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SA’s First Major Canna-Casualty? Nutritional Holdings Silent as Plans Unravel and Investor Anxiety Mounts

Business Day fields concerns from worried Nutritional investors

Nutritional Holdings appears to have gone into a tail-spin with anxious investors facing the prospect of losing whatever money they have in the cannabis company as its JSE listing is almost certain to be terminated.

 

Business Day reported on 7 February 2022 that the new CEO Nikhyle Dasarath said he would update the market this week “but is sick and could not answer more questions” after investors complained about a lack of management communication. Dasarath resigned as Nutritional Holdings director last year after becoming embroiled in a cryptocurrency controversy, but appears to have bounced back into a leadership position.

 

Not that this is likely to have any positive effect on Nutritional’s fortunes.  The Durban-based company has lost 96% of its value, was suspended from trade on the JSE in 2021 for breaches of market regulations, including filing late and incorrect financial statements. And its lost three sponsors in the past 10 months which puts it in breach of JSE regulations.

 

JSE confirms Nutritional directors hard to track down

The JSE confirmed to Business Day that it was in discussions with shareholders who could not reach the CEO or chair, adding that it too had struggled to reach the company. JSE director of regulation Andre Visser told Business Day that if Nutritional Holdings did not acquire a sponsor soon, it could be kicked off the exchange.

He said: “The JSE is aware of a number of areas where the company has not complied with the listings requirements, which include the non-dissemination of Sens announcements for the resignation of designated adviser and quarterly progress report.”

Visser said a designated adviser is a fundamental requirement for companies listed on AltX. Visser said “failure to secure appointment of a designated adviser within relevant time frames stipulated in the requirements and non-compliance with the listings requirements may lead to the termination of a company’s listing”.

 

Business Day’s Katherine Child reported that shareholders who were hoping the penny stock would soon be allowed to trade again became concerned when top executives could not be reached and did not communicate for three months. One claimed to have emailed the company chair nine times in November and December without success.

Shareholder Junior Smith provided unanswered emails he had written to company chair Althea Helena Grewar, who is also executive director and CEO of Luxe Holdings, which owns NWJ and Arthur Kaplan Jewellers.

He told Grewar that ignoring shareholders’ emails “showed a lack of respect for the JSE, its listing rules and shareholders”.

Grewar did not respond to Business Day WhatsApp messages and turned off her phone when called.

Smith has been asking the JSE how it is protecting shareholders from the company.

Visser said: “The JSE takes non-compliance by companies very seriously and is actively investigating these matters.”

 

Nutritional leadership has been a merry-go-round

Child reports that Nutritional has had numerous leadership changes in the past two years and switched from selling maize-based food to schools to punting a cannabis health supplement to unnamed German and Japanese firms.

In December, it failed to update the market, as legally required, with an announcement when its sponsor (the third in 10 months) resigned in December.

Nutritional terminated its relationship with the advisory firm Exchange Sponsors in March, then appointed AcaiaCap Advisors, which it replaced in September with Mercantec, which quit four months later.

The JSE also confirmed Nutritional was in continued breach of listing requirements and should have told the market when Mercantec quit.

Nutritional will need to show it has appointed a fourth advisory firm and give an update on its progress to become compliant with listing requirements.

 

Shadow of CannaCrypt still in the air

Child writes that Nutritional Holdings raised eyebrows in early 2021 after it issued what it called the world’s first cannabis cryptocurrency, CannaCrypt — a digital token to raise money for its cannabis business. In an email riddled with spelling and grammar mistakes, it promised that investors who bought the digital token would see R20,000 transformed into R2.4m in 10 years, amounting to a 12,000% return. This was the brainchild of current CEO Dasarath, who registered a company in his name to hold CannaCrypt’s funds, before being sanctioned by the JSE for not following rules around how related companies do business with each other.

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