quote:
MSITF
Monday Aug 27 2001 Street Wire
SPIT AND POLISH
by Lee M. Webb
Medical Services International Inc., an Edmonton-based penny-stock promotion headed by acknowledged securities violator Robert Talbot, has dusted off its oft-told tale of a rapid home test kit for HIV, adding some new twists to the otherwise hackneyed story. On Aug. 13 and again on Aug. 20, Medical Services reported that it had "signed an agreement to supply an initial order of 50,000 rapid test kits for both HIV and Tuberculosis (TB) to HIVE Exports (SA) (PTY) Ltd. of Cape Town, South Africa." On Aug. 15 the company announced that it had "added a Saliva-based HIV test kit to its current inventory of rapid test kits."
The day after the auspiciously timed Aug. 15 announcement, Toronto-based CablePulse24 (CP24), a 24-hour local news channel, aired a puff-piece on the saliva-based HIV test kit. Evidently veteran reporter and CP24 health specialist Laura DiBattista was unaware of Medical Services' checkered history and many claims regarding HIV test kits, not to mention claims about a much-hyped treatment for AIDS.
Medical Services, previously known as Medical Resorts International Inc., traded under the auspices of the now defunct Canadian Dealing Network (CDN) until the stock was halted on Oct. 21, 1999. The Canadian trading halt was never lifted, but Medical Services continues to trade on the pink sheets in the U.S. and Mr. Talbot's promotional efforts have been primarily directed south of the border for some time now. However, the company's most recent U.S. tout service, Florida-based Big Apple Consulting USA Inc., the successor to Stockbroker Presentations Inc., claims that it is no longer under contract to Medical Services. In spite of being culled, Big Apple still lists Medical Services as a client on its Web site, but the tout service's boiler room operators apparently stopped flogging the stock some time ago in favour of some of their other flagging pink sheet promotions, including E-Rex Inc. Whatever the current status of the association between Big Apple and Medical Services, the Florida tout service was instrumental in reviving the story of the HIV test kits and the AIDS treatment earlier this year.
The company first floated the tale of a rapid home test kit for HIV on Feb. 4, 1999, when it announced the acquisition of a 60-per-cent stake in International Biotech Corp. (IBC), a company that purportedly held the exclusive rights to distribute the V-Scan test kits in the Caribbean and other locations and to market the kits over the Internet. The IBC acquisition story underwent some revisions itself, with the final version presented in a preliminary prospectus for IBC filed with the Ontario Securities Commission (OSC) on Dec. 30, 1999. By that account, IBC had been incorporated in Alberta as a wholly owned subsidiary of Medical Services' predecessor, Medical Resorts, just days before the Feb. 4 announcement of the acquisition of a 60-per-cent stake in the company in a share transaction. By the time IBC preliminary prospectus was filed as part of a dividend in specie scheme announced by Medical Resorts, the company reportedly held the worldwide rights to manufacture, market and distribute the V-Scan test kits. According to the OSC, the preliminary prospectus was riddled with deficiencies that the company made no effort to correct and the attempt to have IBC become a reporting issuer was abandoned, along with the dividend in specie scheme. With trading in Medical Resorts halted, the company under investigation by the OSC, the IBC prospectus dead in the water, and the Internet HIV test kit marketing scheme going nowhere because of a U.S. Food and Drug Administration (FDA) ban on the product, the promotional potential of the test kits was severely constrained. In June of 2000, however, a CDN shell with its own checkered history came into play, spinning out yet another convoluted yarn.
Lignex Inc., a former purveyor of kitty litter, prematurely announced on June 12, 2000, that it would be acquiring a stake in IBC in a cash and share transaction. The premature announcement drew a trading halt from the CDN, but the halt was lifted two days later. Even before Lignex jumped the gun with its announcement, IBC president Doug Wallace, previously a director of parent Medical Resorts, was privately touting the deal and more. Indeed, Mr. Wallace was claiming that IBC had secured the rights to a cure for AIDS, according to correspondence provided to a Stockwatch reporter.
(Mr. Wallace was sanctioned by the Alberta Securities Commission (ASC) in an unrelated matter involving National Gaming Corp. on Nov. 10, 2000, along with repeat securities violator Richard Cholach, an acquaintance and former business associate of Mr. Talbot. In an earlier encounter with regulators, Mr. Talbot and Mr. Cholach reached a settlement agreement with the ASC in yet another matter. Mr. Cholach's most recent escapade with National Gaming drew a 20-year ban from the public markets by the ASC, which also levied a $25,000 administrative penalty and $30,000 in costs against the recidivist securities violator.)
Medical Resorts was oddly silent about the IBC deal with Lignex, which was approved by Lignex shareholders at the company's tightly guarded annual and special meeting on Aug. 3, 2000. In fact, the Lignex shareholders approved the acquisition of all of the outstanding shares of IBC, not just the 50-per-cent stake previously announced. It was not until Nov. 17, 2000, that shareholders of Medical Resorts learned that the company had sold 48 per cent of its interest in IBC prior to June 30, possibly accounting for the early silence regarding the Lignex deal. Just who Medical Services sold that 48-per-cent interest to in the rather timely transaction, at least for the purchaser, was never disclosed.
Following the acquisition of IBC, Lignex changed its name to International Biotechnology Corp. (IBCT) and announced its intention to acquire control of Nevis-based Aladdin Pharmaceutical Corp. in a share transaction. Nevis is a secretive offshore enclave noted for its brassplate banks and as a refuge for fugitive stock promoters and securities violators. Two weeks later, on Sept. 25, 2000, IBCT announced that it had secured a licence from Aladdin to conduct clinical tests and experimental treatments in the Caribbean on a new treatment for HIV and AIDS. The same day, Medical Resorts reported that it had entered into a five-year contract with Aladdin to conduct those clinical studies at its medical facility on Anguilla. According to the news releases, the tests and treatments had been approved by the Caribbean Epidemiology Center (CAREC). As exposed by Stockwatch, the claim of CAREC approval was false, but neither IBCT nor Medical Resorts bothered to retract the claim.
All the hype about the HIV test kits, which Medical Resorts was reportedly going to manufacture for IBCT at its multipurpose facility in Anguilla, and the embroidered claims regarding tests and studies on a scientific breakthrough treatment for AIDS, to be conducted at that same multipurpose facility, did not seem to generate any interest in the stock, so Mr. Talbot enlisted the aid of a professional tout service. On Oct. 23, 2000, without disclosing the financial terms of the contract, Mr. Talbot reported that Florida-based Stockbroker Presentations Inc. (SPI) had been hired to handle "investor relations" for the company. SPI, controlled by veteran stock promoter Roy Meadows, would later be replaced by Big Apple Consulting, though the substitution appears to have involved little more than a name change.
In the early going, Mr. Talbot's Florida touts simply replayed the HIV kits and AIDS treatment stories while running through their "card decks" or "sucker lists" in search of new investors. After Medical Resorts effected a share consolidation on the basis of 1 for 15 and changed its name to Medical Services on Feb. 20, 2001, however, the promotion was ramped up. On March 12, the company reported that Donald Mitchell had been appointed chairman and chief executive officer. The news release touted Mr. Mitchell's purported previous high-level executive position with CBS, among other things, but failed to disclose his stint as president of The Firm of Marc M. Harris, an offshore scam exposed by investigative journalist David Marchant, or his many ties to Big Apple and Roy Meadows and their dubious promotions. On March 14, Medical Services announced that it was testing a new rapid home test kit for diabetes. The same day, Big Apple hosted a "nationwide teleconference" to trot out the company's new chief executive officer and old stories about HIV test kits and a treatment for AIDS.
While Mr. Mitchell added some carefully crafted blather toward the end of the conference call hosted by Big Apple, most of the March 14 teleconference was given over to Mr. Talbot's pitch. According to Mr. Talbot, Medical Services would be manufacturing the HIV test kits for "an associated company of ours, International Biotech." Mr. Talbot indicated that the expected revenue from the kits would be in the range of $8-million to $9-million in the first year, growing to between $14-million and $15-million in the second year. "We are now capable of producing 500,000 kits a month," Mr. Talbot claimed. Whatever number of kits Medical Services is capable of producing, they are not being produced for IBCT, the company with the worldwide rights to manufacture, market and distribute the kits, according to IBCT. On March 20, Stockwatch received a fax from the board of directors of IBCT, then operating under its new name, Veris Biotechnology Inc., denying any involvement with Mr. Talbot or companies with which he is associated.
Mr. Talbot also used the teleconference to once again tell the tale of the breakthrough treatment for AIDS, claiming that the tests would begin on April 1 and that the results would be known within 12 to 14 weeks. That time has long since elapsed with no further word on the vaunted AIDS treatment; nor has there been any news of shipments of the HIV test kits, which were supposed to begin several months ago. Indeed, Medical Services has been silent on both topics until the Aug. 13 announcement regarding the test kit deal with HIVE Exports.
MORE POLISH
In the Aug. 13 announcement of the deal with HIVE Exports, Medical Services polished up its test kit tale, introducing a kit that tests for both HIV and tuberculosis. "Medical Services has the only rapid test kit that detects both HIV and TB at the same time," the company now claims. According to the release, the initial order will be delivered by Dec. 15 of this year, which will give Medical Services about four months to play out the promotion. While the addition of the test for tuberculosis adds a new element to the story, the deal with HIVE Exports may have been more than two years in the making.
According to internal documents obtained by Stockwatch, Mr. Talbot was negotiating a deal between Medical Resorts' former subsidiary IBC and HIVE Exports Inc. of North Carolina as early as July 27, 1999. In fact, Mr. Talbot was trying to set up a joint venture with U.S.-based HIVE Exports to manufacture and distribute the HIV kits in Africa. Among other things, the joint venture proposal was contingent upon HIVE Exports arranging for the building in Zambia to house the manufacturing facilities and placing an initial order for test kits. "HIVE must place an initial order of 50,000 HIVE Kits at a price to be negotiated between the parties," Mr. Talbot's proposal states. "The order must be paid for in U.S. dollars and a letter of credit issued by a western bank must be in place prior to production being commenced."
Evidently Mr. Talbot was also negotiating a joint venture for South America with HIVE Exports, but encountered some "timing" difficulty. "As per our conversation due to time constraints, International Biotech Corporation will not be in a position to move ahead with the joint venture until late January or early February, 2000," an Aug. 31, 1999, fax from Mr. Talbot to Peter Knol of HIVE Exports states. "However we are committed to moving ahead with this joint venture. In the interim period prior to start up of the Joint Venture for South America, all orders from South America will be processed out of the Anguilla facility. Once a facility is completed to manufacture the Kits for South America, all orders being processed out of Anguilla will be transferred to the joint venture facility for South America. I hope that this clarifies the situation and that you understand that we are fully committed to the joint venture for South America but due strictly to timing can not (sic) move ahead until the New Year."
Whether Mr. Talbot will meet with more success in filling the test kit order for HIVE Exports of Cape Town, South Africa, than he did in consummating the joint venture deals with HIVE Exports of Ashville, N.C., remains to be seen. Meanwhile, Medical Services has trotted out a saliva-based HIV test kit and introduced a new company spokesman, at least in an official capacity. It has also managed to garner some fluffy television coverage courtesy of CP24 and its health specialist, Ms. DiBattista. "Laura continues the Citytv tradition of covering the health matters that matter to you," states CP24's biographical information on Ms. DiBattista. "If you need information on how to get and stay healthy, you can count on Laura to give you the straight goods." Evidently delivering the "straight goods" to CP24 viewers did not entail much in the way of research into the company touting the saliva-based HIV test kit.
JUST SPIT
"It's a test so simple, you could just spit," the text outline to Ms. DiBattista's televised puff-piece claims. Seated on a couch to simulate the comfort of a livingroom, Ms. DiBattista did just that for her television audience, spitting rather lustily into the test kit receptacle. "Then you add a couple of drops of solution and you wait 10 minutes," Ms DiBattista said. "If one line appears here, you're negative; but if two lines appear, then you're HIV-positive." Possibly due to time constraints, the reporter used a pen to mark in the lines on the test strip for her demonstration.
Following Ms. DiBattista's demonstration, Medical Services' new spokesman, nattily-dressed William Whitehead, was given a sound byte opportunity. "The product, as you can see, requires no additional equipment," Mr. Whitehead said. "It doesn't require the use of any skilled medical personnel and it will allow the person to complete the test completely confidential."
According to Ms. DiBattista, the manufacturer claims that the test kit is 99-per-cent accurate. She went on to report that the test kit is currently being marketed in the Third World as a cheap alternative to traditional laboratory tests. However, it will eventually be available over the counter, according Ms. DiBattista. Her report went on to note that some people are worried about that development, including Ray Helkio of People With Aids. "You absolutely need counselling or you need some support mechanisms there, if you do test positive," Mr. Helkio said. "I would especially worry about young kids going home, using this kit, testing positive and then being afraid, not knowing what to do, possibly killing themselves."
Apparently as a counter to those concerns, Mr. Whitehead argued that the current system is not working for everyone. "It's estimated that 25 per cent never go back to find out the results," the dapper Mr. Whitehead claimed. Following Mr. Whitehead's brief encore appearance, Ms. DiBattista wrapped up her report. "Well, keep in mind the device tests for HIV antibodies, which can only be detected six weeks after infection; and while the test is coming, it will be at least a year before it's available on pharmacy shelves," said the straight-goods health reporter.
After viewing the CP24 puff-piece, Stockwatch contacted Mr. Whitehead at Whitehead Inc., an advertising and corporate communications firm in Toronto. Mr. Whitehead acknowledged that he was the person identified as the spokesman for Medical Services in Ms. DiBattista's report. When asked how long he had been associated with Medical Services, however, Mr. Whitehead refused to answer, claiming that he did not want "to get into this." When it was suggested that the question seemed reasonable, given that he had been identified as the company spokesman, the corporate communications executive was apparently at a complete loss for words. Following a couple of seconds of silence, Mr. Whitehead hung up.
MEET UNCLEBUCKBILL
While Mr. Whitehead evidently experienced some difficulty in formulating a reply to a simple question from a Canada Stockwatch reporter, he was quite chatty using the alias "UncleBuckBill" as a boosterish poster to StockHouse, an Internet chat site. UncleBuckBill devoted most of his hundreds of posts to touting his favourite stocks, with Medical Resorts alone drawing posts numbering in the hundreds, but he also took time to deliver a plug for Whitehead Inc. "For the record, for the past three decades our firm has worked with companies predominately in the hospitality and tourism sector," the tout wrote on April 9, 2000. "I would be more than happy to send anyone a copy of our latest capability piece or highlights from the last major advertising competition in which we won Gold, Silver and Bronze!"
Mr. Whitehead's evident pride in Whitehead Inc. seemed to be matched by his pride in his stock-picking ability, something he called to the attention of other posters on a number of occasions. Among his supposedly dandy picks was Immune Network Ltd., reportedly flagged by UncleBuckBill while trading at 17 cents per share. In March of 2000, Immune Network briefly ran up to an all-time high of $3.70 before collapsing. Recently, the stock has been changing hands for seven cents. UncleBuckBill was also extremely high on Struthers Inc., touted as a world leader "in animal reproductive biotechnology." Struthers's main focus was on pigs, and UncleBuckBill played with the cliche about flying pigs. "This is one rare case where pigs do fly!" he exclaimed on March 12, 2000, predicting that the stock would be trading between $10 (U.S.) and $15 (U.S.) by the end of the year. Struthers winged its way as high as $1.75 (U.S.) in March of 2000, but last traded at four U.S. cents.
Mr. Whitehead also touted Biotech Holdings Ltd. as a big winner, claiming on March 13, 2000, that the stock was headed for $20. Biotech closed recently at 26 cents. He also liked Canadian Aerospace Group International Inc., buying it at 39 cents and claiming that it was certainly "worth a lot more than a buck." Canadian Aerospace is now changing hands for six U.S. cents. First Telecom Corp. was another favourite; it now commands three cents. Another hot pick, Gimbel Vision International Inc., last changed hands for 7.5 cents.
Of Mr. Whitehead's picks, Medical Resorts drew the largest number of posts. According to StockHouse records, UncleBuckBill registered as a poster on Feb. 28, 1999. Perhaps fittingly, his first message to the chat site was posted to the Medical Resorts discussion on May 12, 1999. "We are just about home!" UncleBuckBill exclaimed. "Hope everyone has enjoyed the ride. I know some of you suffered from a little sickness along the way and yes there have been some bumps." There were to be many more bumps, but UncleBuckBill did his best to smooth them away.
Mr. Whitehead reportedly held a significant number of shares of Medical Resorts. On May 19, 1999, UncleBuckBill indicated that he held at least 575,000 shares in the company. He was also apparently prepared to wait for the stock to mature. "MDRE is like a fine bottle of French wine," he wrote on June 27, 1999. "You buy it and forget about it for a year or so. The rewards make the wait well worth it." He went on to claim that he was accumulating even more of the stock. "My holdings like some others here, are several hundred thousand and I'm still accumulating," he said. "Maybe to an even million."
Not surprisingly, UncleBuckBill got along swimmingly with the other Medical Resorts touts frequenting StockHouse. He was particularly impressed with "Seagull," who did duty as both tout and enforcer, bashing and intimidating posters who criticized the company. "Seagull is one of the most credible and knowledgeable posters this thread has," Mr. Whitehead proclaimed in support of his fellow tout on Aug. 21, 1999. Seagull's posting career came to a sudden halt in July of last year after Stockwatch revealed that the bullish and bullying poster was John Warkentin, an Edmonton police detective, who posted hundreds of messages using the facilities of the Edmonton Police Department. The prolific poster UncleBuckBill also disappeared from StockHouse last year, registering his last post on June 30, 2000, though it is not clear what prompted his departure.
So far, Mr. Whitehead's reappearance as an official spokesman for Medical Services has had no positive effect on the company's stock price. Whether Mr. Talbot will be able to get his latest promotion off the ground or the company encounters yet more bumps remains to be seen. Stockwatch has recently learned that the United States Securities and Exchange Commission (SEC) has been asking questions about Medical Services' association with Big Apple Consulting and its transactions with other companies and individuals in the U.S. An SEC investigator who contacted a Stockwatch reporter stressed that simply because questions are being asked does not mean that the SEC is conducting an investigation. Nonetheless, the SEC has since been in touch with the OSC to discuss Medical Services, according to a Stockwatch source. Medical Services closed at 4.5 U.S. cents on Aug. 24
I realize this is an old article but the same people are involved in the company and the pr's for the product are still the same. I would advise anyone to make a quick buck if possible and get out.
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