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Discussion Questions 1. Breeze plans to build a business by licensing its footwear ventilation technology to a major athletic shoe manufacturer and then using the proceeds to extend the technology to other shoe and foot products. • What is your assessment of the attractiveness of an athletic shoe with Breeze's ventilation technology? In other words, how good is the idea? • What is your assessment of Breeze's strategy to license its technology rather than manufacturer athletic shoe incorporating the technology? • What does Breeze have to do well to make money with this idea? In other words, what are the critical success factors? |
• How well has Breeze established the demand for athletic shoes incorporating its ventilation technology?
• What are the major risks?
2. Breeze has three management team members.
• How capable is this team of launching the business?
• Who among the group is most critical to Breeze's success?
• Are any additional talents or skills needed?
3. Breeze is currently in negotiations with a major athletic shoe manufacturing company.
• How critical is this alliance to Breeze?
• What would motivate the athletic shoe manufacturer to sign a licensing agreement with Breeze?
• How attractive is the licensing structure involving a flat fee per period which Breeze is attempting to negotiate?
4. Breeze's pro forma income statement for year 5 shows revenues of $17,000,000 and net income of $7,763,370.
• Which assumptions are most critical?
• Where and when is the $1,000,000 payment to the inventor reported?
• Assess the balance sheets.
• Are the financial statements credible?
• How could the presentation of the financial statements be improved?
5. Breeze is not currently looking for additional investors. However, assume that you were offered the opportunity to purchase the $70,000 bond held by Gurumbal Pty Ltd., that it was convertible into 5% of the common shares outstanding, and that you had sufficient capital to make this investment.
• What do you see as the major strengths and weaknesses of this investment opportunity?
• What are the major risks?
• How would you get your money out of Breeze?
• Would you invest?