textcentric, incab/tci/tci talking points rev 1.pdf2/13/06 3 tci timeline 2010 develop exit strategy...
TRANSCRIPT
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2/13/06 1
Textcentric, Inc
Adaptive Technology1998 -2006
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2/13/06 2
Briefing
Second Round Seed Money $500,000How Much?
February 28, 2006When?
US Education MarketWhere?
Custom Textbooks and Pedagogical ToolsWhat?
Improve Teaching and LearningWhy?
Adaptive Content TechnologyWhat?
Textcentric, Inc (TCI)Who?
This briefing answers thesequestions and request second stagefinancing for an exciting CMU spin-off opportunity.
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2/13/06 3
TCI Timeline
Develop Exit Strategy2010
Scale to meet the demand2009
Branding Marketing and Sales, New Deployments2008
New Deployments, Develop Markup Content Repository, Deploy Adaptive Content2007
Round Two, $500,000, PSO Rollout and New deployments, Develop pedagogical tools, Expand US Operation.2006
Agreement with PSO (2005 - 2010) and Deployment Conversion and eLearning Applications2005
Develop Marketing Campaign with Pearson Publishing, plc (PSO). And other Clients2004
Develop Custom Printing Application2003
Develop XML Repository Develop Conversion and eLearning applications2002
Round One, VC $250,000, Debenture open SL Operation and Develop Conversion and eLearning Applications2001
Proof of Concept, CMU/ SL Spin-off, TCI, Inc. add Directors2000
CMU R&D Project, and Adaptive Content Pedagogical Tools1999
XML adopted as subset SGML International Printing Standard, TCI Develop Interactive CD1998
Significant Event in TCI History 1998 - 2006Year
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2/13/06 4
Concept1998
SMGL
XML
1. Pedagogical Toolsto Improve learning
StudentThesis
“Metadataand XML
used to improve content reusability and Global Teaching and
Learning”
InternationalText Processing
Standard
2. Custom TextbooksPrinted on the Flyto Improve teaching
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2/13/06 5
Proof of Concept1999 - 2000
Spin-off
Back toDrawingBoard
Adaptive Content
XML Repository
CMU Research
SL Development
PSO Agreement
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2/13/06 6
Round 1
Directors VC Angles Banks US Operations
Workforce Textbooks XML Conversion Administration Print on the Fly
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2/13/06 7
Use of Funds
Proof of Concept Production DeploymentQA Maintenance
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2/13/06 8
XML ConversionLabor Intensive Process
Research Development Production and QA
New Labor
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2/13/06 9
Sri Lanka Labor
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2/13/06 10
Course Development
XML Content Markup Repositories
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2/13/06 11
Tools of the Trade
Microsoft Operating SystemsMicrosoft OfficeWordPower PointExcel
Microsoft Development Environment (MDE).netC# Java
Multi-media development capabilitiesMacromedia Product SuiteGraphic DesignAnimation3D Graphics.
Scripting LanguagesHTMLXMLStyle SheetsJava ScriptAction Script
Standards
SCORMIMSLOMQTILIPADLSIFLTSCAICCASCIISMLGXML
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2/13/06 12
Course ManagementPlatforms
Course Management SystemsPrometheuseCollegeBlackboardWeb CT
Learning Management SystemsVividLearnNet - IsraelI-Learn - Sri Lanka
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2/13/06 13
Deliverable
Custom Designed TextbooksPrinted on the Fly
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2/13/06 14
Custom TextbooksPrinted on the Fly
ProfessorsComposeTextbook
Print on the FlyPrinted Required Copies
Tablet PC
PC Content on DVDs
Content on I-POD
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2/13/06 15
Textbook Costs
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2/13/06 16
Textbook Market
Textbook Publishers
Used Textbook Salestaking market share
Textbook Market
Intellectual PropertyDemandPrinting
Shipping &Handling
Shrinkage Administration
Custom TextbooksPrinted on the fly
Price Increases each year for last 20 years.
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2/13/06 17
TCI Invoice HistoryMay 2002 to December 2005
PSO Average9 Invoices $29,84211-04
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2/13/06 18
TCI Timeline2002 - 2009
‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09
$192,071$67,876
Round 1 - $250,000 Debenture
$281,885 $1,093,334$35,891 $1,640,000 $2,136,000
Assets $188,673Liabilities $447,548Losses ($258,875)
$577,732
1-Q-06 EstimateSales $105,590Expenses $162,308Loss ($56,718)
89% 183% 47% 105%% 89%% 50%% 50%%
PSO Agreement
Round 2 - $500,000
Current Liabilities $103,845
Worst Case4-Q-06Sales $1,093,334Expenses $1,085,428Loss ($92,094)
Best Case4-Q-06Sales $1,200,000 (wag)Expenses $1,084,428Profit $115,572Need $166,660 New Sales
Sales
Sales Growth
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2/13/06 19
LiabilitiesTotal $849,450
1999 - 2006
SL Government$69,900Pass Due
Employees$226,500$2,400 per Month
Investors$51,000$1,000 per Month
Banks$132,200$5,350
Current Liabilities - $103,845$8,750 per Month
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2/13/06 20
Round 2
Investors Innovation Works VC Fund Angle
Advisory Board
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2/13/06 21
Use Round 2
New Employees New Deployments
New Publishers
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2/13/06 22
Education
US Market1990 -2007
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2/13/06 23
US Students 200670,000,000 Students
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2/13/06 24
Student Markets
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2/13/06 25
College Students
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2/13/06 26
Cost of US Education$275,000 per Student
Grades 3 through College, assume 25% are tutored
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2/13/06 27
US Higher Education System1997
Bell Shaped Curve2,288,000 DegreesCost $197,973,000,00014,500,000 EnrollmentAverage $13,653
Teachers990,0002,752,500 staff2.78:1 ratio
Textbooks80% Use them
Lectures Test
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2/13/06 28
Learning Process“When the student is ready the teacher will appear”
LearnTeach Test Grade
Ready
Pass
Fail
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2/13/06 29
How Students Learn TodayMulti-media anytime, anyplace
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2/13/06 30
Pedagogical Market70,000,000 US Students
K-8 High School College Adult
Textbook PublishersSector $113,209,000,000
Supplemental Material Vendors$283,022,500 wag
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2/13/06 31
US StudentsTarget Market… US Students interested in improving learning skills
Assume: 25% of Studentscan improve learningskillswith Adaptive Reader.
Tutor, learning aids andsupplemental materialStudents buy (20%) useTo help them “get it”
Self paced learning without reprisal…till you get it!
“gets it”
Target Market
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2/13/06 32
Student Markets70,000,000 US Students
5%5%35%6. Cost of Sales
38,000,00017,000,00015,000,0007. Students
9,500,0004,250,0003,750,0008. Target
3 months3 months9 months5. Lead Time
AB ReaderAB ReaderXML Textbook4. Products
WebWebDirect3. Sales
6662. Publishers
K-8High SchoolCollege1. Market
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2/13/06 33
Student Marketwags
80%$12/month7. Subscription Fee
25%17,500,0005. Need Help (wag)
1%175,0006. Market Share - Year 1
$36
70,000,000
15,000,000
16,000,000
38,000,000
1997
20%8. Single Sales
100%4. US Students
21%3. College
23%2. High School
54%1. K - 8
% TotalUS Student Enrollment
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2/13/06 34
TCI
Financial History2002 to 2010
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2/13/06 35
The BooksSource: Audited Financial Statements
(21%)($100)$383$483EPS16
(21%)$13,332($51,334)($64,662)Net Income15
(21%)$13,332($51,334)($64,662)EBITDA14
(5.6%)($9,155)$153,538$162,693General Selling and Administration13
Expenses12
2%$1,901$102,204$98,215Gross Margin11
30%$38,394$164,551$126,157Revenue10
Income Statement9
12%$19,899$188,673$168,744Total Liabilities and Equity8
25%($51,336)(258,875)($207,539)Equity7
13%$40,567$343,703$303,136Long Term Liabilities6
42%$30,688$130,845$73,177Current Liabilities5
Liabilities4
12%$19,899$188,673$168,774Total Assets3
21%$6,366$37,217$30,851Current Assets2
% ChangeChange3-31-053-31-04Assets1
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Ratios
(28%)(36%)93%129%GSA5
(20%)
(17%)
0.18
(0.06)
Change
(39%)(31%)(51%)Net Income6
(22%)61%77%Gross Margin4
(13%)(1.24)(1.43)Debt Equity3
(15%)0.360.42Current2
% Change3-31-053-31-04Ratio1
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2/13/06 37
TCI Customers2004 - 2005
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2/13/06 38
TCI Sector Revenue2004 - 2005
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2/13/06 39
TCI Revenue2001 - 2010
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2/13/06 40
Revenue Growth Rate2003 - 2010
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2/13/06 41
TCI Revenue1-1-06 to 12-31-06
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2/13/06 42
TCI RevenueBy Quarter
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2/13/06 43
Cost of Goods SoldBy Quarter
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2/13/06 44
Operating ExpensesBy Quarter
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2/13/06 45
EBITDABy Quarter
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Profit (Loss)By Quarter
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2/13/06 47
TCI Labor ProjectionsBy Quarter
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2/13/06 48
TCI, Inc.
Adaptive Technology Interest Group
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CEOHow much Cash ($000,000)?
$0
$511,000
$0
$0
$0
$15,780,000
$0
$9,900,000
$0
$0
$0
OptionsExercised
$1,480,000
$285,000
$505,000
$5,950,000
$1,000,000
$2,220,000
$531,000
$590,000
$885,000
$639,000
$380,000
Salary
1844
1996
1997
1939
1975
1982
1991
1998
1990
1995
1998
Inception
59
51
34
49
50
50
46
53
43
46
50
Age
Marjorle Scardino
Doug Kelsall
Mike Chasen
Mark Hurd
Bill Gates
Bruce Chizen
Tom Jenkins
Jeff Rodek
Bernard Liautaud
Martin Brauns
Robert Olson
CEO
HPQHewlett-Packard, Inc.
BBBBBlackboard, Inc.
ECLGeCollege.com, Inc.
MSFTMicrosoft, Inc.
PSOPearson Publishing, plc
ADBEAdobe Systems, Inc.
OTEXOpen Text, Inc.
HYSLHyperion Solutions, Inc.
BOBJBusiness Objects, S.A.
IWOVInterwoven, Inc.
STELStellent, Inc.
SymbolCompany
Most recent quarter (mrq) and twelve trailing months (tty))
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2/13/06 50
Financial HighlightsMargins
13.96%
21.93%
18.06%
2.77%
31.57%
30.66%
0.05%
9.47%
8.60%
-0.06%
0.76%
ProfitMargin
6-05
9-05
9-05
10-05
12-05
12-05
12-05
12-05
12-05
9-05
12-05
MRQ
6.42%4.04%5.72%10-30HPQ29.44%8.29%16.86%12-31BBBB28.92%5.99%12.44%12-31ECLG
28.56%16.09%40.92%6-30MSFT
7.98%
36.67%
0.05%
13.06%
6.18%
-0.03%
0.56%
ROE
2.13%5.62%12-31PSO
20.70%37.05%12-2ADBE2.85%7.13%6-30OTEX6.81%13.06%6-30HYSL4.20%12.62%12-31BOBJ
-0.27%-2.02%12-31IWOV1.12%2.93%3-31STEL
ROAOperationMargin
Fiscal YearEnds
Company
Most recent quarter (mrq) and twelve trailing months (tty))
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2/13/06 51
Income StatementAdaptive Content Companies
$975
$17
$30
$7,300
$18,040
$793
$68
$130
$200
$17
$8.6
EBITDA
$8.43
$4.56
$4.93
$30.11
$3.86
$4.01
$8.56
$12.09
$11.92
$4.13
$4.27
RevenuePer Share
1.2%
8.8%
20.7%
7.1%
9.4%
18.8%
-3.4%
4.8%
14.2%
9.1%
14.6%
RevenueGrowth%
$0.82-62%$2,400$20,470$86,700HPQ
$0.80108%$24$78$130BBBB
$0.9859%$22$42$98ECLG
$1.215.5%$13,060$33,590$41,360MSFT
NA
38%
-75%
-0.20%
64%
NA
1,046%
Qtr. EarningsGrowth YoY
$1.18$403$445$6,720PSO
$1.19$602$1,560$1,970ADBE$0.01$228$288$417OTEX$1.11$68$528$721HYSL$1.00$93$725$1,080BOBJ
$0.00-$94$109$170IWOV
$0.03$0.90$75$119STEL
EPSNetIncome
GrossProfit
RevenueCompany
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2/13/06 52
Balance SheetHow much Cash ($000,000)?
$3,830
$20.4
$0.34
$5,220
0
0
$12.93
0
0
0
$993
Debt
$1.77
$0.73
$4.15
$4.90
$3.36
$2.84
$1.78
$7.16
$3.70
$3.00
$2.08
Cash perShare
$13.101.380.14$13,930HPQ
$3.551.86.004$123BBBB
$4.171.850.22$16.2ECLG
$4.252.790$34,700MSFT
$6.90
$3.77
$8.40
$9.80
$16.90
$7.00
$5.63
BookValue
2.100.70$1,410PSO
4.180$1,700ADBE
1.320.32$87OTEX
2.160$425HYSL
1.380$337BOBJ
1.960$127IWOV
2.78.006$59STEL
CurrentRatio
DebtEquity
Cashmrq
Company
Most recent quarter (mrq) and twelve trailing months (tty))
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2/13/06 53
Valuation MeasuresHow much Cash ($000,000)?
1.84
5.0
8.60
2.41
5.9
10.10
2.0
3.5
2.3
1.33
2.01
PriceBook
4.6
9.7
9.7
5.5
7.1
6.0
7.1
6.0
7.1
6.0
6.0
SectorBook
11
22
40
38
22
33
3
30
38
NA
364
TrailingP/E
12,580
460
721
80,710
241,100
21,510
753
1,560
3,090
259
261
EnterpriseValue
1.031589,410HPQ
6.3737843BBBB
4.6728456ECLG
6.6617275,800MSFT
1.501910,160PSO
9.582619,120ADBE
2.0014827OTEX
2.75211,980HYSL
3.18213,420BOBJ
2.2921386IWOV
2.7921319STEL
PriceSales
ForwardP/E
MarketCap
Company
Most recent quarter (mrq) and twelve trailing months (tty))
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2/13/06 54
ProductivityRevenue by Total Hours Paid
69,449,120
921,440
1,000,480
312,000,000
126,880,000
11,926,720
4,661,280
5,22,560
7,974,720
1,447,680
1,015.040
Paid Hours
33,389
443
481
150,000
61,000
5,734
2,241
2,607
3,834
696
488
Employees
$27.79$86,700HPQ
$12.99$130BBBB
$10.64$98ECLG
$32.60$41,360MSFT
$9.68$6,720PSO
$16.52$1,970ADBE
$8.95$417OTEX
$13.30$721HYSL
$13.54$1,080BOBJ
$11.74$170IWOV
$11.72$119STEL
ProductivityRevenueCompany
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2/13/06 55
2006 Productivity Ratio
• The productivity ratio isderived by dividing totalrevenue by total hourspaid per Year.
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2/13/06 56
Thank Youfor the
Opportunity
Questions?