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  • Sparta Commercial Services Reinvents Itself

    Sparta Commercial Services (OTCQB:SRCO) is a small-cap company in the middle of reinventing itself in an enticing market that doesn't carry a lot of competition. In this article, I am going to explain the two major markets the company is developing for itself as well as market potential. We will then look at company fundamentals and investment considerations.

    The Company

    The company can be divided into two parts:

    Specialty Reports, Inc. is the first segment of the company, which is a one stop, online source for truck, motorcycle, auto and RV vehicle title history reports. Secondly, the company markets two different mobile app billing platforms.

     

    1. Specialty Mobile Apps-- this is an app building tool for customized mobile apps for retail power sports, automotive, marine and recreational vehicle dealers. (www.specialtymobileapps.com)
    2. iMobile apps-- this is also an app building tool for a broad range of industries from restaurants, liquor stores and real estate agencies, to grocery stores, funeral homes, and other various markets. (www.imobileapp.com)

    Let's take a look at each of these segments, where the company is marketing, how it's growing and the market potential.

    Specialty Reports Inc.

    This segment generates revenue through vehicle history reports. It charges from $24.95 to $29.95 per report and $49.95 for three reports. The segment can be divided into four different industries:
     

    • (www.Truckchex.com) Users can access the most current title history information available on used trucks via a powerful network of data providers with current history historical title records and potential accident information on heavy-duty or commercial trucks.
    • (www.cyclechex.com) this is the industry's most trusted provider of motorcycle title history information with thousands of consumers and dealers using it each year. Using the unique 17 character vehicle identification number (VIN), the multistate title history report on the motorcycle includes the following types of information: reported theft records, odometer disclosures, salvage or rebuilt titles, flood damage, and manufacturer specifications and standard features.
    • (www.RVchecks.com) this contains information about the RV's title history including reported damage, salvage and other relevant information from both government and private agencies.
    • (www.CarVINreport.com) this product provides automotive title history reports, such as salvage or rebuilt title status, flood damage, recorded odometer reading as well as manufacturer's equipment and recalls….up & coming.

    Strengths of this Segment

    The company's greatest strengths right now lie in the Cyclechex and RVchecks industries. The company continues to look for an alliance to build its CarVinReport division.

    Market Analysis

    First, let's look at the size of the three industries.
     

    • According to information from "TruckIngo," there are 15.5 million trucks operating in the United States.
    • According to the Federal Highway Administration, there are just over 8.1 million registered motorcycles in the United States.
    • According to one statistic, one in 12 U.S. vehicles - owning households also owns an RV. Statistically that would mean about 8.2 million households


    In terms of total market, there are approximately 31.8 million vehicles between the company's three main industries.

    In any given year here are average sales statistics:

    According to a statistical average, just over 150,000 heavy-duty trucks are sold yearly.

    452,000 motorcycles were sold in the United States in 2012. Another statistical average gives us about 167,000 combination RV/towable sales. In any given year, we have a combination of 769,000 vehicles being bought new, and if we double that for used vehicles, we get a total of 2,307,000 vehicles changing hands yearly between these industries.

    There is something unique about this industry because it is becoming more popular for buyers to do their own vehicle checks because they are investing so much money. It is not uncommon for used vehicles to have a couple checks done before the vehicle is even looked at because of the personal investment.

    Because of this, if we take a factor of (1.50) instead of (2.00), just to be conservative and multiply it by the number of vehicles changing hands in the industry (keep in mind the average price of $24.95) we come up with a market potential of $86,339,475.00.

    SCRO has higher margins in the RV industry than it does any other and that seems to be picking up the fastest even though the motorcycle industry is what is really growing. There are no major motorcycle history report competitors in the industry right now.

    Every major auto OEM has a certified pre-owned program. Specialty Reports has a goal to make the Cyclechex history report become part of every certified pre-owned package. Presently, one doesn't exist in the motorcycle segment. The market could be huge:
     

    • Kawasaki
    • Honda
    • Yamaha
    • Harley Davidson
    • BMW
    • Suzuki

    The company just set up a marketing relationship with Allstate Insurance

    Allstate Insurance Company will make Cyclechex motorcycle history reports available to its customers and noncustomers who are considering the purchase of a pre-owned motorcycle. Those who are selling motorcycles and wish to provide assurance to potential buyers will also have access. At the same time Allstate will be able to offer insurance products to Cyclechex customers.

    Cyclechex will be prominently seen and recommended on the "Allstate Rider News" page while Allstate will also have a signature presence on the Cyclechex website.

    The auto industry is an even larger market yet to be tapped by the company. Obviously, there is greater competition in that arena with the two major players being CARFAX and

    AutoCheck. AutoCheck is about half the size of CARFAX and is mostly focused on dealers, presently working with over 13,000. CARFAX works more with the average Joe on the street.

    It is the used car industry that has the greatest potential for growth that SRCO has yet to enter. Certified used vehicles in the United States average just over 2 million a year, and that's not including private owner sales. This is a present price comparison between the two companies I have mentioned and SCRO:
     

    • AutoCheck: one report is $29.99. Unlimited reports are $44.99.
    • CARFAX: one report is $39.99; five is $49.95; Unlimited is $54.99
    • CarVinReport: one report is $24.95; three reports are $49.95

    Mobile Apps

    Specialty Mobile Apps is the company's main push with the iMobile Apps developing.

    This app helps the user perform single or multiple related tasks on a mobile handheld device like a smart phone. It provides a framework where clients can easily utilize and manage interactive customized mobile applications. There is also an online platform for dealers to manage its content. SRI and software development teams can manage licenses and easily retrieve reporting information.

    Basic Features:
     

    1. Content management system- this is a website that allows dealers to upload images to their app, change text content, colors, organize tabs and publish updates.
    2. Mobile client framework- software installed to the individuals mobile device. This is picked up through various distribution channels.
    3. Dealer-customer contact information- the dealer presents the customer with a registration screen upon startup. The customer gives information like name, email and telephone number for the purpose of pushing individual notification messages and other interactive communications.
    4. Multiple locations support- dealers will pay subscription fees based upon the number of store locations they wish to include in their app.
    5. Hours of operation- this information can be displayed to end-users even though store divisions may open at different times.
    6. Vehicle history reports- users will be able to request and retrieve vehicle history reports. They will use a (QR) quick response to a dimensional bar code to scan in the VIN numbers.

    We all know the culture is going from desktop to mobile, so this industry will continue to grow.

    Market Potential

    Automotive and motorcycle dealers like Harley Davidson know that the future to reaching their customers is through mobile apps. Specialty Mobile Apps is the preeminent provider of custom mobile apps for Harley-Davidson dealerships. Presently there are over 100 Harley-Davidson dealerships that partner with the company as well as other Powersports, RV, Marine and Auto dealers and other industries.

    The big thing about the mobile app industry is management and customer service. There are a lot of "mom-and-pop" mobile apps companies popping up but as they grow, they realize they cannot properly service the larger businesses. These small app shops don't have revenue, time, nor the manpower to properly service clients and manage the whole mobile marketing experience. This starts to consume their time and they don't have the ability to sell or build anymore and it drives them out of business.

    The future of the industry is in the commitment to the customer to provide training support and long term technology dedication. This is one of the reasons Specialty Mobile Apps continues to grow and bring on clients.

    This is where dealers should be, and will be investing in the future. Traditionally we have had radio, newspaper ads, TV and industry magazines. Even a website cannot compare to the power of "instant connectivity" to customers. With this move in technology, this is where the car and cycle companies will benefit:

    Increased Sales

    Sales staff will be able to communicate with interested clients, showing them new models and products while they're on the go. What the industry calls "door crasher deals" are promotions, which can also be sent via a mobile app, that are also time and date sensitive. QR codes can also be created and used linking manufacturer promotions for clients.

    Customer Service & Retention

    With the app, customers can easily connect with parts, service, body shop or even sales if they need to while they're on the go. It's not uncommon for a vehicle to breakdown while one is driving. If this happens, the consumer can easily contact the dealer's service department for help. Society continues to go mobile, and it is very important to have this access for the consumer.

    New & Used Sales Inventory

    Customers can have access to showcased vehicles 24 hours a day seven days a week on their mobile apps without having to drive to the dealership. A "dealer inventory feed" will make all information, including pictures, available to customers instantly.

    Since the company has platforms especially designed for the dealer industry, it is far more cost-effective for dealers to work with Specialty Mobile Apps. A dealership can decide to build everything in-house with a standalone generic app that can cost up to $20,000 to put together and maintain. Specialty Mobile Apps charges $1,999 for the app and then an average of $99 a month in a service fee. This is why dealerships continue to turn to them.

    Strategic Partnership with More than Rewards, LLC

    "More Then Rewards" is a leading web based provider of customer loyalty and rewards programs. Presently the company is working with 1900 motorcycle and power sports dealers. Specialty Mobile App dealers will be able to integrate a loyalty program in their mobile app. Consumers will benefit because they can check their rewards account through their mobile device at any time they wish, as well as receive instant rewards for any purchases. A customer will be able to walk into the store and instantly view any discounts because of their available rewards.

    Fundamentals

    As I have written earlier in this article, Sparta Commercial Services is a company remaking itself and in new stages of development. This can also be observed on its latest 10-Q statement.

    Where we start out looking at the company is important to understand what we start with as investors. The company's total assets were $437,722 and a majority of that was Accounts Receivable which is pretty healthy. The company's total liabilities were $4,496,726 most of which is privately held by shareholders with convertible options.

    What an investor needs to realize is this is what I would describe as "favorable debt" which means I highly doubt the company would be in jeopardy of not being able to pay the debt. Number one majority of it is owned by private shareholders that are behind the company. and number two the convertible options are well below the average price of the stock, so I doubt highly anything would be exercised.

    Revenue for the quarter was $118,047 and continues to grow in double digits and according to my interview with company management they expect that to continue.

    The bottom line is that the company's expenditures are still exceeding its revenue. The company slowly moving toward profitability but is not there yet. This is important to understand looking at the potential for investment with the company.

    Other Risk Considerations

    The company is in the middle of legal proceedings with a suit filed asserting claims against the former credit provider seeking substantial damages for the credit provider's alleged breach of fiduciary duties it owed the company. Whether the company wins this legal proceeding could make all the difference in the rate of the company's growth. There is no closing date for resolution settlement yet, but this is a consideration investors must keep in mind.

    The company has to be able to continue to raise funds to operate since its expenditures are larger than its revenue.

    Operating results may fluctuate significantly based upon certain factors outside the company's control. These things include: the demand for products and services; price changes and competition in the market; general economic conditions.

    Summary

    For a company in transition, Sparta Commercial Services has a lot of room to expand in the two industry segments that is focused on. We are not talking about multibillion dollar industries here, but what is unique is the scarcity of competition. This is what really opens the door for SRCO's potential for growth. I have spoken with management and I am pleased with their marketing strategy and organization. An investment in the company must be focused on the long term potential and not a short term quick profit.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: SRCO, LLY
    Mar 07 9:17 AM | Link | Comment!
  • Investors, Keep Your Eyes On Pressure Cycling Technology

    Does anybody remember when the first calculators came out? They were hundreds of dollars. Until they came down in price they were never embraced by the general public. When new technologies develop, there are often two separate lives they go through. The first is what I will describe as the breakthrough. This is when a technology has shown proven value but is too expensive to bring to market. The Second Life begins when the technology matures to the point where it makes financial sense to bring it to market. This is when it starts to grow and thrive.

    Let's take the electric car as an example.

    Electric Car

    The electric car was and still is a good idea. The only problem is-- they aren't selling. General Motors Co's Chevrolet Volt suffers from weak sales and there have been several electric vehicle related startups that have ended up in bankruptcy.

    Even though the concept is great, the price of the technology is keeping it out of the hands of the consumer. Batteries can run anywhere from $12k to $15k-- a third of the price of the car. Even though we have a good idea, the cars don't go far enough and they are too expensive for the average consumer to embrace.

    After the same manner, there is a technology that has been around for a few years that has yet to be fully embraced by its market. This technology is called "pressure cycling technology" or PCT for short. Things are about to change in the global Systems Biological Study industry and PCT is about to see global expansion.

    And Emerging Sample Preparation Strategy for Systems Biological Study

    Sonicators, Homogenizers, Silica Beads and mortar/pestle grinding have been the "go to" means for biological study sample preparation for study up to now.

    Pressure Cycling Technology was pioneered by a small company called Pressure BioSciences, Inc. (OTCQB: OTCQB:PBIO) and brings quality, accuracy and safety to the extraction of nucleic acids, proteins and small molecules (all of which are essential in the discovery process) on a level that has never been achieved before. The method is also versatile because it can be used for animal, plant, microbe and even human cells or tissue. The PCT system is superior to current extraction methods, and there are over 100 publications from a "who's who" list of scientists who say so.

    The system is comprised of two components; a Barocycler instrument and single use, consumable processing containers called Pulse Tubes. The whole system is based on a new, patented way of using pressure, and lots of it. The Barocycler can generate pressure from ambient (normal) to 35,000 psi and then back in a matter of seconds, and that is important because everything in nature can be exquisitely controlled with pressure. The Barocycler chamber can also be temperature controlled, which adds to its ability to uniquely control the cells and its parts (proteins, lipids, etc.). The design of the system reduces cross-contamination and the risk of exposure to the user, this is very important to scientists worldwide.

    Present Challenges to Systems Biological Study

    One of the greatest hindrances to systems biological study is the integration of complex data from multiple analytical sources. In their quest to paint a comprehensive picture of an organism's biological state under certain environmental conditions, systems biologists accumulate data from all sorts of different studies.

    This is the popular method of the day, but also has limiting qualities. It would be nice if "data" could all be collected from one sample. Unfortunately traditional sample preparation methods have biologists extracting one type of chemical constituent from the sample at the expense of losing others. Volume could be another constraint that they run across.

    The solution has been to rely on information that has been collected from replicated experiments and similar data already reported. This creates limitations because it increases uncertainty because the designs of the analysis are never perfectly the same. Because of this, there are often gaps in information that is collected, as well as discontinuity in the various pieces of data from various sources. Often, harsh chemicals or high-energy sterilization procedures are introduced into samples that are highly pathogenic. This can have a damaging effect upon the analytes too.

    Pressure Cycling Technology (PCT) does not make a researcher commit to a specific component, nor does it degrade the targeted material. Because of this, PCT conditions have led to yield's with a more complete set of components (thus, a better chance to make a discovery). The high pressure environment creates a "uniform disruption" and the outcome is better, with higher quality results. The procedure sterilizes and extracts complex or pathogenic viral, bacterial and spore samples without adversely affecting the constituent's biomolecules which provide the invaluable data. For a research scientist this is the best of both worlds - better results, greater safety.

    Studies Have Touted its Superiority

    There have been numerous studies that have shown how well PCT works compared to traditional "Sample Preparation Systems" (SPS). Here are a few examples.

    Forensics- DNA Extraction from Bone

    Forensic scientists can extract DNA from bone for further analysis in almost 1/10 of the time it takes to use the standard extraction method of pulverization. PCT treatment typically takes 2-4 hours while the standard method takes 24 hours or more. There is no need for pulverizing or strong organic solvents. The PUSLE Tubes also offer a reduced risk of cross contamination.

    Extracting DNA from Plant Tissue

    Dr. Susan McCouch's laboratory at Cornell University proved that the PCT System could be used to extract DNA from a wide variety of plants and plant tissues. It removes the need for labor-intensive mechanical disruption of the plant tissue and eliminates the likelihood of cross-contamination with the use of the PULSE Tubes.

    Extracting Protein and RNA from Small Solid Tissue Samples

    The homogenization and extraction of tissue samples have relied upon mechanical disruption or mortar and pestle grinding in the past. Unfortunately, this is a challenge when researchers get small samples because there is a large amount of loss during processing and transfer. Single disposable PULSE Tubes in the PCT System have been shown to reduce the likelihood of sample loss as well as minimize cross-contamination. Since conventional equipment is not needed, the processing time also has been greatly reduced.

    In these three studies, we find different benefits of pressure cycling technology:
     

    • It is faster
    • It is more versatile
    • Its' efficiency is shown to be better in smaller samples that are often harder to process with traditional means
    • It is better at preventing cross-contamination

    The PCT technology has been shown by many well known labs to be much better than other sample preparation methods being used today. Like the electric car, it looks like it has been proven to be better for its market (estimated to be about $6 billion), yet like the electric car, it has not been embraced on a grand scale. That may change in the very near future.

    The original PCT system continues to be used in small important research studies, but the individual test tubes and the requirement for handling samples manually has hindered larger scale sales. Even though studies have shown that the PCT platform offers significant advantages in preparing biomolecules for analysis, the popular platform today is the high throughput (HT) multi-well plates that allow for automation and an unattended approach.

    When researchers can do multiple "sampling" at the same time today in an automated fashion, it's hard for the market to be interested in a manually-intensive single tube system, even when it offers significant advantages over competitive methods. This is what has kept the technology from being fully embraced by the global systems biological study market.

    But unlike the electric car, PCT has found its "Second Life" and is about to raise the eyebrows of the systems biological study community.

    The Game Changing Technology

    After much research, PBIO has developed a breakthrough technology for use in its pressure cycling platform that uses an HT system. The "High Throughput System" is a HT multi well format that utilizes pressure cycling technology (PCT).

    There are an estimated 80,000 research laboratories working with biological samples worldwide. Many of them use the automated universal (HT) sample preparation system in their studies. These machines are $500k to $1000k and the PBIO HT system will attach right to their machines.

    Will these research laboratories invest an extra $50k in this new and more efficient technology? What are the benefits?

    I believe the bottom line is a breakthrough in research. While the investment may seem like a lot of money, it will add speed, efficiency and better analytical results than older traditional methods. Perhaps more importantly, the use of the PCT system has been shown to result in the extraction and recovery of proteins and lipids not extracted and recovered by other current methods. Imagine the value to a scientist in finding a protein or a lipid in a sample that is not found in that sample using other methods.

    Imagine two people of the same age. Both have had the same type and stage of cancer but one responded to treatment and lived while the other did not. Why did this happen? This is what researchers are trying to answer on a cellular (DNA and protein) level. The PCT system will bring better analyte data to answer that question than ever before. It only takes one breakthrough to make the difference for that lab and that company - and that patient. Researchers will be able to do their work with better results at a faster pace. This is the reason the PCT technology will work.

    The list of companies, laboratories and agencies that are interested in, and will use this technology lists like a "who's who" of the biotech industry. Companies like Amgen (AMGN), Merck (MRK) and Biogen (BIIB). Different School like UCLA, Harvard, and Stanford has already expressed interest in the technology. Scientists in pharma, biotechnology, academia and government will use it because of its versatility.

    If you are an investor who enjoys following technology and looking for the next "breakthrough technology" to invest in, pressure cycle technology, with a proven track record in over 150 labs, and its recent breakthrough into high throughput, looks like it's about to grow up. All great technologies: the calculator; the computer; the smart phone… And many more were birthed from an idea and then had a time of maturity until the technology could make financial sense to bring to the markets. I believe PCT is at that point. I would definitely watch the technology and company-- Pressure BioSciences.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: PBIO
    Jan 15 10:34 AM | Link | Comment!
  • ETF SPY: Looks Like Slow Week Ahead

    Technically Speaking:

    RSI- the recent move up the RSI indicator has just touched the top of the 70 line that indicates an over bought position. It is not as high as the last high point, and this is good because it means that the stock can continue to move.

    MACD- the MACD indicator is starting to move sideways instead of moving down just like I predicted it might. This is why the stock continues to now move up instead of going down. Since this particular peak is more of a plateau it gives the impression that the stock will continue to move up in early August.(click to enlarge)

    Bollinger Bands- The last observation I made about the Bollinger bands, I was wondering whether we have found a top or whether it would continue to move up. The last two days of last week the stock moved up and answered our question and now momentum is siding with the Bulls.

    Summary- all momentum looks like the stock is going to continue to move up, the RSI indicator and the MACD indicator point to this and since the stock is moving sideways with a bullish lean in the Bollinger bands, it also looks like in the same stock is can it continue to move up.

    Current Events

    The earnings season so far has been largely positive with more than half of the companies that have reported beating estimates. But cuts in outlooks from a number of bellwethers, including Intel (INTC.O) and Caterpillar (CAT.N), mainly due to increasing concerns over China's growth, have raised fears about the third and fourth quarters.

    The market is also likely to trade sideways next week after the Dow and the S&P 500 marked record closing highs for a second day on Friday.

    Of the 391 companies in the S&P 500 that have reported earnings for the second quarter, 67.8 percent have topped analyst expectations, in line with the average beat over the past four quarters, data from Thomson Reuters showed. About 55 percent have reported revenue above estimates, more than in the past four quarters but below the historical average.

    Tags: SPY
    Aug 03 7:48 PM | Link | Comment!
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