Predictive Technology Group Inc (PRED)

[petermic]

David Baines on AUSE and GTXO

http://www.canada.com/vancouversun/columnists/story.html?id=e7142374-4085-4d92-981d-2b0da156cd23

Shoe companies put the boots to shareholders
David Baines, Vancouver Sun
Published: Friday, July 11, 2008

These boots are made for walkin',
and that's just what they'll do.

One of these days these boots
are gonna walk all over you.

A song by Lee Hazlewood, sung by Nancy Sinatra

Vancouver has spawned two publicly traded shoe companies that are walking all over shareholders.

The first is Aussie Soles Group Ltd., which is marketing a line of Croc-type footwear. It has been touting sponsorship agreements with the Canadian Football League and the B.C. Lions.

This has been quite shocking for me. Whether they know it or not, the Lions have jumped into bed with one of the many grotty Vancouver bulletin-board promotions that have burned shareholders and sullied our city's financial reputation.

Until a few months ago, Aussie Soles was a private company headed by Craig Taplin, an Australian native who now lives in Kelowna.

Taplin merged the company with K-9 Concepts Inc., which had gone public on the OTC bulletin board in the United States on the ruse of selling "Vitamin C shower heads."

I say "ruse," because K-9 Concepts had no operating history and total assets of only $17,000, nearly all of it cash raised from the sale of seed shares.

It was obvious to me that this company was not being created to sell shower heads, but rather as a vehicle for some future promotion.

What typically happens in these situations is that the insiders corral all the shares, making it easy to control the share price. Once the shares are under wraps, the shell is sold to another promoter (in this case Taplin) who vends in his own business (Aussie Soles) and begins promoting the shares in earnest.

According to securities filings, Aussie Soles had "no revenues and nominal assets," but somehow Taplin was able to secure royalty agreements with the CFL and the Lions.

The football connection was shamelessly touted by Tim Fields, editor of a U.S. newsletter called Untapped Wealth.

"Soon every CFL team will be selling Aussie Soles with its team logo. Sales for the first year alone are projected to be 120,000 pairs," Fields gushed, suggesting that sales could reach $200 million and the stock would soar to high heaven.

The newsletter cost $300,000 and was financed by a mystery company called Sujon Limited, so it was nothing more than a paid ad.

Taplin told me he had no idea who Sujon is, and claimed he had nothing to do with the newsletter, but took no steps to to publicly repudiate its contents.

By the end of June, the stock had climbed to $2.55, giving the company a total stock market value of just under $100 million. In my view, public investors were being played for suckers: "If Aussie Soles follows the usual bulletin board pattern, it will turn into that familiar Peanuts football story -- the one where Lucy tees up the ball, then pulls it away just as Charlie Brown is about to kick it," I predicted.

Sure enough, the stock crashed this week by more than half, to $1.20, and will likely crash some more. And as sure as thunder follows lightning, the company will crash, too.

The Lions, however, are acting like it's business as usual. "Our sponsorship agreement is in good standing," George Chayka, the Lions' director of business development, told me Wednesday

He emphasized that the club has no involvement in the ownership or management of Aussie Soles, but I say this doesn't go far enough. By continuing to do business with this company, the Lions and the CFL are giving it a legitimacy it doesn't deserve.

The other Vancouver-created bulletin board company that has gone into the shoe business is GTX Corp.

It was spawned by Jeff Sharpe, owner of Innovative Fitness in Vancouver, as a mineral exploration company called Deeas Resources Inc.

Like K-Concepts, it was an obvious ruse. Sharpe had no prior exploration experience, and the property was a piece of moose pasture.

Sharpe sold the seed shares to a bunch of stooges who obligingly relinquished them to persons unknown shortly after they were cleared for trading.

At that juncture, Sharpe suddenly decided he didn't want to be in the exploration business after all. He sold the shell to Global Trek Xploration, a California company that is developing miniaturized GPS tracking technology that can be used in running shoes.

The shell then changed its name to GTX Corp., and the promotion began in earnest.

In what has to be a new low, U.S. newsletter huckster Geoff Eiten, a well-known promoter of Vancouver bulletin board dogs, touted GTX stock by invoking the case of Elizabeth Smart, the 14-year old Salt Lake City girl who was abducted for nine months by an insane polygamist who was subsequently ruled mentally unfit to stand trial.

"Frightening child abduction leads to revolutionary breakthrough," screamed the headline in Eiten's newsletter, OTC Special Situations Report, beside a "missing" poster of Smart.

"Next generation GPS tracking device so small it fits in a shoe! ... There's still lots more room for the stock to EXPLODE!"

For this newsletter and related services, a mysterious third party called Global Corp. Services Inc. is paying Eiten's company an astounding $1,067,000 plus expenses.

Once again, all this promotion has had the desired effect. The stock peaked at $2.68 last month, for a total market capitalization of $100 million. It has since slumped to $2.03, but I don't think this promotion is over yet.

Sharpe -- who is a director of the merged company -- earlier told me he has no idea who Global Corp. is. He acknowledged that some of Eiten's statements were "pretty ridiculous," and the board would meet "to consider the best way of letting the public know what's sanctioned and what's not."

Well, the board has met, but rather than repudiate any specific statements or promotional materials, the company is simply putting a disclaimer at the bottom of its news releases stating that it "cannot be held responsible or liable for the unauthorized use of this document's content by third parties unknown to the company."

This is really lame. It reminds me of the old joke about the banker who advises a new teller that, if a customer leaves without taking his money, try to get his attention by rapping "sharply" on the counter with a sponge.

[e-mail]