FSD Pharma (CSE: HUGE) (NASDAQ: HUGE) this morning announced that it has settled a class action lawsuit that was filed against the firm in 2019. The class action itself was related to the build-out of its facility in Cobourg, Ontario, which in February 2019 took a turn for the worse when things fell apart with construction partner Auxly Cannabis (TSXV: XLY).
FSD this morning indicated that it has entered into a settlement agreement due to the desire to avoid the expense of court associated with forging ahead to fight the lawsuit. The company admitted no fault or liability in connection with the settlement.
Under the terms of the arrangement, the company will pay $5.5 million to settle the lawsuit, of which $4.6 million will be covered by insurance the company currently has in place. The remainder, $900,000, needs to be covered by the company directly.
To provide further clarity to our readers, this class action was filed February 22, 2019, by a shareholder of FSD whom filed a statement of claim in the Ontario Superior Court. Among other items, the claim alleged that FSD Pharma had made statements containing misrepresentations related to the build-out of the Cobourg facility.
The lawsuit was not filed by Auxly, as certain message boards seem to have misinterpretated. Rather, within regulatory filings, FSD Pharma explicitly states that “to date, neither party has taken further legal action against the counter party,” when referencing the events that transpired with Auxly.
FSD Pharma last traded at $2.14 on the CSE.
Information for this briefing was found via Sedar, and FSD Pharma. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.