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Facedrive, which calls itself a 'people-and-planet-first tech ecosystem,' started as a ride-hailing service in 2016 that promised to offset its carbon emissions through tree planting.Ryan Carter/The Globe and Mail

Several insiders at Facedrive Inc. , including the company’s new chief executive officer, have sold part of their stakes in the company – joining a wave of investors who have offloaded their shares in recent weeks as the stock price has plummeted, regulatory filings show.

Days after Suman Pushparajah became the company’s new CEO on Sept. 1, he sold a total of nearly 800,000 of his 5.4 million Facedrive shares, filings show. On Sept. 2 he sold 183,000 shares at $4.10 apiece, and the next day he sold another 615,500 shares at $2.54 for total proceeds of $2.3-million. Mr. Pushparajah had been restricted from selling his shares through a voluntary lockup agreement, but the company announced on Sept. 1 that it was partly releasing insiders from those agreements.

Mr. Pushparajah was elevated to Facedrive’s top office from his previous executive role because of the resignation of his predecessor, Sayan Navaratnam – the company’s largest shareholder.

On Thursday, Mr. Navaratnam gave notice that he intends to sell nearly nine million of his 30 million shares. Other filings show that Junaid Rizvi, another founder of the company and Facedrive’s current chair, also sold about 800,000 of his more than six million shares between Sept. 1 and 2.

In an e-mailed statement, Facedrive’s chief legal officer said that the majority of Mr. Pushparajah’s shares were still locked up and that he was committed to the long-term growth of the company.

Mr. Pushparajah had received “limited salary” since joining Facedrive in 2018, and wanted to ensure “having adequate personal liquidity as the company entered the next stages of its long-term growth plan,” Mujir Muneeruddin said.

As for the trades by Mr. Razvi, the company chair, he said that Mr. Razvi was “balancing his long-term commitment to the company with his legal right to partially liquidate his position.”

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The selloff signifies a marked turn in the fortunes of Toronto-based Facedrive, which, just seven months ago, had a valuation of more than $5-billion and was heralded by the TSX-Venture Exchange as one of its top 50 companies. In February the stock hit a high of $60 a share, but late Thursday had sunk below $2.

The company, which calls itself a “people-and-planet-first tech ecosystem,” started as a ride-hailing service in 2016 that promised to offset its carbon emissions through tree planting. The company went public, through a reverse merger, in 2019. It has branched into food delivery, online retail and contact tracing for COVID-19, but has struggled to make money. During the first half of the year, it lost $13.4-million on just $9.7-million in revenue.

Up until recently, Mr. Pushparajah, Mr. Navaratnam and Mr. Rizvi had agreed to a further lockup that placed certain restrictions on them selling their shares until 2023. The insiders, who control 49 per cent of the company’s outstanding shares, agreed to the voluntary lockup in March in order to “demonstrate their continued belief in the mission of the company and the opportunity ahead,” Facedrive said in a press release at the time.

When announcing the extended lockup, Mr. Navaratnam, the then CEO, said: “We all realize we are on the cusp of something great, and our only objective is to continue pushing forward our ESG mandate while building long-term sustainable value for our employees, partners and shareholders.”

Since then, the stock price has been in a free fall, a decline that Mr. Navaratnam has blamed on Facedrive’s other founder, Imran Khan, who hasn’t had an operational role with the company for several years. Mr. Navaratnam said in a Sept. 4 press release that Mr. Khan’s refusal to lock up his stake, and his disclosures, starting in July, that he has sold 1.2 million of his 29 million shares, had a “dramatic impact on the stock value and caused it to trend negatively almost every day thereafter.”

Citing Mr. Khan’s trades, Mr. Navaratnam said that it was unfair to disallow other company insiders from trading, and, for that reason, the company was releasing them from their voluntary lockup agreements.

For his part, Mr. Khan has shot back at Mr. Navaratnam, saying, in a press release that he is entitled to trade his shares, and alleging that a lawyer for Facedrive contacted his lawyer about scheduling a hearing so the company could seek protection from creditors under the Companies’ Creditors Arrangement Act.

In recent days, there has been a marked increase in the trading of Facedrive shares. The number of shares traded daily has rarely exceeded 200,000, but since Sept. 2 nearly six million shares have changed hands.

Earlier this year, The Globe and Mail reported on Mr. Navaratnam’s involvement in two other publicly traded companies before he joined Facedrive.

In 2004, he took a technology company public that intended to capitalize on the boom in security spending after the terrorist attacks of Sept. 11, 2001. The company’s share price surged more than 500 per cent, but it was heavily indebted and soon lost 70 per cent of its value.

Later, Mr. Navaratnam served as a director of a biofuels company called PetroAlgae Inc. Shares hit a high of US$26.75 after going public in 2008. The company never reported any sales, and its stock price fell to 85 U.S. cents over the next four years. Regulatory filings show no sign he sold shares in either company.

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