ek-12 business plan

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Office Location: 36 Main Street W. Waconia, MN 55378 612-965-0688 Members: Ryan Jaeger Amanda Klein Peter Meyers Robert Schmaltz Andy Sorensen

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Bethel University Masters Program final project.

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Page 1: eK-12 Business Plan

Office Location:

36 Main Street W.

Waconia, MN 55378

612-965-0688

Members:

Ryan Jaeger

Amanda Klein

Peter Meyers

Robert Schmaltz

Andy Sorensen

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Contents

Executive Summary .......................................................................................................... 5

The Opportunity ............................................................................................................. 5

Company Description ..................................................................................................... 5

Mission Statement and Vision ........................................................................................ 5

Product - Momentum ...................................................................................................... 6

Target Market ................................................................................................................. 6

Marketing Strategy ......................................................................................................... 7

Competition .................................................................................................................... 7

Competitive Advantages and Distinctions ....................................................................... 7

Management ................................................................................................................... 8

Funds Sought and Exit Strategy ..................................................................................... 8

Financials ...................................................................................................................... 9

The Business Opportunity ................................................................................................10

Company Description .......................................................................................................11

The Company ................................................................................................................11

Company Location .........................................................................................................11

Mission Statement .........................................................................................................12

Vision ............................................................................................................................12

Core Values ...................................................................................................................12

Form of Business...........................................................................................................13

The Market .......................................................................................................................13

Demographics/Geographic ............................................................................................13

Lifestyle and Psychographics .........................................................................................14

Purchasing Patterns ......................................................................................................14

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Market Size and Trends .................................................................................................15

The Product ......................................................................................................................15

Momentum ....................................................................................................................15

Momentum Walkthrough ...............................................................................................17

Strategic Position & Risk Assessment ...............................................................................23

Industry Trends .............................................................................................................23

Competitive Environment ..............................................................................................24

Company Strengths .......................................................................................................24

Definition of Strategic Position .......................................................................................24

SWOT ............................................................................................................................25

Momentum Support – Services & Hardware ......................................................................26

Financial Plan ..................................................................................................................27

Salaries .........................................................................................................................27

Revenue Growth ............................................................................................................27

Loans/Capital Required .................................................................................................29

SBA Advantage...........................................................................................................29

Investor Loan .............................................................................................................29

Milestones ........................................................................................................................30

Year One: ......................................................................................................................30

Year Two: ......................................................................................................................30

Year Three: ....................................................................................................................30

Year Four: .....................................................................................................................30

Year Five: ......................................................................................................................30

Management and Organization .........................................................................................31

Organization - Members ................................................................................................31

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Leadership ....................................................................................................................31

Advisory Board ..............................................................................................................33

Marketing Plan .................................................................................................................33

Company Message .........................................................................................................33

The eK-12 Brand ...........................................................................................................34

The eK-12 Approach ......................................................................................................34

Thought Leadership .......................................................................................................34

Expansion of offerings ...................................................................................................34

Technology & data supported curriculums .....................................................................35

Marketing Tactics ..........................................................................................................35

Offline Marketing Tactics ...............................................................................................36

Online Marketing Tactics ...............................................................................................36

Strategic Partnerships ...................................................................................................37

Sales Strategy ..................................................................................................................38

Sales Force ....................................................................................................................38

Sales Cycle ....................................................................................................................38

Operations Plan ................................................................................................................39

Technology Plan ...............................................................................................................45

Infrastructure ................................................................................................................45

Employee Issued............................................................................................................46

Intellectual Property and Contracts................................................................................46

Risk Assessment ..............................................................................................................47

An Overview of the Competition ........................................................................................48

Competition – Companies ..............................................................................................48

Competitive Position ......................................................................................................50

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Future Competition .......................................................................................................50

Exit plans ......................................................................................................................50

Long-Term Development ................................................................................................51

Appendix 1 .......................................................................................................................52

List of Main Education & Training Services ....................................................................52

Appendix 2 .......................................................................................................................53

Appendix 3 (Marketing Membership Budget) .....................................................................54

Appendix 4 (Marketing Plan) .............................................................................................55

Appendix 5 (Addtl Marketing Expenses) ............................................................................56

Appendix 6 (Technical Equipment)....................................................................................57

Appendix 7 (Financials) ....................................................................................................68

Summary of Cash Flows ................................................................................................68

Summary of Profit and Loss: ..........................................................................................69

Balance Sheet 2013: Year End .......................................................................................70

Balance Sheet 2014: Year End .......................................................................................71

Balance Sheet 2015: Year End .......................................................................................72

Balance Sheet 2016: Year End .......................................................................................73

Balance Sheet 2017: Year End .......................................................................................74

5 Year Financial Summary (Chart) .................................................................................75

Appendix 8 (Momentum Screenshots) ...............................................................................76

References ........................................................................................................................86

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Executive Summary

The Opportunity

From 1970 to 2011, there has been a 375%

increase in educational spend with no measurable

improvement in educational results (Coulson, 2012).

Further, standardized testing indicates that the

majority of American students do not meet required

levels for proficiency in math, reading, and science

ranking them 30th place in the world (Childress, 2012).

The opportunity to improve how students learn

through enhanced technology, assessment and metrically driven continuous improvement

offers a lucrative investment opportunity when considering market size. According to

Institute of Education Sciences, the National Center for Education Statistics state that

there were 98,817 operating public elementary/secondary schools during the 2009–10

school year (NCES, 2012).The company that owns the data on best content delivery

methodology would be uniquely positioned within the $863 billion education market.

Company Description

Founded in 2012, eK-12 is a Minnesota-based, limited liability

company (LLC). eK-12 provides evidence-based educational

improvement through a technologically enabled delivery, assessment

and data resource system for public, private and charter schools via its Momentum product

offering.

Mission Statement and Vision

eK-12’s purpose is to revolutionize the educational system and transform student

outcomes through individualized learning plans and evidence-based curriculum

assessment. eK-12’s vision is to be the knowledge center for educational success through

technology delivery, assessment and data management. Due to existing relationships and

identified need, eK-12 will pilot its Momentum product to 2,250 students in the Wayzata

Middle School System. eK-12 looks to expand to a total of twelve schools by 2017 focusing

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on the affluent school districts of Edina, Eden Prairie, Minnetonka, Plymouth and

Woodbury.

Product - Momentum

Momentum is eK-12’s proprietary delivery, assessment and data

software system. The system is designed to enable school-provided

curriculum and deliver it to students in an electronic medium, assess their

skills, and record data for reporting. Momentum will leverage tablets,

smartphones, and computers to engage students in an individual and

interactive learning session, while exposing children to the widely used ways

of doing business in today’s technologically evolving society. This will allow

for ongoing and custom improvement in the classroom, based upon student needs. This

data will be compiled and analyzed into information that establishes metrically proven

educational solutions that help maximize school’s abilities and district budgets. Momentum

is not constrained to a single platform allowing schools to utilize existing hardware.

Target Market

eK-12’s target market consists of teachers, media specialists and administration in

kindergarten through 12th grade education in Twin Cities’ school districts such as Wayzata,

Edina, Eden Prairie, Minnetonka, Plymouth, and Woodbury. These schools were selected

because they reside within affluent communities and have enrollment in excess of 5,000

students with a history of funding technology investments.

Momentum is eK-12’s proprietary delivery, assessment and data software system. The

system is designed to enable school-provided curriculum and deliver it to students in an

electronic medium, assess their skills, and record data for reporting.

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Marketing Strategy

As a technology-based company, the eK-12 brand will be simple, colorful, and reflect

excellence and aspirations of educational institutions. This technology made simple

approach will be easy to understand by the use of visual diagrams, touch screens, and

large engaging images that appeal to the end-user. eK-12’s marketing will target the largest

selling points of teachers, administrators, and students utilizing insights that were gained

through interview research. Specific online and offline

marketing activities will include but are not limited to:

trade shows, print advertisements, industry

networking, website advertising, and social media.

Competition

The competition within the educational market consists of software developers and

specific curriculum-based textbook providers such as Scholastic, Pearson Digital Learning,

and Renaissance Learning. While the established competitors currently occupy

relationships with the target market, they have not successfully integrated to deliver their

content with today or tomorrow’s technology.

Competitive Advantages and Distinctions

eK-12 is focused on supporting content for a curriculum that evolves just as fast as

their learners through its delivery, assessment and data management approach. By using

classroom data, eK-12 will be able to identify effective components within current

curriculums and build software programs that allows for learners to achieve their very best.

Additionally, teachers and students will benefit from the electronic and individualized

learning plans for a broad range of class skill levels. Updates to curriculum content can

easily and cost effectively be implemented through daily downloadable updates.

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Management

The five founding members of the LLC will manage and lead the organization. The

management team brings a diverse background and will perform multiple responsibilities

within the organization. Additionally, eK-12 will utilize an Advisory Board to gain additional

educational expertise. eK-12 will use outside contractual resources for software

development, accounting, legal and other needs as required for growth.

Funds Sought and Exit Strategy

eK-12 is seeking $250,000 in private

investor funding. The funds will be used

during business startup, primarily assisting

in people, equipment and marketing

activities. These investments will carry a 15% annual interest

rate, and will be repaid by the end of the third year of

operation. Additionally, eK-12’s founding members will

contribute $250,000 as an initial investment and secure a

$250,000 small business advantage loan.

eK-12 will operate in growth mode from the date of

incorporation, and will continue in that mindset until either

a strategic partnership or competitive buyout opportunity

comes available.

eK-12 is seeking

$250,000 in private

investor funding.

These investments will

carry a 15% annual

interest rate, and are

planned to be repaid by

the end of the third year

of operation.

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Financials

Category 2013 2014 2015 2016 2017

Sales $111,600 $1,114,875 $3,274,331 $5,251,406 $6,716,250

Gross

Profit $78,000 $440,625 $1,379,606 $2,449,481 $3,121,875

Expenses $580,996 $619,295 $1,015,913 $1,055,336 $1,279,097

Net Profit ($502,996) ($178,670) $272,770 $1,045,609 $1,382,084

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The Business Opportunity

eK-12 is seeking to unify several markets in education by

developing a unique integrative software platform that merges delivery,

assessment, and reporting. There is good reason to believe that this

could result in a large, scalable business with extremely large growth

potential. This is due to the unmet need and high demand to provide

teachers with integrative platforms that allow them to enhance education

with the targeted use of technology. eK-12 recognizes the need to apply

innovative solutions to educational issues by creating a digital delivery

system for curriculums that includes assessment and detailed reporting tools allowing for

the development of evidence based education.

In March 2012, Harvard Business Review (HBR) cited that in nationwide National

Education Advanced Placement (NEAP) tests taken in 2009 that 74% scored below

“proficient” in math, 62% in reading, and 79% in science (Childress, 2012). Worse yet, the

U.S. has fallen to near 30th place in both reading and math behind most other first world

nations and even behind some second world nations. To remain competitive, HBR

advocates new technological approaches to education (Childress, 2012). eK-12 seeks to

answer that call by creating a new method of learning through technology that both allows

children to learn optimized and individualized material faster and more completely.

Further, eK-12 understands that additional increases in school

budgets are unlikely, and therefore will create a system that

consolidates systems down to a more cost effective and streamlined

single platform.

Since 1980, the President’s education budget went from approximately $7 billion with

a handful of programs to $77 billion in 2011 with dozens of educational programs

(Education Department Budget, 2011). In 1997, the total spending across local, state, and

federal education was approximately $442 billion. By 2009, it had almost doubled to $863

billion (US Government Spending, 2012). Even accounting for inflation, it still represents

an almost 32% increase in spending. This trend isn’t ending anytime soon. According to

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the Bureau of Labor Statistics, the Education sector is expected to be the third largest

source of growth in the next 10 years (Occupational Outlook Handbook, 2012). Despite the

increase in jobs and spending, it has not resulted in improved educational results.

In July 2012, the White House issued another two waivers to states from “No Child

Left Behind.” These waivers make over half the states exempt from the Congressional

attempt at education reform (Johnson, 2012). It is estimated that the White House will

exempt another 10 states from meeting the goal of 100% proficiency in reading and math

by 2014 (Ohlheiser, 2012). Despite the exemptions, the President and the Congress intend

to rewrite the law to help fix its shortcomings but not eliminate it. While standardized

testing is sometimes criticized, it remains one of the key metrics used to analyze the

success of a school. The Cleveland mayor, the governor of Ohio, and the teacher’s union

recently agreed to overhaul how teachers are hired, fired, and are paid based on

performance. This performance will be partly measured on test scores (Banchero, 2012).

eK-12 has recognized that there is strong market demand for technology to remain

competitive with our overseas counterparts. Like HBR, we believe that a new industry

based on technology and education is ripe for development

Company Description

The Company

eK-12, LLC is a Minnesota-based company providing evidence-based educational

improvement through a technologically enabled educational delivery and assessment

system for public, private and charter schools via its Momentum product offering.

Company Location

eK-12 corporate headquarters is located at 36 Main Street W, Waconia MN 55378.

This location was selected due its close proximity the Minneapolis and low cost structure.

The physical location serves as office space for eK-12’s management team, software

development, and the server farm necessary for data storage.

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Mission Statement

eK-12’s mission is to revolutionize the

educational system by enhancing the

capabilities of educators to teach the next

generation through the strategic use of

enhanced technological delivery and proper data

assessment. eK-12 will simplify the technology barrier for educators, and provide them with

a system that transforms educational outcomes for children in K-12 private, public, and

charter schools. eK-12 will provide this change through individualized learning plans for

students delivered via the Momentum product.

Vision

eK-12’s vision is to be the knowledge center for educational success through

technology delivery and data assessment. By focusing on evidence-based education, eK-12

will help provide a means to apply educational solutions to curriculums. Knowledge and

data will be shared through the use of technology devices, which will allow for ongoing and

custom improvement in the classroom, based on the need of the end user, the students.

This data will be compiled and analyzed into information that establishes metrically proven

educational solutions that help maximize school’s abilities and district budgets.

Core Values

eK-12’s core values are important because they provide a foundation for success and

are in alignment with our educator target market to partner together to effectively to better

the educational experience for students. eK-12’s expects its partners, suppliers and

customers to adhere to its core values in support of its overall mission. These values

include:

Making a difference, one child at a time

Maximizing the educational achievements of all students through measurement

Enhancing the power of educators and their impact upon students

Showing integrity in all of its actions

Bringing hope and the spirit of transformation to the future of education

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Form of Business

eK-12 will be formed as a Limited Liability Company (LLC) as it provides the most

flexible partnership formation and tax treatment process. The LLC will be organized

through Articles of Organization filed with the State of Minnesota and governed through the

Operating Agreement. The five founding members will fund the initial partnership and

liability is limited to each individual’s capital contributions. The tax law is under

governance of the Internal Revenue Service.

The Market

Demographics/Geographic

The demographic and geographic statistics describe the details of the target market

and help identify the means to maximize the communication of the business. eK-12’s target

market for Momentum is the key decision-makers in the

educational process: teachers, librarians, media/IT

specialists, administration and school board members.

Through research, eK-12 has identified decision makers will

be between the ages of 30-55. Payscale.com indicates the

average teacher medium salary to be $40,182 - $44,337 (Pay

Scale, 2012). According to the National Center for Education

Statistics (NCES) there were 3.7 million full-time equivalent

elementary and secondary teachers in September 2011. This

number has risen 7 percent as of April 2012 (NCES, 2012). Among full-time and part-time

public school teachers in 2007-2008, 76% of public school teachers were female, 44

percent under the age of 40, and 52 percent had a master’s degree or higher. Compared to

public schools, a lower percentage of private school teachers were female (74 percent), were

under age 40 (39 percent), and had a master’s or higher degree (38 percent) (NCES, 2012).

Therefore, from these statistics, eK-12 can create target messages that resonate with

individuals based on specific demographics.

Characteristics:

Ages 23-55

Family oriented

Technically adept

Conservative

Socially responsible

Fun seeking

Value education

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The target market will be tested with eK-12’s pilot program in the Wayzata,

Minnesota middle school system within fifteen classrooms, specifically five each in grades

6th, 7th, and 8th.

Lifestyle and Psychographics

Lifestyle and psychographics of eK-12’s target market help shed light on the interest

and buying patterns of individuals within the educational system. Based on interviews and

other research performed for the business plan, eK-12 can confidently describe its target

market with the following primary lifestyle characteristics: family oriented, technically

adept, conservative, socially responsible, smart shopper, fun-seeking, good housekeeper,

kids at heart, and most importantly understanding of the value of education (Personal

communication, August, 2012).

Purchasing Patterns

Due to multiple levels of approval, the decision making process to propose and agree to

implement Momentum as part of a class or school district will likely be an intense

engagement. According to eK-12’s school district interviews, new classroom products are

considered at any point in the school year, especially if it fits a need. Classroom programs

are typically initiated for school consideration by the teacher and other aids, such as media

specialists. These decisions are then brought to administration and school boards, based

upon requirements. The following is a list of influential considerations for educational

software (Personal communication, August, 2012):

Benefits students

Improve test scores

Ease of functionality, not overly complex

Better than existing offering

Serves a need

Brings efficiency, allowing for time to be spent elsewhere

Program committed to ongoing improvements and updates

Good quality and familiar brand name with good customer services and warranty

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Market Size and Trends

eK-12 believes its business concept offers a lucrative investment opportunity when

considering market size. According to Institute of Education Sciences, the National Center

for Education Statistics state that there were 98,817 operating public

elementary/secondary schools during the 2009–10 school year (NCES, 2012). School

enrollment is currently flat, but there is a higher emphasis on education to improve our

economic financial position (NCES, 2012).

Technology-based learning is a key part of the innovation in education that will

define the future. Today’s students are working with technology in and outside of school.

This is a fundamental component of what they will experience throughout their entire

working life. The trend that efficient technology brings to the classroom impacts this

evolution. The baby boomer generation teachers are leaving the education system which

open positions for generation Y and X teachers to implement new teaching methods for

learning. Lecture driven teaching does not engage with the student on an individual level

and therefore teachers are searching for better ways to interact and hold the attention of

individual learners. Additionally, with school district budget cuts, departments are looking

for ways to consolidate resources to solve many of their needs and provide cost savings to

the budget.

The Product

Momentum

Momentum is eK-12’s proprietary delivery, assessment, and data

software system. Utilizing what eK-12 calls the “D.A.D method,” (Delivery,

Assessment, and Data) it is designed to take school provided curriculum

and deliver it to students in an electronic medium, assess their skills, and

record data for reporting.

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Momentum presently leverages tablets, smartphones,

and computers to engage students in an interactive learning

session, while exposing children to the widely used and

accepted ways of doing business in today’s technologically evolving society. Momentum is

not constrained to a single platform allowing schools to utilize existing hardware.

Momentum is designed around serving four primary stakeholders: students, parents,

educators, and content providers.

Students

• Individualized Lesson Plans w/ varied approaches

• No limits education (self-paced)

• Social learning

Parents

• Single login for all grades, assignments, due dates

• Uniform look and feel from class to class (K-12)

• 24/7 Real time progress reporting

Educators

• Reporting tools for curriculum comparison

• Constantly updated content

• New assessing methodology

Content

Providers

• Steady cash flow

• Reduction of production costs

• Purchasable data offerings that measure curriculum effectiveness

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Momentum Walkthrough

Figure 1: Diagram of Momentum workflow

Momentum starts by establishing independent electronic calendars that are available

to students from the website, their phone, or the tablet. Calendar entries contain

information about upcoming assignments, special events, and various instructor driven

notifications (see figure 2). It includes their task list and current progress. This delivery

method is already in use on most college campuses and children as early as the fourth

grade are already learning “calendaring” skills in Minnesota schools. eK-12 believes there

is a need to teach children these skills earlier in life and do it in a way that’s fun and

understandable.

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Figure 2: Example of Apple iPad Calendar with Momentum scheduling integration

Upon login, the Momentum application will contain all of that students various

subjects and their respective lesson plans. The instructor will guide the students through a

lesson plan that will contain elements of both interactive learning and class participation

(see figure 3).

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Figure 3: Screen shot of Momentum App: Electronic Textbook

Then, the student will utilize the Momentum application to start an individualized

portion of the process that will reinforce the learning while simultaneously providing

feedback to the system and instructor. When the predetermined achievements of the

lesson plan have been met, the system will announce to the learner that an achievement

has been “unlocked” and that they have been awarded a certain number of points (see

figure 4).

Figure 4: Example of achievement unlock notification

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The achievement methodology is being borrowed from

Microsoft’s Xbox Live system which was introduced in 2005.

Achievements have been an overwhelming success and most

major entertainment companies have adopted it – including Sony,

Nintendo (coming 2013), Battle.Net, and Valve/Steam. Gaming as a whole has shown to

increase student success. On the average, academic games in the classroom have been

shown in studies conducted by the Marzano Research Laboratory to have a 20 percentile

gain in student performance (Marzano, 2010).

Each lesson will have a set number of maximum

points that can be earned with varying values being given to

the achievements of each lesson plan. This gives the

individual student/ lesson plan a real time metric to track

and measure progress. Achievements can potentially be

unlocked in a non-linear order allowing students to explore

and progress in a subject at their own pace. The

achievements will be setup in such a way that they can be

done at varying intervals of mastery. Grades can be tied to

having unlocked certain achievements, but students will not

be constrained to only meeting the minimum requirements.

Students who desire to achieve higher levels of success can

advance at their own pace through the lesson plan at school

or at home.

As learners unlock achievements it is displayed on their school profile alongside their

individualized school avatar. This provides a social element to their work in school and

children can identify and compare achievements with their classmates and friends (see

figure 5).

On the average,

academic games in

the classroom have

been shown in

studies conducted by

the Marzano

Research Laboratory

to have a 20

percentile gain in

student performance

(Marzano, 2010).

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Figure 5: Screenshot of the home screen of the Momentum iPad app (with Social) – see Appendix 8 for additional screenshots

Momentum will allow educators to track many different types of metrics on students.

They can see how fast some achievements are unlocked, which are the most frequently

accomplished, and identify the most advanced or struggling students. Additionally, the

Momentum system will use individualized plans to dynamically modulate the difficulty of

the plan in real-time as well as change the delivery type (ex: audio vs. visual) so that

students are able to benefit from multiple types of delivery as well as move at a pace that

maximizes their ability. This is important because students learn at different paces, with

different mediums. Data collected from Momentum will be used to build better

curriculums, suggest mediums that help students learn best, and give children a chance to

exercise their knowledge until proficiency is proven (see figure 6).

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Figure 6: Example report from Momentum showing unit completion time, accuracy, and points

achieved

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Strategic Position & Risk Assessment

eK-12’s objective is to be the premier technical software delivery and assessment

provider for education in grades kindergarten through twelfth grade in the Twin Cities. To

achieve this goal, objectives have been established to build the program using real-time

statistics to nurture and enhance Momentum. The strategic position emphasizes:

Software that implements efficiencies into the day and life of a teacher, student,

parent, and administrator

An experience that encourages learning

Custom individualized learning plans

IT savvy resources with skills needed to customize programs to the goals of each

school and individual classrooms

In-person or online training of software system

Industry Trends

The education industry trends show investment

dollars continuing to support the workforce of the

future. Despite the often talked about budget cuts, it

is proven that investing in education and the skills of

elementary, primary, and secondary education will

directly impact the U.S. job market and economy.

“An estimate of $1.15 trillion has been spent nationwide on education at all levels for

school year 2011-2012, a substantial majority comes from state, local, and private sources”

(U.S. Department of Education, 2012). Given the recent economic downturn, education will

remain a high priority for developing the next generation workforce.

Technology devices are creating the classroom of the 21st Century. Many schools

have implemented tablet pilot programs and are discovering many advantages, including a

faster rate in which students learn, the ability to use the Internet as a resource, and

eliminating the inconvenience and experience of curriculum textbooks. (Personal

communication, August, 2012)

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Competitive Environment

There is no other company designed exactly like eK-12 that focuses on both

technology delivery via a custom software interface and offering assessment of student

learning. Yet, other competitors have relationships within the target market. It will be the

task of eK-12 to gain the trust and confidence in the educators and curriculum provides to

displace the competition. The sales approach, much like the learning approach, will be

hands-on with integration of the software to allow for the ability to drive to the individual

need of the prospect. A tradeshow is an example of this process as eK-12 would use the

face-to-face opportunity for teachers to interact with a tablet and Momentum, while a

system expert or experienced user walks them through features and benefits of the system.

Company Strengths

With its unique technological delivery and assessment system, eK-12 will set the

course to evolve just as fast as their learners. By using classroom data, collected through

the Momentum product, eK-12 will be able to identify effective and ineffective components

within current curriculums and build software programs that are best in breed that allows

for learners to achieve their very best. Additionally, teachers and students will benefit from

the electronic lesson plans and individualized learning plans for a broad range of class skill

levels. Because of the software learning platform, updates and modifications to content can

easily be implemented by sending revisions through a program update, a much more cost

effective solution than investing in text books year after year. Lastly, eK-12 believes the

technology capabilities of the company will be a valuable resource for education and

curriculum programs.

Definition of Strategic Position

The difference between eK-12 and its competitors is that they were founded as

companies publishing textbooks, other publishing materials and assessments, and just

recently started offering technology solutions. eK-12 is based first and foremost on

technology, and thus, will launch the company with the foundation of technology, research

and processes critical to the success of students in the 21st century classroom, rather than

be tied to mediums of the past. The data gathered from the system will give the company a

significant head start, should imitators attempt to replicate the program. It will require

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several years to acquire datasets and competitors will always operate in a data deficit

compared to eK-12. eK-12 intends to measure far more than just test scores allowing for

potential licensing of curriculum data in the future. This makes changes to curriculum

relevant and applicable.

eK-12 believes this will be a highly profitable business solution and expects a return

of investment in three years (see P&L statement in Appendix 7). The complexities of the

approval process will cause for a long sales cycle that will need to be factored into the

strategic objectives of the marketing and sales plan. This technology based delivery and

assessment system improves in time as the foundational pool of data becomes larger, which

betters the investment by validating product updates.

SWOT

A SWOT analysis was used to evaluate eK-12’s position. This method identifies eK-

12’s strengths, weaknesses, opportunities, and threats to illustrate the company, product

and services. This meaningful information is used to maximize elements both in and

outside the marketplace, so eK-12 has the opportunity to market with a clear

understanding of their market differentiators.

FAVORABLE UNFAVORABLE

INTERNAL

STRENGTHS

Efficient agile business model

Curriculum design, one that

responds to the classroom of tomorrow

Target customer, if already, and IT client

Quality Product Portfolio

Education – well funded by

public resources

High Employee Productivity

Interactive learning environment

like no other in the marketplace

Programs that are simple to use

with many built in efficiencies

Individualized learning plans

WEAKNESSES

Marketplace presence

Curriculum go-to

market strategy, (6 month delay)

Branding challenge when starting as an

IT service company

District, schools, and

teachers must invest and adopt technology

Debt

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Investor in Research and

Development

EXTERNAL

OPPORTUNITIES

Close the gap between

technology and curriculum

Product leverage peer pressure

in a positive way

Curriculum provider

partnerships

Product betters with time, as

more data is compiled

Opportunity to gain a loyal

reputation through IT services

Fast developing emerging markets

American Product

THREATS

Decrease in public

funding

Another established

company generates a similar product in

year one.

Insufficient protection

of intellectual products (ie.

Classroom data)

Regulations

Not for profit competitive

organizations

Competition

Momentum Support – Services & Hardware

eK-12 understands that multiple streams of revenue are essential to the success of

the business. Therefore in support of Momentum, eK-12 will have service and hardware

revenue streams, as well as curriculum licensing fees that will be discussed in greater

detail in the strategic partnerships section of this business plan. eK-12 will provide

technical support, repair and maintenance of existing technology and all aspects of its

product offering. The services will ensure that educators spend their time focused on

learners, not technology. The actual revenue stream is projected at $69,000 in year one,

$3,609,000 in years two and three, and $9,552,750 in years four and five.

eK-12 will establish various partnerships with hardware vendors to supply the

technology used in the classroom. Tablets like the Apple iPad and Microsoft Surface,

software licensing, low voltage wiring, wireless access points, switching gear, servers, and

other technology goods and services will be sold through eK-12 to support their mission.

From the customer’s perspective, buying hardware through eK-12, or through traditional

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distribution will be cost neutral proposition. eK-12 assumes they will realize a 5% profit

margin on all hardware sales.

By developing these ancillary revenue streams, eK-12 can help fund its growth into to

the educational market and deliver $13,230,750 in additional revenue support over the first

five years in operation.

Financial Plan

eK-12 realizes in order to become a successful startup that some key assumptions

need to be made and explained in realizing the full potential of profits.

Salaries

Each principle member of eK-12 will receive a salary of $50,000

starting out for the first three years with a 3% increase for inflation. In year

four, the founding members will get a raise to $61,000 and finally receive a

$100,000 salary in year five.

eK-12 plans on employing a full time programmer/operations employee from the

start, with a base salary of $100,000. Financial estimates include an annual raise of 3%

due to inflation. According to payscale.com trend lines for IT personnel, a $100,000/year

base will provide eK-12 with a very competent programmer, which is essential for the initial

development work. In years three through five, there will be two additional programmers

added to compensate for the increased workload. Additionally, eK-12 will add two

administrative employees and two sales professionals to help with

increased demand and sales lead generation. To ensure the “right”

people are brought in, market competitive salaries have been assumed in future financial

projections.

Revenue Growth

eK-12 will focus on growth upon incorporation. The plan’s revenue growth comes

from a “conservative” estimate on what could truly be attained. The largest source of

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revenue growth is from the Momentum platform. eK-12 projects moving into two new

schools in 2014 and three new schools each year from 2015-2017. eK-12’s pilot program

will begin with one class (750 students) in each grade. The price of Momentum software

per student starts out at $15per seat. That will increase by 10% in year two and 25% in

year three. For clarity eK-12 has Momentum increasing in price over years two and three.

This is due to eK-12 possessing useable data that will increase client value. Early adopters

will realize a reduced price, in order for us to secure initial business.

eK-12 also has projected tablet sales, packaged with Momentum software as needed.

eK-12 realizes that some schools will have already invested in tablets and will only be

interested in Momentum software. For financial projects, it is assumed that hardware sales

will be included in 75% of the new schools added annually.

Residual revenues will increase exponentially for

Momentum, while hardware is only a one time sale. eK-12

will negotiate a 5% distributor discount on hardware to

justify the sale. This will allow ek-12 to recoup costs for

handling the transaction, while keeping the pricing cost neutral for the customer.

Service contract fees will be in place for $7.00 per month per tablet per tablet. The

numbers of units projected are directly correlated to the number of Momentum units sold

per month.

The final revenue stream is content licensing. eK-12 believes that introducing one

medium to handle all of the students learning is critical. Based on personal interviews, ek-

12 has established that a “normal” text book will last three calendar years before being

replaced (Personal Communication, 2012). The average student will have six classes and

books at a given time in school. The average cost of each book is approximately $100

(Personal Communication, 2012). That $100 would normally go directly to the textbook

provider, but instead will be channeled through eK-12 as a residual revenue stream. eK-12

will be taking a 30% fee on licensing content. The licensing fee is projected at $16 a

month per user. That number is derived from assuming six textbooks at $100 each, lasting

36 months. eK-12’s 30% fee equates to a $5 profit each month per user. Just as the

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service contracts stated above, this licensing fee will also be directly correlated to the

number of Momentum units sold monthly.

Loans/Capital Required

The loan assumptions are as follows:

SBA Advantage

eK-12 will pursue a $250,000 SBA Advantage loan through US Bank. This type of

loan allows financing for startup businesses. The note can be extended to seven to ten

years, but eK-12 believes the note will be paid off in full within 5 years, while carrying an

interest rate of 5.5%. The rate is a standard market rate on SBA Advantage loan programs.

Investor Loan

eK-12 will also seek a three-year term, $250,000 loan made available through private

investors. The rate will be 15% APR as normal market conditions support. These loans are

planned to be paid off first within three years. eK-12 will do this because it’s the highest

interest rate and therefore the largest expense in interest paid. The amount of $250,000

came into play for startup capital as eK-12 develops its product and takes a loss for the

first two years. After year three, eK-12 will show a profit and the remaining money

requested that hasn’t been fully used (SBA NOTE) will provide 6-9 months of liquidity in

reserves that support all operating expenses, with the assumption of no revenue being

generated. While a conservative approach, this practice will help alleviate liquidity

concerns and ensure free cash flow for the startup phase of the business.

ALL RELATED FINANCIAL DOCUMENTATION CAN BE FOUND IN APPENDIX 7

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Milestones

Below is a high level summary overview of financial projections for years one through five.

Year One:

eK-12 projects a net loss of -$502,996 in the first year. This is due to heavy

development in Momentum and no significant revenue for the first nine months.

The additional losses are also attributed to the high startup costs of the

business.

Year Two:

eK-12 projects a net loss of -$178,670 in year two. As you can see from the

balance sheet and income statements, our pilot program with Wayzata is

generating revenue, along with the addition of two more schools. We have also

increased the pricing of Momentum by 10% in year two.

Year Three:

eK-12 projects a net profit of $272,770 in year three. Three more schools have

been added to the revenue stream and Momentum has appreciated in value by

25%, due to the added value of the data that has been collected. eK-12 added

five additional employees in marketing, development, and administrative

positions in year three.

Year Four:

eK-12 projects a net profit of $1,045,906 in year four. An additional three

schools have been added to the revenue stream. Assuming that eK-12 has

defined itself in the marketplace and the original sunk costs of the startup have

been absorbed.

Year Five:

eK-12 has projected a net profit of $1,382,084 in year five. Another additional

three schools have been added to the revenue stream. Operational efficiencies

have been realized, which are lowering our operating costs. The five principle

members of the organization are now fully involved in the business while

drawing higher salaries.

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Management and Organization

Organization - Members

As an LLC, management will consist of eK-12’s five founding members. Each member

will be responsible for key components within the organization, although all members will

share in sales and as needed areas of responsibility within the company structure. Key

aspects such as software development and accounting will be an outsourced activity

performed under contractual guidelines.

Leadership

Peter Meyers (President): Peter is currently the Vice

President of Client Engagement and Service Delivery for SIRVA Inc.

His background includes nearly 20 years of professional experience

ranging from corporate America to entrepreneurship that enabled

him to participate in the creation of three different companies.

Peter’s main skill sets range from leadership, operations, marketing

and account management. Peter has been involved in multiple industries, but has always

focused on the transference of data to meaningful information for customers. He brings

strategic simplicity to complex business matters. For eK-12, Peter will serve as President

and be responsible for overall management and strategic direction of the company

Andy Sorenson (Vice President): Andy is currently an

Engineering Manager for Donaldson Company, Inc. His

professional experience consists of over ten years in engineering for

the Donaldson Company and Stratasys Inc. With that experience,

Andy has always been focused on leadership, productivity, and

efficiency. Andy is critical to the success of this company in

ensuring all deadlines are met and time is well spent, while always

keeping a strong focus on the customer and ensuring satisfaction. For eK-12, Andy will

serve as a Vice President and be responsible for overall management of operations and

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overall project management. His main goal is to ensure company values and goals are

constantly moving forward and always on task.

Robert Schmaltz (Vice President): Robert is currently the

Director of Information Technology for Roxbury Capital

Management. His experience consists of over 18 years as an IT

professional. Robert’s skill set ranges from network architecture,

enterprise deployment technologies, software development, server

and infrastructure support; followed with budgeting and data

management. Of those 18 years Robert has worked for Rockwell-Collins, Best Buy,

Stratasys, Metro Machine and Engineering, and Roxbury Capital Management. During his

professional career Robert has over 10 years of leadership experience. With eK-12 being a

tech company mixed with education, Roberts experience is critical in all product life cycles

and company goals. For eK-12, Robert will serve as a Vice President and be responsible for

all data management, software development, and ongoing IT support.

Amanda Klein (Vice President): Amanda is currently the

Director of Marketing and Strategy for Star Exhibits. Amanda’s

professional experience consists of over 10 years of advertising,

marketing, sales, idea generation and public speaking. Amanda

has worked with a variety of technology consulting and advertising

firms across the Twin Cities ranging including N’compass,

Touchpoint Media, and Star. Amanda brings essential creativity, innovative and marketing

acumen that will help drive eK-12 into the future. Her presentation and relationship

management skills are world class and make her an essential member in this LLC. For eK-

12, Amanda will be responsible for marketing strategy and activities. Her duties will include

marketing campaigns, ensuring that eK-12 is on the leading edge of technology. Amanda

will also be responsible for customer service and account management.

Ryan Jaeger (Vice President): Ryan is currently a Business Banking officer for US

Bank. Ryan’s professional experience consists of over four years in the corporate banking

world ranging from account management, sales, and finance. In the four years of his

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development, he has worked for Aerotek and US Bank NA. Both

areas constantly being promoted at a rapid pace and truly

understanding the business goals and needs. Ryan is a true

relationship builder/provider for all clients and internal employees.

Ryan brings a level of expertise in finance that many people don’t

have. His knowledge of key ratios, business leverage, and cash flow

calculations are extremely critical to any long-term success that eK-

12 will have. For eK-12, Ryan will serve as a Vice President, responsible for key account

management and overall sales. His goal will be to have a balanced focus on bringing in

new clients and growing existing ones. Responsible for all customer service requests as

needed in the initial stages of the business, as Ryan will later shift his focus to full financial

oversight.

Advisory Board

The main deficiency in the eK-12 founding member’s strengths and attributes is their

lack of knowledge and involvement in the educational process and system. To buttress

these weaknesses, eK-12 will form an advisory panel that will help drive these initiatives

and bring credibility to the process. eK-12 envisions that this advisory panel would be

comprised of the following:

At least one individual that is extremely well versed in data compilation and analysis

At least two different district superintendents that are versed in curriculum changes

A strong mix of individual front-line educators with varying tenure.

High caliber teachers that have displayed “excellence” amongst their peers

A seasoned Parent Teacher Organization (PTO) representative

A member from a well-established and respected curriculum provider

Marketing Plan

Company Message

“Maximizing genius through technology infused education”

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The eK-12 Brand

The eK-12 brand is the visual look and feel that reflects the tactical attributes of the

company. As a technology-based company that interacts with the creative minds within

school systems, the brand will be simple, colorful, and reflect excellence and aspirations of

educational institutions. This technology made simple approach will be easy to understand

by the use of visual diagrams, touch screens, and large engaging images that appeal to the

end-user.

The eK-12 Approach

This idea for a company started with a group of colleagues that were impacted daily

by the school system, be it teachers, parents, or students themselves. Concerned for the

future of education, and feeling trapped with the desk and lecture approach, eK-12 asked

this simple question… What if? This thought process evolved into eK-12’s business plan.

This company is built with a strong foundation of passionate people with the desire to make

a difference and change the way of thinking about education. This new approach includes

the following points of differentiation in thought leadership, offerings, and technology and

data supported curriculums.

Thought Leadership

The more eK-12 can teach the smarter eK-12 looks. The smarter eK-12 looks, the

more schools (clients) will want to work with the company. The people and network of eK-

12 believe they can be a valued resource to school districts faced with complex decisions

and challenges. To obtain thought leadership, marketing content will utilize white papers,

case studies, webinars, and mobile learning centers that feature the proprietary Momentum

system.

Expansion of offerings

eK-12’s on-line product catalog enables districts and schools to confidently engage

the company from beginning to end on a project. With IT services and technology based

curriculum delivery, the company has the ability to not only implement the software, but

customize the use for maximized efficiency. eK-12 can advise schools on smart and

innovative hardware solutions that will meet the need for the school, grade, or classroom.

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Technology & data supported curriculums

The method and approach at which people learn

best varies amongst students. The traditional teaching

model does not maximize technology in the classroom.

Often times, tablets such as Apple iPad’ s or Microsoft

Surface’s are tested in the classroom environment, by

simply having a few available to use. They are not tied

to the curriculum or individual lesson plans as

subsequent devices. eK-12 believes in introducing

technology early, as it will be something the learner will

experience throughout their entire life. The proposed technology uses electronic lesson

plans and individual assessment software on a tablet of another device to participate in

classroom learning. The results and feedback of the individual learning is then logged,

stored, and kept for further development. This research brings assurance and assistance

to methods of teaching as the data will indicate the level of comprehension of the student

for all those who play a role in this person’s educational future.

Marketing Tactics

eK-12 distinguishes itself from its competitors with a better understanding of the needs of

the end user. The selected marketing activities were chosen with purpose, as the company

believes the following identified methods and mediums reach our audience and target their

needs as a potential consumer of Momentum. The previously highlighted points of

differentiation and usability examples will be the motivation of the company’s marketing

tactics. eK-12’s marketing will target the largest selling points of teachers, administrators,

and students utilizing insights that were gained through interview research. (Personal

communication, August, 2012) These include:

An opportunity to better the learning experience

Bridge the gap of curriculum, lecture driven teaching and technology in the

classroom

User friendly

Monitors progress and reports with date driven results

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Exciting and easy to use

Ability to sample the product before purchase

Competitive pricing

Create a culture of learning on each individual device

Highlight features beyond what is already being used

Offline Marketing Tactics

eK-12 has identified several tactics to market the product and service offerings. In

the first two years, sales and marketing will drive to expand into the marketplace through

multiple channels of communication. Content, collateral, and PR will be the responsibility

of the CMO. An annual marketing budget of $27,805 has been accounted for in the

financials section to meet those needs.

MARKETING TACTICS AND ADDITIONAL UPFRONT EXPENSES ARE HIGHLIGHTED IN APPENDIX 3.

Online Marketing Tactics

eK-12 will make an aggressive effort to drive web site

traffic measured in terms of monthly clicks. The web site will

serve as the hub of information from other social sites,

videos, and training materials. The company believes a high

percentage of clients can be found on the web, and for that

will maximize online capabilities. Even though teachers are

actively involved in the classroom and not in front of the

computer but 1-2 hours a day, they do search for credible

sources and ideas through sites such as the school websites,

blogs, Twitter, and Pinterest. eK-12 will refresh web site

content on a daily basis by displaying case studies,

testimonials, white papers, and webinar recordings. This

information will be pushed through an electronic newsletter

sent to clients once a month.

Between the skill sets of the CMO and CTO, the development and functionality of eK-

12’s online market will be created in-house, saving the company approximately $60,000 for

eK-12 will refresh

web site content on a

daily basis by

displaying case

studies, testimonials,

white papers, and

webinar recordings.

This information will

be pushed through

an electronic

newsletter sent to

clients once a month.

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web site creation, $15,000 for the Email Newsletter based on Twin Cities wide distribution,

and $67 for website hosting fees.

In future years, the company will have developed a formal website strategy inclusive

of a search engine optimization plan. These plans run anywhere from $15,000-$25,000 a

year depending on their complexity. Online strategies will allow eK-12 to rank high in

search systems such as Google, Bing, and Yahoo when key words are used as a search

such as, “tablet learning in the classroom” or “technology and standardized testing.”

Strategic Partnerships

eK-12 will pursue multiple strategic partnerships in the areas of technology and

content as a way to control costs and utilize the latest in available technology. In the

technology space, Microsoft Bizspark is an outstanding strategic partner. Microsoft

Bizspark is a free program for startups that offers software, support, and visibility. The

global program helps software startups by providing software development tools, technical

support, and access to over 2,000 other partners involved in the technology space

(Microsoft, 2012). The available software is: ASP.NET, SQL Server, Visual Studio, Windows

7, Windows Azure, and Windows Server. The program offers three free years of software

access based upon criteria that eK-12 easily qualifies for. The program requires partners to

be developing software, privately held, be in existence less than 3 years and make less than

$1 million in annual

revenue. This partnership

will function like a free

licensing arraignment for

mutual advantage.

While Bizspark provides access to software and other technology partners, eK-12 will

also pursue a strategic partnership with Microsoft Corporation. Microsoft is attempting to

make in-roads into public education. eK-12 can partner with Microsoft on hardware to test

and implement during its pilot program.

Lastly, in regards to technology strategic partnerships, eK-12 will make significant

efforts to partner with the major players in educational curriculum. These partnerships are

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critical to the success of eK-12, as part of the proposition we will make to those curriculum

providers. Essentially our business model, if successful, will drastically change the way

that curriculum providers generate content. Shifting to an electronic delivery medium will

result in a loss of revenue by selling textbooks. We will be able to provide curriculum

providers a steady residual revenue stream by converting textbook revenue to digital

licensing agreements. eK-12 will collect on this revenue and make a monthly payment to

each curriculum provider, while marking up and retaining a 30% profit margin.

Sales Strategy

Sales Force

During the pilot phase, the five founding members of eK-12 will serve as its initial

sales force. Each brings a relationship building orientation and sales experience that will

allow eK-12 to control costs and direct funds at initial software development. As the

members are equity focused and will not draw sales commission, the sales efforts will not

be incentive based beyond agreed upon compensation and actual ownership. The sales

activity will be closely tied to the previously described marketing elements. The members

will work tradeshows, network with school boards, and attend educational events to spend

time with teachers and administers.

SEE APPENDIX THREE FOR TARGETED MARKETING ACTIVITIES THAT WILL REQUIRE ATTENTION.

Sales Cycle

According to a personal interview will Bill Kuendig, an educator in the Wayzata

Middle School system, the US school system in general makes the majority of system

changes and upgrades during the summer months to avoid disruption to the educational

schedule. Maintenance, lesson plans, and related technical processes will occur mostly

during the standard September through June period when there is the majority of usage

among students.

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Operations Plan

eK-12 estimates that the initial software development work and

accompanying viable prototype program elements will be completed in

approximately six (6) months after launching the business in January 2013.

This timeline projection is based upon prior experience in software

development cycles that multiple founding members have participated in.

The prototype is imperative to have as a sales tool and will be a critical

building block in the sales process to help convey the impact that our

Momentum system will have on the educational process and system. To

reduce risk in the development process, the leadership team decided to provide a physical

working space to house its initial development work. The most obvious concern is around

protecting the intellectual property of the proprietary software system, and the membership

believes that a controlled environment will minimize the possibility of a security breach

eK-12 will lease a physical office space located at 36 Main Street W, Waconia MN

55378 to house necessary computer servers in a temperature and humidity controlled

environment. This installation will create a scalable solution from which eK-12 can deploy

their data center and some small office space. Renovations would require the installation of

some additional walls, A/C equipment, and additional power carrying an estimated cost of

$31,710.

The physical space is located just outside of Minneapolis in a location that offers easy

access to the southwestern suburbs, but at significantly less expensive pricing than would

be found in closer proximity to the city. Since the majority of the work will be done onsite,

and services will be delivered via the web, the location keeps expenses low but maintains

flexibility.

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Exhibit 7: Proposed floor plan in rental space (after renovations)

Exhibit 8: Waconia location in relation to Minneapolis Metro

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:

Exhibit 9: Rental space in downtown Waconia

Exhibit 10: Business front at 36W Main Street Waconia, MN

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The first six (6) months, projected to start January 1st, 2013 and commencing June

30th 2013, will be devoted to software development. The leadership team will implement a

stage gate process that will allow clearly defined goals and established milestones along the

way, to ensure that the progress is directed properly at the desired end result. The goal is a

functional prototype to allow the projected pilot to launch for the 2013-2014 school year.

eK-12 will continue to use a stage gate process through their business cycle to ensure

custom projects and needs for schools are attended to, without any surprises at the time of

delivery. Upon future expansion, it is understood that each and every installation will be

unique. This stage gate process provides a development tool and establishes deliverables to

reduce rework. Once a purchase order is received and Momentum is installed, key members

from the respective school boards that eK-12 is doing business with will join in the stage

gate process. It is assumed that most of the project definition work will be done during the

sales cycle, allowing time on the back end to complete any other necessary elements..

Below is a high level example of the stage gate process and the key deliverables that are

expected within each stage.

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Stage Gate Layout

Since eK-12 does not physically manufacture a product, issues surrounding

inventory, production control, manufacturing capacity, supply, and distribution are

minimal. However, part of the technology development plan will contain a rigorous quality

control plan and ensure that the testing performed on individual development projects are

adequate to fully qualify a product for release. Ongoing testing throughout all phases of

product development and installation will unveil answers to processes that may need

attention or improvement

From a lights-on perspective, the Vice President of Operations will handle all of the

day-to-day activities associated with maintaining the physical facility. For the first one to

three years, this office will support software developers and computer servers. Activities

such as building maintenance, cleaning, and upgrades will be handled by internal

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personal. Once the space expands and revenues can support additional resources, they

will be handled either by additional direct hires or outside contractors. Those decisions will

be made based on the current financial position, when deemed warranted by the leadership

team.

In addition to the duties stated above, the Vice President of Operations will also take

on the role of directing our field service and installation employees. Activities surrounding

these individuals will include: taking and fielding technical service calls, scheduling and

coordinating on-site installation, and troubleshooting activities. Additionally, coordination

of any warranty claims on both the software and the service side of the business will be

handled by the operations team.

From an order fulfillment standpoint, the Vice President of Finance will serve as the

head of accounting. Within those departments would be accounts receivable and accounts

payable. Initially, the Vice President of Finance will act alone in these roles dealing with

both our suppliers and customers in terms of payment. The books will be kept using a

product such as Quicken, or something similar, until a more rigorous ERP system such as

Oracle is required to do business. In all actuality, these functions will be limited at the

start, and will further expand as the business grows. As the need requires, additional staff

will be brought in to help fill these roles.

The Vice President of Technology will be directing and managing the custom software

development process. The initial plan is to bring on a seasoned software developer as a

contract employee to assist in the first generation of software. While the Vice President of

Technology takes on the task of developing the mobile applications, the other developer will

begin the web development and desktop application that will be necessary to house the

data. If additional capacity is needed, eK-12 will use tightly managed contracts and

outsourced IT resources. All software developed will be fully owned by eK-12 and two (2)

year non-competes and non-solicitation restrictions will be required for all contract

employees to maintain our competitive advantage. It will be up to the leadership team to

determine what work can be outsourced, without compromising the IP position.

The last piece surrounding the operational plan would be centered on contingency and

pandemic planning. The Vice President of Technology will be responsible for developing

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and deploying a contingency plan that will allow eK-12 to remain operational should a

catastrophic event occur and wipe out the facility. Insurance quotes have been obtained

and are located in the financial section of this business plan to replace the physical

inventory of servers and office equipment. Additionally, a nightly backup to the Amazon S3

cloud will be utilized to ensure that server storage remains intact.

Technology Plan

eK-12 is a technology delivery, assessment, and

data company. This hybrid state means that it needs to

exist at the forefront of the industry to be successful. In

order to support their education enhancement mission,

the technology plan will seek to keep eK-12 constantly

innovating while refreshing infrastructure on a regular

basis. Additionally, the assessments conducted will be

used to further new avenues of inquiry, build evidence-

based curriculums, and enhance the digital delivery

system (Momentum).

eK-12’s technology needs are a large portion of the fixed operating costs. Servers,

software, and the facilities necessary to support them will consume the majority of the

technology budget. This is why eK-12 has broken our technology expenses into

infrastructure and employee issued equipment.

Infrastructure

The infrastructure represents both direct revenue generating production equipment

as well as non-revenue generating internal use technology. eK-12 believes it is important to

operate on the same technology as their customers. They will utilize the same tools,

software, hardware, and cloud services used to support their clients. In common parlance,

eK-12 believes it important to “eat our own dog food.” During the startup phase, eK-12 will

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have a reduced physical footprint with a small number of servers, hardware, and software

with estimated startups costs of $213,540.

SEE APPENDIX 2 FOR A MORE DETAILED BREAKDOWN OF INITIAL EQUIPMENT NECESSARY,

CONSIDERED, AND QUOTED.

The specified equipment installation detailed in Appendix 2 will create a scalable

solution from which eK-12 can deploy their products. Due to the controlled environment

requirements of a datacenter, a suitable physical location has been identified to meet those

needs and is further discussed in the operations section of this plan. The space identified

is of sufficient size that can host both a datacenter and some small office space at a

monthly rental rate of $1,200. Some renovations will be required, including the installation

of some additional walls, A/C units, and some additional power and backup generators to

ensure uninterrupted server functionality.

Employee Issued

Aside from the datacenter hardware needs discussed earlier, each employee will be

issued a phone, PC, and tablet for their professional work use. At all times, eK-12’s staff

will operate in much the same way that they expect their educational partners to work.

The software development team will utilize desktops equipped with multiple monitors and

software specific integrated-development-environment (IDE).

Intellectual Property and Contracts

eK-12 will construct the company to reduce risk and likelihood of legal issues in

intellectual property and contracts. Momentum will become a registered trademark of eK-

12, LLC. As the delivery and assessment software represents unique intellectual property

and is key to eK-12’ s lasting competitive advantage. Additionally, eK-12 will utilize written

contracts with schools (customers) and suppliers (vendors) and clearly identify the

expectation of all parties involved in the business relationship. eK-12 estimates that this

legal protection will require a $15,000 investment and provide lasting value to the

enterprise.

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Risk Assessment

There are a number of risks associated with a business of

this type, scope, and scale. The educational system is

constantly evolving and very difficult industry to penetrate.

The industry as a whole is extremely resistant to change. eK-

12 is proposing a complete revamp of the current educational

model that exists today and the company anticipates

resistance.

Secondly, education is a strongly competitive environment.

Another competitor could mimic eK-12’s approach. It is very possible that someone else is

already a year or two into a very similar development process. First mover advantage is

critical with this business venture and someone else that launches a similar idea prior to

eK-12’s could trump the work. That is not to say that there is no room for multiple

solution providers in the industry, but a huge competitive advantage will be awarded to the

company that reaches the market first. The intent is to be an industry driver.

Funding is a current and future obstacle. The personal funding that will be raised by

the founding members will give eK-12 a good start to begin the development work. A

business model that does not immediately start generating revenue is of high concern, but

that work is necessary to build excitement and interest within the industry. That prototype

tool will not only generate excitement amongst the customer base, but will also be

extremely valuable within the investment community.

Finally, since this change is so dramatic in relation to the historical model, there will

be opposition from the current generation of parents. There is a risk that too much

technology integration could hinder a learner’s social interaction with others, and obstruct

their natural creativity. This risk and concern needs to be taken into account during the

sales process and other developments eK-12 is prepared for, to ensure there is a “balancing

act” of developing a healthy mix.

…a huge competitive

advantage will be

awarded to the

company that

reaches the market

first. The intent is to

be an industry driver.

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An Overview of the Competition

eK-12 completed a thorough competitive evaluation to understand their product and

service capabilities. For the purposes of this business plan, eK-12 primarily focused on

education software. The top companies were selected to compare and analyze with as eK-12

believe this is a learning opportunity in the growth of Momentum.

Competition – Companies

Scholastic is a global book publishing company known for

publishing education materials for schools, teachers and parents.

Scholastic has grown its business most recently by acquiring other media companies,

including Read180, Education Product Information, Soup2Nuts, Reading Counts, and Tom

Snyder Productions. As a whole, the company capacities include a comprehensive system

of curriculum, instruction, assessment and professional development (Scholastic, 2012)

Pearson Digital Learning is a leader in curriculum solutions for preK-12

grades. They are known based on proven instructional technologies in

education. With their product offerings of Waterford, SuccessMaker

Enterprise, KnowledgeBox and NovaNet, they offer a variety of services to school systems.

They invest in computer-based instruction, development in preparation for high-stake

testing, digital learning systems in reading, math, science and social studies (Pearson,

2012)

Renaissance Learning is a technology-based school improvement and

student assessment program for K-12 schools. Renaissance Learning’s

tools provide daily formative assessment and periodic progress-monitoring technology to

enhance core curriculum, support differentiated instruction, and personalize practice in

reading, writing and math (Renaissance Learning, 2012).

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Archipelago Learning is a subscription-based software as a service

provider of education studies used by over 14 million students in

nearly 38,700 schools throughout the United States, Canada, and United Kingdom. Their

digital supplemental product suite uses technology to transform education. Their goal is to

make rigorous learning fun, engaging, accessible, and affordable. The company's core

business, Study Island, provides standards-based instruction, practice testing, and other

tools for students in Kindergarten through 12th grade. As of July, 2012 they purchased

another education technology solutions known as PLATO Learning. PLATO was known for

online courses and standards-based assessments that accurately identify student needs

and prescribe course study with interactive instruction (Archipelago, 2012)

Scientific Learning Corporation is a worldwide company that strives to

develop learners to their full potential. The company develops,

distributes, and licenses technology that accelerates learning by

improving processing efficiency of the brain. Scientific Learning uses technology to teach

language, reading, and comprehension skills in public and private schools in the US and 45

other countries. Flagship products include FastForWord, FastForLanguage, and

FastForLiteracy software. This company is different from the rest, as it also sells directly

to parents. eK-12 targets this company as the closest representation to this business plan.

Along with their education services, they also provide online consulting, web based

training, and remote technical consultants (Scientific Learning, 2012).

Compass Learning is an expansive curriculum that covers every

grade, and every course, including advanced placement, college

readiness, ELL/ESL, gifted and talented to response to intervention students. They focus

on empowering teachers by providing a wide range of support services to provide a

personalized learning experience (Compass Learning, 2012).

See Appendix 1 for more specifics on the competitive landscape.

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Competitive Position

eK-12 will offer the ability to integrate technology and improve learning opportunities

through a unique delivery system, assessments model and data driven results for to better

the learner of today and tomorrow. This platform combined with established curriculums

provides the flexibility for real time electronically delivered product updates. Through the

Momentum delivery system, teachers and students will willing adopt technology as more

than just a device but a resource to addresses the immediate need in schools today.

There will be a new product learning curve when introducing Momentum, because of

the drastic shift from traditional paper delivery system to a technologically rich delivery

system. Through eK-12’s marketing and sales efforts, the company will first strive to be

involved in a pilot program in schools and eventually become a necessity that compliments

the learning style of students today. Competitors that are expected to be encountered most

often include Scientific Learning, for the similarity of services, and Renaissance Learning as

a Midwest regional company.

APPENDIX 2 CONTAINS SPECIFICS ON THE COMPETITIVE REVENUE LANDSCAPE

Future Competition

eK-12’s competitors are constantly evolving and expanding through investment by

acquisition of other education programs and companies. A reasonable prediction of future

competition will be the company’s dependence on technology not textbooks to teach

curriculum. The companies who align themselves closely with a technology by partnering

with eK-12 will improve standardized tests and stand out amongst the rest. By focusing on

individual’s year over year performance, students are compared to their own progress and

not a “typical” classroom or school standards.

Exit plans

A predetermined exit plan is a crucial element to consider up front. The founding

members of eK-12 mutually agree that the initial $50,000 investment is critical to starting

this business. The first three years of major development and establishing the business

does not leave room or cash flow for an exit of any one individual. That original investment

may not be recouped in any way shape or form during the first three years of business,

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unless there is a majority agreement decision to sellout to an interested party. If that

situation happens to become a reality, a legal team would be involved to equally split the

proceeds, and any opportunity to remain a part of the business would involve an individual

personal negotiation with the buyout entity.

Regarding investments made by outside venture capitalists, a percentage ownership

option would be made available, taking into account that the founding members will always

maintain a 51% majority ownership stake. An outside party, when warranted by investor

interest, will perform an annual valuation process as necessary. A legal team will also be

brought into the mix when that scenario comes up, to take into account current economic

conditions, market interest rates, terms and conditions of any investment opportunity.

Long-Term Development

As with any new startup company, there is a high probability that a new and

innovative breakthrough in technology will trigger high interest from the industry, and

become a takeover target by a larger competitor. In the future, after the business is

established, the founders of the business would be open to a long-term strategic

partnership. eK-12 would consider the financial windfall that could come as a result of a

major player takeover and complete buyout.

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Appendix 1

List of Main Education & Training Services

Company Products Headquarters/

Locations

Year

Founded

On what Basis

does

Momentum

Compete?

Scholastic System 44

Read About Read 180 New Connection

Reading Counts TomSnyder

Wiggle Works Text Talk Math Solutions

SAM

New York,

NY/Worldwide

1920 Reading, Math

and Language Assessments

Pearson Curriculum,

testing and Multimedia learning tools.

Waterford SuccessMaker

NovaNet CourseSmart eTextbooks

Chandler, AZ/

60% of sales in

N. America. In

a total of 70

countries

1844 –

Part of

Pearson

PLC.

1998

Education

Co.

Curriculum

(Math, Science, Reading)

Improvement Programs

Digital platform

Individualized

learning

Renaissance

Learning

Accelerated

Reader Accelerated Math

Wisconsin

Rapids, WI/

International

1985 Reading and

Math Assessments

Interactive Hardware

Archipelago

Learning

Study Island

Education City Reading Eggs

ESL ReadingSmart

Northstar

Learning

Dallas, TX/

US, Canada,

UK

2000 Web based

solutions Benchmarking

Test Preperation

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Scientific

Learning

Corporation

Fast ForWord

Fast ForLiteracy Fast ForLanguage

Oakland, CA/

International

1996 IT Platform

Data Driven Reports Web based

training Consulting

Compass

Learning

Odyssey RenzulliLearning

Austin, TX/

International

1969 A curriculum Personalize

learning

Broad range of offerings

Appendix 2

Exhibit 11: Annual revenue each company made in 2011. Financial data pulled from

company annual reports and Hoovers.

$254,700,000.00

$2,100,000.00

$130,090,000.00

$7,400,000.00

$41,080,000.00

Revenue/Sales

Scholastic Education and TechnologyServices

Pearson Leaning

Renaissance Learning

Archipelago Learning

Scientific Learning

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Appendix 3 (Marketing Membership Budget)

Marketing Budget & Calendar Annual Expenses

Shows

FETC (www.fetc.org) $4,600 (Exhibit & Expenses)

TCEA (www.tcea.org) $2,457 (Exhibit & Expenses)

ISTE (www.iste.org) $4,800 (Exhibits & Expenses)

MEMO Fall Conference $630 (Registration & Expenses)

TIES Education Technology Conference $1258 (Exhibit & Expenses)

Memberships

MEMO (Minnesota Education Media Organization) $60/year

Direct Mail $6,500/year

Print $3,000/year

Market Networking

Meetings $1,500/year

Entertainment $2,500/year

$27,305/Year

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Appendix 4 (Marketing Plan)

Example of a quarterly marketing/communications plan

September October Novemember December

Messages/ThemesTechnology in the Classroom/eK-12

Vision

Tablets 101/Industry Knowledge Share How do students learn today?/eK-12 Services ek-12 Gives Back/2013 Outlook

Industry Focus 6, 7, 8th Grade Teachers 6, 7, 8th Grade Administrators 6, 7, 8th Grade Students TBD

Audience:

Clients/Prospects

Webinar "Technology in the Classroom"

Moment of Impression - Teacher

testimonial (Online Marketing)

Enewsletter

Direct Mail Postcard - TIES Conference

Administration Case Study

White Paper - Students Today

Day and Life of Student Case Study

Holiday Card

TIES 2012 Education Technology

Conference

Sales/Marketing Account Plans (5 school districts) Account Plans (5 school districts) Account Plans (5 school districts) Account Plans (5 school districts)

Sales Outreach Calls/Emails/Meetings/Proposals Calls/Emails/Meetings/Proposals Calls/Emails/Meetings/Proposals Calls/Emails/Meetings/Proposals

eK-12 Marketing/ Communication Calendar (Q4)

Marketing / Outreach Tools Topics

Custom Post Cards What keeps administrators up at night?

Emails 5 things to think about when teaching

Enewsletter Industry News/Highlights

Media Kit (Cold Account) Service/Product features

Calls Learn more in less time

IT Service Audit Moment of Impression (testimonial)

Face to Face Meeting How do students really learn?

eK-12 Events Preparing students for the future

Client Surveys/interviews Technology is our Future

Webinars Technology adoption made easy

Website

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Appendix 5 (Addtl Marketing Expenses)

Upfront marketing expenses include:

Adobe Design & Web Premium Software $ 1,899

Print $ 6,000

Trade Shows Booth $ 20,000

Total: $ 27,899

Online Marketing Tactics

Adobe Design & Web Premium Software $ - Already included

Online consultant $ 8,500

Stock Photos $ 400

Website host $ - eK-12 servers

Total: $ 8,900

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Appendix 6 (Technical Equipment)

IBM System x3530 M4 (Server)

Form factor/height 1U Rack

Processor (max) Two 8-core Intel Xeon E5-2450 series processors

Cache (max) 20 MB per processor

Memory (max) 64 GB (4 x 16GB) 12 slots (UDIMM/RDIMM)

Media bays One optional DVD bay for 2.5" model

Disk bays Eight 2.5" or four 3.5" hard disk drives (HDDs)

RAID support hardware RAID-0, -1, -10 or RAID-5, -50 or -6, -60 (Configured

RAID-1, w/Hot Spare)

Power supply (std/max) 2 x 675 W hot-swap redundant power supplies

Hot-swap components Power supplies, fan modules and hard disk drives

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PCIe interface 2 PCIe slots (x16/x8) (1/0 or 0/2) + PCIe x4 for slotless RAID

Expansion slots 2 PCIe 3.0 slots (Intel Quad Port 1Gbps)

Ethernet Interface Intel Ethernet Controller I350 Dual 1 Gb on board + Intel I-350

Embedded Dual-Port GbE Activation for IBM System ×(FoD)

VGA ports 1 front (optional for 3.5” HDD models, model dependent) /1 back

USB ports 7 (2 x front, 4 × rear, 1× internal)

Maximum internal

storage

Three 3.5" hard disk drives (1TB 7.2K 6Gbps SATA)

Systems management IBM IMM2 with optional upgrade FoD to remote presence, Predictive

Failure Analysis, diagnostic LEDs, standard Light path with optional

advanced kit, IBM Systems Director and Active Energy Manager™

Operating system VMware Vsphere v5.01 u1

Limited warranty 3-year customer replaceable unit and onsite service, next business day

9×5, service upgrades available

Total system price: $8,640.00

NetApp FAS2240-4 (Network Storage)

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Technical Highlights

SAN Protocol Support IP SAN (iSCSI)

Network Protocol Support NFS V2/V3/V4 over UDP or TCP, PCNFSD V1/V2 for (PC) NFS client

authentication, Microsoft® CIFS, HTTP 1.0, HTTP 1.1 virtual hosts

LUNs Up to 1,024

FlexVol® Volumes Up to 500 per controller

Snapshot™ Copies Up to 127,000 per controller

Number of Supported Hosts

Up to 2 ports per controller configured as front-end (host) connectivity ports

Up to 4 directly connected servers per active-active configuration

Connected hosts per HA pair:

Up to 256 SAN connected servers

Supported Configurations

Controller Hardware Configurations

Single controller, active-active or active-passive controllers in an HA pair

Back-End (Disk) Configurations

Best practice: Dual-path with standalone and multipath HA storage (MP-HA)

for HA pairs

Supported: Single path with standalone or HA pairs

Operating in 7-Mode

FAS2240 in Data ONTAP® 8.1

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Operating in Cluster-Mode

FAS2240 in Data ONTAP 8.1

Reliability Redundant hot-swappable controllers, cooling fans, and power supplies

Management

Full-duplex 10/100 Base-T Ethernet onboard console, diagnostic LED,

Maintenance Center, SNMP, telnet, SSH, HTTP, Web (SSL), host scripting, e-

mail alerts

Security Virus protection, SecureAdmin™, IPSec, CHAP authentication, role-based

access control (RBAC)

Maximum RAID Group and Aggregate Sizes

Maximum RAID Group

Sizes

RAID 6 (RAID-DP®)

SAS and FC: 28 (26 data disks plus 2 parity disks)

SATA: 20 (18 data disks plus 2 parity disks)

RAID 4

SAS and FC: 14 (13 data disks plus 1 parity disk)

SATA: 7 (6 data disks plus 1 parity disk)

RAID 6 + RAID 1 or RAID 4 + RAID 1 (SyncMirror®)

Volume/Aggregate

Maximum aggregate: 60TB raw, 54TB usable

Maximum usable volume size: 53.7TB usable

(no Snapshot copy reserve in either case)

Scalability FAS2240-4

Active-Active

Configuration Single Controller

Max. Raw Capacity 432TB 432TB

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Max. Number of Internal Disk Drives 24 24

Max. Number of Expansion Disk Drives 120 120

Max. Number of Total Disk Drives (Internal + External) 144 144

Max. Drives per Back-End (Disk) FC Loop 84 84

ECC Memory 12GB 6GB

Onboard I/O FAS2240-4

Active-Active

Configuration Single Controller

Onboard GbE Ports 8 4

Onboard SAS Ports 4 2

Modular I/O Slots 2 1

I/O Card Support FAS2240-4

Active-Active

Configuration Single Controller

Dual-Port 8/4/2Gb FC Disk Adapter (max.) 2 1

Dual-Port 10GbE Ethernet Adapter 2 1

Software FAS2200 Series

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Operating System Data ONTAP

Operating Systems Supported Windows® 2000, Windows Server® 2003, Windows XP, Linux®, Sun

Solaris, AIX, HP-UX, Mac® OS, VMware® ESX®

Standard Software

Data ONTAP Essentials:

Efficiency: FlexVol, deduplication, compression and thin provisioning

Availability: Multipath I/O, MultiStore®

Data Protection: RAID-DP, Snapshot, NearStore®, and Open Systems

SnapVault®

Performance: FlexShare®

Management: System Manager, Operations Manager, Protection

Manager, Provisioning Manager

Extended-Value Software

(Licensed)

SnapManager® Suite: Application and virtual machine aware backup,

recovery, and cloning (for Oracle®, Exchange, SharePoint®,

SQL® Server, SAP®, Virtual Infrastructure, and Hyper-V™)

SnapRestore®: Fast restore of Snapshot copies in seconds

SnapMirror®: Simple, efficient, and flexible disaster recovery

FlexClone®: Instant virtual copies of databases or virtual machines

SnapVault: Disk-to-disk backup software for complete backups and

online archives to primary or secondary storage in minutes instead of

hours or days

OnCommand™ Insight Balance for NetApp: Advanced analytics for

physical and virtual environments

Complete Bundle: All of the Extended-Value Software in a single

bundle for all-inclusive convenience (Note: Insight Balance not included

in Complete Bundle)

Storage Specifications

Disk Shelves Supported (Fibre

Channel, SATA, SAS)

DS14mk4 FC, DS14mk2 FC (only supported in Data ONTAP 8.1

with ESH4 shelf module), DS14mk2AT

Each w/14 low-profile slots for FC and SATA disk drives*

DS2246

With 24 slots for performance (SAS) HDD

DS4243 / DS4246

With 24 slots for performance (SAS) HDD or capacity (SATA)

HDD

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* Not supported on FAS2220

Disk Drive Support

Disks Supported on New Configurations

FAS2240-4

Internal SSD: 100GB

Internal capacity HDD: 1TB, 2TB, 3TB disks

External FC: 300GB, 450GB, 600GB

External performance HDD: 300GB, 450GB, 600GB

External capacity HDD: 500GB, 1TB, 2TB, 3TB disks

FC: 36GB, 72GB, 144GB, 300GB disks

SATA: 250GB, 320GB, 500GB, 750GB, 1TB disks

Disk Shelf Support

Shelves Supported

Embedded Switched Hub4 (ESH4) *

AT-FCX *

IOM3

IOM6

Internal Disk Drive Storage Interface Serial-Attached SCSI (SAS)

Disk Drive Storage Shelf Interface Serial-Attached SCSI (SAS) (FAS2240 with optional FC adapter for

FC-AL storage connection)

Power Supply/Cooling Fans Dual, redundant, hot-pluggable, integrated power supply/fan

assemblies (220V/110V)

System Specifications FAS2240-4

AC Power/Current (line voltage for standalone systems

dependent on local power distribution; system cabinets are 200

to 240VAC only)

88 to 264VAC, 0.9 to 4.8A, 50/60Hz

Weight (fully loaded) 107.1 lbs (48.6 kg), HA with 24 disks

Height 7" (17.9 cm)

Width 19" IEC rack-compliant (17.6", 44.9 cm)

Depth (without cable management brackets) 24" (61 cm)

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Operating Temperature, Altitude, and Relative Humidity

10°C to 40°C (50°F to 104°F); at </=

3,000 m (at </= 10,000') elevation; 20%

to 80% relative humidity, noncondensing

Nonoperating Temperature and Relative Humidity

-40°C to 70°C (-40°F to 158°F); at </=

12,192 m (at</= 40,000’) typical of

unconditioned airplane cargo bay, 8% to

80% relative humidity, noncondensing,

in original container

Operating Acoustic Noise

FAS2240-4:

Declared sound power (LwAd)

per ISO 9296: 6.9 Bel

Sound pressure (LpAm)

(bystander positions): 49.6 dB

Min. Cabinet Clearances for Airflow 25.4 cm (10 in) in front, 30.5 cm (12 in)

in rear

Min. Cabinet Clearances for Service 76.2 cm (30 in) in front, 76.2 cm (30 in)

in rear

Compliance RoHS-compliant

Safety / Emissions / Immunity

Safety: EN 60950, CE, CSA 60950, UL

60950, CB IEC60950-1 (all national

deviations), EN60825-1, GOST-R, BSMI

CNS14336, CCC GB 4943-2001, SABS,

S Resolution 92-98

Emissions/Immunity: FCC Part 15

Class A, ICES-003, CE, MIC, VCCI,

AS/NZS CISPR 22, EN55022, EN55024,

IEC61000-3-2, IEC61000-3-3, CoC

(South Africa), BSMI, KN22

EN61000-4-2, EN61000-4-3, EN61000-

4-4, EN61000-4-5, EN61000-4-6,

EN61000-4-11, KN24, CISPR 24

FAS2200 System Power Specifications

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Model Input Voltage

Active-Active Single Controller

Typical Maximum Typical Maximum

FAS2240-4

100-120VAC

Power, W 545 582 482 533

Thermal, BTU/hr 1861 1987 1646 1820

200-240VAC

Power, W 531 568 468 517

Thermal, BTU/hr 1813 1939 1598 1765

Approximate Price: $105,000

Cisco c3750x-24T-S (24 port gigabit switch)

Average power consumption 134W

Average thermal production: 455BTU/hour

24 Ethernet 10/100/1000 ports and four Small Form-Factor Pluggable (SFP) uplinks

18.1 x 17.5 x 1.8 inches ; 15.6 pounds

Price: $2,500

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APC Symmetra LX 8kVA Power Array

(Uninterruptable Power Supply)

Highlights

Features N+1 redundancy and scalable

power capacity

Provides scalable, redundant power

protection for small datacenters,

network rooms and high-performance

IT equipment

Audible alarms provide active

information on battery conditions

Hot-swappable batteries and

electronics provide power to the loads

even when they are being replaced

Quoted Price: $9,100

Liebert-CRV Self Contained Row Based Cooling (204CRV)

Highlights

Flexibility

Available in nominal capacities from 20kW to 40kW.

Automatically balances the airflow and cooling

capacity independently based on the needs of the IT

equipment.

Horizontal airflow cooling design is suitable for non-

raised or raised floors.

Air, water, glycol, and chilled water systems available

Adjustable supply air baffles maximize cooling to rack

equipment by avoiding the need to provide extra air

that is lost to the room.

Caster mounted for easy placement

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Approximate Price: $10,000

Software

VMWare VSphere v5

Microsoft Windows Datacenter

Microsoft Windows 8

Mac OS X

Microsoft Exchange Enterprise

Microsoft SQL Server Enterprise

Microsoft Sharepoint

Microsoft Lync

Microsoft Visual Studio

Approximate total price (excluding Microsoft BizSpark program): $40,000

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Appendix 7 (Financials)

Summary of Cash Flows

Cash Flow 2013 2014 2015 2016 2017

TOTAL TOTAL TOTAL TOTAL

CASH RECEIPTS

Income from Sales

Cash Sales $108,300 $1,097,250 $3,227,714 $5,167,495 $6,420,516

Collections $4,275 $54,731 $157,299 $263,466 $335,293

Total Cash from Sales $112,575 $1,151,981 $3,385,014 $5,430,961 $6,755,809

Income from Financing

Interest Income $1,960 $3,336 $15,938 $50,347 $123,692

Loan Proceeds $250,000 $250,000 $0 $0 $0

Equity Capital Investments $250,000 $0 $0 $0 $0

Total Cash from Financing $501,960 $253,336 $15,938 $50,347 $123,692

Other Cash Receipts $0 $0 $0 $0 $0

TOTAL CASH RECEIPTS $614,535 $1,405,317 $3,400,951 $5,481,308 $6,879,501

CASH DISBURSEMENTS

Inventory $0 $0 $0 $0 $0

Operating Expenses $516,157 $524,243 $883,558 $952,423 $1,191,259

Commissions/Returns & Allowances $2,400 $40,125 $123,263 $188,063 $42,188

Capital Purchases $246,550 $0 $230,020 $0 $0

Loan Payments $57,303 $161,299 $161,299 $161,299 $57,303

Income Tax Payments $0 $0 $0 $0 $0

Investor Dividend Payments $0 $0 $0 $0 $0

Owner's Draw $0 $0 $0 $0 $0

TOTAL CASH DISBURSEMENTS $822,411 $725,668 $1,398,140 $1,301,785 $1,290,750

NET CASH FLOW ($207,876) $679,650 $2,002,811 $4,179,523 $5,588,751

Ending Cash Balance $42,124 $721,773 $ 2,724,585 $6,904,108 $12,492,895

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Summary of Profit and Loss:

2013 2014 2015 2016 2017

Income Statements 2013

TOTAL TOTAL TOTAL TOTAL

INCOME

Gross Sales $114,000 $1,155,000 $3,397,594 $5,439,469 $6,758,438

(Commissions) $0 $0 $0 $0 $0

(Returns and allowances) $2,400 $40,125 $123,263 $188,063 $42,188

Net Sales $111,600 $1,114,875 $3,274,331 $5,251,406 $6,716,250

(Cost of Goods) $33,600 $674,250 $1,894,725 $2,801,925 $3,594,375

GROSS PROFIT $78,000 $440,625 $1,379,606 $2,449,481 $3,121,875

EXPENSES - General and

Administrative

Salaries and wages $349,956 $362,204 $642,000 $697,835 $900,891

Employee benefits $30,000 $33,000 $66,550 $73,205 $80,526

Payroll taxes $52,493 $54,331 $96,300 $104,675 $135,134

Professional services $17,000 $8,000 $12,000 $10,000 $8,000

Marketing and advertising $26,028 $26,028 $26,028 $26,028 $26,028

Rent $14,400 $14,400 $14,400 $14,400 $14,400

Equipment rental $0 $0 $0 $0 $0

Maintenance $1,200 $1,200 $1,200 $1,200 $1,200

Depreciation $52,203 $52,203 $103,625 $90,292 $86,167

Insurance $9,000 $9,000 $9,000 $9,000 $9,000

Telephone service $4,080 $4,080 $4,080 $4,080 $4,080

Utilities $7,200 $7,200 $7,200 $7,200 $7,200

Office supplies $2,400 $2,400 $2,400 $2,400 $2,400

Postage and shipping $0 $0 $0 $0 $0

Travel $0 $0 $0 $0 $0

Entertainment $2,400 $2,400 $2,400 $2,400 $2,400

Interest on loans $12,635 $42,848 $28,730 $12,621 $1,671

Other (change title here) $0 $0 $0 $0 $0

Other (change title here) $0 $0 $0 $0 $0

TOTAL EXPENSES $580,996 $619,295 $1,015,913 $1,055,336 $1,279,097

Net income before taxes ($502,996) ($178,670) $363,693 $1,394,146 $1,842,778

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Balance Sheet 2013: Year End

Balance Sheet

eK12 Education

Fourth Quarter

2013

ASSETS

Current Assets

Cash $42,124

Accounts Receivable $1,425

Inventory -$33,600

Other Current Assets $0

Total Current Assets $9,949

Fixed Assets

Land $0

Facilities $31,710

Equipment $160,140

Computers & Telecommunications $54,700

(Less Accumlated Depreciation) $52,203

Total Fixed Assets $194,347

Other Assets $0

TOTAL ASSETS $204,295

LIABILITIES

Current Liabilities

Short-Term Notes Payable $47,188

Income Taxes Due $0

Other Current Liabilities $0

Total Current Liabilities $47,188

Long-Term Liabilities

Long-Term Notes Payable $158,144

Other Long-Term Liabilities $0

Total Long-Term Liabilities $158,144

NET WORTH

Paid-In Capital $500,000

Retained Earnings -$501,036

Total Net Worth -$1,036

Page 72: eK-12 Business Plan

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Balance Sheet 2014: Year End

Balance Sheet

eK12 Education

2014

ASSETS

Current Assets

Cash $721,773

Accounts Receivable $4,444

Inventory -$707,850

Other Current Assets $0

Total Current Assets $18,367

Fixed Assets

Land $0

Facilities $31,710

Equipment $160,140

Computers & Telecommunications $54,700

(Less Accumlated Depreciation) $104,407

Total Fixed Assets $142,143

Other Assets $0

TOTAL ASSETS $160,510

LIABILITIES

Current Liabilities

Short-Term Notes Payable $132,569

Income Taxes Due $0

Other Current Liabilities $0

Total Current Liabilities $132,569

Long-Term Liabilities

Long-Term Notes Payable $204,311

Other Long-Term Liabilities $0

Total Long-Term Liabilities $204,311

NET WORTH

Paid-In Capital $500,000

Retained Earnings -$676,370

Total Net Worth -$176,370

TOTAL LIABILITIES AND NET WORTH

$160,510

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Balance Sheet 2015: Year End

Balance Sheet

eK12 Education

2015

ASSETS

Current Assets

Cash $2,724,585

Accounts Receivable $17,024

Inventory -$2,602,575

Other Current Assets $0

Total Current Assets $139,034

Fixed Assets

Land $0

Facilities $46,710

Equipment $320,160

Computers & Telecommunications $109,700

(Less Accumlated Depreciation) $208,032

Total Fixed Assets $268,538

Other Assets $0

TOTAL ASSETS $407,571

LIABILITIES

Current Liabilities

Short-Term Notes Payable $148,679

Income Taxes Due $90,923

Other Current Liabilities $0

Total Current Liabilities $239,602

Long-Term Liabilities

Long-Term Notes Payable $55,632

Other Long-Term Liabilities $0

Total Long-Term Liabilities $55,632

NET WORTH

Paid-In Capital $500,000

Retained Earnings -$387,663

Total Net Worth $112,337

TOTAL LIABILITIES AND NET WORTH

$407,571

Page 74: eK-12 Business Plan

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Balance Sheet 2016: Year End

Balance Sheet

eK12 Education

2016

ASSETS

Current Assets

Cash $6,904,108

Accounts Receivable $25,532

Inventory -$5,404,500

Other Current Assets $0

Total Current Assets $1,525,139

Fixed Assets

Land $0

Facilities $46,710

Equipment $320,160

Computers & Telecommunications $109,700

(Less Accumlated Depreciation) $298,324

Total Fixed Assets $178,246

Other Assets $0

TOTAL ASSETS $1,703,385

LIABILITIES

Current Liabilities

Short-Term Notes Payable $55,632

Income Taxes Due $439,460

Other Current Liabilities $0

Total Current Liabilities $495,092

Long-Term Liabilities

Long-Term Notes Payable $0

Other Long-Term Liabilities $0

Total Long-Term Liabilities $0

NET WORTH

Paid-In Capital $500,000

Retained Earnings $708,293

Total Net Worth $1,208,293

TOTAL LIABILITIES AND NET WORTH

$1,703,385

Page 75: eK-12 Business Plan

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Balance Sheet 2017: Year End

Balance Sheet

eK12 Education

2017

ASSETS

Current Assets

Cash $12,492,859

Accounts Receivable $28,160

Inventory -$8,998,875

Other Current Assets $0

Total Current Assets $3,522,144

Fixed Assets

Land $0

Facilities $46,710

Equipment $320,160

Computers & Telecommunications $109,700

(Less Accumlated Depreciation) $384,491

Total Fixed Assets $92,079

Other Assets $0

TOTAL ASSETS $3,614,223

LIABILITIES

Current Liabilities

Short-Term Notes Payable $0

Income Taxes Due $900,154

Other Current Liabilities $0

Total Current Liabilities $900,154

Long-Term Liabilities

Long-Term Notes Payable $0 Other Long-Term Liabilities $0 Total Long-Term Liabilities $0

NET WORTH

Paid-In Capital $500,000 Retained Earnings $2,214,069 Total Net Worth $2,714,069

TOTAL LIABILITIES AND NET WORTH

$3,614,223

Page 76: eK-12 Business Plan

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5 Year Financial Summary (Chart)

-$1,000,000

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

2013 2014 2015 2016 2017

5-Year Financials At-a-Glance

Gross SalesGross ProfitNet Profit

Page 77: eK-12 Business Plan

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Appendix 8 (Momentum Screenshots)

Momentum login on iPad – system remembers users and automatically universally applies username/password where appropriate allowing for “single sign-on.”

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Momentum utilizes the system calendar of whatever platform is using it. This screenshot shows momentum integrated with the iOS calendar on an iPad

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This is the main launch screen on an iPad. It includes the child, his/her associated classes (left hand column), and links to their friends with comparisons of classes (bottom). Momentum indicates their overall achievement scores as well as recent activity with progress in those courses.

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After selecting a class, unit, and work concept, Momentum offers multiple ways for the student to cover the content including a digital textbook, videos, examples, and an assessment portion.

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Momentum’s digital textbook allows students to do many of things we’ve come to expect with digital media including searches and hotlinking.

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Video supplied by the content provider can be viewed here. Additionally, instructors can automatically link in information they find on other rich media sources like YouTube.

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Momentum is capable of walking students through examples with animations. Since some learners are more audio oriented, the system can also read sections to the learner.

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The social part of the product allows learners to share their profiles and avatars with their friends encouraging them to work together to accomplish more achievements. Some achievements could even be designed to require teamwork in order to complete the challenge.

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Momentum’s reporting system empowers educators with information about class characteristics like how long it took to earn achievements and the number of students that received those achievements. Momentum will provide large and expansive datasets that will afford researchers new means of associating and correlating effectiveness. Ultimately, this data could potentially be used to compare various types of curriculums to measure effectiveness and develop even more targeted ILPs based on psychographics and demographics.

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Real-time data can provide educators with information about students who need to be challenged and those that need a little assistance faster than traditional assessment methods.

Page 87: eK-12 Business Plan

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