Marijuana shares lost losses and Aphria (APHA) turned significantly higher on Thursday when the Canadian cannabis producer fought with a…
Marijuana shares lost losses and Aphria (APHA) turned significantly higher on Thursday when the Canadian cannabis producer fought with a seller who claimed that some of his acquisitions were rigged to surreptitiously enrich the company’s insiders.  X
Aphria said there was an independent panel to review these agreements, which meant acquisition of companies in Latin America. But despite fought to defend a short sales report released Monday, one of the companies published behind the new claims about the company later on Thursday afternoon.
The company, Hindenburg Research, said Thursday that it dug up “several irregularities” related to a company called Liberty Health Sciences, which the company said was supported by Aphria. These results, Hindenburg asserted, “raised more questions about thought unlimited insider self-handling.”
Earlier on Thursday, Aphria said in its statement that the Board “reiterated its confidence” in the process that led to Latin American acquisitions. The statement said that the board also stood for Aphria’s Latin American business.
“But” said Aphria “in the face of erroneous and misleading accusations of some card dealers, whose only interest is to benefit from a decline in the Company’s shares, it makes an extensive review led by a special committee of independent directors of these and all other claims of interest to protect Aphria shareholders. “
Aphria said John M. Herhalt, an independent leader, would chair the committee. Board members Shlomo Bibas and Tom Looney would also be in the committee. Aphria said each member was independent and joined the Board after the Latin American acquisitions had been closed.
CEO Vic Neufeld added: “We are determined to protect our shareholders and restore market confidence by confirming all the facts through an independent process to counter transparency and fraud.”
According to a BNN Bloomberg story on Wednesday, Neufeld said that the company would soon provide a line-by-line response to the Monday report released Monday by Quintessential Capital and Hindenburg Research.
The report was called Aphria a “scaling game with a cannabis affair on the page.” Aphria on Monday called the report “false and bad” and said it was practicing legal options.
However, the Aphria share closed 33% on the stock market today, after falling as much as 1
Among other marijuana stocks, Canopy Growth (CGC) slipped 3.8%. Cronos Group (CRON) recovered 2.7%. Aurora Cannabis (ACB) fell 2.2%. Tilray (TLRY) lost 1.3%.
Aphria share quoted on the New York Stock Exchange last month. Many marijuana shares have practiced less since Canada’s recreationalization in October.
The corresponding sales report on Monday claimed that Andy DeFrancesco, a long-term carrier of Aphria, was to set up or acquire an international company. That company would then be purchased by a Canadian shell controlled by DeFrancesco’s private limited company, Delavaco Group, reported the report.
The shell company would then be kicked up by a company called Scythian Biosciences, reported the report. Neufeld and DeFrancesco hold “important insider roles” in that company, the report continued. Scythian would then sell his interest in Aphria at an inflated price.
“As a result,” the report says, “DeFrancesco and unnamed interested receive cash and / or Scythian shares, Scythian receive cash and / or shares in Aphria and Aphria shareholders receive international assets that are basically worthless.”  In summary, the report has said that Aphria has spent more than 280 million Canadian dollars on acquisitions that “seem to have clear signs of insider self-trade” in Latin America and Jamaica.
The report claimed that three of the units absorbed by Aphria in the acquired unit – Marigold Acquisitions in Jamaica, MMJ Colombia Partners in Colombia and MMJ International Partners in Argentina – once had “Delavaco” in their name. The names were then changed before their acquisition was announced.
The report stated, among other things, that Marigold’s registered office was a deserted building.
In Argentina, it was argued that ABP, a acquired company, Aphria, had a single small pharmacy in its name. A visit to an ABP site described as a distribution center resembled an unfinished warehouse, with a desk and a few stacked boxes, the report claims. Scythian said that ABP’s sales last year came over $ 11 million. However, the report citing an employee said sales were only $ 430,000.
Brady Cobb, CEO of SOL Global Investments, formerly scytic, told BNN Bloomberg on Thursday that the report was “almost entirely false” and that the companies ” with the will not find what they were looking for. “
He said, for example, to find a golden” herb house “in Jamaica, which companies claimed they could not find, was a matter of walking fifteen to twenty meters further.  And he said the companies did not take careful care when they traced down a cultivation site whose existence they questioned.
He also dismissed previous questions that regulators have raised about DeFrancesco’s record saying that he was someone who was “ahead of the curve” and did business with integrity.
“These transactions were all conducted under Canadian law and securities law,” he said about the acquisition. “These transactions were all noted by the different stock exchanges.”
In response to the Monday report, Aphria said Tuesday that it “unambiguously stands behind” its Latin American business. The company said that the acquisitions were independent and carefully investigated and included visits to the site. Aphria also said that it had almost 100 employees in the region. It also stated that the acquisitions were made at a price consistent with the industry.
DeFrancesco, in an interview with Financial Post, said that the “majority” in the report was incorrect. From the pictures of what appeared to be vacant or minimally occupied buildings or offices in the report he said: “I’m not sure when the pictures were taken alike.”
He also said that using shell companies to make an acquisition was relatively common practice.
Aphria, on Tuesday, said that Marigold, in Jamaica, was fully functioning, with licenses in cannabis cultivation and R & D. Marigold’s farm had hitherto harvested about 2500 kilograms of cannabis, said Aphria.
Aphria also said that the Colombia company, Colcanna, “has received” licenses to grow, process and export cannabis. ABP, in Argentina, had delivered 1,500 bottles of Aphria’s Rideau CBD oil to a hospital for a clinical study, said it.
Quintessential said that Aphria’s response failed to address its key conclusions about the acquisitions, their structure or Hindenburg’s new discoveries, published on Thursday, claiming that a cannabis company, Liberty Health Sciences, purchased a Florida property through a must whose proprietor comprised Aphria, Scythian, DeFrancesco and others. This acquisition enabled holders to reap a profit of 5 million Canadian dollars on their investments within six days, Hindenburg claimed.
Hindenburg also claimed that “anonymous individuals” bought 242 million shares in Liberty for $ 0.001 one share in a private placement “just days after Aphria announced its intention to buy its shares at the 208x price.”
Hindenburg concludes that Neufeld participated in the deal. Aphria did not respond immediately to mailed questions late Thursday. These questions were about whether Neufeld participated in the deal, whether it had or would bring an action against Hindenburg and Quintessential, and when the company would offer a more detailed response to the two reports.
According to Hindenburg, Neufeld and DeFrancesco, members of the board of liberty Firman said that in January, Liberty announced plans to buy a company called 242 Cannabis, a company that oversees shells without operations, reports the report. A subsidiary of that company had an agreement to purchase real estate in Florida.
Liberty paid about 13.5 million Canadian dollars for that property, Hindenburg said. However, the report claimed that DeFrancesco paid 8.5 million Canadian dollars for the property six days earlier. 242 Cannabis Shell Company, Hindenburg allegedly, was registered with DeFrancesco’s husband.
Holders of these shell companies also included the investor Barry Honig. Honig was recently charged by the SEC for the orchestration of a pump and dump system. He also helped transform a biotechnology company into the cryptofocused outfit Riot Blockchain (RIOT).
Riot Blockchains stock increased last year and then fell when the surrounding blockchain technology softened and questions arose about its operations and acquisitions.
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