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413. 12 INC. (“412”) 12, headquartered in McLean, Virginia, is a curriculum company and management company for kindergarten through ninth grade (grades 10-12 currently in development). «12 is the largest operator of K-12 virtual schools in the world. &12’s mission is to enable delivery of world-class education for students in grades K-12, consisting of comprehensive online and offline curriculum that supports numerous applications. 12 has invested more than $70 million in building a state-of-the-art curriculum offering, integrated assessment and the supporting technology delivery systems. 13.1. History k12 was founded in December 1999, with the goal of leveraging technology to create the highest-quality curriculum. 12 launched its first offering in September 2001 for students in grades K-2. This offering was launched in conjunction with several of the world’s leading education experts and included interactive lessons in Language Arts, Math, Science, History, Art and Music. &12 launched grades 3-5 in the fall of 2002, grades 6 and 7 in the fall of 2003, grade 8 in the fall of 2004 and grade 9 in fall of 2005. k12 has continually improved its production process and is now producing courses that are of higher quality and at a lower cost per lesson than it originally produced. Building the service in this modular, roiling fashion allows k12 to capture students at an early stage and to build out its product offerings in alignment with student progress. 13.2. Current Operations k12 provides a world-class education for its students which combines a comprehensive online and offline curriculum with integrated assessments and supporting technology delivery systems. «12 currently provides its education to grades K-9 through more than 7,000 interactive lessons, and is in the process of developing content for grades 10-12. Today, k12 sells its curriculum through the following channels: & Virtual public schools (91% of 2006E Revenue) — k12 ts the largest curriculum and management provider to virtual public schools in the U.S. — k12 offers its curriculum directly to the rapidly growing virtual school market (projected to be offered to 24,000 students in 2007) @ District-managed virtual programs (3% of 2006E Revenue) — k12 sells the curriculum and technology directly to school districts who mange their own virtual schools — This is a fairly new initiative for 412 but is expected to be a larger part of total revenue over time EH School districts for traditional classrooms (3% of 2006E Revenue) — k12's science curriculum has been piloted as the science curriculum in various school districts including Philadelphia — Initial results are promising B Direct to consumer (3% of Z006E Revenue) ~—- To parents who prefer home-schooling or want to augment or enhance their children’s public or private school education 106 HOUSE_OVERSIGHT_024539