|Oh for the good ol days when news like this was soon followed by a halt, now all we get is 7 cents down.|
DJ IN THE MONEY: SHEP Tech's Questionable Alliance Claims
By Carol S. Remond
A Dow Jones Newswires Column
NEW YORK (Dow Jones)--You'd think we're talking about sliced bread.
SHEP Technologies Inc. (STLOF), a small Vancouver, British Columbia,
company created less than a year ago via a merger with an Isle of Man
corporation, says it has developed an experimental technology that
harnesses lost energy generated when a driver steps on the brakes.
That energy can then be used to offset the power needed when the
vehicle accelerates again.
How much of a "killer app' are we talking about? A recent newsletter
- subsidized by SHEP - puts it this way: The technology "could be one
of the great investment discoveries of our times - with SHEP on the
edge of a potential billion dollar royalty."
The newsletter, The Intrepid Investor, is a monthly, subscription
publication whose self-described mission it to go "everywhere in
search of sound, relatively low-risk investments." The recent edition
cited above goes on to inform readers that SHEP has forged a business
relationship with Ford Motor Co. (F) and major auto-parts supplier
Easton Corp. (ETN). "Ford reached agreement with SHEP in 1999, and
brought in the Eaton Corp.," the newsletter said. "Ford is expected to
begin with medium-sized SHEP trucks in the 2005 model year."
Except these business relations don't appear to exist, or at least
not in the way described by the newsletter. And there are questions
about the possible relationship between that newsletter and companies
and people affiliated with publishing company Agora Inc. - a company
facing civil charges for disseminating false information.
"Ford doesn't have and has not had a formal relationship with SHEP
to acquire SHEP's hydraulic launch assist technology," Mike Vaughn, a
Ford spokesman said.
"Ford has no plans to manufacture any vehicle using SHEP
components," Vaughn added.
Gary Klasen, a spokesman for Eaton, said that there is "no active
relationship, and there are no agreements, between Eaton and SHEP."
Early prototype models of an Eaton's own brake-assist product used
some SHEP components, Klasen acknowledged, but the new generation of
the product, first installed in vehicles last December, doesn't
include any SHEP components or technology.
Malcolm P. Burke, SHEP's president and chief executive, didn't
return multiple phone calls.
A SHEP investors-relations official referred all questions about
Ford and Eaton to Burke.
SHEP shares, which had been trading below a dollar in late May,
skyrocketed to a high of $2.85 a share last week on heavy volume. The
stock closed Tuesday at $1.41.
According to a disclaimer on The Intrepid Investor, the SHEP content
"appears as paid advertising, subsidized by SHEP and a 3rd party group
to provide public awareness of SHEP." The disclaimer also says "SHEP's
management have approved and signed off as 'approved for public
dissemination' all statements made herein regarding SHEP's history,
technology and current as well as prospective business operations."
Brian Sodi, named in corporate filings as manager of Capital
Financial Media LLC, The Intrepid Investor's publisher, said in an
email Wednesday that each and every page of advertising material was
approved for public dissemination by SHEP's president.
Behind 'The Intrepid' Masthead
The Intrepid Investor disclaimer also indicates that Capital
Financial Media managed a total production budget of $898,500 for this
"current and past print advertising efforts and retained, over and
above the cost of production, any amounts that remain as compensation
as a fee for production services.
"An additional $102,500 is expected to be received over a period of
approximatively two months from the current mail date for additional
production costs," the disclaimer adds.
In addition to these moneys, Capital Financial Media also "has
received 15,000 shares of SHEP and is expected to receive up to 20,000
additional shares of SHEP." Capital Financial Media may also receive
options to purchase SHEP shares for its services, according to the
How much of these costs SHEP covered isn't spelled out in the
disclaimer, and SHEP or Capital Financial Media aren't saying. But
SHEP's balance sheet would suggest it doesn't have a lot of money to
spend on promotions, and its auditor, Davidson & Company, has attached
a going-concern statement to its latest annual report.
Filings with the Securities and Exchange Commission show that SHEP
raised about $1.6 million late last year and earlier this year selling
shares in private placements. But SHEP shows just $69,000 in cash and
cash equivalent as of the end of March, though that amount is up from
$4,253 at the end of December.
(SHEP also helped finance at least one other marketing effort, an
electronic promotion published in MarketByte LLC's OTC Journal at a
cost of $75,000, according to a disclaimer on that publication. In
that case MarketByte also received 100,000 free trading shares of SHEP
as payment by an unnamed third party.)
There are also questions about whether Capital Financial has any
relation to Baltimore publishing company, Agora, which the SEC, in a
suit filed in U.S. District Court in Maryland in April, accused of
scheming to defraud investors by disseminating false information.
Agora last week filed a motion to dismiss the SEC suit.
In a telephone voicemail message last week, Capital Financial's Sodi
said that neither Agora, nor its president, William Bonner, owned or
own any part of Capital Financial Media.
But Luke Hodgens, a man described by Sodi in his message as one of
his employees, told Dow Jones Newswires in a phone interview that
there is a "slight affiliation" between Capital Financial Media and
Agora. "One of the owners of Agora has a small interest in" Capital
Financial Media, Hodgens said.
Agora's general counsel, Matthew Turner, didn't return any of Dow
Jones Newswires' phone calls.
But a variety of state documents indicate a relationship between
Capital Financial Media and Agora.
Stay with us here.
Florida corporate documents show that in January, Capital Financial
Media LLC of Florida merged with Capital Financial Media LLC of
Maryland and Florida corporate documents, in turn, show that the
principal office of Capital Financial Media of Maryland is 14 West
Mount Vernon Place in Baltimore - which is also the main address of
Agora. And Maryland corporate documents show Agora's president,
William Bonner, as resident agent for Capital Financial Media of
Also, one of Agora's units, Agora Investment Conferences, is located
on the same property as Capital Financial Media, in Delray Beach, Fla.
And property records in turn show that the Florida property is owned
by Formano Properties of Delray Beach Inc., whose president, according
to corporate records, is Mark Ford.
Finally, Florida corporate records name Mark Ford as a director of
Agora Travel Inc., and these same records list William Bonner, Agora's
president, as a director of Agora Travel. The address for both Bonner
and Ford in the Agora Travel corporate documents is that of Agora in
Perhaps all coincidence. But investors should do a lot more legwork
on SHEP before deciding it's The Next Big Thing. And they may want to
seek out sources of information besides The Intrepid Investor.
(Carol S. Remond is one of four In The Money columnists who take a
sophisticated look at the value of companies and their securities and
explore unique trading strategies.)