Here's an interesting one. At the beginning of this month, Decision Diagnostics Corp (OTCMKTS:DECN) put out a press release detailing the severing of ties, plans and communications with a company called Tauriga Sciences Inc (OTCMKTS:TAUG). The two had previously reported their intentions to combine by way of a reverse merger, Decision into Tauriga, and use this as a platform from which to launch an uplisting to a major exchange. What happened to these plans makes for a compelling short case for Tauriga, and puts Decision in a sort of limbo state.Here's why.Back in April, an unnamed investment banker introduced the Decision CFO Keith Berman to the CEO of Tauriga, Seth Shaw, and Shaw persuaded Berman to join Tauriga's board of directors. The appointment came with the pretense that the two companies would merge as described above, and at the time, this was seen as a sort of precursor to the marrying or the two entities.Tauriga bills itself as a life sciences company:
"Tauriga Sciences, Inc. operates as a diversified life sciences company focusing on the development of a biology platform technology. The company, through its subsidiary, Pilus Energy LLC, develops an alternative cleantech energy platform that creates electricity through consumption of polluting molecules from wastewater."
However, according to the Decision release, Berman quickly realized this wasn’t the case. The company has ongoing litigation against an accounting firm called Cowan Gunteski, which it alleges mishandled some accounting for it and – in doing so – caused a delisting. Berman, having spent some time with Shaw, says he realized that Tauriga's only operational focus is the resolution of this litigation. In other words, no life sciences activity at all.He also hired some lawyers to do a bit of research in an attempt to figure out how much Tauriga might make from the litigation if it wins. Tauriga asserts its in excess of $3 million, and almost certainly more. Berman's lawyers say its max $250K plus potentially some refund on the fees paid for the accounting work.As such, Berman has pulled out of his director role, and the reverse merger is off. Here's the company's conclusion:
"Tauriga Sciences, Inc. is a publicly traded corporation that exhibits no business activity, little revenue and no apparent product or service. DECN due diligence revealed Tauriga to effectively exist as a trading shell whose sole revenue objective appears to be limited to the prospect of a jury award from a successful prosecution of a lawsuit filed against its former auditor."
Since this became public, however, Tauriga hasn’t collapsed in value, as might be expected. The company is currently trading for a market cap of over $9 million. With the above conclusion drawn by one of its own (now ex) board members, how can markets justify this valuation?This author believes this is a solid short thesis, with a target of zero.So where does this leave Decision? Well, in all honesty, not in a great position. The company also suffered some misfortune at the hands of an accounting firm, and is unable to provide any audited financials for the last few years. It needed a reverse merger to form the basis of an uplisting application, and now there isn't one in the pipeline – at least not near term.All we can do is watch for the company's next move, and see how things play out. It's got a bit of cash on hand, and not too much debt, and it's bringing in about half a million revenues quarterly. Its current market cap of a little over $3 million looks about right, but there could be some upside if it can find a way to move forward.We'll keep an eye on it so you don't have to.Subscribe to our newsletter for DECN and TAUG updates below!Disclosure: We have no position in DECN or TAUG and have not been compensated for this article.
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