Allen Kopicko Mohammad Pervaiz Trena Rich Learnrite Mini Case

2011 given A expected gross profit margin (or growth rate)= Industry Sales, children software, (MILLION) $

2012 30%

2013 30%

2014 30%

2015 30%

1,000.00 $ 1,300.00 $ 1,690.00 $ 2,197.00 $ 2,856.10

2011 given B sales (in millions) Year-to-year Annual Sales Growth rates for Learnrite 1.0

2012 9.6 860.00%

2013 30.1 213.54%

2014 67.8 125.25%

2015 121.4 79.06%

Compound Sales Growth rates for Learnrite

860.00%

1405.00%

2160.00%

2935.00%

2011 given C sales (in millions) Expected Market share for Learnrite 1.0 0.10%

2012 9.6 0.74%

2013 30.1 1.78%

2014 67.8 3.09%

2015 121.4 4.25%

2011 given given given given D sales (in millions) expected gross profit margin (or growth rate) Operating & Marketing Expense (in millions) Net Profit Margins (NPM) Expected Profit after Operating & Marketing Expense $ $ 1.0 30% 3.0

2012 9.6 30% 5.0

2013 30.1 30% 0.0 10% 9.03 $ 3.01 $

2014 67.8 30% 0.0 10% 20.34 $ 6.78 $

2015 121.4 30% 0.0 10% 36.42 12.14

0.30 $ (2.70) $

2.88 $ (2.12) $

2011 given Expected asset turnover ratio 2.0

2012 2.0

2013 2.0

2014 2.0

2015 2.0

Return on Assets

6.02 $

13.56 $

24.28

Industry/Market

Pricing/Profitability

Financial/Harvest

Management Team

Market size potential Venture growth rate Market Share (year 3) Entry Barriers Gross Margin After-tax margins Asset intensity Return on assets Cash flow breakeven Rate of return IPO potential Founder's control Experience/expertise Functional areas Flexibility/adaptability Entrepreneurial focus Overall total points OTP/16

3 3 1 1 2 2 2 2 2 2 1 2 3 2 3 3 34 2.13

LearnRite.com is pursuing a noble endeavor. Edutainment is something everyone should invest in. However, with such low barriers to entry, the saturated education software industry will likely impede the firm's ability to grow and increase its gross and after-tax margins. Although the quality of the management team is assuring, that alone will not guarantee the company's success. In order for LearnRite.com to emerge as a truly attractive investment, it needs to acquire patents or differentiate its products enough to grab a significant market share by the third year.