World

Small Caps are Fueling the Growth of the Cannabis Industry

Published

6 years ago

December 6, 2019

Investors should watch out for these three cannabis stocks in the coming weeks, for better or worse. CannTrust Holdings (TSX:TRST) might get delisted from the Toronto Stock Exchange and OrganiGram Holdings (NASDAQ:OGI) is trying a bounce back with some positive results. Meanwhile, in the US, Veritas Farms Inc. (OTC:VFRM) posted an impressive growth in quarterly results.

CannTrust might be delisted from the Toronto Stock Exchange

The Toronto Stock Exchange has formally informed CannTrust Holdings Inc. (TSX:TRST) that it is currently reviewing the company’s eligibility to list its common shares due to its failure to file audited financial statements as of December 31, 2018. That includes the interim financial statements for the first, second and third quarters of 2019.

The Toronto Stock Exchange notice is a warning, stating: “If the Company is unable to remedy these defaults by March 25, 2020, the Company’s securities will be delisted 30 days after that date.”

In August, CannTrust issued a statement following Health Canada’s decision to suspend its crop licenses, indicating that it would review and possibly publish updates on previous disclosures. This has not yet been done.

Health Canada had suspended CannTrust’s licenses following the discovery that the company had been growing unlicensed cannabis at its facilities in Ontario. The situation has resulted in a cascade of consequences, including the replacement of the CEO, the suspension of its sales and product processing license, class action lawsuits and an order to destroy more than $56.4 million (CA$75 million) worth of inventory. Since April, the company’s stock has lost more than 90% of its value.

OrganiGram Holdings scores points on its own scale

This Canadian cannabis grower is slowly gaining ground on a small scale. In a sector flooded with bad news, OrganiGram Holdings Inc (NASDAQ:OGI) is trying to balance itself with a little good news.

The New Brunswick-based cannabis producer can boast of having “one of the lowest crop costs per gram” compared to other producers. That’s not an easy task, at a time when large cannabis companies are struggling with their production costs in a market in which prices are falling due to oversupply.

However, that turned out to be only a consolation prize when OrganiGram released its latest results last week. The figures showed a net loss of $16.9 million (CA$22.5 million), while net income for the quarter ending August 31 was $12.3 million (CA$16.3 million), a significant increase from the same quarter last year, when the figure was only $2.4 million (CA$3.2 million). However, last quarter’s revenues decreased from the $18.7 million (CA$24.8 million) earned in the previous three-month period.

Despite the loss, the company offered revenue improvement forecasts and presented its plans for so-called 2.0 cannabis products, which will be released in the coming months.

OrganiGram has indicated that it intends to launch spray pens in December, cannabis-infused chocolates in the first three months of 2020 and cannabis powder drinks in the second quarter of 2020.

In addition to the results, Raymond James’ analyst Rahul Sarugaser reportedly stated in a research note that the company is “very well positioned to survive the upcoming industry turbulence and become a leader in the sector”.

Veritas Farms Inc. – A cannabis stock with huge growth potential

In Canada the cannabis industry is held back by negative financial results experienced by the majority of companies listed on the Toronto Stock Exchange. However, in the US the cannabis sector is still on the rise, with some small caps positioning themselves at the forefront, thanks to their impressive revenue growth. The most representative example in this regard is Veritas Farms Inc. (OTC:VFRM), a producer and distributor of full-spectrum CBD products based in Lauderdale, Florida.

The company was founded in 2015 and owns a 140-acre industrial hemp farm and facility, located in Pueblo, Colorado. Since its foundation, Veritas experienced year-on-year growth, with the latest quarterly results continuing the upward trend.

Veritas Farms’ Q3 2019 operating results are impressive. The company managed to more than double sales compared to Q3 2018, and reached a new record. The cannabis producer’s total revenue increased by 165% to $1,215,810 compared to $459,329 in Q3 2018. Gross profits increased by as much as 468% to $495,058, compared to $87,187 in the similar period of 2018.

Veritas Farms’ hard-won success is driven by a strategic expansion of its retail network, new product releases, and a relentless focus on the quality of its CBD-based products. Veritas’ nine product categories are currently featured on the shelves of more than 4,800 brick-and-mortar stores, as well as in several online marketplaces.

The cannabis industry is fast-growing, fueled by increasingly friendly cannabis laws and by the rise of companies like Veritas Farms Inc. Veritas and other small caps offer transparency and high-quality CBD-based products. Thanks to these positive factors, the cannabis industry is set to become one of the most important economic sectors, not only in the US, but also on a global scale.

World

TRG Chairman Khaishgi and CEO Aslam implicated in $150 million fraud

Published

6 days ago

June 23, 2025

Jenny Jackson

In a scathing 52-page decision, the Sindh High Court has found that TRG Pakistan’s management was acting fraudulently and that Bermuda-based Greentree Holdings historic and prospective purchase of TRG shares were illegal, fraudulent and oppressive.

The Sindh High Court has further directed TRGP to immediately hold board elections that have been overdue and illegally withheld by the existing board since January 14, 2025.

In the landmark ruling, the Sindh High Court has blocked the attempted takeover of TRG Pakistan Limited by Greentree Holdings, declaring that the shares acquired by Greentree, nearly 30% of TRG’s stock, were unlawfully financed using TRG’s funds in violation of Section 86(2) of the Companies Act 2017.

“Having concluded that the affairs of TRGP are being conducted in an unlawful and fraudulent manner and in a manner oppressive to members such as the Petitioner (Zia Chishti), the case falls for corrective orders under sub-section (2) of section 286 of the Companies Act,” Justice Adnan Iqbal Chaudhry concluded.

The case was brought by TRGP former CEO and founder Pakistani-American technology entrepreneur Zia Chishti against TRG Pakistan, its associate TRG International and TRG International’s wholly-owned shell company Greentree Limited. In addition, the case named AKD Securities for managing Greentree’s illegal tender offer as well as various regulators requiring that they act to perform their regulatory duties.

The case centred around the dispute that shell company Greentree Limited was fraudulently using TRG Pakistan’s own funds to purchase TRG Pakistan’s shares in order to give control to Zia Chishti’s former partners Mohammed Khaishgi, Hasnain Aslam and Pinebridge Investments.

According to the case facts, the Chairman of TRG Pakistan Mohammed Khaishgi and the CEO of TRG Pakistan Hasnain Aslam masterminded the $150 million fraud. They did so together with Hong Kong based fund manager Pinebridge who has two nominees on TRG Pakistan’s board, Mr. John Leone and Mr. Patrick McGinnis.

According to the court papers, Khaishgi, Aslam, Leone, and McGinnis set up a shell company called Greentree which they secretly controlled and from which they started buying up shares of TRG Pakistan. The fraud was that Greentree was using TRG Pakistan’s funds itself. The idea was to give Khaishgi, Aslam, Leone, and McGinnis control over TRG Pakistan even though they owned less than 1% of the company, lawyers of the petitioner told the court.

This was all part of a broader battle for control over TRG Pakistan that is raging between Khaishgi, Aslam, Leone, and McGinnis on one side and TRG Pakistan founder Zia Chishti on the other side. Zia Chishti has been trying to retake control of TRG Pakistan after he was forced to resign in 2021 based on sexual misconduct allegations made by a former employee of his. This year those allegations were shown to be without basis in litigation that Chishti launched in the United Kingdom against The Telegraph newspaper which had printed the allegations. The Telegraph was forced to apologize for 13 separate articles it published about Chishti and paid him damages and legal costs.

After Chishti resigned in 2021, Khaishgi, Aslam, Leone, and McGinnis moved to take total control over TRG Pakistan and its various subsidiaries including TRG International and to block out Chishti. The Sindh High Court’s ruling today has reversed that effort, ruling the scheme fraudulent, illegal, and oppressive.

It now appears that Zia Chishti will take control of TRG Pakistan in short order when elections are called. He and his family are now the largest shareholders with over 30% interest. He is closely followed by companies related to Jahangir Siddiqui & Company which have over a 20% interest. The result appears to be a complete vindication for Zia Chishti and damning for his rivals Aslam, Khaishgi, Leone, and McGinnis who have been ruled to have been conducting a fraud.

TRG Pakistan’s share price declined by over 8% on the news on heavy volume. Market experts say that this was because the tender offer at Rs 75 was gone and that now shares would trade closer to their natural value. Presently the shares are trading at Rs 59 per share.

According to the court ruling, since 2021, shell company Greentree had purchased approximately 30% of TRG shares using $80 million of TRG’s own money, which means that that the directors of TRG Pakistan allowed company assets to be funneled through offshore affiliates TRG International and Greentree for acquiring TRG’s shares – a move deemed both fraudulent and oppressive to minority shareholders. The Sindh High Court also found illegal Greentree’s further attempt to purchase another 35% of TRG shares using another $70 million of TRG’s money in a tender offer.

The ruling is a major victory for the tech entrepreneur Zia Chishti against his former partners and the legal ruling paves the way for him to take control of TRG in a few weeks.