Back in December, reports from short-sellers Quintessential Capital Management (QCM) and Hindenburg Research targeted a Canadian cannabis giant, Aphria (TSE: APHA)(NYSE: APHA), accusing them of funneling shareholder’s money through insider LATAM acquisitions.
As the weeks past, these reports went on to target other associated companies, which included Green Growth Brands (CNSX: GGB) who announced they were planning on a hostile takeover bid for Aphria. However, one company that the short sellers targeted in an auxiliary report, Liberty Health Sciences (CSE: LHS) announced today that an independent, third-party investigation they arranged had concluded that many parts of the short seller reports were wrong.
All of these companies, when the reports first came to public attention and began affecting stock prices, warned their shareholders that these authors stood to “realize significant gains in the event that the price of any stock covered herein declines,” with most of these companies vocally short selling shares. They added that these companies also couldn’t stand by the accuracy or completeness or their information, which could be wrong on some points.
Back on January 11th, Liberty Health Science’s board hired Grass & Co, a US-based professional accounting company to address the allegations of the report. The company specializes in working within the cannabis industry and further partnered with an independent real estate investment firm and appraiser with no prior affiliation with LHS to come to a fair estimation of the worth of recent acquisitions.
Today, the results of this investigation were revealed, showing multiple errors in the QCM/Hindenburg report. Some of these errors came from the appraisals of the real estate component of 242 Cannabis, which the report accused of being worth far less than the C$5 million spent by LHS and is refuted by Grass & Co. The findings also showed that Vic Neufeld, the company’s prior Chair and ex-CEO of Aphria, did not have an insider stake in the transaction with the QCM/Hindenburg report appearing to be based on inaccurate filings which have been corrected since.
The board of directors went on to conclude that “the Short Seller Report was materially inaccurate with the respect to key allegations and was presented in a misleading and inaccurate manner and, accordingly, should not be relied upon. The independent directors recommended no further action be taken at this time by the Board but reserved the right to do so if present with additional information.”
Hindenburg Research has had little to say in recent weeks over Aphria, GGB, and LHS, and many are awaiting a response from the company to today’s announcement. As for QCM, they had mentioned last month that their website was supposedly under a hacking attack and restricted their Twitter access to no longer being publicly accessible. As of today, their website is still broken.
Liberty Health Sciences Company Profile
Liberty is a cannabis provider committed to providing a trusted, high-quality cannabis experience based on our genuine care for all cannabis users and a focus on operational excellence from seed to sale, with a focus on markets in the United States.
Liberty’s measured approach to expansion opportunities is focused on maximizing returns to shareholders, while keeping consumers’ well-being at the forefront of what we do. –Liberty Health Sciences