April 10, 2021 - An investor in shares of Champignon Brands Inc. (OTC: SHRMF) filed a lawsuit in the U.S. District Court for the Central District of California over alleged violations of Federal Securities Laws by Champignon Brands Inc. in connection with certain allegedly false and misleading statements made between March 27, 2020 and February 17, 2021.
Canada based Champignon Brands Inc. cultivation, distribution, and proliferation of medicinal mushrooms and its derivatives in North America.
On February 17, 2021, Champignon Brands Inc. announced that “the Company has determined to withdraw and refile its condensed interim consolidated financial statements and management’s discussion & analysis (‘MD&A’) for the three and six month periods ended March 31, 2020”.
Further, Champignon Brands Inc. stated that “management determined that the financial statements needed to be restated to correct the accounting for the Acquisitions as 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.”
The Company also announced that “it was determined that a shareholder and contracted consultant (the ‘Consultant’) of the Company was a related party with respect to the Acquisitions.”
Shares of Champignon Brands Inc. (OTC: SHRMF) declined from $1.06 per share on December 14, 2020, to as low as $0.355 per share on March 23, 2021.
According to the complaint the plaintiff alleges on behalf of purchasers of Champignon Brands Inc. (OTC: SHRMF) common shares between March 27, 2020 and February 17, 2021, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between March 27, 2020 and February 17, 2021, the defendants made false and/or misleading statements and/or failed to disclose that Champignon Brands Inc. had undisclosed material weaknesses and insufficient financial controls, that Champignon Brands Inc’s previously issued financial statements were false and unreliable, that Champignon Brands Inc’s earlier reported financial statements would need to be restated, that Champignon Brands Inc’s acquisitions involved an undisclosed related party, that as a result of the foregoing and subsequent reporting delays and issues, the British Columbia Securities Commission would suspend Champignon’s from trading, and that as a result, defendants’ statements about Champignon’s business, operations, and prospects, were materially false and misleading and/or lacked a reasonable basis at all relevant times.