees.”

Left told Proactive Investors in a phone interview that the amount of money Namaste pays “consultants” is “absurd.”

Namaste responds

There is an added complication: Namaste Technologies is currently in the middle of a blackout period, as it aims to acquire Cannvas MedTech Inc (CSE:MTEC, FRA:3CM), a cannabis business technology company. What this means is that corporate insiders, such as the CEO, are not allowed to speak to the public about their business. 

But Namaste released an official statement Tuesday: 

“The company wishes to respond to these claims and inform shareholders that its Nasdaq application is progressing but has not yet been accepted or approved, that the company’s sale of its US assets was not to a ‘related party’ and was not a ‘related party transaction’ as defined under applicable Canadian securities laws and that other assertions made by Citron are equally inaccurate and misleading.”

Where to from here?

Namaste says in its statement it’s prepared to fight back.

“The company is prepared to pursue any legal remedies it deems necessary to protect its rights and its reputation and shall continue to respond strongly to false and defamatory statements such as those mentioned in these publications.

“Citron is engaged in the practice of short-selling securities for its own financial gain. Citron has previously published false and misleading information in respect to the company as a means to manipulate the company’s share price. Citron has also targeted other Canadian companies in the cannabis sector.”

Andrew Left, however, says he’s not done and there’s more in the pipeline when it comes to further reports about Namaste Technologies.

Law firms announce they are investigating claims

On Thursday, New York-based law firm Bernstein Liebhard LLP announced it is investigating potential securities fraud claims on behalf of shareholders of Namaste Technologies Inc. in regards to allegations that Namaste and/or its executives may have issued materially misleading business information to the investing public.

Rosen Law Firm has also announced it has filed a class action lawsuit on behalf of purchasers of the securities of Namaste Technologies Inc. 

Namaste said it has not yet been served, adding that it “understands that US law would require consolidation of any further federal court litigation, and the flurry of press releases and advertisements does not mean there will be myriad lawsuits. The company intends on vigorously defending these claims.”

Shares of Namaste were down 0.5% at C$2.05 in Toronto and down 4.8% at US$1.58 in New York. 

– Lenore Fedow contributed to this report –

Contact Katie Lewis at [email protected]
Follow her on Twitter: @kelewis

Story by ProactiveInvestors