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Tactex Controls Inc. (TTX) |
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CEOCFO CEOCFO Monthly Analyst |
"To print this page go to file and left click on print" Tactex Controls pressure sensing
technology is bringing hope to healthcare providers who need to monitor the movement of
patients while in bed Bio of CEO, CEOCFOinterviews: Mr.
Inkster, how did Tactex Controls get its start and where are you today? Mr. Inkster: “We originally incorporated in February of 1998. The original vision for starting the company was a new technology, which we had previously developed for the Canadian Space Agency under one of the research programs. We ended up during that earlier program developing something that we call Kinotex™, a patented, fiber-optic, pressure-sensing technology. Originally, the application was for robotics in space; we were trying to develop material which could give robots in space a sense of touch, something that could give the robot a skin, which would act much like human skin and would enable the robot to tell if it was bumping into something or if it was grasping an object. After we developed this for the Space Agency, we realized there were far more applications on earth. We acquired the commercial rights to this technology and Tactex was founded to exploit those commercial rights.” CEOCFOinterviews: Is it normal for a private company to end up with the technology after developing it? Mr. Inkster: “Yes, it is a matter-of-course here in programs like this to have the private company that develops the technology end up with commercial rights to it. In reality, it was a jointly funded program so the Space Agency paid for about half the development cost and we paid for the rest. They got what they wanted, which was the solution for the space application and they were happy to give us the exclusive rights to the technology and pressure sensing applications with the understanding that these commercial spin-offs will generate jobs and taxes and so on.” CEOCFOinterviews: Are their similar technologies in the market? Mr. Inkster: “There
are a number of pressure sensing technologies in the market; most people will be quite
familiar with them, For example, if they have a lap-top computer, they might have a
small touch-pad on the lap-top, which is used as a pointing device. Those are usually
capacitive sensing devices and they sense where the finger is and can do what a
‘mouse’ does. Other competing technologies are called “resistance film
technologies” and they change the resistance of a thin sheet of material depending
upon where it is pressed and how hard it is pressed. Our technology competes in that
market space. CEOCFOinterviews: How will your products be used in the Healthcare area? Mr. Inkster: “Our technology allow us to make a wide range of different products; we think that we have applications in dozens of industries and thousands of applications. We are very carefully focusing on a small sub-set of those applications as we grow. The initial products that we built were in the music and graphic art area. The next area of development was in Medical Devices. The reason we chose the Medical Device area is because we had been asked by a couple companies whether we could build a large sensor, which could be installed in a mattress. This sensor could tell what the patient was doing in the bed; we started doing market research on that, and discovered there were many things that are required in nursing home and hospital settings, which other technologies had not been able to do. There was a big market for it and we could solve the technical challenge.” CEOCFOinterviews: What are the applications in the mattress area? Mr. Inkster: “There are a number of applications in that mattress area. First, is fall prevention in the elderly and in this case we built a sensor that sits underneath the mattress and can tell if a patient is in bed or not. Moreover, if a patient gets out of bed and therefore is at risk of falling and injuring themselves, the software connected to our sensor can even see the patient move their legs over to the side and sit up and get ready to get out of bed. We can sound an alarm that alerts the caregiver that the patient needs assistance. A second application has to do with bedsores and, in this case, the intent is to monitor the patients movements to make sure they are moving and therefore they aren’t going to get bedsores. If they are not, perhaps they have been repositioned. These are separate applications but a similar requirement is to make a mattress ‘smart’ enough to know what the patient is doing on top of it.” CEOCFOinterviews: Will you be manufacturing and bringing your products to market through partnering? Mr. Inkster: “It depends on the application. Our intent right now is for some applications to sell the sensors themselves as we manufacture to another company to integrate it into their end product, which is the route we will most likely take with the pressure-reduction mattress. They understand that market and have well-established distribution channels, therefore that is an effective way to get our technology to market. In the fall-prevention market, we will manufacture our own product and take it to market ourselves through distribution channels that we will set up ourselves. It depends on what is the most effective route to market. The technology is not a challenge; we can build a part of the product or the entire product. What determines the commercialization strategies are really the channel and the partners and how they want to work.” CEOCFOinterviews: Where are you with regard to bringing products to the marketplace? Mr. Inkster: “In the case of the touch-controller market, we have been shipping products since early 2000. This end product we sell at our website – it is purchased by musicians and graphic artists. In the last year (2002), we have been shipping, in commercial volumes, controllers to other companies who are integrating them with their products. In the area of the hospital beds and ‘smart’ mattresses we are in alpha testing, which means we have designed, built and tested sensors and they are currently in trial at a nursing home right now to see how well they work. Our intent with those products is to have them in the market at the end of this year.” CEOCFOinterviews: Please tell us about your agreement with Nitta Corporation of Japan. Mr. Inkster: “We have been looking for awhile now for a way to effectively work with Asia, and we have decided to work with Nitta Corporation, based in Osaka. Nitta is a large publicly traded Japanese company whose well known in this market for their expertise in pressure-sensing technology. They manufacture a few other pressure-sensing technologies and they were interested in acquiring our technology because it can do things the others couldn’t. They are most interested in our Healthcare, Medical Devices area, and in an advanced robotics application, both of which they are selling into at present. The deal with them involves a long-term strategic partnership. The products we develop in North America, they will be able to sell in Asia and vice-versa. As their labs develop products based on our technology we will have the rights to them in North America. The deal with them is a technology licensing deal with a strategic partnership arrangement on the side.” CEOCFOinterviews: Can you tell us a little about the cash and credit position of Tactex? Mr. Inkster: “We have been around since 1998, and we are a publicly traded company. We raised money as we went public in the middle of 2000, and we used that money to develop manufacturing capability and initial sales. We haven’t announced our year-end results yet for the year 2002, but at present, we have adequate cash and cash flow from sales to sustain us as we go forward. We are at that stage where we are past the early high-risk start-up times and we have shown that we can survive in the hard years of 2001 and 2002. We are starting to grow quickly now.” CEOCFOinterviews: Do you need to get attention for your company industry-by-industry? Mr. Inkster: “If we were selling end-products ourselves and that were our business model, then yes, we would have to develop a reputation, experience and knowledge of individual industries. It’s easier I think if you choose an OEM (Original Equipment Manufacturers) model as we have. If you primarily focus on components to other manufacturers working in that area, then there is a much smaller group of potential customers and with a bit of market research you can easily learn who they all are and what they require. The marketing job is much easier; we have chosen that obviously because we think that after we show success in the Medical Devices area there will be another market and we will use the same approach to that new market.” CEOCFOinterviews: Do you have continuing R&D efforts on the technology itself or is it all now just on applications? Mr. Inkster: “No, there is ongoing technology development in general. Most of it is supported by groups like the Space Agency and the National Research Council. This technology is felt to be an enabling technology and it is worth investing in continued refinement and the developing new methods of manufacturing of production for the underlying material. There is that basic research going on and then a parallel stream of application developments. It is specific markets that we have chosen to focus on.” CEOCFOinterviews: In October you received the Vancouver Island Advanced Technology Center Award for Innovative Excellence; will you tell us about that and what it means for the company? Mr. Inkster: “In our community, and I suppose it is similar to many communities in the United States and Canada; small companies like ours are really never heard of by the public. Our markets are primarily export and international, therefore we tend to be fairly quiet in our local community. The award for Innovative Excellence was a nice bit of local recognition where our peers and other companies in the area decided that the technology that we were developing was particularly important and will be more so in the future. It was great to get that kind of credit locally and of course, it doesn’t mean anything in terms of sales but it does provide some credibility and validation of the technology.” CEOCFOinterviews: Has the downturn in technology in general had an effect on your company? Mr. Inkster: “It certainly has and I would think that there would be very few companies that would claim otherwise. It has had two effects on us; first, many of our customers have scaled back their plans for new product introduction, especially in the music and graphic arts area. The downturn just meant that their sales had been lower than what they expected and therefore they are less bullish on introducing new products that we could help to enable. Secondly, it makes a financing market much more difficulty. Thankfully, we are one of the lucky few that are not urgently in need of financing right now. We are growing on the cash that we are generating internally. If we had absolutely to do a financing, then it would be very difficult just like it is for every other company. Right now we are capital limited, which means we are growing nicely but if we had access to more capital, we would be much more aggressive in the markets that we tackle and would be able to grow more quickly; that’s just the reality of today’s market situation. Fortunately, it is not affecting us much directly.” CEOCFOinterviews: Have you gotten all the ‘bugs’ out of your product? Mr. Inkster: “We have built dozens of different devices when we first started working with this technology. We built toys and tools, and exotic interfaces of one kind or another, surfaces that people wear and walk on, and all sorts of strange things; we never had difficulty making the technology work with any of these applications. Choosing an application that makes commercial sense is where the challenge is. We have built surfaces which work perfectly but don’t meet a market demand or the customer that we were building them for may have decided that they have different performance requirements. It is our experience that the difficulty is on the marketing and product development side, and not on the underlying technology. The bugs are out of it and it is working pretty well; we are manufacturing these things in volumes. Most of that risk is behind us now.” CEOCFOinterviews: Going forward are you looking for applications and perhaps people to partner with or are people coming to you? Mr. Inkster: “People are coming to us more and more. This deal with Nitta has certainly increased the interest of Tactex in our community of customers. I think what that deal has done is validate our technology with a large international customer; that suddenly makes some of the other groups that we are talking to realize that they had better move quickly. We are focused on the product that we have in the pipeline right now, the ones that we are manufacturing and variants of those in music and graphic arts and our big development effort last year on the ‘smart’ mattress or bed sensor technology. If people come to us with new development concepts and new application, then we will partner with them and license technology to them.” CEOCFOinterviews: Is it difficult to get the right people to understand the technology and market it? Mr. Inkster: “I haven’t found that to be a difficulty. I think people feel the projects that we are working on are exciting; some of them are space related, robotics and music. Scientists, engineers and technical people love to work on projects like that. We have had access to some really great staff and have been able to put their great ideas to work on the projects that we are tackling. I don’t think there has been any problem in that area at all.” CEOCFOinterviews: In closing, what would you say to shareholders and potential investors? Mr. Inkster: “Everybody was told when they considered an investment that this was a three to five-year investment target and was one those companies that you would go into in the early days with a promise and that is in fact what happened. We have met the sales projections set in the early days of the company, and are gradually growing. That was up until last year and now we are starting to grow rapidly. What people won’t realize by watching the stock price or the general performance is what has happened in the last six months. We have started to make rapid progress in this Medical Devices area. To the shareholders that are out there for a long time, I would say we are still on-track for the three to five year goal for turning Tactex into a very impressive company. For people considering investing in the company now, I would say that it is still early enough for the bulk of the ride to be ahead of us.” disclaimers |
