Content Specialists Technology e-Learning about Technology for Age 8-13

Overview Large and growing demand to interest kids in engineering and technology Large and growing need for constructive, after-school activities. Need for quality, in-school, technology specialists despite tight budgets. Need for content that readily captures youngsters’ interest. Based on: Proven and acclaimed content created at MIT’s Media Lab. Unique Internet delivery model offers high caliber university talent (Harvard, MIT, Tulane, UCLA) anywhere there is Internet access. Experienced, talented management & development team. Build-it-Yourself is a collaborative e-learning solution aimed at the underserved age 8-13 segment. Based on groundbreaking work at MIT’s Media Lab, it addresses the demand to teach children to learn and appreciate science and technology Build-it-Yourself satisfies:

Market Segments At Home After School Public School Private School Commercial After School Public- After School Private-After School 25 Million BIY US Opportunity: After School Programs = 3.00 Million Youngsters Available budget: est. $1.8 Billion ($600/yr/child) 26,569 Schools (5 Million Kids) 15% (750 K youngsters) 71,270 Schools (20 Million Kids) 10% (2 million youngsters) 15 Million Youngsters Source: Institute for Educational Science, US dept. of Education, Digest of Educational Statistics and Wallace Foundation May K - 325K youngsters Age 8-13

vision, product/service (IP) customer examples market

The Vision The Challenge: The next generation of leaders and builders must use complex technology to solve tough problems. The Mission: Inspire and guide kids to build creative inventions. Empowering the next generation of builders

What We Do Build-It-Yourself provides after- school and at-home workshops that inspire and empower kids to … create, design, build and invent. We engage boys and girls in playful approaches to design, invention and scientific inquiry. We train kids to apply complex technology to solve problems. Empowering the next generation of builders

Who We Target Boys and girls ages 8 to 13 Parents "One can imagine Build-It-Yourself students in later years sliding about a mile down the street to continue their projects at MIT." Quote from an article in The Improper Bostonian about the Build-It-Yourself laboratory near MIT Empowering the next generation of builders 10 million are enrolled in after-school enrichment programs.

The Product Database of Content Elements: Online database of: Playful storylines and associated challenges Building tricks and lessons Functional building blocks that enable kids to build complex projects quickly. Empowering the next generation of builders Content Specialists Collaboration

Seth Mastin – BA Computer Science, MIT Rebekah Gendron – MEd, Rhode Island Univ Max Seidman – Sophomore BB&N Valeria Roman – Science Journalist, Argentina Naseem Makiya – Junior Harvard Michael Hsu – Sophomore, Choate Liu Huan – Senior, Shanghai High School Joan Tarud – MS Mechanical Engineering, MIT Network of Specialists: Graduates and students from the Harvard/MIT community who inspire and guide kids. Empowering the next generation of builders The Product Content Specialists Collaboration

Effective Collaboration Tools: 2-way audio/video webcast platform enables kids to collaborate with peers and specialists in a global laboratory. Empowering the next generation of builders The Product Content Specialists Collaboration

Differentiation 1)Build-It-Yourself appeals to a high % of boys and girls. Technology is applied to a broad range of kids' interests and social issues in a playful way. It is a unique integration of technology with whimsical storylines, art, games, and social collaboration. 2)Build-It-Yourself students execute complex ideas quickly. The Build-It-Yourself database of construction modules encourages kids to break down complex solutions into simple, reusable, functional building blocks. This database of construction modules minimizes mentor time spent on repetitive, basic concepts and maximizes valuable mentor time focused on individual questions and solutions. Empowering the next generation of builders

3)Build-It-Yourself offers consistent, high-quality instruction at half the cost of traditional instruction. Experienced, inspiring, Build-It-Yourself specialists, (many from MIT and Harvard) collaborate with kids, parents and teachers via live Webcasts. ($10/hr for babysitter, $10-$20/hr for camp or after school program, $10/hr for public school, $50/hr for private teacher.) If a member pays $10/mo and does a 1hr workshop each weekend, the cost is $2.50/hr for live collaboration. In addition members get access to on demand content and web space to post projects. 4)Build-It-Yourself projects are unusually engaging and creative. The Build-It-Yourself program focuses on the presentation of ideas as much as on the execution of ideas. Each project is presented on the Web. The result... kids build confidence because their projects look good, win positive feedback and are accessible to a global audience. Empowering the next generation of builders Differentiation

Our Workshops Are In Demand 16 schools schools served: –70% are repeat customers –Include BB&N, The Park School, Concord Academy –Growth via word-of-mouth More than 1400 kids served More than 15,000 hours of workshops delivered More than $320K revenue generated “Clio was thrilled. She couldn't stop talking about what she did.” Parent “I never thought my son would give up soccer for anything.” Parent Key StatisticsValidation Empowering the next generation of builders

Testimonials "The goal is to highlight the 'powerful ideas' in the modules -- that is, the ideas that help you understand how the module works, and provide you with a foundation for building other things." Professor Mitchel Resnick, from the MIT Media Lab, directing the collaboration between MIT and Build-It-Yourself to develop a database of construction modules "Build-It-Yourself is a fascinating program that engages students in creative projects to design and build robots. Both of my children --ages 7 and 9-- have participated in Build-It-Yourself workshops and learned greatly from it. It's very interesting pedagogy." Dr. Fernando Reimers, Associate Professor and Director of HGSE's International Education Policy program, describing the Build-It-Yourself program to colleagues at the Harvard Graduate School of Education "Thanks for putting on one of the best Robotics workshops that I have been to." Science teacher at the Jamestown Middle School, RI commenting on a Build- It-Yourself workshop for teachers Empowering the next generation of builders

Testimonials Empowering the next generation of builders

Customer Examples At Home - After-School Microsoft Pilot Program Private Summer and After-School Concord Academy BB&N Shady Hill Park Renbrook (Hartford) Public Summer School and After School Greater Lawrence Schools Cranston Middle School (Cranston, RI) LaMesa California (SanDiego) Schools Runkle (Brookline) Before using BIY they had mixed results using their own content or a competitor’s

Product/Content (IP) Over 25 pre-packaged hour projects, programs and lesson plans Ranges from basic animated vehicles to complex robots, vehicles, multi- player web games and personal web site development. Database accessible component library Over 50 core control and operational components inspired by MIT Media Lab education research. Structured database developed at the Media Lab Lesson plans for teaching technology and engineering fundamentals Process for engaging youngsters using web-collaboration software Best practice for live, interactive e-learning Learn, create, construct Share Document Web-publish and present Effectiveness-proven content based on over 1,400 youngsters in sixteen schools.

Build-It-Modules (IP) Over 50 hardware and software building blocks: from gear trains to chassis to programmable modules from graphic programming to graphic illustrating On-Line Building Block Module Library  Rotate 10  Shake, Flap, Gyrate 13  Sound Off 6  Roll, Walk 4  Throw 2  Squirt 1  Detect 5  Program Control 8  Other 3

Competition Mad Science $100+M (franchisee total) Franchise distribution delivers mixed quality Play-Well Franchise and Direct Focused on entertainment Children’s Technology Workshop Direct – instructor on site Web site is “game” oriented-only Odyssey of the Mind Focused on Creativity not technology Programs delivered by local school personnel Unlike competitors, BIY offers live web access to technology student-teachers, content developed in collaboration with MIT, Build-It-Blocks and our On-Line database

Three Ways to Reach the Market  B2B via Channel: B-i-Y delivers e.instruction and content to youngsters in school settings  B-i-Y trained and certified instructors lead by B-i-Y specialist in web-cast  B2B via VARs: Programs delivered by certified Commercial Business Partners already providing education (Bright Horizons, Sylvan, Mad Science, Nobel Learning, etc)  B2C: Self-guided at home programs (with parent or home-care provider)  B-i-Y web specialist available via interactive video/audio  B-i-Y web-based virtual build projects

Plan Scale web delivery of after- school programs nationally; to public/private schools via alliances Secure VAR channel offering after-school programs Launch Build-it-Yourself web site Build a base of youngsters, parents and educators who have experienced Build-it-Yourself programs, then launch the B-I-Y social/education site

Overview: Results by Channel VAD Channel (Alliances): After School Public/Private Programs 2.75 Million (est.) children served Served by over 90,000 schools 4-6 month close cycle At $12/hr retail: $445 million opportunity 5 th year goal: 2% market share = $8.9 million Net Income: 13% of revenue VAR Channel: Commercial After-School Program Vendors 325,000 (est.) children served Under 100 organizations (Bright Horizons, Edison, Nobel, Knowledge Learning Corp, etc) 6-9 month close cycle plus 3-6 month time-to-pilot At est. $600 per child/yr, opportunity = $195 million 5th year goal: 6% market share = $12.5 million Net Income: 24% of revenue Web Site: social/collaboration/learning network 300,000 subscribers in 5 th year $8 per month 5 th year goal: $28.8M revenue Net Income: 50% of revenue Sources: Digest of Educational Statistics 2005, The Catalyst 2006 and After School Alliance

The Team 1.Steve Fisch: CEO. COO Iona Technologies (NASDAQ:IONA), president Attunity (NASDAQ:ATTU), CEO Virtual Access Networks (acquired by Symantec) and Reconda International (acquired by MQ Software). Sales and Marketing executive at McDonnell Douglas (Boeing), Prime Computer and Computervision. BSEE and MBA. School Committee: Sudbury Mass 2.John Galinato: Founder and Product Manager. BEE and MS Cornell; co-founder and product manager at Autographix; founder/president Computer Aided Communications. 3.Ann Butler: Content Advisor. M.Ed. 1998, Technology in Education, Harvard Ed School 4.Barbara Ross: Operations & Marketing Advisor. Co- Founder/COO WebCT acquired by Blackboard Inc.

Growth to $50+ M Revenue by SourceYear 1Year 2Year 3Year 4Year 5 Alliances (B2B2C)$221,880$1,310,240$2,293,920$4,587,840$8,899,200 EBITDA-245,188134,760488,168983,3361,423,672 Commercial Vendors (B2B)$0$360,000$1,800,000$3,600,000$12,500,000 EBITDA-275, ,050137,750725,5003,041,000 Web2C$0$75,750$9,847,500$18,512,500$28,850,000 EBITDA$0($332,370)$4,188,990$9,256,250$14,425,000 Total Revenue$221,880$1,745,990$13,941,420$26,700,340$50,249,200 EBITDA ($520,188)($421,660)$4,814,908$10,965,086$18,889,672

In 5Years => 402,800 children Kids EngagedYr 1Yr 2Yr 3Yr 4Yr 5 Alliances5703,3605,88011,76022,800 Channels06,00030,00050,00080,000 Web2C050065,000175,000300,000 TOTAL Youngsters5709,860100,880236,760402,800

Series A Investment in two $750,000 tranches: 1 st builds out core business nationally and initiates channel/alliances 2d builds-out channel and enables initial launch of Web2C site Cash FlowYear 1Year 2Year 3Year 4Year 5 Beginning Cash$1,400,000$789,084$345,240$5,172,236$16,286,498 Cash Flow($610,916)($443,844)$4,826,996$11,114,262$19,107,392 Ending Cash$789,084$345,240$5,172,236$16,286,498$35,393,890 Louisiana Fund committed to lead with 50% of funding based on $1M pre-money valuation

Valuation Comps Web2.0 Social Networks –ClubPenguin/Disney (WebKinz, NeoPets/Viacom MTV, etc.) Education Applications –BlackBoard (SunGard, etc.) Education Content & Texts –McGraw-Hill (Pearson, etc.) Full Services Education –Bright Horizon ( Nobel, etc.) 10:1 5:1 2.4:1 1.5:1 BIY moving up the value chain Cap Value: Rev (examples)* Exit is possible through any of the companies in these categories * source: Fidelity FY06 revenue, recent CAP and published reports

Investment of $1.5 million is required to expand the B2B business, fill-out the team, shrink wrap the product, expand infrastructure and develop distribution partnerships. Large and growing demand for constructive, after-school activities. Consistent, high-quality instruction without in- school specialists Collaboration with MIT Media Lab. Proven and acclaimed content. Unique web delivery model. Access to high caliber student specialists. Experienced, talented team.

Addendum

Testimonials "The goal is to highlight the 'powerful ideas' in the modules -- that is, the ideas that help you understand how the module works, and provide you with a foundation for building other things." Professor Mitchel Resnick, from the MIT Media Lab, directing the collaboration between MIT and Build-It-Yourself to develop a database of construction modules "Build-It-Yourself is a fascinating program that engages students in creative projects to design and build robots. Both of my children --ages 7 and 9-- have participated in Build-It-Yourself workshops and learned greatly from it. It's very interesting pedagogy." Dr. Fernando Reimers, Associate Professor and Director of HGSE's International Education Policy program, describing the Build-It-Yourself program to colleagues at the Harvard Graduate School of Education "Thanks for putting on one of the best Robotics workshops that I have been to." Science teacher at the Jamestown Middle School, RI commenting on a Build-It-Yourself workshop for teachers