Namaste Technologies (TSXV: N) (OTCQB: NXTTF), an e-commerce platform, and online portal that connects patients to doctors prescribing marijuana-related solutions continues to make headlines. If you’ve been following the recent story, you’d have heard that the company’s CEO and co-founder is facing some serious allegations. Sean Dollinger, who co-founded Namaste with Kory Zelickson five years ago out of his garage, took fire from Citron Research, a firm well known for exposing frauds and shorting companies, back in October 2018. A special committee formed alongside the board of directors in the midst of October’s short attack, and have continued to push the fact that the CEO has apparently breached his fiduciary duty to shareholders. Accusing him of self-conduct, self-dealing and other undisclosed particulars.
The committee feels he should be removed from the board in the shareholders best interest and have requested to terminate his contract. Just this past Monday Dollinger threatened to take legal action against the company’s board to “begin setting the record straight.” He recommends that shareholders ignore the rumours, and as of Feb 8th, he goes on record saying that he wants the committee to follow a proper process and not step out of line with their accusations.
He then makes a statement later in the week stating he will not be able to continue steering the company towards its bright future but will stay on the board of directors… Not the kind of defensive statement that some were hoping for. Many wonder what is taking place behind the scenes, the truth behind these allegations, as well as the intentions of this special committee. “I strongly object to the special committee purporting to have the authorization to remove me. I am of the view that the special committee has exceeded its mandate and is purporting to take control of the board,” Dollinger said in an affidavit. When asked if he would want to regain control of the company fully again on last weeks Midas letter, he had no comment.
Namaste shares have since plummeted. It seems that such allegations have created confusion and this special committee may be responsible for the uncertainty in the market and the affected share price. Regardless, the lower share price proposes an opportunity in the short term for any who believe in the mandate and long-term vision of Namaste, with or without the CEO on board. Dollinger still sits as the largest shareholder, however, making him omnipresent. The interim CEO Meni Norim has since made statements to the public stating that Namaste is “moving full-steam ahead” with a “strong, talented management team in place” and a “solid business,” he added. His letter cited, among other things, Namaste’s license to distribute medical cannabis in Canada, a “healthy pipeline of partnerships” and a “strong cash position.”
The question remains what actions will be taken and how can the public regain confidence while the truth is surfaced. It seems a very common occurrence in today’s venture markets, that business owners are wrongfully accused without a plethora of facts. It becomes even more difficult for the average investor to discern fact from fiction when the interests of shorting firms are so widely different than that of long-term investors. We can only hope that justice is served and that whoever has the malice intentions removes themselves from the picture so that equilibrium can be restored in what I believe is a great Canadian Cannabis company.
Stay connected to the story, and Happy investing!
Images source: Shutterstock
Video source: Midas Letter
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