Stocklemon Reports on Concentrax (OTCBB: CTRX)
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Concentrax, located in Houston, Texas, is a provider of vehicle-monitoring services and technologies. The Company’s signature product, the Track-Down, provides accurate, reliable, real-time data on asset use and location, and has applications for commercial trucking; rental vehicles/equipment; military; delivery; law enforcement; aviation and air cargo; corporate fleets, and emergency, health care and rescue vehicles.
Sounds pretty good, doesn’t it? Well, there is only one problem with that description, Concentrax does not have even 1 customer. For that matter, they do not even have a product to sell to a potential customer. According to the Company’s most recent quarterly filing, “The Company is a development stage business and has not recorded any revenues. The Company has developed vehicle locator units, but lacks the capital to produce and market them, and therefore there is no history of operations.”
Furthermore, the company has no money to commence operations. The Company has slightly over $75,000 in the bank. How can they ever expect to compete in this competitive field without capitalization? And, if the Company does raise money how else can they create an offering without massive dilution and the possibility of a death spiral convertible debenture. Even the auditors of Concentrax issued a “Going Concern” due to their lack of capitalization
On July 1, 2001, Concentrax registered 240,000 shares at a price of $.50 per share to consultants. Curious about this stock registration, Stocklemon called Concentrax’s investor relations department and spoke to Tim Kippur, a Concentrax representative. Mr. Kippur is a former stockbroker and a fairly nice gentleman. When we asked Mr. Kippur what the purpose of the S-8 Registration, he responded by saying that it was for investor relations and market making purposes. Stocklemon informed Mr. Kippur that this such a registration for these purposes is illegal. Mr. Kippur immediately responded with the following: “I am a former stockbroker and an S-8 can be used for any type of consultants.” SORRY CONCENTRAX. According to the SEC Website,
“S-8 is available for the issuance of securities to consultants or advisors only if:
They are natural persons;
They provide bona fide services to the registrant; and
The services are not in connection with the offer or sale of securities in a capital-raising transaction, and do not directly or indirectly promote or maintain a market for the registrant’s securities.”
http://www.sec.gov/divisions/corpfin/forms/s-8.htm
The SEC understands that S-8 was frequently used in Microcap Fraud and this rule was instituted to protect the investor. According to the SEC, “This practice has been used in fraudulent promotions of microcap securities. In other cases, Form S-8 has been used to distribute securities to public investors through so-called “consultants” whose service to the issuer is selling the securities. This practice, which deprives public investors of the benefits of Securities Act registration, has been the subject of several Commission enforcement actions.”
http://www.sec.gov/divisions/enforce/microcap.htm#regs8
This would not be the first time that Concentrax has paid a hefty amount for stock promotion. According to the companies filings, “On April 9, 2002, we issued 75,000 shares to an individual in exchange for his financial consulting services. This issuance was considered exempt from registration by reason of Section 4(2) of the Securities Act of 1933.” Interestingly, this is more stock than they issued their lawyer and their board of directors combined.
Empty Promises
Concentrax has been promising its shareholders a business for years, however, they still have not delivered on their promise. Concentrax was developed as American Tracking Services Inc. in December of 1998. It is almost four years later and the Company still considers themselves a development stage company. According to the Companies 10K filed 4/30/2002,
“We are presently negotiating the sale of Locator Units with potential customers from various industries. Without disclosing their names, those potential customers include: o Several auto and equipment rental companies (with a need for potentially thousands of Units per company); o Five Commercial Fleets — including vehicles that transport goods as well as vehicles in service fleets. o Five bus companies, including school and charter buses; o An air cargo container company (with a potential need for 4,000 Units); o An overnight shipping company (with a potential need for 2000 Units); o A lottery company (with a potential need for 3000 Units): o A grocery supply company (with a potential need for 1000 Units).
It is the opinion of our president that purchase agreements will be signed within the next 60 days from: the lottery company, the overnight shipping company, one of the air-cargo container companies, two of the bus companies, two of the commercial fleets and at least three of the auto and equipment rental companies.”
http://www.freeedgar.com/search/ViewFilings.asp?CIK=1136917&Directory=1111865&Year=02&SECIndex=130&Extension=.tst&PathFlag=0&TextFileSize=129394&SFType=&SDFiled=&DateFiled=4/30/2002&SourcePage=FilingsResults&UseFrame=1&OEMSource=&FormType=10KSB&CompanyName=CONCENTRAX%2BINC
At the printing of this report, which is approximately 90 days after the filing of the above-referenced 10K, not 1 of those potential customers have signed on.
Mom and Pop Shop
Stocklemon believes that Concentrax is just an idea and can barely be considered an active business. The Company’s headquarters are at 817 Oak Glen, the CEO’s home residence. This small business currently has 2 employees, including the CEO/President. The other Concentrax employee is the CFO/Treasurer. They do not even have a receptionist or a secretary.
On numerous occasions, in an attempt to contact a Concentrax employee, Stocklemon has called the Company’s house/office. To our shock and dismay, Stocklemon was never able to reach a live person. In fact, the Company’s business line is answered by an answering machine. The machine’s recording states the following: “Thank you for calling Concentrax, all of our representatives are assisting other customers at this time.” Stocklemon finds this recording to be misleading and deceptive because apparently they do not have any representatives nor any customers. Alternatively, they can simply say, “We are not home, please leave your message after the beep.” Please try it yourself. Concentrax’s number is: (888) 340-9715.
Deception
Stocklemon is of the belief that Concentrax has undertaken many (other) deceptive practices in order to promote its stock price. One of the clearest examples of this is the constant press releases put out earlier this year that have Concentrax as a company that helps fight terrorism. In one of theses releases, the CEO stated,
“This agreement with Texoga is an opportunity for Concentrax to take an active role in the war on terrorism,” said company President and CEO Mark Gifford.” “We will be providing cities the resources they need to act fast in the event that they are targeted and their citizens are put at risk. We will also be helping to protect the initial line of defense in any emergency situation: the men and women who arrive on the emergency scene first.”
http://www.concentrax.com/displaynews.asp?ChosenEvent=3&Title=March_13,_2002__Concentrax_Provides_Technology_in_War_on_Terrorism
How can they be providing cities resources if they do not even have a working product and call center? Thus, Stocklemon believes this is nothing more than pure hype.
Guess what, this hype doesn’t stop there. During the past month, Concentrax has put out two different press releases which are both without substance. Stocklemon believes that although these release say NOTHING they indicate that the Company simply underestimates the intelligence of the individual investor. For example, the releases contain such nebulous headlines as, “Program Response Could Lead to Major Sales”, and “Response to Pilot Program Overwhelming”, which sound like tabloid headlines. Are we soon to read, “Bat Boy Joins Elvis and Vice President of Concentrax”?
http://www.concentrax.com/displaynews.asp?ChosenEvent=10&Title=July_15_Concentrax:_Program_Response_Could_Lead_to_Major_Sales
The Cherry on the Sundae.
In the Concentrax’s 2001 annual filing it states, “Please be aware that the website presently refers to fictitious press releases about our Company, none of which are actual press releases.” Stocklemon has never read this line in a corporate filing. Although we find this amusing, with a Company such as this, it is not entirely unexpected. So maybe Bat Boy isn’t that far off?
http://www.freeedgar.com/search/ViewFilings.asp?CIK=1136917&Directory=1111865&Year=02&SECIndex=130&Extension=.tst&PathFlag=0&TextFileSize=129394&SFType=&SDFiled=&DateFiled=4/30/2002&SourcePage=FilingsResults&UseFrame=1&OEMSource=&FormType=10KSB&CompanyName=CONCENTRAX%2BINC
Insider Selling
If the insiders are selling, than why should you be buying. If the best days of the Company are in front of it, then why is the CEO selling stock? Here is a list of some of the Concentrax selling that we have seen as of late (please click on the link below).
http://biz.yahoo.com/t/c/ctrx.ob.html
Conclusion
Stocklemon respects the spirit of the entrepreneur and likes to see great ideas become realities. Unfortunately, we do not believe this is one of them. The company had been in business for three and a half years and has nothing to show except a lofty stock price. The intentions of the company to produce this product are not congruous with their stock promotion and overly ambitious press releases. Maybe one day Concentrax will be a viable product but today CTRX is a lemon.