2/13/06 1

Textcentric, Inc

Adaptive Technology1998 -2006

2/13/06 2

Briefing

Second Round Seed Money $500,000How Much?

February 28, 2006When?

US Education MarketWhere?

Custom Textbooks and Pedagogical ToolsWhat?

Improve Teaching and LearningWhy?

Adaptive Content TechnologyWhat?

Textcentric, Inc (TCI)Who?

This briefing answers thesequestions and request second stagefinancing for an exciting CMU spin-off opportunity.

2/13/06 3

TCI Timeline

Develop Exit Strategy2010

Scale to meet the demand2009

Branding Marketing and Sales, New Deployments2008

New Deployments, Develop Markup Content Repository, Deploy Adaptive Content2007

Round Two, $500,000, PSO Rollout and New deployments, Develop pedagogical tools, Expand US Operation.2006

Agreement with PSO (2005 - 2010) and Deployment Conversion and eLearning Applications2005

Develop Marketing Campaign with Pearson Publishing, plc (PSO). And other Clients2004

Develop Custom Printing Application2003

Develop XML Repository Develop Conversion and eLearning applications2002

Round One, VC $250,000, Debenture open SL Operation and Develop Conversion and eLearning Applications2001

Proof of Concept, CMU/ SL Spin-off, TCI, Inc. add Directors2000

CMU R&D Project, and Adaptive Content Pedagogical Tools1999

XML adopted as subset SGML International Printing Standard, TCI Develop Interactive CD1998

Significant Event in TCI History 1998 - 2006Year

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Concept1998

SMGL

XML

1. Pedagogical Toolsto Improve learning

StudentThesis

“Metadataand XML

used to improve content reusability and Global Teaching and

Learning”

InternationalText Processing

Standard

2. Custom TextbooksPrinted on the Flyto Improve teaching

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Proof of Concept1999 - 2000

Spin-off

Back toDrawingBoard

Adaptive Content

XML Repository

CMU Research

SL Development

PSO Agreement

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Round 1

Directors VC Angles Banks US Operations

Workforce Textbooks XML Conversion Administration Print on the Fly

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Use of Funds

Proof of Concept Production DeploymentQA Maintenance

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XML ConversionLabor Intensive Process

Research Development Production and QA

New Labor

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Sri Lanka Labor

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Course Development

XML Content Markup Repositories

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Tools of the Trade

Microsoft Operating SystemsMicrosoft OfficeWordPower PointExcel

Microsoft Development Environment (MDE).netC# Java

Multi-media development capabilitiesMacromedia Product SuiteGraphic DesignAnimation3D Graphics.

Scripting LanguagesHTMLXMLStyle SheetsJava ScriptAction Script

Standards

SCORMIMSLOMQTILIPADLSIFLTSCAICCASCIISMLGXML

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Course ManagementPlatforms

Course Management SystemsPrometheuseCollegeBlackboardWeb CT

Learning Management SystemsVividLearnNet - IsraelI-Learn - Sri Lanka

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Deliverable

Custom Designed TextbooksPrinted on the Fly

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Custom TextbooksPrinted on the Fly

ProfessorsComposeTextbook

Print on the FlyPrinted Required Copies

Tablet PC

PC Content on DVDs

Content on I-POD

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Textbook Costs

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Textbook Market

Textbook Publishers

Used Textbook Salestaking market share

Textbook Market

Intellectual PropertyDemandPrinting

Shipping &Handling

Shrinkage Administration

Custom TextbooksPrinted on the fly

Price Increases each year for last 20 years.

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TCI Invoice HistoryMay 2002 to December 2005

PSO Average9 Invoices $29,84211-04

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TCI Timeline2002 - 2009

‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09

$192,071$67,876

Round 1 - $250,000 Debenture

$281,885 $1,093,334$35,891 $1,640,000 $2,136,000

Assets $188,673Liabilities $447,548Losses ($258,875)

$577,732

1-Q-06 EstimateSales $105,590Expenses $162,308Loss ($56,718)

89% 183% 47% 105%% 89%% 50%% 50%%

PSO Agreement

Round 2 - $500,000

Current Liabilities $103,845

Worst Case4-Q-06Sales $1,093,334Expenses $1,085,428Loss ($92,094)

Best Case4-Q-06Sales $1,200,000 (wag)Expenses $1,084,428Profit $115,572Need $166,660 New Sales

Sales

Sales Growth

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LiabilitiesTotal $849,450

1999 - 2006

SL Government$69,900Pass Due

Employees$226,500$2,400 per Month

Investors$51,000$1,000 per Month

Banks$132,200$5,350

Current Liabilities - $103,845$8,750 per Month

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Round 2

Investors Innovation Works VC Fund Angle

Advisory Board

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Use Round 2

New Employees New Deployments

New Publishers

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Education

US Market1990 -2007

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US Students 200670,000,000 Students

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Student Markets

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College Students

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Cost of US Education$275,000 per Student

Grades 3 through College, assume 25% are tutored

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US Higher Education System1997

Bell Shaped Curve2,288,000 DegreesCost $197,973,000,00014,500,000 EnrollmentAverage $13,653

Teachers990,0002,752,500 staff2.78:1 ratio

Textbooks80% Use them

Lectures Test

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Learning Process“When the student is ready the teacher will appear”

LearnTeach Test Grade

Ready

Pass

Fail

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How Students Learn TodayMulti-media anytime, anyplace

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Pedagogical Market70,000,000 US Students

K-8 High School College Adult

Textbook PublishersSector $113,209,000,000

Supplemental Material Vendors$283,022,500 wag

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US StudentsTarget Market… US Students interested in improving learning skills

Assume: 25% of Studentscan improve learningskillswith Adaptive Reader.

Tutor, learning aids andsupplemental materialStudents buy (20%) useTo help them “get it”

Self paced learning without reprisal…till you get it!

“gets it”

Target Market

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Student Markets70,000,000 US Students

5%5%35%6. Cost of Sales

38,000,00017,000,00015,000,0007. Students

9,500,0004,250,0003,750,0008. Target

3 months3 months9 months5. Lead Time

AB ReaderAB ReaderXML Textbook4. Products

WebWebDirect3. Sales

6662. Publishers

K-8High SchoolCollege1. Market

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Student Marketwags

80%$12/month7. Subscription Fee

25%17,500,0005. Need Help (wag)

1%175,0006. Market Share - Year 1

$36

70,000,000

15,000,000

16,000,000

38,000,000

1997

20%8. Single Sales

100%4. US Students

21%3. College

23%2. High School

54%1. K - 8

% TotalUS Student Enrollment

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TCI

Financial History2002 to 2010

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The BooksSource: Audited Financial Statements

(21%)($100)$383$483EPS16

(21%)$13,332($51,334)($64,662)Net Income15

(21%)$13,332($51,334)($64,662)EBITDA14

(5.6%)($9,155)$153,538$162,693General Selling and Administration13

Expenses12

2%$1,901$102,204$98,215Gross Margin11

30%$38,394$164,551$126,157Revenue10

Income Statement9

12%$19,899$188,673$168,744Total Liabilities and Equity8

25%($51,336)(258,875)($207,539)Equity7

13%$40,567$343,703$303,136Long Term Liabilities6

42%$30,688$130,845$73,177Current Liabilities5

Liabilities4

12%$19,899$188,673$168,774Total Assets3

21%$6,366$37,217$30,851Current Assets2

% ChangeChange3-31-053-31-04Assets1

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Ratios

(28%)(36%)93%129%GSA5

(20%)

(17%)

0.18

(0.06)

Change

(39%)(31%)(51%)Net Income6

(22%)61%77%Gross Margin4

(13%)(1.24)(1.43)Debt Equity3

(15%)0.360.42Current2

% Change3-31-053-31-04Ratio1

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TCI Customers2004 - 2005

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TCI Sector Revenue2004 - 2005

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TCI Revenue2001 - 2010

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Revenue Growth Rate2003 - 2010

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TCI Revenue1-1-06 to 12-31-06

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TCI RevenueBy Quarter

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Cost of Goods SoldBy Quarter

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Operating ExpensesBy Quarter

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EBITDABy Quarter

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Profit (Loss)By Quarter

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TCI Labor ProjectionsBy Quarter

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TCI, Inc.

Adaptive Technology Interest Group

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CEOHow much Cash ($000,000)?

$0

$511,000

$0

$0

$0

$15,780,000

$0

$9,900,000

$0

$0

$0

OptionsExercised

$1,480,000

$285,000

$505,000

$5,950,000

$1,000,000

$2,220,000

$531,000

$590,000

$885,000

$639,000

$380,000

Salary

1844

1996

1997

1939

1975

1982

1991

1998

1990

1995

1998

Inception

59

51

34

49

50

50

46

53

43

46

50

Age

Marjorle Scardino

Doug Kelsall

Mike Chasen

Mark Hurd

Bill Gates

Bruce Chizen

Tom Jenkins

Jeff Rodek

Bernard Liautaud

Martin Brauns

Robert Olson

CEO

HPQHewlett-Packard, Inc.

BBBBBlackboard, Inc.

ECLGeCollege.com, Inc.

MSFTMicrosoft, Inc.

PSOPearson Publishing, plc

ADBEAdobe Systems, Inc.

OTEXOpen Text, Inc.

HYSLHyperion Solutions, Inc.

BOBJBusiness Objects, S.A.

IWOVInterwoven, Inc.

STELStellent, Inc.

SymbolCompany

Most recent quarter (mrq) and twelve trailing months (tty))

2/13/06 50

Financial HighlightsMargins

13.96%

21.93%

18.06%

2.77%

31.57%

30.66%

0.05%

9.47%

8.60%

-0.06%

0.76%

ProfitMargin

6-05

9-05

9-05

10-05

12-05

12-05

12-05

12-05

12-05

9-05

12-05

MRQ

6.42%4.04%5.72%10-30HPQ29.44%8.29%16.86%12-31BBBB28.92%5.99%12.44%12-31ECLG

28.56%16.09%40.92%6-30MSFT

7.98%

36.67%

0.05%

13.06%

6.18%

-0.03%

0.56%

ROE

2.13%5.62%12-31PSO

20.70%37.05%12-2ADBE2.85%7.13%6-30OTEX6.81%13.06%6-30HYSL4.20%12.62%12-31BOBJ

-0.27%-2.02%12-31IWOV1.12%2.93%3-31STEL

ROAOperationMargin

Fiscal YearEnds

Company

Most recent quarter (mrq) and twelve trailing months (tty))

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Income StatementAdaptive Content Companies

$975

$17

$30

$7,300

$18,040

$793

$68

$130

$200

$17

$8.6

EBITDA

$8.43

$4.56

$4.93

$30.11

$3.86

$4.01

$8.56

$12.09

$11.92

$4.13

$4.27

RevenuePer Share

1.2%

8.8%

20.7%

7.1%

9.4%

18.8%

-3.4%

4.8%

14.2%

9.1%

14.6%

RevenueGrowth%

$0.82-62%$2,400$20,470$86,700HPQ

$0.80108%$24$78$130BBBB

$0.9859%$22$42$98ECLG

$1.215.5%$13,060$33,590$41,360MSFT

NA

38%

-75%

-0.20%

64%

NA

1,046%

Qtr. EarningsGrowth YoY

$1.18$403$445$6,720PSO

$1.19$602$1,560$1,970ADBE$0.01$228$288$417OTEX$1.11$68$528$721HYSL$1.00$93$725$1,080BOBJ

$0.00-$94$109$170IWOV

$0.03$0.90$75$119STEL

EPSNetIncome

GrossProfit

RevenueCompany

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Balance SheetHow much Cash ($000,000)?

$3,830

$20.4

$0.34

$5,220

0

0

$12.93

0

0

0

$993

Debt

$1.77

$0.73

$4.15

$4.90

$3.36

$2.84

$1.78

$7.16

$3.70

$3.00

$2.08

Cash perShare

$13.101.380.14$13,930HPQ

$3.551.86.004$123BBBB

$4.171.850.22$16.2ECLG

$4.252.790$34,700MSFT

$6.90

$3.77

$8.40

$9.80

$16.90

$7.00

$5.63

BookValue

2.100.70$1,410PSO

4.180$1,700ADBE

1.320.32$87OTEX

2.160$425HYSL

1.380$337BOBJ

1.960$127IWOV

2.78.006$59STEL

CurrentRatio

DebtEquity

Cashmrq

Company

Most recent quarter (mrq) and twelve trailing months (tty))

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Valuation MeasuresHow much Cash ($000,000)?

1.84

5.0

8.60

2.41

5.9

10.10

2.0

3.5

2.3

1.33

2.01

PriceBook

4.6

9.7

9.7

5.5

7.1

6.0

7.1

6.0

7.1

6.0

6.0

SectorBook

11

22

40

38

22

33

3

30

38

NA

364

TrailingP/E

12,580

460

721

80,710

241,100

21,510

753

1,560

3,090

259

261

EnterpriseValue

1.031589,410HPQ

6.3737843BBBB

4.6728456ECLG

6.6617275,800MSFT

1.501910,160PSO

9.582619,120ADBE

2.0014827OTEX

2.75211,980HYSL

3.18213,420BOBJ

2.2921386IWOV

2.7921319STEL

PriceSales

ForwardP/E

MarketCap

Company

Most recent quarter (mrq) and twelve trailing months (tty))

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ProductivityRevenue by Total Hours Paid

69,449,120

921,440

1,000,480

312,000,000

126,880,000

11,926,720

4,661,280

5,22,560

7,974,720

1,447,680

1,015.040

Paid Hours

33,389

443

481

150,000

61,000

5,734

2,241

2,607

3,834

696

488

Employees

$27.79$86,700HPQ

$12.99$130BBBB

$10.64$98ECLG

$32.60$41,360MSFT

$9.68$6,720PSO

$16.52$1,970ADBE

$8.95$417OTEX

$13.30$721HYSL

$13.54$1,080BOBJ

$11.74$170IWOV

$11.72$119STEL

ProductivityRevenueCompany

2/13/06 55

2006 Productivity Ratio

• The productivity ratio isderived by dividing totalrevenue by total hourspaid per Year.

2/13/06 56

Thank Youfor the

Opportunity

Questions?