Borislav Tonev

Tanaris Power (OTCBB:TPHX) Needs a Recharge

by Borislav Tonev April 17, 2015

Tanaris Power (OTCBB:TPHX) is being pumped at the moment. A landing page was set up by an entity called The Profit Letter and newsletters like Trade of the Week Financial and Investors Alley are making sure that the word is properly spread around. The budget stands at $600 thousand, and as is often the case, the pumpers talk about potential buyout offers from Tesla Motors Inc (NASDAQ:TSLA) and about how TPHX could soar to $5.56.

Unfortunately for them, investors don't appear to be paying too much attention. The pump gave the stock a boost at the beginning of the week when it managed to reach more than $0.70 per share. Over the last two sessions, however, it lost about 16% and it's now sitting at just over $0.60 – pretty much back where it started.

On Tuesday, Tanaris announced that they have started the development of a battery that will be 40% more powerful than the current models, but even that wasn't enough to stop the slide. Clearly, investors are treading carefully, and we'll now try to find out why.

The paid pump in and of itself is a big enough red flag. Many people have fallen for similar promotions and most of them have ended up badly burned. That's why, when they see a pump, some investors prefer to sit on the sidelines. There are a few other things that could scare them away.

The press releases, for example, would have you believe that the company has gone through a reverse merger recently and that it's now in the business of developing and manufacturing batteries. The latest 10-Q tells a different story.

The name and ticker symbol are indeed new and in January, TPHX (then known as Recursons Montana S.A.) signed a securities purchase agreement. According to it, the public company was supposed to issue some shares and pay a total of $350 thousand in seven equal installments in order to acquire the lithium-ion battery business. TPHX's management team managed to pay $75 thousand in January and February, but then, they fell behind schedule which means that the company is currently in default under the agreement. In other words, nobody can say for sure whether the acquisition of Tanaris will be completed at all.

If the deal goes through, TPHX will have a new CEO. His name is Bruce Farmer and he might also be deterring some investors away. He is still listed as the CEO of Kolasco Corp (OTCMKTS:KLSC) – an OTC company that got suspended by the SEC due to “questions regarding the accuracy of company information.” Mr. Farmer has also been involved with an entity called Capilano Capital Inc – a company that has acted as the paying party in a few stock promotions. All in all, Mr. Farmer's reputation isn't exactly spotless. That, however, isn't the biggest problem.

The biggest problem can be found in the S-1 form filed when the company was trying to go public. As you can see from it, a couple of years ago, Luis Asdruval Gonzalez Rodriguez and Miguel Guillen Kunhardt, the members of the soon-to-be-former management team, held 75 million shares or 100% of the issued and outstanding stock. In order to have the stock listed on the OTC Markets, Mr. Rodriguez and Mr. Kunhardt sold a total of 30 million shares to some unnamed investors at a price of just $0.002 per share.

If the deal with Tanaris gets completed, Mr. Rodriguez and Mr. Kunhardt will cancel the majority of their shares. The unnamed investors, however, won't need to do that. Instead, they'll have the chance to unleash a huge amount of stock on the open market and walk away with some hefty profits.

Comments 1

1. Guest
April 20, 2015, 02:24AM

Quotes Thank you for your analysis of recent events around THPX.
It is so easy to get burn with penny stocks.
As always "Management" is key in a company success ... as you mentioned this is not rhe case with Tanaris (THPX).
Avoid.
regards.
Eric de M (Belgium Europe)

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