A flurry of paid promotions are paying off for Auri Inc. (OTC:BB: AURI, Stock Forum) , a U.S. footwear company that has entered the Canadian market and is supposedly at the centre of an “explosion” in fashion shoe stocks.
Between December 2010 and July 2011, the stock soared from under 10 cents to 80 cents on the U.S. OTC Bulletin Board. And even after falling back to close at 60 cents on Wednesday, the Laguna Beach Ca., company has a market cap of $53 million based on the roughly 88.6 million shares outstanding. The 52-week low is 2 cents.
Headed by President and CEO Ori Rosenbaum, who owns 44.2% of the shares outstanding, Auri has been getting a lot of help from tout sheets, such as KnockOutPennyStocks, ElitePennyStock.com, and MomentumHunter.com, which are keeping the company’s name in the spotlight.
EastwindResearch.com, which was paid $250,000 in cash by third party Winning Media to write an Auri profile, said the company is at the centre of a MEGA hot trend – the explosion in fashion shoe stocks – and has the potential to be a $6 stock “in a very short time.’’
In its profile, EastwindResearch.com goes on to gush about the “Apple Inc. (NASDAQ: AAPL, Stock Forum) kind of buzz’’ surrounding Auri, which purportedly designs and markets fashion footwear for men and women, fusing innovative designs with performance engineering, “that cradles the feet like a bucket seat,’’ Eastwind said.
Auri’s stated plan is to position its footwear as a value based proposition in higher end retailers, targeting men and women in their late 20s to early 50s.
The shoes are available not only in the United States, but also via outlets in Ontario, Quebec, Saskatchewan, and Alberta at a retail price tag of between $150 and $200, company spokesman Ted Haberfield told Stockhouse this week.
“This is why you need to position yourself now with Auri while it is trading at just $65 cents,’’ Eastwind said.
As first noted by pumpsanddumps.com, the recent hype seems to be a bit over the top for a company which had only $304,037 in sales during the three months ended March 31, 2011 when it posted a net loss of $329,332 or $00.00.
Regulatory filings indicate that the company is not only overpriced, but also underfunded with only $210,232 in cash on hand, $990,038 in total assets and over $1 million in liabilities.
Since Auri has been featured by at least four different tout sheets in recent weeks, the obvious question is what happens when the promotions stop.
According to regulatory filings, Auri went public in February 2011, through the merger of Wellstone Filter Sciences, Inc. and Auri Design Group, LLC, which was founded in 2008. With only three full-time employees, the company has no manufacturing facilities of its own. Instead it sources products directly or indirectly via independently-owned manufacturers in China
In documents filed with the U.S. Securities & Exchange Commission, Auri said it has spent substantial amounts on product design and development and the launch of its products.
“As a result, we have historically experienced negative cash flows from operations since our inception and, unless we are able to generate sufficient revenues from product sales, we expect the negative cash flows from operations to continue for the forseeable future,’’ the company said.
Auri warned that its auditors have expressed doubts about the company’s ability to continue as a going concern.
Still, regulatory filings say the company is raising its profile by recently hiring DC Consulting Inc. of Denver Colorado to provide investor relations services under a one-year deal that requires the consulting firm to receive 250,000 Auri common shares per quarter and $4,000 per month as long as the agreement is in effect.
Company documents indicate that there is an obvious need for Auri to get the stock trading at much higher levels. That’s because the participants in a recent private placement financing are under water unless the stock stays above 50 cents.
During the three months ended March 31, 2011, the company said it raised $195,000 from the private placement of 390,000 units to five accredited investors. Each unit consists of one common share and 2-year warrants entitling the holder to purchase an additional share at $1 a share.
Meanwhile, in the footnotes of its report, EastwindResearch.com says its employees are not registered investment advisors in any jurisdiction. It also tells investors to do their own due diligence, use stop losses, and not to invest any more than they can afford to lose.
That is solid, some would say fashionable, advice.