FOR IMMEDIATE RELEASE
SchoolNet
New York, New York
September 26, 2005

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SchoolNet Closes $3 Million Financing from New York City Investment Fund

Funding Advances SchoolNet's Leadership Position

SchoolNet, Inc., the leader in Instructional Management Solutions (IMS) for K-12 school districts, today announced that it has received $3 million in senior loans and commitments from New York City Investment Fund (NYCIF), through its affiliated certified capital company (CAPCO), the New York Small Business Venture Fund II, LLC (NYSBVF II) , which invests in emerging technology companies that help spur the growth of small businesses to create jobs and help revitalize communities in New York City. This funding advances SchoolNet’s ability to implement its vision: improving the world’s education systems by using data to increase academic achievement.

“We are thrilled to partner with NYCIF, which provides growth capital to ventures that will benefit New York City and generate jobs,” said Jonathan D. Harber, president and CEO of SchoolNet. “NYCIF funding will support our extraordinary company growth as we work with many of the nation’s largest school districts, such as Austin, Cleveland, Chicago, Philadelphia and Pittsburgh.” SchoolNet’s Instructional Management Solutions have won two CODiE Awards, and the company has been n amed in each of the last two years among the Top 10 of New York’s Fastest Growing Technology Companies in the Deloitte Technology Fast 50 competition.

"We’re very pleased to work with SchoolNet as they assist K-12 school districts in accelerating student performance and improving their education systems,” said Kathryn S. Wylde, President and CEO of the Partnership for New York City. NYCIF is the Partnership’s economic development and investment arm. “Given the increasing demand for products that enable school districts and schools to obtain and analyze data across school districts, schools and classrooms, coupled with SchoolNet’s innovative software technology, we feel this New York-based company is poised for considerable growth.”

Added Janice Roberts, Co-President and Co-CEO of NYCIF: "SchoolNet has a strong customer base and is recognized as a market leader. Moreover, SchoolNet’s real time data and analysis on student, school and district performance should lead to improved school and student performance. NYCIF’s additional capital will contribute to the growth of this innovative, New York City-based company and help SchoolNet further solidify its position as the ’best of breed’ Instructional Management Solutions provider for K-12 school districts.”

About SchoolNet, Inc.

SchoolNet is the leader in Instructional Management Solutions (IMS) that improve efficiency and increase achievement in K-12 school systems. SchoolNet’s award-winning Instructional Management Solutions are built upon an open, scalable platform that provides users with the data, reports, tools, and content to individualize instruction and improve schools. SchoolNet’s IMS are used successfully by some of the nation’s largest school districts including Philadelphia and Chicago and meet industry standards such as Schools Interoperability Framework (SIF) as recommended by the U.S. Department of Education’s National Education Technology Plan and the Gateway to Education Materials (GEM).

About NYCIF/NYSBVF II

The New York City Investment Fund (www.nycif.com) is the vision of Henry R. Kravis, founding partner of Kohlberg, Kravis, Roberts & Co., who serves as its Co-Chairman, along with Russell L. Carson, General Partner of Welsh, Carson, Anderson & Stowe. NYCIF has raised over $100 million to mobilize the city’s world financial and business leaders to help build a stronger and more diversified local economy. To that end, NYCIF has built a network of top experts from the investment and corporate communities who help identify and support New York City’s most promising entrepreneurs in both the for-profit and not-for-profit sectors. NYCIF is the investment and the economic development arm of the Partnership for New York City (www.pfnyc.org), the city’s largest business organization.

NYSBVF II is a certified capital company that NYCIF organized to participate in a New York State program that provides tax credits to insurance companies that invest in small businesses via certified capital companies (CAPCOs).