Champignon Brands Inc.
On June 22, 2020, Champignon Brands Inc. (“Champignon” or the “Company”) announced that the Company had “been selected for continuous disclosure review by the British Columbia Securities Commission (the “Commission”) and “in connection with the review, the Commission had issued a cease trade order suspending in the securities of the Company pending the filing of business acquisition reports.”
On this news, the Company’s stock price fell 24% to close at $0.500 per share on June 22, 2020, thereby damaging investors.
On September 15, 2020, the Company issued a press release stating, amongst other things, “the Commission issued a replacement cease trade order . . . , pending the filing of a revised material change report . . . in connection with the acquisition by the Company of AltMed.” Champignon further stated that “the acquisition of AltMed should be treated as a reverse-takeover.”
On this news, Champignon’s stock price fell 5% to close at $0.271 per share on September 16, 2020, thereby damaging investors.
On February 17, 2021, Champignon announced that it would restate its financial statements for the three and six month periods ended March 31, 2020. Specifically, “the Company previously recognized intangible assets in connection with” certain acquisitions, and “management determined that . . . the assets do not meet the definition of intangible assets for the purposes of international financial reporting standards and as result will be recorded as transaction costs in the Company’s statement of loss and comprehensive loss.” Champignon also stated that “a shareholder and contracted consultant (the ‘Consultant’) of the Company was a related party with respect to” those acquisitions.
On this news, Champignon’s stock price fell 10% to close at $0.687 per share on February 17, 2021, thereby damaging investors further.
The Complain alleges that Defendants failed to disclose to investors that: (1) the Company had undisclosed material weaknesses and insufficient financial controls; (2) the Company’s previously issued financial statements were false and unreliable; (3) the Company’s earlier reported financial statements would need to be restated; (4) the Company’s acquisitions involved an undisclosed related party; (5) as a result of the foregoing and subsequent reporting delays and issues, the British Columbia Securities Commission would suspend the Company from trading; and (6) as a result, Defendants’ statements about the Company’s business, operations and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.
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