SECTION: Business BC; Securities; Pg. D5
LENGTH: 885 words
HEADLINE: Burke hasn't quite had the Midas touch
SOURCE: Vancouver Sun
BYLINE: David Baines
> BODY:
> 'Don't they have compulsory retirement at The Sun?"
> asked Malcolm Burke, president and CEO of Shep
> Technologies Inc., when I dropped into his Howe
> Street office this week.
>
> It had been a long time since I had last seen Burke.
> Obviously, he hadn't missed me. He knew from
> experience
> that I was not attracted to the kind of junior
> stocks that he has made a career out of promoting,
> so he was
> naturally a bit leery.
>
> "Even if I could turn a dog turd into a gold brick
> overnight you would still write a negative story,"
> he lamented.
>
> Not true. I would write a very positive story. The
> problem is that Burke, who has touted dozens of
> junior
> stocks during the past two decades, has not yet
> managed to turn any dog turds into gold bricks.
>
> Burke is 60 years old, extremely amiable and a
> consummate promoter. I first met him in November
> 1991 when he
> was promoting Creator Capital Inc., a Vancouver
> Stock Exchange-listed company that was in the
> process of
> acquiring Sky Games International Inc. of Las Vegas.
>
> Sky Games was developing a laptop computer gameboard
> that played six Las Vegas gambling games. The device
>
> would accept credit cards and compute a running
> debit or credit, making it suitable for use in
> airplanes, cruise
> ships and hotels.
>
> "It's a very compelling product," Burke said at the
> time, explaining why the stock had surged to the $6
> level.
>
> But Creator was also paying promoter Joe Merrin (who
> years earlier had been briefly sidelined by B.C.
> regulators for trading infractions) $1,500 per month
> to act as a "financial adviser" and refer brokers to
> the
> stock. Merrin's nickname was Machine Gun Joe Merrin,
> a tag which originally alluded to his arsenal of
> automatic
> weapons, but later referred to the speed with which
> he could blow off stock.
>
> In any event, Sky Games, despite a joint venture
> with Harrah's, never quite got off the ground. Burke
> quit in
> 1999 and by the end of last year, the company's
> cumulative losses totalled $67.1 million.
>
> In early 1993, while the Sky Games promotion was
> still in progress, Burke and Merrin began promoting
> Mashiach
> Capital Corp., a VSE company that featured robotic
> figures (such as dinosaurs and giant bugs) for
> amusement
> parks, museums and other attractions.
>
> Mashiach (later called Animatronix Entertainment
> Corp.) was a real company with real revenues, but it
> also had
> real losses. The share price plunged to pennies and
> by January 1997, Burke was gone. The company's
> shares
> have since been delisted.
>
> Now Burke is promoting Shep Technologies, whose
> shares are quoted on the OTC Bulletin Board in the
> United
> States. Shep is developing a system that
> hydraulically captures the energy generated by a
> vehicle when it
> brakes, then releases that energy when the vehicle
> accelerates again.
>
> "It's one of those compelling stories where the
> potential benefits are easily assessed," says Burke.
>
> One party that found the story extremely compelling
> was The OTCjournal.com, which specializes in
> promoting
> nascent stocks.
>
> "A test drive in the parking lot of a shopping mall
> was all we needed," it stated in a February
> write-up. "The
> experience convinced us that this technology had the
> potential to end up on millions of vehicles world
> wide, and
> as such was a microcap investor's dream."
>
> More temperately, it added: "We don't expect to
> generate significant revenues until 2004" which,
> according to
> my calendar, is just a few months away.
>
> The disclaimer provides a possible reason for its
> enthusiasm: Shep paid the newsletter's owner,
> MarketByte
> LLC, $75,000 cash and an unidentified third party
> gave it another 100,000 shares, which provides an
> enormous
> incentive to tout the stock.
>
> Another newsletter, The Intrepid Investor, was even
> more enthusiastic. It stated that Shep's technology
> "could
> be one of the great investment discoveries of our
> times" and the company could be "on the edge of a
> billion-
> dollar royalty."
>
> In a familiar refrain, the disclaimer notes that the
> newsletter's publisher, Capital Financial Media,
> managed a
> $576,000 budget to promote Shep and retained any
> amount over and above the cost of production. It
> also
> expected to receive 42,000 shares from a third-party
> group and options to buy another 63,000 shares at
> $1.50
> to $3 each. Once again, this sort of incentive
> system doesn't usually lend itself to discerning
> reports.
>
> According to Bloomberg financial news, not one
> mainstream analyst follows the stock. And Shep
> certainly doesn't
> fit the financial profile of a viable R&D company.
> As of March 31, it had only $437,000 US in total
> assets, a big
> working capital shortage and negative equity. (Burke
> says that, since then, the company has raised
> another
> $1.4 million US in equity capital, but at the
> current rate, these funds will be quickly consumed.)
>
> All this has caught the attention of Carol Remond, a
> Dow Jones Newswires columnist-terrier who is ripping
> into
> Shep's pant leg. Among other things, she complains
> that Burke has not returned her many phone messages.
> "She
> keeps putting out very nasty things about us,"
> protests Burke, explaining why he hasn't responded
> to her
> calls. "She makes you look quite benign, actually."
>
> Shep stock closed Tuesday at $2.10 US, up 15 cents
> on the day. The company's total stock market value
> is now
> $46 million US.
>
> dbaines@png.canwest.com |
