Flotek (NYSE:FTK) put out an SEC filing in which it admitted the substantial points in my last blog post. The data that it presented proving the efficacy of FracMax was inconsistent with the official data at the Texas Railroad Commission and wrong.
Flotek argued that FracMax and its "complex nano-fluid" (CnF) worked nonetheless.
You can find the SEC filing here.
It denied one suggestion in my original post. Flotek had long said that FracMax – an oil-field-database iPad app –Â was a key to its sales success. However the iPad app crashed two iPads and clearly did not perform its stated function.
Here is what Flotek said in the SEC filing.
A final assertion made in the report claims that attempts to download FracMax® for personal use resulted in iPad malfunctions and no success in obtaining an operating version of the software application. The author concludes that the program does not operate properly.
As the company has consistently noted since inception, FracMax® is a proprietary software application for the exclusive internal use of Flotek employees. While the company is preparing to release a new version of the software available for use by operators, FracMax® is not currently available outside of Flotek employees. A key code as well as other security requirements are necessary to obtain a working copy of the FracMax® application. This has been a consistent policy since FracMax® was introduced in 2014.
In other words it stated that there is no version of FracMax available to people who are not Flotek employees.
Here is a video that Flotek presented on its Investment Day in September.
This video ends with a long claim for the benefit of FracMax. To quote:
Now U.S. and national oil companies can license versions of the application customized to them on a FracMax centric Apple iPad which offers the ability to import specific reservoir and production software outputs for individual wells. Its associated FracMax Halo Technology enables selection of unique data fields for the particular user.
With the Flotek FracMax app hundreds of hours' worth of detailed and potentially expensive return on investment analysis is available with the touch of a screen.
It's more impactful and convenient than ever to experience the real world benefit of CnF, an innovation that is revolutionizing an industry by truly making a difference.
You can touch it, you can see it, and now you can believe it. Your data has become intelligent in a way never imagined.
The future is here.
This version of FracMax is clearly available to non-Flotek employees.
I hope that Flotek can show us at least one modified version of FracMax useable by third parties. Or it can somehow explain away that video.
Or otherwise it is simple.
There is a major misrepresentation with likely severe legal ramifications.
And it will get ugly.
