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Unformatted text preview: CAPSTONE CASE 2: SPATIAL TECHNOLOGY, INC. Suggested Case Discussions and Analyses A. Describe Spatial Technologys business model in terms of revenues, profits, and cash flows. Spatial is the originator of a 3D modeling file format (SAT) and object manipulation protocol intended to facilitate general 3D modeling and animation. Its revenues historically have been due to prepaid royalties, licensing fees, and maintenance and training for users of its 3D products and formats. Exhibit 6c displays the statement of cash flows for the past three years. Only recently have operating cash flows become positive. Spatial still faces cash flow challenges. B. What intellectual property, if any, does Spatial Technology possess? Spatials file format (SAT) and modeling approach are its primary intellectual property. Although parts of this IP are protected, Spatial, in an attempt to have its approach adopted as an industry standard has published its file format, making it readily available to adopters and competitors. C. Describe the experience and expertise characteristics of the management team. The management team has a founder that is well known in the field with previous successful experience. The operations and financing members of the team have been subject to turnover. The team seems to be stronger on technical expertise. D. Describe Spatial Technologys pricing and marketing strategy. Spatial has adopted a strategy of forward-funding itself by taking large amounts of prepaid royalties. Historically, its two primary revenue areas were royalties and licenses. More recently, much of its revenue has been from maintenance and training. Spatials marketing strategy has varied, including some historical efforts to sell to the retail market. Spatials marketing strategy is primarily to sell to software vendors who incorporate Spatials technology in their own shipped products. E. Discuss the competition faced by Spatial Technology in conjunction with 3D modeling technology in general and specifically with it ACIS product. Spatial competes with others firms trying to win the adoption race for formats and approaches in mathematical 3D modeling and animation. It also competes with some of its adopters where the line is gray between what Spatial provides and what some of its competitors provide (e.g. Autocad). 16 Capstone Case 2: Spatial Technology, Inc. F. Describe the four successful rounds of venture financing (A through D) achieved by Spatial Technology in terms of sources and amounts. What additional financing sources have been used? Round A for $1,000,000 was raised from Nazem &amp; Co. shortly after organization. Round B for $7,300,000 was from institutional investors and a potential customer (Hewlett Packard). Round C for $3,100,000 was again raised from the institutional investors. Round D for $2,742,557 was raised from 3 of the institutional investors and Hewlett Packard....
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- Spring '09