By Peter Kennedy
It’s a long way from mineral exploration in British Columbia to manufacturing sexual potency pills in California.
But a Vancouver, Canada junior formerly known as Burrow Mining Inc. made that transition earlier this month when it acquired a license to manufacture and distribute a line of sexual potency pills and liquid products that are produced under the Libigrow brand.
Along the way, Burrow changed its name to True 2 Beauty Inc. (OTO: TRTB, Stock Forum), a company that is based in Los Angeles and quoted on the U.S.A. Pink Sheets.
The completion of this unusual transition was accompanied this week by an aggressive promotions effort that included a trading alert on Stockprofessors.com and coverage by Murphy Analytics among others.
But it had little impact on the stock price, which was quoted at 22 cents Thursday, and trades in a 52-week range of $1 and $0.02.
Based on the 119 million shares outstanding, the company currently has a market value of about $26.2 million.
In its October 18 stock trading alert, Stockprofessors.com describes True 2 as “undervalued, undiscovered, and prime for our members to make some quick profits.’’
However in the footnotes at the end of its report, Stockprofessor.com said it was paid $65,000 by Trinity International LLC, a third party. It also said the payment constituted a conflict of interest that impacts its ability to remain objective in any communication regarding the company.
Murphy Analytics LLC said it was paid $8,500 by Grand Palm Ltd. (a company that it says is a True 2 investor) to produce a research report on True 2, but added in the footnotes that this report should not be construed as investment advice or as an offer to buy or sell any securities.
Murphy Analytics also said it made no independent attempt to verify the reliability, accuracy or completeness of information that is available in True 2 press releases or in documents filed with the U.S. Securities and Exchange Commission (SEC).
So how did we get here?
Prior to the transition to pill manufacturing and the change of name, Burrow Mining was focused on mineral exploration in the Stikine area of northwestern British Columbia and headed by chief executive officer Cathy Ho. She is described in regulatory reports as a 26-year-old fitness consultant.
However, with only $2,193 in cash as of October 31, 2009, the company was unable to keep its mineral assets in good standing.
In January, 2010 Burrow tried to enter the beauty products industry by striking a deal with Hair Tech International Inc. and Dreamcatchers International Inc., companies that feature socialite Paris Hilton on their websites.
Published reports say Hilton was paid $3.5 million to promote Hair Tech’s hair extension products as part of a 2007 marketing campaign.
But the British Columbia Securities Commission cease traded the stock in March after the company failed to file its financial statements and the deal with Hair Tech and Dreamcatchers was terminated in May at the request of Hairtech and Dreamcatchers, SEC filings show.
It was around this time that Burrow changed its name to True 2.
Fast forward to October 4, 2010 and True 2 had signed a licensing deal that gives it the worldwide rights to the Libigrow family of products, including Libigrow, Libigirl, Libiliquid Shots and the Libiliquid Relaxation Drink.
It secured the worldwide manufacturing and distribution license in exchange for 160 million restricted shares.
To fund the expansion of the Los Angeles manufacturing plant, the company said it had arranged for a $5 million private placement at 20 cents a share. True 2 said it had placed $2.3 million worth of shares with European accredited investors and was planning to expand the plant’s production capacity to 20 million pills per month from one million.
Proceeds of the private placement have also put the company in a position to promote itself through stock alerts and reports by paid newsletter writers.
Libigrow founder Alex Hbaiu is now True 2’s President and chief executive officer. By “word of mouth,’’ and advertising, he has led the growth in sales to over $10 million, the company said.
However, there is as yet no financial information to indicate whether or not the manufacturing facility is profitable.
It means there is nothing available to contradict the view of Hotstocked.com’s Gediminas Jasionis who said True 2 is part of an industry that is extremely unpopular with investors, and that it will be difficult for the company to raise investment money on favourable terms.
Phone calls to True 2’s head office in Los Angeles were not returned.
An investment in this company may be the equivalent of a shot in the dark.