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Terpenetech Accounts filed - the panama pump fraud at AIM listed Eden confirmed

By Tom Winnifrith | Friday 5 May 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

The fraud is confirmed. Will Eden Research's (EDEN) Nomad Shore cap resign? Will Eden impair the carrying value of Terpenetech which appears to be insolvent? Does anyone care any more?

You will remember the fraud here. It started in 2011 when Eden sold something to Terpenetech (a near dormant company with no money). Eden booked that as revenue and "an amount falling due within one year" - a current asset. Hmmm. It stayed as a current asset in Eden's accounts for 2011, 2012, 2013 and 2014. The bill was finally paid in 2015. But how was it paid?

In August 2015 came the big panama pump fraud. Eden sold another asset to Terpenetech, for £600,000. Of course Terpenetech had no cash at all. But luckily Eden invested £920,000 to take a 29.9% stake in Terpenetech and ( since it had no cash) paid for that in shares. Quite why 29,9% of a company with no assets, trivial sales and no prospect of generating cash was worth £972,000 is a tad confusing. handily those shares that Terpenetech picked up left it holding just under 3% of Eden so it had no need to declare any share sales.

Accounts for the year to July 31 2016 are now out HERE. You will see that Terpenetech admits that all the shares in Eden were indeed dumped. That has allowed it to clear its liabilities to Eden of c £680,000. But the cash position - and the loss for the year of c£300,000 - suggests that the shares were dumped at a big loss.

At the period end cash at hand was ZERO. There were amounts owed due within one year of £87,055 but amounts owing due within one year of £26,981 and long term amounts owingof £88,095. The balance sheet does not look like a trainwreck because those worthless assets bought from Eden are in there at £652,083 even though it is clear they are not generating any business from them. Why not fess up and write them off? With cash of nil and the company clearly losing money why is this company not deemed insolvent? If Eden and a company owned by one of the directors is the boss called in sums due, Terpenetech would go tits up?

It is hard to see that Terpenetech's position has improved since July 31 2016.

In light of all this surely the 2016 accounts for Eden must be restated. can the £600,000 revenue from Terpenetech be said to be in any way genuine. And how can the carrying value of £920,000 for is 29.9% stake in this insolvent POS be justified? And how can Shore cap continue to act for a company that has clearly done a panama pump fraud.


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