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OTC Journal Members:
On June 4, 2002, one of the OTC
Journal's editors was invited to visit Ford's top secret "Skunk
Works" in Dearborn, Michigan to experience a revolutionary new technology
which could end up, in some form, on nearly all cars. Its potential was
compared to fuel injection, air bags, and anti lock brakes in the early
The visit was hosted by Cliff Carlson,
Senior Technical Specialist from Ford who heads the Advanced Power
Train Architecture & Propulsion Concepts department. This same Ford
executive headed up the General Motors team that developed the technology
to convert nearly all newly made cars from carburetors to fuel injection
in the late 1970s.
The giant facility was a car enthusiast's
dream. We were greeted with a row of "black car" Aston Martins and several
high tech looking Jaguars.
Nestled amongst these thoroughbred
sports cars, and looking like an NBA center at a jockey convention, was
a a slightly worn 2001 Lincoln Navigator outfitted with a 4.0-liter Jaguar
V8. Underneath the vehicle, bolted to the frame on either side of the gas
tank, were two long cylinders, each about twice the size of a SCUBA tank.
Mounted on the center console was
a full computer screen with keyboard, attached to a CPU bolted to the floor
between the two front seats. The computer screen allowed the driver to
monitor the performance of the system. Performance adjustments could be
made with keyboard entries.
Two years of experimentation with
the system has led Ford to conclude the following:
In 2002 Ford and Tier 1 supplier
Corp (NYSE: ETN) upgraded the status of this new technology to "Implementation
Ready", meaning Ford has instructed Eaton to make plans for mass
production. Eaton will be paying licensing and royalty fees to the developer
of this revolutionary technology- the subject of this edition.
Fuel Economy improved by 38%- The normal
13 MPG in city driving was improved to 18 MPG (miles per gallon).
The 275 Horsepower engine generated
360 horsepower when accelerating uphill from a stop.
Pollution emissions were reduced by
Brake Life improved by 77%.
For your consideration, an idea that's
too risky for most investors:
Profile: SHEP Technologies Inc. (OTC BB: STLOF)
On June 4, 2002, when our editor was
permitted to drive Ford's Proof Of Concept Navigator, we
hoped we would be able to publish on this revolutionary technology some
day. That day has come.
Stock Listing: OTC BB: STLOF
Estimated Shares Issued and Outstanding:
Estimated Public Float: 8 Million
Last Closing Price: $1.75
Market Capitalization: $38.5 Million
52 High and Low: $1.90 x $.45
Corporate Web Site: www.shepinc.com
A test drive in the parking lot of
a shopping mall was all we needed. The experience convinced us this technology
had the potential to end up on millions of vehicles world wide, and as
such was a microcap investor's dream. Here's the story:
Stored Hydraulic Energy Propulsion
Over the past thirty years there
have been many improvements in the safety of motor vehicles. However, due
to inefficiencies, there is still a great deal of energy wasted while driving.
The SHEP (stored hydraulic energy
propulsion) system captures energy used during braking and recycles
the energy back into the vehicle at the time it needs it most; when accelerating
from a dead stop. At this time, the engine is performing least efficiently,
burning the most fuel, and emitting the most pollutants.
After nearly two years of testing
and fine tuning, Ford has been able to capture a full 70%
of the energy wasted in braking in the Proof of Concept Navigator,
an astounding accomplishment by engineering standards.
There are three components to the
system as follows:
It works as follows: When you apply
the brakes in a SHEP fitted vehicle, the Ifield Pump grabs the drive
shaft. The spinning drive shaft turns the pump, and it stores the energy
in a hydraulic storage tank as the vehicle slows.
The Ifield Motor/Pump: Attached
directly to the drive shaft of the vehicle, the Ifield Pump makes it happen.
When the driver applies the brakes, the Ifield Pump actually grabs the
drive shaft and helps slow the vehicle to a stop. Ford estimates
the pump extends brake life by 77%. The pump transfers the energy created
by the turning of the drive shaft to the:
Unitised Accumulator System:
This is a hydraulic tank which stores the energy provided by the Ifield
during the braking process. The energy can then be transferred directly
back to the pump and used to turn the drive shaft as the vehicle accelerates
from a dead stop. The entire process is controlled by the:
Electronic Control System: The
brains of the operation. It is software which tells the pump what to do
during the braking and accelerating process.
When accelerating from a stop, the
electronic control systems instructs the built up pressure to turn the
pump, and the pump turns the drive shaft until the pressure is dissipated.
The engine then takes over. Visit SHEP's corporate web site at www.shepinc.com
for a virtual demonstration.
We were astounded when we actually
had the opportunity to drive Ford's "Proof of Concept" Navigator and experienced
working first hand. In a shopping mall parking lot directly across from
a top secret Ford facility in Dearborn, Michigan, we drove the SUV. After
achieving a speed of about 35 miles per hour, our editor brought the vehicle
to a stop. The computer screen which had been rigged up between the driver
and passenger seats showed the hydraulic pressure building in the accumulator
system during braking.
When accelerating from a dead stop,
the tachometer did not move above idle speed until the Navigator was already
traveling about 25 miles per hour, meaning the engine had not engaged.
It was simply idling. At about 25 MPH the tachometer jumped from 1100 to
about 3000 RPMs, indicating the engine was now moving the vehicle. The
transition was quiet and seamless; virtually unnoticeable if you weren't
aware of it.
Since the engine is not used during
the start up phase, Ford has determined the SHEP system as fitted
on the Proof of Concept Navigator yields the following result:
38% improvement in fuel economy.
32% faster acceleration from a stop.
51% less pollution.
77% longer brake life.
SHEP Technologies Owns
Currently, SHEP Technologies Inc
has offices in England and Canada. The company owns multiple world wide
patents on the Ifield Pump. A new generation of the pump is being
developed now, and new patents will be applied for. The pump was originally
developed by Richard Ifield, an Australian born engineer who spent his
career in England.
Richard Ifield was a member of Sir
Frank Whittle's team that invented the jet engine, and Ifield is credited
with developing the fuel delivery systems. The Ifield pump was used on
the first Concorde.
SHEP has also applied for
two comprehensive world wide patents on its unique UAS (Unitised Accumulator
System), the hydraulic storage system.
SHEP has two formal agreements
in place at this time. The first is with Eaton Corporation (NYSE: ETN).
a global manufacturer of highly engineered products that serve industrial,
vehicle, construction, commercial, aerospace and semiconductor markets.
Eaton is Ford's selection to be the Tier 1 manufacturer and supplier of
the mass produced SHEP system. For the fiscal year ended 12/31/02, Eaton's
world wide sales were
The second agreement is with:
Technologies Signs On To Develop the SHEP Jaguar
On February 6th, it was announced
that SHEP had entered into an agreement with PI
Technologies to deliver a working prototype of the SHEP system on a
Jaguar X type before the end of 2003. PI Technologies, a subsidiary
of PI Group, is a British based company
considered by many to be the foremost worldwide expert in the design and
development of automotive electronics.
PI is owned by Ford, but only 40%
of their business is Ford related. They are more well known as the premier
provider of electronic control systems for Formula 1, NASCAR, and many
other OEMs in the automotive world. The company employees 130 engineers
in their worldwide operations.
In the near term, we anticipate the
relationship with PI Technologies will open many doors for SHEP Technologies.
They have relationships with all the major auto manufacturers world wide,
and many governmental agencies with a mandate to reduce emissions and improve
PI will focus most of its energies
on the electronic control systems. This is the brains of the operation,
and tells the system when to engage and disengage. Fine tuning of the process
can lead to significant performance enhancements. Upon conclusion, SHEP
will own the computer software PI develops on their behalf.
SHEP Technologies is not a
capital intensive company. They own patents, development agreements, technological
expertise, and a concept. They don't have a lot of hard assets. They only
need several world wide offices and engineers to interface in development
with Ford, Eaton, and PI Technologies. Therefore, their need for cash is
minimal and their burn rate is very low.
They plan to generate revenues through
licensing agreements, and strategic manufacturing partnerships.
It is contemplated Eaton will
an initial licensing fee, and royalties in the 3% to 7%
range for every SHEP system it produces. Once this money begins
to flow, it will have minimal cost and be mostly profit.
It will be years before the SHEP
system is widely available on standard passenger cars. The initial market
for the system will be in small to mid sized truck fleets who's use requires
a lot of stopping and starting, where the return on investment will be
greatest. Specific examples include delivery trucks (FEDX, UPS, Postal,
etc.), garbage trucks, municipal buses, etc. These types of vehicles have
the best chassis design for adding the system. No major modifications to
their design are required. Due to the nature of their use, they will also
get the most benefit.
Pictured here is the highly publicized
Ford Tonka Truck, the truck of the future which has been widely demonstrated
at car shows for the past two years. The truck employs HLA technology
(hydraulic launch assist), Ford's proprietary designation for the
System. This is the truck of the future, and uses the SHEP Technology.
When considering the market for the
Technology it is evident that any investor who participates in the
speculative end of the market should own shares of SHEP Technology.
After all, there are sixty million vehicles manufactured world wide annually,
and that's just motor vehicles. The SHEP technology also works on
any mode of transportation where energy is wasted in the braking process.
For example, the company is currently demonstrating the technology to the
London Subway system where vast amounts of energy wasted could be recaptured.
Whether you are talking about a hybrid
electric car, President Bush's hydrogen car of the future, or a city bus,
they all need to come to a stop and then get started again. In fact, anything
that isn't airborne is a candidate for SHEP technology.
We also believe you must plan to
participate in SHEP for at least two years if you hope to experience
a once-in-a-lifetime gain. Undoubtedly, there will be trading opportunities
around corporate developments, but major commercial deployment is probably
two years out. The remainder of 2003 will be development oriented. SHEP
is working on financing from government agencies with a pollution control
mandate, further relationships like the one with Ford, and high profile
publicity. We don't expect the company to generate significant revenues
Because of the enormous upside
potential, we recommend you allocate 10% of your risk capital to an investment
in SHEP. However, a prudent strategy would be to make your initial
investment only be 25% of the amount you intend to allocate.
One year from today SHEP could
be trading at $10 or $.10, and we don't know which it will be. If Ford
announces commercial availability next week and the London Subway system
signs a development contract, the stock could be $5 overnight. If there
are few developments for the next six months, the stock could trade down.
Use a limit order- don't
pay more than Friday's closing price or even less, and be prepared to wait
a few days to get filled if you have to.
By starting with only 25% of the
capital you intend to invest, you are in a position to acquire a larger
number of shares for the same money in a declining market. If corporate
developments lead to higher levels, as you accumulate you will still have
an average cost below the current market.
Early investors in companies developing
fuel injection, air bags, and anti lock brakes undoubtedly made enormous
fortunes over time. The same opportunity exists here for investors. These
products first appeared on a few high end models, and several years later
were incorporated into nearly every vehicle on the road. SHEP has
the same potential.
Very few investors know about this
company, and the OTC Journal is the first to publish on a widespread
basis. This first look gives you the competitive advantage.
If you want more
information on the company and its technology, or have any questions, simply
call their toll free Investor Relations number: 1-866-893-7039.
More on management,
financial condition, and potential alliances in future editions.
SHEP Technologies, Inc corporate web
site- www.shepinc.com- Click
Ford Announces first demonstration of
of Concept Navigator- Click
Business Description of Eaton Corp.-
Article in Popular Science on
Revolutionary Propulsion system in Ford Tonka Truck- Click
Read about Ford's Tonka Truck- the Truck
of the Future- Click
EPA Press release on Ford's commitment
to energy efficient vehicles- Click
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