b'CASES GOODWINIndia Globalization Capital, Inc.: Alde-BinetAphria, Inc.: In re Aphria, Inc. Securities Tchatchou, et al. v. India Globalization Capital,Litigation, Case No. 1:18-cv-11376-GBD (S.D.N.Y., Inc., et al., Case No. 8:18-cv-03396-PWG Dec. 5, 2018)(D. Md., Nov. 2, 2018) Aphria, Inc. (Aphria) is a Canadian based company India Globalization Capital, Inc.s (IGC) developsand one of the largest cannabis production companies intellectual property for the treatment of seriousin the world. In July 2017, Aphria announced that it was medical conditions through its research ofplanning to use its experience in Canada to expand the phytocannabinoid-based therapies in the Unitedcompany into newly federal legal markets. As part of this States, in addition to building farming facilities to beplan, Aphria spent approximately C$193 million to acquire offered for lease. In September 2018, IGC announceda number of Latin American assets located in Jamaica, that it would begin producing a CBD-infused beverageArgentina and Colombia. The company subsequently called Nitro G. The company further stated thatsold the assets to Scythian, a company it also recently it had entered into a distribution agreement with aacquired. manufacturing partner based in Malaysia and planned aIn December 2018, two short-seller activist secondary stock offering, which ultimately raised stockholdersHindenburg Research (Hindenberg) and $30 million.Quintessential Capital Management (QCM)began In the first week of October 2018, Citron Research andinvestigating the acquisitions and published reports MarketWatch each published reports that discloseddisclosing their findings, which included corporate records alleged issues surrounding (i) Nitro G productand photographs of the Latin American sites. The reports development, including assertions that it would beeach alleged that the acquired assets had virtually zero nearly impossible to have the product manufacturedworth. Shortly thereafter, the companys stock price in Malaysia because of the countrys law banning thedropped from $7.90 to $4.51, which represented a total possession or sale of cannabis, and (ii) the companysmarket capitalization loss of more than $220 million. own price targets for its stock, which were nearly 50%In response to the report, Aphrias board implemented of the then-current trading price. The companys stocka special committee to investigate the acquisition and price subsequently dropped by more than 36%.publicly respond to the assertions made by Hindenburg On October 29, 2018, the NYSE announced that itand QCM. The special committee completed its review was delisting IGCs common stock from the exchangeand refuted many of the short-seller claims. However, the explaining that the company was touting ventures thatspecial committee did ultimately conclude that certain success of which is problematical. After the companysinsiders at the company had interests in the acquisition stock was delisted, IGCs stock declined further bythat should have been disclosed.77.5%. Investors filed a putative class action against the Investors filed a putative class action suit against IGCcompany and its executives alleging violations of and its CEO and CFO alleging violations of SectionsSections 10(b) and 20(a) of the Exchange Act and Rule 10(b) and 20(a) of the Exchange Act and Rule 10b- 10b-5 for allegedly false and misleading statements made 5 in connection with allegedly false and misleadingin connection with its acquisition of the Latin American statements made in connection with the quality of oneassets. According to plaintiffs, the acquisition was a sham of the companys manufacturers. Specifically, plaintiffsand its true purpose was to assist executives in siphoning alleged that what IGC described as an experiencedmoney from the company by having Aphria purchase manufacturer was a recently-created distributorcompanies previously owned by its executives. Plaintiffs entity controlled by IGC. Further, IGC plaintiffs allegedfurther allege that the acquired assets were primarily non-that the company failed to disclose to investors thatoperational and grossly overvalued. cannabis was illegal and punishable by death inIn September 2019, defendants filed a motion to dismiss Malaysia. Defendants moved to dismiss in Octoberthe amended complaint. The parties completed briefing 2019 and the parties completed briefing in Decemberin January 2020. The case is ongoing and defendants 2019. The case is ongoing and defendants motion tomotion to dismiss was heard on February 18, 2020, and dismiss is set to be heard in 2020. the Court took the matter under advisement.9'