What happened

Shares of PolarityTE (NASDAQ:PTE) couldn't get a lift today after the company announced it had been added to the Russell 2000 and Russell 3000 Indexes. That's because notorious short-seller Citron Research released a report calling the company a fraud and asked for the SEC to "halt this stock immediately."

The report is pretty damning, although Citron didn't have to dig very far: Most of the research presented was gathered from public government databases. When compared to recent statements and activities by PolarityTE, it seems all too obvious that something is wrong.

As of 1:18 p.m.EDT, the stock had settled to a 30.7% loss.

A touch screen showing a declining stock chart.

Image source: Getty Images.

So what

Unfortunately for PolarityTE and its shareholders, it appears that Citron Research is on the right path. The company's claims of owning a novel tissue engineering platform never did seem legitimate. After all, shares were listed on the Nasdaq exchange through a reverse merger with a video game developer called Majesco Entertainment, the company reported just $13,000 in revenue in the most recent quarter, and its management team has a questionable past. How many red flags do you need?

Now what

This one's pretty easy, so I'll repeat what I said in April: PolarityTE is as questionable as they come, has zero credibility, and has nothing to back up the claims for its tissue engineering platform. The fact that management continues to issue stock offerings to raise funding from capital markets should be a huge red flag for investors, both in terms of dilution and in answering the question, "What, exactly, is all the money for?" Long story short, it appears as if Citron Research is on the right path. Investors should stay far away from this stock.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.