OnCourse Technologies Investors
Dear Fellow Shareholders:
Having observed the fourth anniversary of our incorporation on May 28, I would like to take this occasion to update you on our progress at OnCourse Technologies, Inc.
Our vision has enabled us to integrate Micro Estimating Systems, CAM Solutions, Cimtronics, and TekSoft into the OnCourse family. In December 2001, we took another major step forward with the incorporation of our Internet division, Tools4Mfg.com, as another wholly owned subsidiary. All this is part of our ongoing strategy of developing a suite of integrated software applications and an electronic commerce vehicle for manufacturers.
As you may know, OnCourse now is an SEC fully reporting company, with approximately 820 shareholders. Our common stock is traded on the Over the Counter Bulletin Board (symbol: OCTH). Acquisitions have driven our revenues from $1.8 million to $4.9 million.
Another noteworthy accomplishment is that our two main subsidiaries have reached milestones that are rare for software companies: Micro Estimating Systems, Inc. is celebrating its 20th year in business and TekSoft, Inc. celebrated its 20th anniversary in 2001.
We believe we have made tremendous strides through acquisitions and cutting-edge product development. At the same time, we’ve fared better than many companies in today’s challenging economic times. Most important, we believe we remain positioned for growth in the future. Over the past few years, over $1 million was invested to develop the public company. Most of that came from investors. Now, we will focus on raising the level of capital we initially envisioned from public trading. To do so, we have recently taken important steps to encourage greater investment in OnCourse Technologies, including the hiring of financial advisors to help the company achieve both short and long-range and objectives.
From 2000 to 2001, many companies servicing the manufacturing sector reported sales declines in the 15-30% range. In context, therefore, OnCourse’s 6% decrease in sales from $5.2 million in 2000 to $4.9 million in 2001 was not what we had planned, but we certainly held our own.
The company’s year-end 10-KSB SEC filing is on line in the investor section of OnCourse’s web site for your review at www.octh.com. If you would like a printed copy of the filing please let us know.
When you review the financial areas in the 2001 10-KSB filing, I feel it is appropriate to point out that the majority of the company’s losses are not hard dollars, but are comprised of significant non-cash charges required by GAAP and SEC regulations. The largest contributor to these charges is $2.6 million in depreciation & amortization. Another required accounting procedure that affects the company’s reported income is deferred revenues. Deferred revenues, which represent revenues invoiced but not yet recognized, are listed in the current liabilities section of the balance sheet. Deferred revenues increased 16 %, or approximately $266 thousand, bringing the total deferred revenue amount to almost $1.9 million as of December 31, 2001.
The manufacturing sector is starting to show signs of improvement. We believe that many potential customers — those who stood pat for a while — are now ready to consider our profit-enhancing suite of software products.
Our new products and the integration of CAM into our Estimating software — being unique in the market place — are already generating favorable reviews and improving distribution.
The Editor and Chief of one of the most popular trade publications in our industry had this to say about our products, “Automatic Feature Recognition and Knowledge Based Machining may be one of the most significant innovations that I have seen in the manufacturing industry in the last fifteen years.” Equally exciting, we plan to introduce another revolutionary product, SolidCost™ at the International Machine and Technology Show (IMTS) this September 4-11th in Chicago. This event is typically attended by over 100,000 manufacturing professionals and is the largest metalworking and manufacturing trade show in North America. If you would like free tickets to attend anytime during this eight-day event we would be happy to send them to you.
The innovative products we will demonstrate at IMTS incorporate knowledge based machining and revolutionary technology, enabling OnCourse customers to quickly and comprehensively calculate the costs of machined and fabricated components. These new engineering and costing programs are the combined results of decades of manufacturing experience, visionary management, skilled and dedicated software engineers and literally hundreds of man-years of programming. These and other exciting products are now achievable because of the combined strengths and talents of the companies under the OnCourse umbrella.
It is also a credit to OnCourse people and products that we have secured more than 15 new distributors in the past year bringing the total to 140 distributors around the globe. In the months ahead, we hope to successfully raise additional funds to further enhance our sales, marketing, and distribution channels now operating in the U.S, and more than 40 other countries.
Our on-going goal, of course, is to increase revenues and profitability and, in doing so, to create more value for our shareholders.
Once again, I personally thank you for your investment in our company and wish you and your loved ones the blessings of good health and prosperity.
Very truly yours,
Ron Barranco
Chairman and CEO
This letter includes forward-looking statements, which are made pursuant to the ‘safe harbor’ provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, comments with respect to our objectives, targets, strategies, financial condition, the results of our operations and our businesses, our outlook for our businesses and for the U.S. and international economies. By their very nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and other forward-looking statements will not prove to be accurate. Such risks and uncertainties are discussed in the company’s form 10-KSB and other filings with the SEC. We caution readers not to place undue reliance on these forward-looking statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, targets, expectations, estimates and intentions expressed in such forward-looking statements.