NEW YORK, April 27, 2020 (GLOBE NEWSWIRE) -- Pomerantz LLP announces that a class action lawsuit has been filed against PharmaCielo Ltd. (“PharmaCielo” or the “Company”) (OTCQX: PCLOF) and certain of its officers. The class action, filed in United States District Court for the Central District of California, and indexed under 20-cv-03759, is on behalf of a class consisting of all persons and entities other than Defendants who purchased or otherwise acquired publicly traded PharmaCielo securities from June 21, 2019, and March 2, 2020, both dates inclusive (the “Class Period”). Plaintiff seeks to recover compensable damages caused by Defendants’ violations of the federal securities laws under the Securities Exchange Act of 1934 (the “Exchange Act”).
PharmaCielo, through its subsidiary, PharmaCielo Colombia Holdings S.A.S., purports to cultivate, process, produce, and supply medicinal-grade cannabis oil extracts and related products in Colombia and internationally.
The complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about PharmaCielo’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (i) PharmaCielo engaged in undisclosed related party transactions with General Extract LLC (“General Extract”); (ii) PharmaCielo engaged in misleading transactions and loans with General Extract; (iii) PharmaCielo had significantly overstated the efficacy and competitiveness of the Company’s business and operations in South America, including Peru and Colombia; (iv) PharmaCielo’s Research Technology and Processing Centre was never on-schedule and is delayed; (v) the Rionegro facility is located on a floodplain and contaminated with mold and pesticides from its previous tenants; (vi) PharmaCielo’s Cauca Department land has never been utilized by the Company and is idle; and (vii) as a result, Defendants’ public statements were materially false and/or misleading at all relevant times.
On January 9, 2020, Marijuana Business Daily (“MBD”) published an article entitled “New medical cannabis sales opportunities in Peru face downward price pressure after winning company’s very low bid” (the “MBD Article”). According to that article, “[t]he price offered by the winner of the first bidding process to supply medical cannabis in Peru came in well below that of other applicants,” including PharmaCielo, which, “[t]o comply with the purity requirement . . . offered CBD isolate in powder form,” and was disqualified “because the company didn’t make an offer in ‘liquid’ form as required.”
On this news, shares of PharmaCielo fell $0.122 per share, or 4.80%, to close at $2.42 per share on January 10, 2020. However, PharmaCielo’s shares continued to trade at artificially inflated prices as a result of the Defendants’ continued misrepresentations and misstatements throughout the rest of the Class Period.
On March 2, 2020, Hindenburg Research published a report (the “Report”) explaining that PharmaCielo had failed to disclose: (i) transactions with related parties; (ii) misleading business transactions and loans with General Extract and XPhyto Therapeutics Corp.; (iii) the delayed state of its Research Technology and Processing Centre’s construction; and (iv) the poor state of its Rionegro Growing Facility.
On this news, shares of PharmaCielo fell $0.5132 per share over the next two trading days, or 36.14%, to close at $0.9068 per share on March 3, 2020, damaging investors.