2006 1st Half    

In this issue:

New Developments
  • Chrysalis Named One of Most Active Investors in 2005
  • Koleman Karleski Promoted to Managing Director
  • David Parento Joins as Associate

Portfolio Company Developments
  • TechSkills, LLC
  • Construction Software Technologies, Inc.
  • Telemics, Inc.
  • Cybera, Inc.
  • HealthMedia, Inc.
  • FWI, Inc.

  • Meet Our CEOs: Ted Dacko and Chip Slack
  • Chrysalis Hosts Media Roundtable

New Developments

Chrysalis Named One of Most Active Investors in 2005

In June 2006, the Venture Capital Industry Report, published by Dow Jones and VentureSource, named Chrysalis one of the most active investors. Chrysalis was listed in the top 25 of the "Most Active Products & Services Investors" for 2005. Within this sector, Chrysalis financed four deals: Intechra and RAD Electronics which were both new investments, and AfterBOT and TechSkills which were both follow-on rounds.

  • Intechra, Carrollton, TX, a leading recycler and remarketer of computers and related information technology assets.

  • RAD Electronics, Inc., Simi Valley, CA, an outsource provider of electronics manufacturing services.

  • AfterBOT, Inc., Atlanta, GA, a provider of software and services to retailers which enable them to share real-time point-of-sale transaction information with suppliers and consumers.

  • TechSkills, LLC, Austin, TX, a national post-secondary education and training provider, specializing in blended-learning solutions (instructor-led combined with e-learning) for IT certification, Allied Health services, and business skills training.

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Koleman Karleski Promoted to Managing Director

In March 2006, Chrysalis Principal Koleman Karleski was promoted to Managing Director. In this role, Koleman will continue to focus on investments in healthcare services and technology and in business services. He also will continue to spearhead Chrysalis' marketing and fundraising efforts.

"This promotion reflects Koleman's evolution into a leader within both this firm and the markets we serve," said David Jones, Jr. "Koleman's intelligence, tenacity, and devotion to the entrepreneurs and companies he works with have shown him to be a great partner in company-building, as well as a fine investor."

Since joining the firm in 1997, Koleman has worked closely with various Chrysalis portfolio companies including Aperture Credentialing (sold to a subsidiary of UnitedHealth Group), Manorhouse Assisted Living (sold to LifeTrust Assisted Living), Primis (sold to LandAmerica Financial Group), and TechRepublic (sold to Gartner Group, Inc.). He currently serves on the boards of Chrysalis portfolio companies AfterBOT, FWI, HealthMedia, and MedServe.

Prior to Chrysalis, Koleman worked for Providian Corporation's Capital Management business unit where he focused on strategic planning and business development. A native of Pittsburgh, Koleman earned a BSE from Princeton University where he concentrated on operations research and financial engineering. He currently volunteers for Big Brothers Big Sisters of Kentuckiana and serves as President of the Princeton Alumni Association of Louisville.

Congratulations to Koleman on this well-deserved promotion!

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David Parento Joins as Associate

In August 2006, David W. Parento joined Chrysalis as an Associate. David joins us from Davis Polk & Wardwell in Menlo Park where he was an Associate working on M&A, recapitalization and restructuring, private equity, and capital market transactions. He holds a BA from Yale University, a JD from Vermont Law School, and a MSc in Management from the Stanford Graduate School of Business, where he was a Sloan Fellow.

At Chrysalis, David will provide analytical and transactional support to the investment team for Chrysalis' three primary investment sectors: healthcare services and technology, media and communications, and business services.

Please join us in welcoming David to the Chrysalis team.

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Portfolio Company Developments

TechSkills, LLC

In August 2006, Austin, Texas-based TechSkills, LLC, a national post-secondary education and training provider, acquired the Boston University Corporate Education Center (BUCEC) from Boston University. BUCEC, a well-recognized and highly respected provider of professional development and management training, will continue to offer its programs onsite at client locations, at BUCEC's current Massachusetts locations, and at many of the 30 campuses in 17 states currently operated by TechSkills, allowing TechSkills to broaden its reach in the professional education market. The company uses a unique blended learning approach, the "Facilitated Learning Method," which combines e-learning technology with the best elements of traditional classroom-based education.

In a series of related transactions, TechSkills completed debt and equity financings in excess of $10 million. Chrysalis, which led the company's $5.5 million Series B round in late 2003, participated in the recent mezzanine debt and Series D equity financings. Chrysalis Managing Director Bob Saunders serves on the TechSkills board of directors.

Please click here to view the complete press release.

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Construction Software Technologies, Inc.

In July 2006, Cincinnati-based Construction Software Technologies, Inc. (CST), the construction industry's leading provider of online bid solicitation and preconstruction management services, acquired Northstar Exchange Corporation to firmly establish CST as the undisputed industry leader in the U.S. Now established in nearly 50 markets, CST represents nearly 1,000 general contractor and 10,000 specialty contractor/supplier customers across the nation. CST's range of online tools and solutions will allow these customers to increase competitiveness through reduced costs and increased efficiency.

Chrysalis Managing Director Bob Saunders serves on the company's board of directors.

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Telemics, Inc.

In July 2006, Chrysalis exited its investment in Telemics, Inc., a provider of wireless based remote sensing technologies for lighting and other applications. Telemics was acquired by Tyco Electronics Corp., a segment of Tyco International, Ltd. (NYSE: TYC, BSX: TYC). Terms of the asset purchase were not disclosed. As a result of the acquisition, Telemics will continue to develop the remote light monitoring market on a worldwide basis and deploy its patented technology in other new monitoring and control applications. Telemics CEO, Eddie Johnson, has joined Tyco as Director for Intelligent Lighting of Tyco Electronics' Energy Division.

Chrysalis was an original investor in Telemics.

Please click here to view the complete press release.

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Cybera, Inc.

In June 2006, Nashville-based Cybera, Inc., a provider of private, broadband wide-area networking solutions, was named to the exclusive Entrepreneur Hot 100 list of the fastest growing private companies in America for the second year in a row. The company ranked #81 with annual revenue growth of 65%, EBITDA growth of 77%, and net income growth of 50%.

Chrysalis participated in Cybera's $12.8 million Series C round of financing in January 2006, and Principal Wright Steenrod serves on the company's board of directors.

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HealthMedia, Inc.

In July 2006, Ann Arbor-based HealthMedia, Inc., a leader in web-based tailored behavior change programs, helped launch the state of Arkansas's "AR Wellness" weight management and nutrition program for state and public school employees and dependents. The program is the culmination of Arkansas Governor Mike Huckabee's pledge to reduce chronic adult obesity statewide.

Early in June, the company announced that its products had been recognized as part of Kaiser Permanente's receipt of the prestigious Innovations in Healthcare Award from the Adapted Business Leaders (ABL) organization, a nationally-renowned roundtable of CEOs from healthcare or technology companies headquartered along the west coast corridor between San Diego and San Francisco. The award was given for Kaiser's eHealthy Lifestyles program which incorporates five of HealthMedia's products.

Chrysalis is HealthMedia's largest shareholder, and Managing Director Koleman Karleski serves on the company's board of directors.

Please click here to view the complete press release on AR Wellness.

Please click here to view the complete press release on the Innovations in Healthcare Award.

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FWI, Inc.

In April 2006, Scottsdale, Arizona-based Faxwatch, a wholly-owned subsidiary acquired by FWI, Inc. in 2005, changed its name to VerusMed which stands for "Truth in Medicine." The name change is intended to emphasize the company's core values of providing objective and relevant medical news and information.

VerusMed, founded in 1994, helps more than 150,000 physicians and healthcare professionals stay abreast of the latest medical advancements across key therapeutic areas and industry segments ranging from Neuroscience to Men's Health to Oncology and more than 40 other specialty service areas. The company has twice been named to the Inc. 500 list of America's fastest growing companies.

Chrysalis co-led the $5 million Series A round of financing in September 2005 for FWI, Inc., a holding company created to target healthcare-related niche publications and information services. Chrysalis Managing Director Koleman Karleski serves on FWI, Inc.'s board of directors.

Please click here to view the complete press release.

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Meet Our CEOs: Ted Dacko and Chip Slack

Chrysalis is privileged to work with a group of talented, seasoned, and exciting CEOs. We are pleased to present two more profiles as part of our new "Meet Our CEOs" column, highlighting the individuals as well as illustrating how their leadership has transformed their respective organizations:

Ted Dacko, HealthMedia, Inc.

Ted Dacko joined HealthMedia, Inc. in 2000 as EVP Sales and was quickly elevated to CEO to undertake a significant downsizing and turnaround when the technology bubble burst. Recognizing Ted's leadership abilities and the large market opportunity for the company's proven behavioral change programs, Chrysalis led a recapitalization of the company in March 2003 as the sole new investor and worked closely with Ted to recruit a seasoned CFO and several other key managers.

Under Ted's direction, HealthMedia has grown dramatically. The company has increased its revenue run rate by 245% since Chrysalis' initial investment which represents a compound annual growth rate of 46%. HealthMedia currently serves approximately 80 customers across the country including self-insured employers, healthcare plans, disease management partners, and pharmaceutical manufacturers.

Chip Slack, Intechra

Lynn "Chip" Slack is Chairman and CEO of Intechra Holding Corporation. Chip has over twenty years of business experience in asset recovery, banking, private equity, consulting, and management. Prior to launching Intechra Chip was a principal with Votum Capital in Jackson, MS. Before that he was Executive Vice-President of First American Corporation in Nashville.

Recognizing the opportunity to consolidate the fragmented electronics recovery industry, in 2004 Chip acquired a distressed company which was subsequently renamed Intechra and became a platform company for future acquisitions. In August 2005, Chrysalis co-led a $4 million financing to support the company's expansion and acquisition efforts. Later in 2006, Intechra acquired RetroBox, establishing Intechra as the largest full-service information technology asset disposition company in the United States, with three processing facilities, 10 sales offices across the country, and over $40 million in annual revenue.

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Chrysalis Hosts Media Roundtable

In June 2006, Chrysalis organized and hosted the "Idea Exchange on the Changing Media Landscape." Bringing together over 40 participants from traditional and digital media sources, as well as industry thought leaders, the group discussed innovation and change within the media industry, both locally and nationally. Panels highlighted the challenges and opportunities that traditional media executives face in moving assets into the digital space, as well as the insights and innovations of new media entrepreneurs.

Thank you to our participants and we look forward to seeing you again soon.

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Chrysalis Ventures
101 South Fifth Street
Suite 1650
Louisville, KY 40202-3122

Phone: (502) 583-7644
Fax: (502) 583-7648
Web site : www.chrysalisventures.com
E-Mail: info@chrysalisventures.com

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