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Tuesday, December 06, 2005

Table Trac (TBTC) competitors

Big Alliance Competitor
In my google checking post here, I came across this:

In other news: June 14, 2005, IGT (IGT, website, sec) and Shuffle Master (SHFL, website, sec) and Progressive Gaming International Corp (PGIC, website, sec) announced they would work on table management automation, "Intelligent Table System". Done in three phases: 1) Table manager doing much of what Table Trac does (IGT), 2) RFID chips (PGIC), 3) Card manager (SHFL).

First, let's look at the three companies.

market cap: $10,000,000,000
P/E: 25
Hardly anything in SEC documents about the joint venture.

market cap: $400,000,000
P/E: 92
In June 2005, we also entered into initial strategic agreements with IGT and Shuffle Master to create a comprehensive ITS. This system is expected to combine our TableLink [CT] software module which provides RFID bet recognition capability, with IGT’s table management systems, including TableTouchtm, and Shuffle Master’s automatic shufflers, IBR optical card reading shoes and other accessories. IGT will be responsible for selling and distributing our portion of the ITS suite of products and any other products developed by us under the definitive agreements. Shuffle Master will become our preferred vendor for automatic card shufflers, IBR optical card shoes and other key accessory products. We are working towards definitive agreements relating to the development and sale of the ITS, but can provide no assurances as to when such agreements will be entered into or if such agreements will be entered into at all.
In June 2005, we also entered into initial strategic agreements with IGT and Shuffle Master to create a comprehensive ITS. In addition, we agreed to issue to IGT up to $40 million of our 6% senior subordinated convertible notes. We expect that we will modify the terms of the 6% senior subordinated convertible notes to reduce the conversion price of the notes. We have not yet reached an agreement with IGT regarding the modified price, but for illustration purposes only, in this prospectus we assume a conversion price of $9.25, which would cause our 6% senior subordinated convertible notes to be convertible into up to a maximum of approximately 4.3 million shares of our common stock.
For example, as part of our joint development arrangement with IGT and Shuffle Master, we agreed not to manufacture or sell our intelligent shoe products for a three-year period.
market cap: $100,000,000
P/E: 37
agreement to sell RFID IP to IGT. Patents #5,735,742 and #5,651,548. Also some optical bet recognition and chip tracking patents #6,313,871 and #5,781,647 and #6,532,297. The price is $10.5 million now, $4.9 million in 2007. Both companies will share in royalties.
...we will be the provider of automatic card shufflers, card reading intelligent shoes, card and chip sorters and verifiers. IGT will be the provider of back-end table gaming management systems, including player tracking, patron loyalty and rewards, as well as bonusing applications. PGIC will be the provider of RFID bet recognition, automated gaming chip tracking and payoff recognition.
In their Sept 6, 2005 8-K announcing quarterly results, they mention this same stuff.

Venture Catalyst Wireless System
Venture Catalyst (website, sec) has a very strong balance sheet. Assets are mostly cash. Acid ratio is nearly 2 (cash/current liabilities). Revenues for Q3 2005 are $2.1 million which is 19% above the prior year. Gross margins are 52%. They're running at an operating loss. Cash flow for 2005 is very high so far. 7.2 million shares, no dilution.

They have 2 customers: Barona Tribe (since 1991) and Buena Vista Tribe (since Feb 2005). They have a multi-faceted system called Mariposa. They had to give away some profit sharing rights to Barona to keep their business in 2004: 25% scaling up to 35% of profits (wow!) and exclusivity within 65 miles of the casino. But Barona has been a testing ground and the agreement with VCAT is essentially a fixed monthy fee ($597K) plus cost of living adjustments (not to exceed 5%). Barona has a $200 million loan that causes VCAT to get no payments when the loan is in default.

This could be a viable investment, but the profit sharing with Barona is brutal.

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