k12 intends to expand the business to international markets and believes there is a significant worldwide demand for high-quality online curriculum. In the near-term it can do so by serving multinational corporations with large employee bases comprised of expatriates. ki2 generated $6 million of revenue in 2002, its first year of operations, growing to more than $116.0 million projected for FYE June 30, 2006. 13.3. Virtual Schools and District-Managed Virtual Programs (94% 2006E Revenue) The past decade has seen an increase in the number of contracts and charters awarded to Education Management Organizations (“EMOs”), which manage traditional K-12 public schools on behalf of a school district (“contract schools”) or manage charter schools either as the charter holder (“charter schoois”) or under contract with the charter holder ("contract charters"). In the early half of the 1990's, EMOs were mostly contract schools, managing traditional K-12 schools on behalf of schoo! districts. Later, as public money became available to charter schcols through the use of vouchers, these organizations moved toward charter school management and contract charter management. A movement toward alternatives to the public school system is expected to generate substantial growth in the for-profit EMO sector. Alternative schools and alternative management pregrams provide a significant opportunity to improve the current educational “product.” Furthermore, under the NCLB, growth in public school management is expected to continue as schcols that fail to achieve “Adequate Yearly Progress” ("AYP") for four consecutive years are subject to one of the following sanctions: replacement of all or most staff including the principal, state takeover of the school, hiring an outside entity to manage the school, or becoming a charter school. 412 is well positioned to take advantage of these trends. To comply with NCLB, all states submitted a plan to the Department of Education indicating baseline achi