Citron Research has released its hard-pressed opinion of Village Farms (TSX: VFF) (NASDAQ: VFF). Although their short position comes with a question of intentions, their reports are usually backed with evidence-based arguments. In this case, the research firm claims that the SEC should be getting involved and halting Village Farms’ stock as they supposedly violated a whole blanket of regulatory rules. In 2017 Village Farms saved their failing tomato business with a perfectly timed joint venture with Emerald Health Therapeutics (TSXV: EMH) (OTCQX: EMHTF). The stock entered the market with no shortage of paid promotion and hasn’t stopped since. Citron research claims they are one of the many pretenders whose share price has inflated due to false promises.
Citron warns investors that a drop in share price is certain and that the SEC may step in and get involved. Village Farms have allegedly opened multiple unlicensed penny stock sites that are promoting the company and paid large sums towards social media promoters. If that wasn’t enough, the CEO of their JV partner Emerald Health was chairman of Vitality Biopharma (OTC: VBIO), which as suspended for stock manipulation. Rotten management track records are usually the last thing to go noticed. Emerald Health continues to operate in good standing however has been through multiple name changes, says Citron. From Firebird Capital to Firebird Energy to T-Bird Pharma… It seems they are more focused on their name than their operating business as directors of the company have rapidly sold off the stock on all of the last major press releases.
The Citron report continues to list a bunch of previous Joint Ventures that Emerald Health took part in. They all had similar fates, as the stock charts plummeted and no substantial business was built. One of the most well known was their failed partnership with Namaste Technologies (TSXV: N) (OTCQB: NXTTF), which makes the cut, alongside 3 others in the report. Overall Citron attributes the massive rise to their listing on the NASDAQ. However when listing on the NASDAQ the SEC rears their head, and many companies cannot handle the ongoing pressure. In this case, Citron believes the SEC will want to monitor all financial projections, promotional activities, and beneficial ownership.
Village Farms announced last month that they intend to create a joint venture with Nature Crisp. Touting to have merged with trailblazers in the hemp industry. In reality, Nature Crisp has little to no experience in Hemp cultivation says Citron Researchers. It does not take much research to poke holes in many of these elusive press releases.
Village Farms claims that they will become a leading authority in hemp cultivation and that the partnership will give them a sustainable advantage in supplying CBD derived products to big box grocery retailers in the United States. Nature Crisp seems to be permanently closed on Google Reviews…which is really not building them a great defense case here. We will wait to see if the company makes any statements addressing this short report. Right now Village Farms trades at $15.99 per share and boasts a $760 million market cap with under 50 million shares outstanding. As shorts continue to pile on over the last few months, many are hard pressed to know if Village Farms’ assets and future potential can really hold up this massive valuation. Only time will tell so stay tuned for future updates on the Village Farms/Citron Research saga.
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