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Mindshaker
Executive Summary

Mindshaker provides graduate students and faculty with an efficient, comprehensive avenue to access educational materials via the Internet. The current system of textbook sales supports high markups by campus bookstores and retailers, involves journeying to an often poorly organized or sold out bookstore, and waiting in long lines during peak season. Current web retailers only provide part of the solution, as supplemental educational materials must be ordered from multiple sources. As curricula have become more sophisticated and producers of supplemental materials have grown, professors must comb through an increasingly fragmented marketplace and deal with numerous suppliers to assemble the necessary supplemental course materials. Mindshaker promises a better way.

Mindshaker provides a single source of proven books, articles by academic and industry experts, cases and value added learning aids for more than 2.8 million graduate students and the faculty that instruct them. The company's Web site allows anyone to search for and purchase books and other educational materials via secure transaction interface. Students from participating colleges can click on their classes to bring up a menu displaying syllabi, software and other learning aids, all required texts, book abstracts, price and availability. Students spend minutes on a transaction that would have taken 30 to 90 minutes at traditional vendors. Students save time and duplication of effort and the books are conveniently shipped to their doorstep, generally within 48 hours. Educators gain the ability to review the syllabi of other professors, share information, build digital "coursepacks", and sample and purchase other materials from a library of short electronic articles.

To accomplish this, Mindshaker has established academic and business contacts at 20 top universities from whom the curricula and booklists are secured. All major textbook publishers have also been contacted and accounts are currently being established. Harvard Business School, Kenan-Flagler, Darden and other case vendors have tentatively agreed to provide materials in digital format. Fulfillment, customer service and billing logistics will be handled by a third party logistics provider.

No traditional "bricks and mortar" are required, and the business can grow as needed without accruing fixed costs. Except for a small administrative office, all elements of the business from book storage and fulfillment to the computer equipment that houses the web site are located in third-party service businesses that provide full service at low cost. Sales and marketing is primarily handled via inexpensive ads at colleges, with active sales and marketing performed by students on commission.

Net revenue grows from $2.2 mil to $22.0 mil from 1999 - 2003. The increase is due to expansion into more schools and solidified relationships with professors. Advertising revenues during this period have been estimated at a conservative level. Given the company's target market, management believes advertisers will be anxious to gain access to this market. Returns stem from obsolete inventory and are expected to be moderate. The chart below shows a five-year breakdown of revenues.

1999 2000 2001 2002 2003
Textbook Revenue 1,966,500 9,819,600 14,139,600 17,739,600 21,339,600
Other Product Revenue 237,173 565,614 757,635 946,819 1,136,003
Advertising Revenue 6,000 12,000 12,000 12,000 12,000
Less: Returns 44,836 223,887 322,383 404,463 4W543
Net Revenue 2,164,837 10,173,327 14,586,852 19,293,956 22,001,060

The Company's cost of goods (CGS) should decline over the five-year period due to increased sales of higher margin supplemental educational products. From 1999 - 2003, CGS is expected to decrease from 95.7 percent of revenues in 1999 to 74.8 percent of revenues in 2003. CGS in 1999 include one-time software development costs incurred to begin operations.

Management expects Mindshaker's operating expenses to be fairly constant as a percent of sales. From 1999 - 2003, operating expenses are forecasted to decline from 14.9 percent of revenues to 10.8 percent of revenues. Most operating expense components are a constant cost and enable the margin to decline as the company's market increases. The forecasted revenues and costs translate to significant increases in profitability from 1999 - 2003. Such increases offer investors a unique opportunity for substantial gains.


Mindshaker
Table of ContentsAppendices
1. Executive Summary
2. Market Analysis
3. Company Description
4. Marketing & Sales
5. Products & Services
6. Operations
7. Management
8. Financials
Initial Programs
Employees
Industry Analysis
Management Biographies
Board CV Summaries
Valuation Analysis
Balance Sheets
Income Statements
Competitor Analysis
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