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Unfortunately, we have not been able to find a picture of
a one-armed paper hanger, so the graphic above will have to
suffice in describing just how busy we’ve been since our last
newsletter. In September we closed two investments in the
same week, an experience that we hope does not repeat itself
soon.
In our third investment, the fund invested $4.8 million alongside
management to purchase Champion Technologies, Inc. from its
corporate owners. CTI manufactures quartz crystal oscillators
for telecommunications applications. The majority of its products
go into the cellular market as frequency control devices for
base stations and microwave radios. CTI has a strong position
with a who’s who list of telecom companies and will focus
its efforts on broadening its product line to gain a larger
share of its customers’ frequency control component purchases.
In our fourth investment, the fund put $2.5 million (with
a one year option to invest an additional $2.0 million) in
growth equity into Spyder Active Sports, Inc. The company
designs and markets high performance ski wear. They sponsor
the US Ski Team and provide the distinctive spider web patterned
skin suits that the racers wear in addition to great technically
oriented ski wear for the rest of us. Spyder has never advertised
and David Jacobs, the company’s founder, believes that substantial
untapped growth potential exists worldwide for their apparel.
The investment will fund increased sales and marketing efforts
as well as enable management to streamline the company’s manufacturing
and distribution structures.
Trussway and SCOA continue to do well. We have signed a letter
of intent for our first acquisition for Trussway which will
bring both a new product line and a new geography to the company.
SCOA has had good success adding new chains while maintaining
comp store gains that are among the highest in the shoe business.
They are also evaluating an acquisition. Each of these acquisitions
feels like a new deal for us given our level of involvement
and helps to explain why we haven’t been in the office much
this Fall.
Lastly, with all of this investing activity comes the inevitable
dwindling of our war chest. We have sufficient capital for
1 - 2 more investments and given the opportunities we are
now looking at have decided to start raising new capital.
We expect to generate sufficient interest among our current
investors and a few others with whom we have kept contact
to make the process relatively painless.
We encourage you to call us with interesting investment opportunities
within the closely-held and family owned business market.
We look for transactions where we can invest $2 million to
$10 million in equity capital in established companies with
$25 million or more in revenue. Should you call, we guarantee
you a thoughtful and timely response.
Best regards,
Tad Kelly, John Flanigan & Blake Morris
511
Sixteenth Street, Suite 600 Denver, CO 80202
Telephone: (303) 571-0100 Facsimile: (303) 571-0114
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