Case 2:21-cv-00675-RCY-RJK Document 1 Filed 12/30/21 Page 1 of 23 PageID# 1
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF VIRGINIA
`(Norfolk Division)
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`
`
`MICHELE DELUCA, Individually and on
`Behalf of All Others Similarly Situated,
`
`
`Plaintiff,
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`
`Case No.
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`
`CLASS ACTION COMPLAINT
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`
`JURY TRIAL DEMANDED
`
`
`INSTADOSE PHARMA CORP. f/k/a
`MIKROCOZE, INC. and TERRY WILSHIRE,
`
`
`v.
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`Defendants.
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`
`
`
`
`
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`Plaintiff Michele DeLuca (“Plaintiff”), individually and on behalf of all others similarly
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`situated, by Plaintiff’s undersigned attorneys, for Plaintiff’s complaint against Defendants, alleges
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`the following based upon personal knowledge as to Plaintiff and Plaintiff’s own acts, and
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`information and belief as to all other matters, based upon, inter alia, the investigation conducted
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`by and through Plaintiff’s attorneys, which included, among other things, a review of the
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`Defendants’ public documents, conference calls and announcements made by Defendants, United
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`States (“U.S.”) Securities and Exchange Commission (“SEC”) filings, wire and press releases
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`published by and regarding Instadose Pharma Corp. f/k/a Mikrocoze, Inc. (“Instadose”,
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`“Mikrocoze”, or the “Company”), analysts’ reports and advisories about the Company, and
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`information readily obtainable on the Internet. Plaintiff believes that substantial additional
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`evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for
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`discovery.
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`NATURE OF THE ACTION
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`1.
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`This is a federal securities class action on behalf of a class consisting of all persons
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`and entities other than Defendants that purchased or otherwise acquired Instadose securities
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`between December 8, 2020 and November 24, 2021, both dates inclusive (the “Class Period”),
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`seeking to recover damages caused by Defendants’ violations of the federal securities laws and to
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`pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the
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`“Exchange Act”) and Rule 10b-5 promulgated thereunder, against the Company and one of its top
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`officials.
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`2.
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`Instadose does not have significant operations and was at all relevant times
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`classified as a “shell” company. Instadose was formerly known as “Mikrocoze, Inc.”, which was
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`organized to sell micro-furniture for small spaces via the Internet. The Company has since pivoted
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`its business to focus on growth and acquisition of pharmaceutical grade agricultural products.
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`3.
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`On December 7, 2020, Instadose (then still known as Mikrocoze) entered into a
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`non-binding letter of intent with Instadose Pharma Corp., a Canadian-based cannabis producer
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`(“Instadose Canada”), and holders of a majority of its outstanding shares for a transaction to
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`acquire 100% of the outstanding common shares of Instadose Canada in exchange for
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`approximately 80% of the issued and outstanding shares of common stock of the Company
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`following such exchange (the “Business Combination”).
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`4.
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`Throughout the Class Period, Defendants made materially false and misleading
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`statements regarding the Company’s business, operations, and compliance policies. Specifically,
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`Defendants made false and/or misleading statements and/or failed to disclose that: (i) Instadose
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`had performed inadequate due diligence into the Business Combination and/or ignored significant
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`red flags associated with Instadose Canada; (ii) Instadose’s internal controls and policies were
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`inadequate to detect and/or prevent impermissible trading activity by control persons of the
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`Company; (iii) the foregoing subjected Instadose to a heightened risk of regulatory scrutiny and
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`enforcement action; and (iv) as a result, the Company’s public statements were materially false
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`and misleading at all relevant times.
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`5.
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`On July 9, 2021, the Ontario Securities Commission (“OSC”) announced that the
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`Chairman and Chief Executive Officer (“CEO”) of Instadose Canada, Grant Ferdinand Sanders
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`(“Sanders”), was charged quasi-criminally with one count of fraud in relation to his role as
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`Chairman and CEO of Instadose Canada, which, since July 2017, had raised more than $9.4 million
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`from investors. The OSC alleged that investor funds were diverted to the benefit of Sanders, his
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`family, and associates, and that Instadose Canada materially misrepresented the nature of its
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`business.
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`6.
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`Then, on October 15, 2021, Instadose Canada announced that an overwhelming
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`majority of its shareholders voted in favor of the Business Combination, which remains subject to
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`customary closing conditions, including approval by a Canadian court. Following completion of
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`the Business Combination, Instadose expected that its Board of Directors would consist of, among
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`others, Sanders.
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`7.
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`Then, on November 24, 2021, in a filing with the SEC, Instadose disclosed that
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`“[o]n November 23, 2021, the Company was notified by the SEC that it had ordered, pursuant to
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`Section 12(k) of the [Exchange Act], that trading in the securities of [Instadose] is suspended for
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`the period from 9:30 a.m. EDT on November 24, 2021, through 11:59 p.m. EDT on December 8,
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`2021.” Instadose advised investors that the SEC’s order specifically stated that “it appears to the
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`[SEC] that the public interest and the protection of investors require a suspension in the trading of
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`[Instadose] securities . . . because of questions and concerns regarding the adequacy and accuracy
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`of information about Instadose . . . in the marketplace, including: (1) significant increases in the
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`stock price and share volume unsupported by the company’s assets and financial information; (2)
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`trading that may be associated with individuals related to a control person of Instadose . . .; and
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`(3) the operations of Instadose[]’s Canadian affiliate.”
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`8.
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`On this news, and after Instadose’s common stock began publicly trading again on
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`December 9, 2021, the Company’s stock price fell $22.61 per share, or 91.87%, to close at $2.00
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`per share on December 9, 2021.
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`9.
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`As a result of Defendants’ wrongful acts and omissions, and the precipitous decline
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`in the market value of the Company’s securities, Plaintiff and other Class members have suffered
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`significant losses and damages.
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`JURISDICTION AND VENUE
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`10.
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`The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) of
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`the Exchange Act (15 U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the
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`SEC (17 C.F.R. § 240.10b-5).
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`11.
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`This Court has jurisdiction over the subject matter of this action pursuant to 28
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`U.S.C. § 1331 and Section 27 of the Exchange Act.
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`12.
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`Venue is proper in this Judicial District pursuant to Section 27 of the Exchange Act
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`(15 U.S.C. § 78aa) and 28 U.S.C. § 1391(b). Instadose is headquartered in this Judicial District,
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`Defendants conduct business in this Judicial District, and a significant portion of Defendants’
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`actions took place within this Judicial District.
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`13.
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`In connection with the acts alleged in this complaint, Defendants, directly or
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`indirectly, used the means and instrumentalities of interstate commerce, including, but not limited
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`to, the mails, interstate telephone communications, and the facilities of the national securities
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`markets.
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`PARTIES
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`14.
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`Plaintiff, as set forth in the attached Certification, acquired Instadose securities at
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`artificially inflated prices during the Class Period and was damaged upon the revelation of the
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`alleged corrective disclosures.
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`15.
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`Defendant Instadose is a Nevada corporation with principal executive offices
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`located at 1545 Crossways Boulevard, Suite 250, Chesapeake, Virginia 23320-0210. Instadose
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`securities traded in an efficient market on the OTC markets (“OTC”) under the trading symbols
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`“INSD” and “MZKR” during the Class Period.
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`16.
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`Defendant Terry Wilshire (“Wilshire”) has served as Instadose’s President,
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`Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, and a
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`Director of the Company at all relevant times.
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`17. Wilshire possessed the power and authority to control the contents of Instadose’s
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`SEC filings, press releases, and other market communications. Wilshire was provided with copies
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`of Instadose’s SEC filings and press releases alleged herein to be misleading prior to or shortly
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`after their issuance and had the ability and opportunity to prevent their issuance or to cause them
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`to be corrected. Because of his positions with Instadose, and his access to material information
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`available to him but not to the public, Wilshire knew that the adverse facts specified herein had
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`not been disclosed to and were being concealed from the public, and that the positive
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`representations being made were then materially false and misleading. Wilshire is liable for the
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`false statements and omissions pleaded herein.
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`18.
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`Instadose and Wilshire are collectively referred to herein as “Defendants.”
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`SUBSTANTIVE ALLEGATIONS
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`Background
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`19.
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`Instadose does not have significant operations and was at all relevant times
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`classified as a “shell” company. Instadose was formerly known as “Mikrocoze, Inc.”, which was
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`organized to sell micro-furniture for small spaces via the Internet.
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`20.
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`On November 6, 2020, the Company, then still known as Mikrocoze, reported that
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`on October 9, 2020, Sukhmanjit Singh (“Singh”), the Company’s CEO, Chief Financial Officer,
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`President, Treasurer, Secretary, and Director of the Company, had resigned effective immediately.
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`Following Singh’s resignation, the Company became heavily involved with Instadose Canada.
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`21.
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`For example, in the same disclosure regarding Singh’s resignation, the Company
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`reported that Defendant Wilshire, a purported award-winning risk and fraud mitigation manager
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`“currently responsible for Global Risk assessment and Corporate Social Responsibility at
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`Instadose Pharm Corp.”—i.e., most likely, Instadose Canada—had consented to act as the new
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`President and Member of the Board of Directors of the Company.
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`22.
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`Approximately a month later, on December 7, 2020, Instadose reported the
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`Company’s intention to acquire 100% of the outstanding common shares of Instadose Canada.
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`23.
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`Then, on March 11, 2021, Mikrocoze changed its name to “Instadose Pharma
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`Corp.” and its trading symbol to “INSD”, while pivoting its business to focus on growth and
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`acquisition of pharmaceutical grade agricultural products—i.e., Instadose Canada’s focus.
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`Materially False and Misleading Statements Issued During the Class Period
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`24.
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`The Class Period begins on December 8, 2020, the day after Instadose filed a
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`current report on Form 8-K with the SEC, signed by Defendant Wilshire, reporting the Company’s
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`intention to acquire 100% of the outstanding common shares of Instadose Canada. Specifically,
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`that filing stated, in relevant part:
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`On December 7, 2020, Mikrocoze . . . entered into a non-binding letter of intent
`(the “Letter of Intent”) with Instadose [Canada] . . . and holders of a majority of its
`outstanding shares (the “Shareholders”) for a potential transaction pursuant to
`which the Company would acquire 100% of the outstanding common shares of
`Instadose [Canada] (the “Acquisition”) from the Shareholders in exchange for
`approximately 80% of the issued and outstanding shares of common stock of the
`Company following such exchange.
`
`The parties intend that the closing of the Acquisition occur no later than 90 days
`after the execution of the definitive transaction documents (the “Definitive
`Documents”), subject to extension by the parties. Closing of the Acquisition would
`be subject to a number of conditions, including but not limited to, approval of the
`Acquisition by the shareholders of the Company and Instadose [Canada], obtaining
`necessary third party approvals, and no material adverse change occurring in the
`Company or Instadose [Canada].
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`The parties have agreed to an exclusivity period of ninety (90) days from the date
`of the Letter of Intent, during which negotiations leading to the execution of
`Definitive Agreement shall be undertaken in good faith and in a mutually exclusive
`manner and that neither party will circumvent the other during such negotiations.
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`25.
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`On February 25, 2021, Instadose filed an annual report on Form 10-K with the SEC,
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`
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`reporting the Company’s financial and operating results for its fourth quarter and fiscal year ended
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`November 30, 2020 (the “2020 10-K”). That filing contained substantively the same statements
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`as referenced in ¶ 24, supra, regarding the Company’s intention to acquire 100% of the outstanding
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`common shares of Instadose Canada.
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`26.
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`In its section regarding related party transactions, the 2020 10-K only advised that
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`“[d]uring the period ended November 30, 2020, an entity controlled by the former CEO paid
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`expenses of $26,091 on behalf of the Company and advanced the Company $330”; that “[t]he total
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`amount owed to the former CEO, or entities controlled by the former CEO, as of November 30,
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`2020 was $82,085 (November 30, 2019 - $55,664)”; and that “[t]he amounts due to related parties
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`are unsecured and non-interest-bearing with no set terms of repayment.”
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`27.
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`The 2020 10-K also stated that “[t]here are no off-balance sheet arrangements
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`currently contemplated by management or in place that are reasonably likely to have a current or
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`future effect on the business, financial condition, changes in financial condition, revenue or
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`expenses, result of operations, liquidity, capital expenditures and/or capital resources.”
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`28.
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`Appended as an exhibit to the 2020 10-K was a signed certification pursuant to the
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`Sarbanes-Oxley Act of 2002 (“SOX”), wherein Defendant Wilshire certified that “the [2020 10-
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`K] fully complies with the requirements of Section 13(a) or 15(d) of the [Exchange Act]” and that
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`“the information contained in the [2020 10-K] fairly presents, in all material respects, the financial
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`condition and results of operations of Mikrocoze[.]”
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`29.
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`On April 14, 2021, Instadose filed a quarterly report on Form 10-Q with the SEC,
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`reporting the Company’s financial and operating results for the quarter ended February 28, 2021
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`(the “1Q21 10-Q”). That filing contained substantively the same statements as referenced in ¶ 24,
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`supra, regarding the Company’s intention to acquire 100% of the outstanding common shares of
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`Instadose Canada, while noting that “[b]oth parties have agreed to verbally extend the time [for
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`the agreement] in order to complete the audit of the seller.”
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`30.
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`In its section regarding related party transactions, the 1Q21 10-Q only advised that
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`“[d]uring the period ended February 28, 2021, the CEO paid expenses of $11,355 on behalf of the
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`Company”; that “[t]he total amount owed to the CEO as of February 28, 2021, was $11,355
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`(November 30, 2020 - $82,085- owed to the previous CEO)”; that “[t]he amounts due to related
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`parties are unsecured and non-interest-bearing with no set terms of repayment”; that “[o]n
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`February 28, 2021, the former CEO of the Company forgave all related party loans to the Company
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`totaling $82,085”; and that “[t]his was reflected as an increase in Additional-Paid-In-Capital in the
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`financial statements.”
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`31.
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`The 1Q21 10-Q also stated that, other than a situation described in its section
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`regarding liquidity and capital resources—namely, certain “cash advances from our sole Officer
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`and Director,” “cash received in our initial offering,” and a verbal commitment from Defendant
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`Wilshire “to continue to fund our operations up to $75,000[,]” which “is not in writing and maybe
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`[sic] rescinded at any time”—“the company has no off-balance sheet arrangements that have or
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`are reasonably likely to have a current or future effect or change on the company’s financial
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`condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
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`resources that are material to investors.”
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`32.
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`Appended as an exhibit to the 1Q21 10-Q was substantively the same SOX
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`certification as referenced in ¶ 28, supra, signed by Defendant Wilshire.
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`33.
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`On July 9, 2021, the OSC announced that the Chairman and CEO of Instadose
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`Canada, Sanders, was charged quasi-criminally with one count of fraud in relation to his role as
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`Chairman and CEO of Instadose Canada, which, since July 2017, had raised more than $9.4 million
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`from investors. The OSC alleged that investor funds were diverted to the benefit of Sanders, his
`
`family, and associates, and that Instadose Canada materially misrepresented the nature of its
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`business.
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`34.
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`On July 14, 2021, Instadose filed a quarterly report on Form 10-Q with the SEC,
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`reporting the Company’s financial and operating results for the quarter ended May 31, 2021 (the
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`“2Q21 10-Q”). That filing contained substantively the same statements as referenced in ¶ 24,
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`supra, regarding the Company’s intention to acquire 100% of the outstanding common shares of
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`Instadose Canada, while noting that “[t]he anticipated consummation of the contemplated
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`transaction is July 31, 2021.”
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`35.
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`In its section regarding related party transactions, the 2Q21 10-Q only advised that
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`“[d]uring the period ended May 31, 2021, the CEO paid expenses of $33,930 on behalf of the
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`Company”; that “[t]he total amount owed to the CEO as of May 31, 2021, was $51,130, which
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`includes $17,200 in accrued management fees. (November 30, 2020 - $82,085- owed by the
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`previous CEO)”; that “[t]he amounts due to related parties are unsecured and non-interest-bearing
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`with no set terms of repayment”; that “[o]n February 28, 2021, the former CEO of the Company
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`forgave all related party loans to the Company totaling $82,085”; that “[t]his was reflected as an
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`increase in Additional-Paid-In-Capital in the financial statements”; and that the Company had
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`entered into an executive employment agreement with Defendant Wilshire, while detailing the
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`terms of that employment agreement.
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`36.
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`The 2Q21 10-Q also contained substantively the same statements as referenced in
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`¶ 31, supra, regarding the Company’s off-balance sheet arrangements, while also providing the
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`following details regarding its evolving liquidity and capital resources situation:
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`As of May 31, 2021, we had $5 in cash and $51,130 due to a related party. As of
`November 30, 2020, we had 65 in cash, and $82,085 due to a related party, the
`former president/director of the Company . Total liabilities as of May 31, 2021,
`were $60,409 compared to $82,423 at November 30, 2020. The funds available to
`the Company will not be sufficient to fund the planned operations of the Company
`and maintain a reporting status. As of May 31, 2021, the Company owed $51,130,
`which includes $17,200 in accrued management fees. (November 30, 2020;
`$82,085 owed to the previous CEO of the Company) to its current Chief Executive
`Officer. During the six-month period ended May 31, 2021 and May 31, 2020, the
`CEO, paid expenses of $33,930 and $9,410, respectively, on behalf of the
`Company. All amounts due to the related party are unsecured, non-interest bearing
`and have no set terms of repayment.
`
`37.
`
`Appended as an exhibit to the 2Q21 10-Q was substantively the same SOX
`
`
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`certification as referenced in ¶ 28, supra, signed by Defendant Wilshire.
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`38.
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`On September 22, 2021, Instadose filed a current report on Form 8-K with the SEC,
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`signed by Defendant Wilshire, providing an update on the contemplated transaction with Instadose
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`10
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`Canada (the “September 2021 8-K”). That filing stated, inter alia, that “[o]n September 1, 2021,
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`Instadose . . . entered into a plan of arrangement (the ‘Agreement’) with [Instadose Canada,]” and
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`that “[u]pon the satisfaction of the conditions set forth in the Agreement, the Company will acquire
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`all of the issued and outstanding shares of common stock (the ‘Shares’) of Instadose[ Canada,]”
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`with “[t]he consideration to be paid for each Share [to] be 1.34 shares of common stock of the
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`Company.”
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`39.
`
`The September 2021 8-K also highlighted the business operations of Instadose
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`Canada, indicating to investors the purported benefits that would flow to Instadose following
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`consummation of the Business Combination:
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`[Canadian] Instadose is building a large-scale commercial outdoor growing,
`cultivation, production, and global distribution platform (the “Global Distribution
`Platform”) for medicinal cannabis and cannabinoid oil. Utilizing the Global
`Distribution Platform, Instadose [Canada] will be seeking to open the commercial
`gateway to a new wholesale marketplace capable of providing pharmaceutical
`industry companies with large, sustainable, consistent, diverse, and low‑cost
`supplies of high‑quality medicinal cannabis and cannabinoid oil for use in bulk as
`an active pharmaceutical ingredient.
`
`Instadose [Canada]’s Global Distribution Platform spans five (5) world continents
`to date, including Africa, Europe, Asia, South America, and North America (each,
`a “Continent”). Within each Continent, Instadose [Canada] is establishing
`operational subsidiaries and joint venture partnerships to secure access to
`government-issued licenses and permits in countries such as The Democratic
`Republic of the Congo, the Republic of North Macedonia, the Portuguese Republic,
`the Republic of India, Colombia, Mexico, and Canada, each seeking to increase
`their level of participation within the global Medicinal Cannabis industry.
`
`Upon consummation of the transaction, the Company will no longer be considered
`a “shell” company.
`
`40.
`
`On October 13, 2021, Instadose filed a quarterly report on Form 10-Q with the SEC,
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`
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`reporting the Company’s financial and operating results for the quarter ended August 31, 2021 (the
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`“3Q21 10-Q”). That filing contained substantively the same statements as referenced in ¶¶ 38-39,
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`supra, providing an update on the contemplated Business Combination, and indicating to investors
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`the purported benefits that would flow to Instadose following consummation of the Business
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`Combination.
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`41.
`
`In its section regarding related party transactions, the 3Q1 10-Q only advised that
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`“[d]uring the period ended August 31, 2021, the CEO paid expenses of $45,974 on behalf of the
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`Company”; that “[t]he total amount owed to the CEO as of August 31, 2021, was $88,974
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`(November 30, 2020 - $82,085- owed by the previous CEO), which includes $43,000 in accrued
`
`management fees”; that “[t]he amounts due to related parties are unsecured and non-interest-
`
`bearing with no set terms of repayment”; that “[o]n February 28, 2021, the former CEO of the
`
`Company forgave all related party loans to the Company totaling $82,085”; that “[t]his was
`
`reflected as an increase in Additional-Paid-In-Capital in the financial statements”; and that the
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`Company had entered into an executive employment agreement with Defendant Wilshire, while
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`detailing the terms of that employment agreement.
`
`42.
`
`The 3Q21 10-Q also contained substantively the same statements as referenced in
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`¶ 31, supra, regarding the Company’s off-balance sheet arrangements, while also providing the
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`following details regarding its evolving liquidity and capital resources situation:
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`As of August 31, 2021, we had $nil in cash and $88,974 due to a related party. As
`of November 30, 2020, we had 65 in cash, and $82,085 due to a related party, the
`former president/director of the Company . Total liabilities as of August 31, 2021,
`were $113,233 compared to $82,423 at November 30, 2020. The funds available to
`the Company will not be sufficient to fund the planned operations of the Company
`and maintain a reporting status. As of August 31, 2021, the Company owed $88,974
`(November 30, 2020; $82,085 owed to the previous CEO of the Company) to its
`current Chief Executive Officer. During the nine-month period ended August 31,
`2021 and 2020, the CEO paid expenses of $45,974 (and accrued management fees
`of $43,000) and $9,410, respectively, on behalf of the Company. All amounts due
`to the related party are unsecured, non-interest bearing and have no set terms of
`repayment.
`
`43.
`
`Additionally, the 3Q21 10-Q stated that “[d]uring the period the Company agreed
`
`
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`to sell 1,000 shares of the Company’s common stock at $1.00 per share to 10 shareholders” and
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`“[n]o cash was received and shares were issued subsequent to the period”; that “[s]ubsequent to
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`the period the Company agreed to sell an additional 200 shares of the Company’s common stock
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`at $1.00 per share to 2 shareholders”; and that “[t]he $1,200 in cash was received for all 10
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`shareholders during the period and 2 shareholders from subsequent period and all 1,200 shares
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`were issued subsequent to the period.”
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`44.
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`Appended as an exhibit to the 3Q21 10-Q was substantively the same SOX
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`certification as referenced in ¶ 28, supra, signed by Defendant Wilshire.
`
`45.
`
`On October 15, 2021, Instadose Canada announced that an overwhelming majority
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`of its shareholders voted in favor of the Business Combination, which remains subject to
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`customary closing conditions, including approval of a Canadian court. Following completion of
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`the Business Combination, Instadose expected that its Board of Directors would consist of, among
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`others, Sanders.
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`46.
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`On October 21, 2021, Instadose filed a current report on Form 8-K with the SEC,
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`signed by Defendant Wilshire, providing an update on the contemplated transaction with Instadose
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`Canada. That filing stated, in relevant part:
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`On October 19, 2021, Instadose [Canada] applied to the Supreme Court of British
`Columbia (the “Court”) in connection with a proposed plan of arrangement (the
`“Plan of Arrangement”) giving effect to an arrangement (the “Arrangement”) under
`section 288 of the Business Corporations Act (British Columbia), S.B.C. 2002,
`c.57, as amended, (the “BCBCA”) involving the Petitioner, its shareholders and
`Instadose Pharma Corp. (formerly Mikrocoze Inc.) (“MZKR”).
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`Instadose Canada received a Final Order which provided for, among others, (i)
`pursuant to Section 291 (4)(c) of the BCBCA the Arrangement as provided for in
`the Plan of Arrangement, including the terms and conditions thereof and the
`distributions, issuances, exchanges and/or adjustments of securities contemplated
`therein or in connection therewith, is procedurally and substantively fair and
`reasonable to the Instadose Shareholders; and (ii) pursuant to section 291(4)(a) of
`the BCBCA, the Arrangement as provided for in the Plan of Arrangement,
`including the terms and conditions thereof and the distributions, issuances,
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`Case 2:21-cv-00675-RCY-RJK Document 1 Filed 12/30/21 Page 14 of 23 PageID# 14
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`exchanges, and/or adjustments of securities contemplated therein or in connection
`therewith, be and was hereby approved by the Court.
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`Closing of the Arrangement is expected to occur on or about November 15, 2021.
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`47.
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`The statements referenced in ¶¶ 24-32, 34-44, and 46 were materially false and
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`
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`misleading because Defendants made false and/or misleading statements, as well as failed to
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`disclose material adverse facts about the Company’s business, operations, and compliance
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`policies. Specifically, Defendants made false and/or misleading statements and/or failed to
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`disclose that: (i) Instadose had performed inadequate due diligence into the Business Combination
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`and/or ignored significant red flags associated with Instadose Canada; (ii) Instadose’s internal
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`controls and policies were inadequate to detect and/or prevent impermissible trading activity by
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`control persons of the Company; (iii) the foregoing subjected Instadose to a heightened risk of
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`regulatory scrutiny and enforcement action; and (iv) as a result, the Company’s public statements
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`were materially false and misleading at all relevant times.
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`The Truth Emerges
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`48.
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`On November 24, 2021, during after-market hours, Instadose filed a current report
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`on Form 8-K with the SEC, disclosing that the SEC had ordered the suspension of trading of the
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`Company’s securities because of various issues with its business, trading activity, and Canadian
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`affiliate. Appended as an exhibit to that filing was the SEC’s Order of Suspension of Trading,
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`dated November 23, 2021, which stated, in relevant part:
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`It appears to the [SEC] that the public interest and the protection of investors require
`a suspension in the trading of the securities of Instadose. . . because of questions
`and concerns regarding the adequacy and accuracy of information about Instadose
`. . . in the marketplace, including: (1) significant increases in the stock price and
`share volume unsupported by the company’s assets and financial information; (2)
`trading that may be associated with individuals related to a control person of
`Instadose . . .; and (3) the operations of Instadose[]’s Canadian affiliate . . . .
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`Case 2:21-cv-00675-RCY-RJK Document 1 Filed 12/30/21 Page 15 of 23 PageID# 15
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`The [SEC] is of the opinion that the public interest and the protection of investors
`require a suspension of trading in the securities of the above-listed company.
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`THEREFORE, IT IS ORDERED . . . that trading in the securities of the . . .
`Company is suspended for the period from 9:30 a.m. EST on November 24, 2021,
`through 11:59 p.m. EST on December 8, 2021.
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`49.
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`On this news, and after Instadose’s stock began publicly trading again on December
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`9, 2021, the Company’s stock price fell $22.61 per share, or 91.87%, to close at $2.00 per share
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`on December 9, 2021.
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`50.
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`As a result of Defendants’ wrongful acts and omissions, and the precipitous decline
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`in the market value of the Company’s securities, Plaintiff and other Class members have suffered
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`significant losses and damages.
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`PLAINTIFF’S CLASS ACTION ALLEGATIONS
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`51.
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`Plaintiff brings this action as a class action pursuant to Federal Rule of Civil
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`Procedure 23(a) and (b)(3) on behalf of a class consisting of all those who purchased or otherwise
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`acquired Instadose securities during the Class Period and were damaged upon the revelation of the
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`alleged corrective disclosures (the “Class”). Excluded from the Class are Defendants herein; the
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`officers and directors of the Company, at all relevant times; members of their immediate families
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`and their legal representatives, heirs, successors or assigns; and any entity in which Defendants
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`have or had a controlling interest.
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`52.
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`The members of the Class are so numerous that joinder of all members is
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`impracticable. Throughout the Class Period, Instadose securities were actively traded on the OTC.
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`While the exact number of Class members is unknown to Plaintiff at this time and can be
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`ascertained only through appropriate discovery, Plaintiff believes that there are hundreds or
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`thousands of members in the proposed Class. Record owners and other members of the Class may
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`be identified from records maintained by Instadose or its transfer agent and may be notified of the
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`Case 2:21-cv-00675-RCY-RJK Document 1 Filed 12/30/21 Page 16 of 23 PageID# 16
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`pendency of this action by mail, using the form of notice similar to that customarily used in
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`securities class actions.
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`53.
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`Plaintiff’s claims are typical of the claims of the members of the Class as all
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`members of the Class are similarly affected by Defendants’ wrongful conduct in violation of
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`federal law that is comp