Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2006

OR

o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from______________to______________

Commission File Number 000-32469

THE PRINCETON REVIEW, INC.
(Exact name of registrant as specified in its charter)

Delaware		22-3727603
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2315 Broadway New York, New York		10024
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (212) 874-8282

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x

No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer x

Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o

No x

The Company had 27,574,512 shares of $0.01 par value common stock outstanding at May 8, 2006.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION			3
	Item 1. Condensed Consolidated Financial Statements		3
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Operations	4
		Condensed Consolidated Statements of Cash Flows	5
		Notes to Condensed Consolidated Financial Statements	6
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
	Item 3. Quantitative and Qualitative Disclosures about Market Risk		17
	Item 4. Controls and Procedures		17
PART II. OTHER INFORMATION			18
	Item 1. Legal Proceedings		18
	Item 1A. Risk Factors		18
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		18
	Item 3. Defaults Upon Senior Securities		18
	Item 4. Submission of Matters to a Vote of Security Holders		19
	Item 5. Other Information		19
	Item 6. Exhibits		21
SIGNATURES			22

PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements

THE PRINCETON REVIEW, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets

	March 31, 2006			December 31, 2005

	(in thousands, except share data)
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	3,143		$	8,002
Accounts receivable, net of allowance of $2,126 in 2006 and $1,601 in 2005		24,518			22,493
Accounts receivable-related parties		542			1,591
Other receivables ($697 in 2006 and $789 in 2005 from related parties)		728			813
Inventories		2,828			2,798
Prepaid expenses		2,467			2,229
Other current assets		1,310			1,307

Total current assets		35,536			39,233
Furniture, fixtures, equipment and software development, net		16,074			16,155
Goodwill, net		31,506			31,506
Investment in affiliates		1,873			1,938
Other intangibles, net		13,717			13,371
Other assets		3,753			3,168

Total assets	$	102,459		$	105,371

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,931		$	10,449
Accrued expenses		9,634			10,826
Current maturities of long-term debt		1,469			1,530
Deferred income		18,438			16,548

Total current liabilities		38,472			39,353
Deferred rent		2,408			2,327
Long-term debt		2,681			2,845
Series B-1 Preferred stock, $.01 par value; 10,000 authorized, issued and outstanding at March 31, 2006 and December 31, 2005 (liquidation value of $11,018)		10,000			10,000
Stockholders’ equity
Preferred stock, $.01 par value; 4,990,000 shares authorized; none issued and outstanding at March 31, 2006 and December 31, 2005		—			—
Common stock, $.01 par value; 100,000,000 shares authorized; 27,572,172 issued and outstanding at March 31, 2006 and December 31, 2005		276			276
Additional paid-in capital		116,449			116,279
Accumulated deficit		(67,555	)		(65,430	)
Accumulated other comprehensive (loss)		(272	)		(279	)

Total stockholders’ equity		48,898			50,846

Total liabilities and stockholders’ equity	$	102,459		$	105,371

See accompanying notes to the condensed consolidated financial statements.

THE PRINCETON REVIEW, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)

	Three Months Ended March 31,

	2006			2005

	(in thousands, except per share data)
Revenue
Test Preparation Services	$	25,033		$	22,885
K-12 Services		6,873			7,919
Admissions Services		3,174			2,794

Total revenue		35,080			33,598
Cost of revenue
Test Preparation Services		7,845			7,037
K-12 Services		4,726			4,023
Admissions Services		1,290			773

Total cost of revenue		13,861			11,833

Gross profit		21,219			21,765
Operating expenses		23,089			21,575

Income (loss) from operations		(1,870	)		190
Interest expense		(31	)		(309	)
Equity in the income (loss) of affiliates		(67	)		(67	)
Other income		—			41

Loss before provision for income taxes		(1,968	)		(145	)
(Provision) benefit for income taxes		—			—

Net loss		(1,968	)		(145	)
Dividends and accretion on Series B-1 Preferred Stock		(157	)		(195	)

Net loss attributed to common stockholders	$	(2,125	)	$	(340	)

Net loss per share - basic and diluted	$	(0.08	)	$	(0.01	)

Weighted average shares used in computing net loss per share		27,572			27,570

See accompanying notes to the condensed consolidated financial statements.

THE PRINCETON REVIEW, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)

	Three Months Ended March 31,

	2006			2005

	(in thousands)
Cash flows from operating activities:
Net income (loss)	$	(1,968	)	$	(145	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		451			400
Amortization		1,661			1,336
Bad debt expense		762			165
Write-off of inventory		166
Stock based compensation		170			—
Other, net		101			(185	)
Net change in operating assets and liabilities:
Accounts receivable		(1,654	)		(2,202	)
Inventory		(196	)		131
Prepaid expenses		(238	)		342
Deferred book and software development costs		(846	)		515
Other assets		(74	)		326
Accounts payable and accrued expenses		(2,711	)		(659	)
Deferred income		1,890			(3,145	)

Net cash used by operating activities		(2,486	)		(3,121	)

Cash flows from investing activities:
Purchases of furniture, fixtures, equipment and software development		(1,366	)		(1,931	)
Payment of related party loan		133			—
Note receivable		250			250
Additions to capitalized K-12 content, capitalized course costs		(1,010	)		(587	)

Net cash used in investing activities		(1,993	)		(2,268	)

Cash flows from financing activities:
Proceeds (payments) from revolving credit facility		—			(2,000	)
Capital lease payments		(223	)		(168	)
Dividends on Series B-1 Preferred Stock		(157	)		(125	)
Proceeds from exercise of options		—			7

Net cash used in financing activities		(380	)		(2,286	)

Net decrease in cash and cash equivalents		(4,859	)		(7,675	)
Cash and cash equivalents, beginning of period		8,002			19,197

Cash and cash equivalents, end of period	$	3,143		$	11,522

See accompanying notes to the condensed consolidated financial statements.

THE PRINCETON REVIEW, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)

1. Basis of Presentation

The accompanying unaudited interim consolidated financial statements include the accounts of The Princeton Review, Inc. and its wholly-owned subsidiaries, The Princeton Review Canada Inc. and Princeton Review Operations L.L.C., as well as the Company’s national advertising fund (together, the “Company”).

These financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and reflect all adjustments, consisting only of normal recurring accruals, that are, in the opinion of management, necessary for a fair presentation of the interim financial statements. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, 2005 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission. The results of operations for the three-month period ended March 31, 2006 are not necessarily indicative of the results to be expected for the entire fiscal year or any future period.

Products and Services

The following table summarizes the Company’s revenue and cost of revenue for the three-month periods ended March 31, 2006 and 2005:

	Three Months Ended March 31,

		2006		2005

	(in thousands)
Revenue
Services	$	31,158	$	30,186
Products		1,837		1,708
Other		2,085		1,704

Total Revenue	$	35,080	$	33,598

Cost of Revenue
Services	$	12,080	$	10,861
Products		1,646		793
Other		135		179

Total Cost of Revenue	$	13,861	$	11,833

Services revenue includes course fees, professional development, subscription fees and marketing services fees. Products revenue includes sales of workbooks, test booklets and printed tests, sales of course material to independently owned franchisees and fees from a publisher for manuscripts delivered. Other revenue includes royalties from independently owned franchisees and royalties and marketing fees received from publishers.

Stock-Based Compensation

Prior to January 1, 2006, the Company accounted for the issuance of stock options under the recognition and measurement provisions of Accounting Principles Board (“APB”) No. 25, Accounting for Stock Issued to Employees , and related interpretations, as permitted by FASB Statement No. 123, Accounting for Stock-Based Compensation . No stock-based employee compensation cost was recognized in the Statement of Operations for the three months ended March 31, 2005, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. Effective January 1, 2006, the Company adopted the fair value recognition provision of FASB Statement No. 123(R), Share-Based Payment , using the modified-prospective transition method. Under that transition method, compensation cost recognized in the quarter ended

March 31, 2006 includes: (a) compensation cost of all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of Statement 123, and (b) compensation cost of all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of Statement 123(R). Results of prior periods have not been restated.

As a result of adopting Statement 123(R) on January 1, 2006, the Company’s loss before taxes and net loss for the three months ended March 31, 2006, is $170,000 lower than if it had continued to account for share-based compensation under Opinion 25. Basic and diluted loss per share for the three months ended March 31, 2006 would have been $0.08, if the company had not adopted Statement 123(R), compared to reported basic and diluted loss per share of $0.08.

Prior to the adoption of Statement 123(R), the Company presented all tax benefits of deductions resulting from the exercise of stock options as operating cash flows in the Statement of Cash Flows. Statement 123(R) requires the cash flows resulting from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) to be classified as financing cash flows. Because of the Company’s historical net losses, and the uncertainty as to the realizability of its tax benefits, no tax benefits have been recorded.

The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provision of Statement 123(R) to options granted under the Company’s stock option plan for the three months ended March 31, 2005. For purposes of this pro forma disclosure, the value of the options is estimated using a Black-Scholes option-pricing formula and amortized to expense over the options vesting periods.

	Three Months Ended March 31, 2005

	(In thousands, except per share amounts)
Net loss attributed to common stockholders, as reported	$	(340	)
Total stock-based employee compensation expense detemined under fair-value based method for all award, net of related tax effects		(513	)

Pro forma net loss attributed to common stockholders	$	(853	)

Net loss per share:
Basic and diluted, as reported	$	(0.01	)

Basic and diluted, pro forma	$	(0.03	)

Adoption of New Accounting Pronouncements

In May 2005, the FASB issued SFAS No.154, “ Accounting Changes and Error Corrections — a Replacement of APB Opinion No. 20 and FASB Statement No. 3” (“SFAS 154”). SFAS 154 requires retrospective application to prior period financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS 154 also redefines “restatement” as the revising of previously issued financial statements to reflect the correction of an error. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005 and does not have a significant impact on the Company’s consolidated financial statements.

	Other recently issued accounting pronouncements include the following:

	•	Financial Accounting Standards Board (“FASB”) Staff Position FAS 13-1, “ Accounting for Rental Costs Incurred during a Construction Period ” (October 2005);

	•	FASB Staff Position FAS 115-1, “ The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments ” (November 2005);

	•	FASB Staff Position FIN 45-3, “ Application of FASB Interpretation No. 45 to Minimum Revenue Guarantees Granted to a Business or Its Owners ” (November 2005); and,

	•	FASB SFAS No. 155, “ Accounting for Certain Hybrid Financial Instruments – an amendment of FASB Statements No. 133 and 140 ” (February 2006).

	The Company does not expect these pronouncements to have a significant impact on its consolidated financial statements.

Use of Estimates

The preparation of the financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant accounting estimates used include estimates for uncollectible accounts receivable, deferred tax valuation allowances, impairment write-downs, amortization lives assigned to intangible assets and money back guarantees. Actual results could differ from those estimated.

Reclassifications

Certain balances have been reclassified to conform to the current quarter’s presentation.

2. Stock-Based Compensation

As of March 31, 2006, the Company has a stock-based compensation plan more fully described below. The compensation cost charged against income for this plan was $170,000 for the three months ended March 31, 2006. Due to the Company’s historical net losses, and the uncertainty as to the realizability of its tax benefits, no income tax benefit has been recognized in the statement of operations for this share-based compensation arrangement.

The Company’s 2000 Stock Incentive Plan (as amended and restated on March 24, 2003) (“the Plan”), which is shareholder-approved, initially permitted grants of incentive stock options, non-qualified stock options, restricted stock and deferred stock to eligible participants for up to 2,538,000 shares of common stock, as adjusted. On various dates, beginning in June 2000 through March 2006, an additional 2,675,744 shares were authorized. The Company believes that such awards better align the interest of its employees with those of its shareholders. Options granted under the Plan are for periods not to exceed ten years. Other than for options to purchase 133,445 shares granted in 2000 to certain employees which were vested immediately, options outstanding under the Plan generally vest quarterly over two to four years. As of March 31, 2006, there were approximately 1,012,700 shares available for grant.

The fair value of each option award is estimated on the date of grant using a Black-Scholes option pricing model that uses assumptions noted in the following table. Expected volatilities are based on implied volatilities from traded options on the Company’s stock, historical volatility of the Company’s stock, and other factors. The Company uses historical data to estimate option exercise and forfeiture within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding, The risk-free rate for periods within the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

	Three Months Ended March 31,

	2006			2005

Assumptions
Expected volatility		44	%		59	%
Expected dividends		0	%		0	%
Expected term (in years)		5.0			5.0
Risk-free rate		5.00	%		4.25	%

A summary of option activity under the Plan as of March 31, 2006, and changes during the period then ended is presented below:

	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value ($000)

Outstanding at January 1, 2006		3,298,494		$	7.00
Granted		10,500		$	5.18
Forfeited		(47,774	)	$	7.41
Exercised		—		$	0.00

Outstanding at March 31 2006		3,261,220		$	6.99		6.06	$	1,055

Exercisable at March 31, 2006		2,134,059		$	6.99		4.53	$	870

The weighted average fair value of options granted during the three months ended March 31, 2006 was $3.89. No options were exercised during the three months ended March 31, 2006.

A summary of the status of the Company’s nonvested options as of March 31, 2006 and changes during the period ended March 31, 2006, is presented below:

Nonvested Options	Options			Weighted- Average Grant-Date Fair Value

Nonvested at January 1, 2006		484,449		$	3.09
Granted		10,500		$	5.18
Vested		(41,165	)	$	2.95
Forfeited		(12,565	)	$	4.47

Nonvested at March 31, 2006		441,219		$	3.17

As of March 31, 2006, there was $1.4 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 4.0 years. The total fair value of shares vested during the three months ended March 31, 2006 was $170,000 respectively.

3. Line of Credit

In February 2005, the Company repaid the entire outstanding balance and terminated the three-year revolving credit facility the Company had entered into in May of 2004 with Commerce Bank, N.A. The outstanding balance at the time of payment was $2.0 million. Additionally, the Company wrote-off unamortized deferred financing costs of approximately $0.1 million.

4. Series B-1 Preferred Stock

On June 4, 2004, the Company sold 10,000 shares of its Series B-1 Preferred Stock to Fletcher International, Ltd. (“Fletcher”) for proceeds of $10,000,000. These shares are convertible into common stock at any time. Prior to conversion, each share accrues dividends at an annual rate of the greater of 5% and the 90-day London Interbank Offered Rate (LIBOR) plus 1.5%, subject to adjustment. Dividends are payable, at the Company’s option, in cash or

registered shares of common stock. At the time of issuance of the Series B-1 Preferred Stock to Fletcher, each share of Series B-1 Preferred Stock was convertible into a number of shares of common stock equal to: (1) the stated value of one share of Series B-1 Preferred Stock plus accrued and unpaid dividends, divided by (2) the conversion price of $11.00, subject to adjustment. In accordance with the terms of the agreement with Fletcher, the conversion price was decreased to $9.9275 per share because effectiveness of the registration statement relating to the Fletcher shares was delayed until December 28, 2004.

Fletcher may redeem its shares of the Series B-1 Preferred Stock, in lieu of converting such shares, at any time on or after November 28, 2005, for shares of common stock unless the Company satisfies the conditions for cash redemption. If Fletcher elects to redeem its shares and the Company does not elect to make such redemption in cash, then each share of Series B-1 Preferred Stock will be redeemed for a number of shares of common stock equal to: (1) the stated value of $1,000 per share of Series B-1 Preferred Stock plus accrued and unpaid dividends, divided by (2) 102.5% of the prevailing price of common stock at the time of delivery of a redemption notice (based on an average daily trading price formula). If Fletcher elects to redeem its shares and the Company elects to make such redemption in cash, then Fletcher will receive funds equal to the product of: (1) the number of shares of common stock that would have been issuable if Fletcher redeemed its shares of Series B-1 Preferred Stock for shares of common stock; and (2) the closing price of the common stock on the NASDAQ National Market on the date notice of redemption was delivered. As of June 4, 2014 the Company may redeem any shares of Series B-1 Preferred Stock then outstanding. If the Company elects to redeem such outstanding shares, Fletcher will receive funds equal to the product of: (1) the number of shares of Series B-1 Preferred Stock so redeemed, and (2) the stated value of $1,000 per share of Series B-1 Preferred Stock, plus accrued and unpaid dividends.

In addition, the Company granted Fletcher certain rights entitling Fletcher to purchase up to 20,000 shares of additional preferred stock, at a price of $1,000 per share, for an aggregate additional consideration of $20,000,000. The agreement with Fletcher provides that any shares of additional preferred stock will have the same conversion ratio as the Series B-1 Preferred Stock, except that the conversion price will be the greater of (1) $11.00, or (2) 120% of the prevailing price of common stock at the time of exercise of the rights (based on an average daily trading price formula), subject to adjustment upon the occurrence of certain events. Due to the delay in the effectiveness of the registration statement relating to the Series B-1 Preferred Stock, the conversion price for any such additional series of preferred stock was reduced to the greater of (1) $9.9275, or (2) 108.3% of the prevailing price of common stock at the time of exercise of the rights. These rights may be exercised by Fletcher on one or more occasions commencing July 1, 2005, and for the 24-month period thereafter, which period may be extended under certain circumstances. The agreement with Fletcher also provides that shares of additional preferred stock will also be redeemable upon terms substantially similar to those of the Series B-1 Preferred Stock. The voting rights of the Series B-1 Preferred stockholders are limited to voting with regard to: (1) any changes to the rights, preferences or privileges of the Series B-1 Preferred stockholders, (2) authorizing, creating or issuing any senior securities or securities that rank pari passu with the Series B-1 Preferred Stock, or any securities issued by a subsidiary of the Company, (3) changing the number of authorized shares of preferred stock, and (4) amending any provision of any security of the Company so as to make such security redeemable by the Company.

For the three months ended March 31, 2006, dividends of approximately $157,000 were paid to the Series B-1 Preferred Stockholder. For the three months ended March 31, 2005, dividends of approximately $125,000 were paid to the Series B-1 Preferred Stockholder.

See Footnote 8, Subsequent Events, Notice of Partial Redemption of Preferred Stock.

5. Segment Information

The Company’s operations are aggregated into four reportable segments. The operating segments reported below are the segments of the Company for which separate financial information is available and for which operating income is evaluated regularly by executive management in deciding how to allocate resources and in assessing performance.

The following segment results include the allocation of certain information technology costs, accounting services, executive management costs, legal department costs, office facilities expenses, human resources expenses and other shared services, which prior to January 1, 2006 were almost fully allocated out to the divisions on a broadly defined consumption basis. Beginning January 1, 2006, the Company refined its allocation methodology, which resulted in lower allocations to the divisions and more retained in unallocated Corporate costs. In addition, the Company reclassified certain commissions from cost of revenue to operating expenses. The prior period has been restated to reflect these changes. The impact of these changes was an increase in segment operating income of $1.6 million for Test Preparations Services, $926,000 for K-12 Services and $348,000 for Admissions Services for the three months ended March 31, 2005. The Corporate segment operating loss increased by $2.9 million for the three months ended March 31, 2005.

The majority of the Company’s revenue is earned by the Test Preparation Services division, which sells a range of services including test preparation, tutoring and academic counseling. Test Preparation Services derives its revenue from Company operated locations and from royalties from, and product sales to, independently-owned franchises. The K-12 Services division earns fees from assessment, intervention materials sales and professional development services it renders to K-12 schools and from its content development work. The Admissions Services division earns revenue from subscription, transaction and marketing fees from higher education institutions, counseling services and from selling advertising and sponsorships. Additionally, each division earns royalties and other fees from sales of its books published by Random House.

The segment results include EBITDA for the periods indicated. As used in this report, EBITDA means earnings before interest, income taxes, depreciation and amortization. The Company believes that EBITDA, a non-GAAP financial measure, represents a useful measure for evaluating its financial performance because it reflects earnings trends without the impact of certain non-cash and non-operations-related charges or income. The Company’s management uses EBITDA to measure the operating profits or losses of the business. Analysts, investors and rating agencies frequently use EBITDA in the evaluation of companies, but the Company’s presentation of EBITDA is not necessarily comparable to other similarly titled measures of other companies because of potential inconsistencies in the method of calculation. EBITDA is not intended as an alternative to net income (loss) as an indicator of the Company’s operating performance, nor as an alternative to any other measure of performance calculated in conformity with GAAP.

	Three Months Ended March 31, 2006

	(In thousands)
	Test Preparation Services		K-12 Services			Admissions Services			Corporate			Total

Revenue	$	25,033	$	6,873		$	3,174		$	—		$	35,080

Operating expenses (including depreciation and amortization)	$	12,454	$	4,121		$	2,250		$	4,264		$	23,089

Segment operating income (loss)		4,733		(1,974	)		(365	)		(4,264	)		(1,870	)
Depreciation & amortization		504		812			486			310			2,112
Other		—		—			—			(67	)		(67	)

Segment EBITDA	$	5,237	$	(1,162	)	$	121		$	(4,021	)	$	175

Total segment assets	$	55,045	$	24,506		$	8,183		$	14,725		$	102,459

Segment goodwill	$	31,006	$	—		$	500		$	—		$	31,506

Expenditures for long lived assets	$	355	$	1,061		$	225		$	801		$	2,442

	Three Months Ended March 31, 2005

	(In thousands)
	Test Preparation Services		K-12 Services			Admissions Services			Corporate			Total

Revenue	$	22,885	$	7,919		$	2,794		$	—		$	33,598

Operating expenses (including depreciation and amortization)	$	9,785	$	4,651		$	2,827		$	4,311		$	21,574

Segment operating income (loss)		6,062		(754	)		(807	)		(4,311	)		190
Depreciation & amortization		468		585			388			295			1,736
Other		—		—			—			(67	)		(67	)

Segment EBITDA	$	6,530	$	(169	)	$	(419	)	$	(4,083	)	$	1,859

Total segment assets	$	45,370	$	22,772		$	15,413		$	17,839		$	101,394

Segment goodwill	$	31,011	$	—		$	500		$	—		$	31,511

Expenditures for long lived assets	$	43	$	3,426		$	436		$	529		$	4,434

Reconciliation of operating income (loss) to net income (loss) (in thousands):

	Three Months Ended March 31,

	2006			2005

	(in thousands)
Segment operating income (loss)	$	(1,870	)	$	190
Unallocated amounts:
Interest expense, net		(31	)		(309	)
Other income		—			41
Equity in loss of affiliate		(67	)		(67	)

Net income (loss)	$	(1,968	)	$	(145	)

6. Earnings (Loss) Per Share

Basic and diluted net income (loss) per share information for all periods is presented under the requirements of SFAS No. 128, Earnings per Share . Basic net income (loss) per share is computed by dividing net income (loss) attributed to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is determined in the same manner as basic net income (loss) per share except that the number of shares is increased assuming exercise of dilutive stock options, warrants and convertible securities and dividends related to convertible securities are added back to net income (loss) attributed to common stockholders. The calculation of diluted net income (loss) per share excludes potential common shares if the effect is antidilutive. During the periods presented in which the Company reported a net loss, shares of convertible securities and stock options that would be dilutive were excluded because to include them would have been antidilutive.

For the three months ended March 31, 2006 and 2005, 27,572,172 and 27,569,764 common stock shares were used in the computations of net loss per share, respectively. Excluded from the computation of diluted net loss per common share because of their antidilutive effect were 1,839,385 shares of common stock issuable upon conversion of Series B-1 Preferred Stock and 160,722 stock options for the three months ended March 31, 2006 and 1,007,303 shares of common stock issuable upon conversion of Series B-1 Preferred Stock and 112,578 stock options for the three months ended March 31, 2005.

7. Comprehensive Income (Loss)

The components of comprehensive income (loss) for the three-months ended March 31, 2006 and 2005 are as follows:

	Three Months Ended March 31,

	2006			2005

	(in thousands)
Net income (loss) attributable to common stockholders	$	(2,125	)	$	(340	)
Foreign currency translation adjustment		7			(5	)

Total comprehensive income (loss)	$	(2,118	)	$	(345	)

8. Subsequent Events

Credit Agreement

On April 10, 2006, the Company entered into a Credit Agreement (the “Credit Agreement”), among the Company, Princeton Review Operations, L.L.C., a wholly owned subsidiary of the Company (“Operations”), Golub Capital CP Funding, LLC and such other lenders who become signatory from time to time, and Golub Capital Incorporated (“Golub”), as Administrative Agent.

The Credit Agreement provides for a revolving credit facility with a term of five years and a maximum aggregate principal amount of $6.0 million, of which $5.0 million was drawn down on the date of closing (the “Credit Facility”). Operations is a guarantor of the Company’s obligations under the Credit Agreement. As of the date of execution, Golub Capital CP Funding is the only lender party to the Credit Agreement.

Outstanding amounts under the Credit Facility bear interest at rates based on either (A) 350 basis points over the London Interbank Offered Rate (“LIBOR”) or (B) 145 basis points over the greater of the prime rate and the Federal Funds Rate plus 50 basis points, at the election of the Company.

The Company’s borrowings under the Credit Facility are secured by a first priority lien on all of the Company’s and Operations’ assets. In addition, the Company pledged all of its equity interests in its subsidiaries, and all other equity investments held by the Company to Golub as security for the Credit Facility.

The Credit Agreement contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, limits on the Company’s ability to make investments and incur indebtedness and liens, maintenance of a minimum level of EBITDA of the Company’s Test Preparation Services Division, and maintenance of a minimum net worth. The Credit Agreement contains customary events of default for facilities of this type (with customary grace periods and materiality thresholds, as applicable) and provides that, upon the occurrence and continuation of an event of default, the interest rate on all outstanding obligations will be increased and payment of all outstanding loans may be accelerated and/or the lenders’ commitments may be terminated.

Notice of Partial Redemption of Preferred Stock

On May 1, 2006 the Company received a notice from Fletcher pursuant to which Fletcher elected to redeem 2,000 shares of the Company’s Series B-1 Preferred Stock. In accordance with the terms and conditions of the Agreement, dated as of May 28, 2004, pursuant to which the Company issued the Series B-1 Preferred Stock to Fletcher, the Company elected to redeem such shares in cash, rather than common stock.

On May 3, 2006, the Company received a second notice from Fletcher pursuant to which Fletcher elected to redeem an additional 2,000 shares of Series B-1 Preferred Stock. The Company’s election to redeem the initial 2,000 shares in cash also applies to the additional 2,000 shares to be redeemed by Fletcher.

These redemptions must be consummated within 30 days of Fletcher’s notice to the Company. The Company is currently in discussions to secure financing for these redemptions, the total amount of which is expected to be approximately $4.2 million.

Restructuring

In April 2006, the Company announced and commenced implementation of a restructuring program. The planned actions include among other things, streamlining its software development groups and reducing staff in some administrative functions to better align its cost structure with revenue and growth expectations. Restructuring costs are expected to be between $750,000 to $900,000, and consist primarily of severance-related payments for all employees terminated in connection with the restructuring.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

All statements in this Form 10-Q that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by words such as “believe,” “intend,” “expect,” “may,” “could,” “would,” “will,” “should,” “plan,” “project,” “contemplate,” “anticipate” or similar statements. Because these statements reflect our current views concerning future events, these forward-looking statements are subject to risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to demand for our products and services; our ability to compete effectively and adjust to rapidly changing market dynamics; the timing of revenue recognition from significant contracts with schools and school districts; market acceptance of our newer products and services; continued federal and state focus on assessment and remediation in K-12 education; and the other factors described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2005 filed with the SEC. We undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

Overview

The Princeton Review provides educational products and services to students, parents, educators and educational institutions. These products and services include integrated classroom-based and online instruction, professional development for teachers and educators, print and online materials and lessons, and higher education marketing and admissions management. We operate our businesses through three divisions, which correspond to our business segments.

The Test Preparation Services division derives the majority of its revenue from classroom-based and Princeton Review Online test preparation courses and tutoring services. Additionally, Test Preparation Services receives royalties from its independent franchisees, which provide classroom-based courses under the Princeton Review brand. Since 2004, this division has also been providing Supplemental Educational Services (“SES”) programs to students in public school districts. This division has historically accounted for the majority of our overall revenue and accounted for approximately 71.0% of our overall revenue in the first quarter of 2006.

The Test Preparation Services division’s revenue increased 9.4% from 2005 levels. During the first quarter of 2006, the fastest growing areas for this division continue to be its SES courses, sales of which have increased in response to the increased emphasis on state assessments, and institutional sales, which are partially attributed to the new SAT test introduced in 2005. Tutoring grew modestly, and course revenue was negatively affected by the fact that the March SAT course ran entirely in Q1 and many more students chose Early Start MCAT courses that started in the fourth quarter of 2005.

The K-12 Services division provides a number of services to K-12 schools and school districts, including assessment, professional development, intervention materials (workbooks and related products) and face-to-face instruction. As a result of the increased emphasis on accountability and the measurement of student performance in public schools in this country and the centralization of school districts’ purchasing of assessment, professional development and supplemental educational products and services, this division continues to see growing demand by the public school market for its products as evidenced by the number of contracts and the size of the sales pipeline.

The K-12 Services division experienced a revenue decrease of 13.2%, as compared to 2005 levels. During the first quarter of 2006, K-12 Services revenue decreased primarily due to the New York City Department of Education’s (NYCIA) decision not to administer tests during the first quarter of 2006. Additionally, during 2005 revenue from SES courses was recognized in this division, whereas in 2006 SES revenue began to be recognized by the Test Preparation Services division. Overall assessment services revenue increased despite the lack of NYCIA testing because of new and smaller contracts with other school districts. Primarily due to changes in product mix, and new contract development costs, gross margins in this division declined from 49.2% in 2005 to 31.2% in 2006.

Our Admissions Services division currently derives most of its revenue from the sale of web-based admissions and application management products and marketing services to educational institutions. Additionally, this division has seen growth in revenue from its counseling services business. During the first quarter, revenue from high school counseling contracts entered into in the third quarter of 2005 is primarily responsible for the 13.0% increase in this division’s revenue over 2005 levels.

In the first quarter of 2006, we adopted the provisions of Statement of Financial Accounting Standards No. 123(R), Share-Based Payment. The effect of our adoption of Statement of Financial Accounting Standards No. 123(R) on our financial statements is described in Notes 1 and 2 to the condensed consolidated financial statements.

In April 2006, we announced and commenced implementation of a restructuring program. The planned actions include, among other things, streamlining our software development groups and reducing staff in some administrative functions to better align our cost structure with revenue and growth expectations. Restructuring costs are expected to be between $750,000 to $900,000 and consist primarily of severance-related payments for all employees terminated in connection with the restructuring.

Results of Operations

Comparison of Three Months Ended March 31, 2006 and 2005

Revenue

For the three months ended March 31, 2006 total revenue increased by $1.5 million, or 4.4%, from $33.6 million in 2005 to $35.1 million in 2006.

Test Preparation Services revenue increased by $2.1 million, or 9.4%, from $22.9 million in 2005 to $25.0 million in 2006. This increase is driven primarily by an increase of approximately $1.0 million in SES (after adjusting for the reclassification of SES revenue from K-12 Services to Test Preparation Services), reflecting successful enrollment efforts in the cities where we were selected to be an after-school provider, as well as increases in institutional and tutoring revenue of $865,000. These increases were partially offset by a decrease of $1.1 million in retail classroom revenue.

K-12 Services revenue decreased by $1.0 million, or 13.2%, from $7.9 million in 2005 to $6.9 million in 2006. This decrease is primarily the result of a decrease in intervention materials sales of $338,000 and a decrease in SES course revenue (which is now recognized in the Test Preparation Services division) of $1.0 million. These decreases were partially offset by a net increase in revenue from assessment services of $330,000 despite the loss of $1.2 million in assessment fees from NYCIA.

Admissions Services revenue increased by $380,000, or 13.6%, from $2.8 million in 2005 to $3.2 million in 2006. This increase was driven primarily by an increase of $480,000 in counseling revenue.

Cost of Revenue

For the three months ended March 31, 2006 total cost of revenue increased by $2.0 million, or 17.1%, from $11.8 million in 2005 to $13.9 million in 2006.

Test Preparation Services cost of revenue increased by $808,000, or 11.5%, from $7.0 million in 2005 to $7.8 million in 2006. This increase is attributed to cost of goods associated with the revenue increase of $2.1 million (primarily SES related). Gross margin declined slightly from 69.1% to 68.7% due to lower retail revenue year-over-year.

K-12 Services cost of revenue increased by $703,000, or 17.5%, from $4.0 million in 2005 to $4.7 million in 2006. This increase is primarily related to an increase in content development and customer support costs of approximately $1.0 million which was partially offset by lower teacher costs for after school courses. Gross margin declined from 49.2% to 31.2% primarily due to additional amortization expense for K-12 content, loss of high margin workbook revenue, and additional startup and customer support costs for contracts entered into in 2005.

Although margins are down in the first quarter, management believes they will improve over the balance of the year.

Admissions Services cost of revenue increased by $517,000, or 6.9%, from $773,000 in 2005 to $1.3 million in 2006. This increase is primarily driven by an increase of $201,000 related to counseling labor and related costs, 2005 reclassification of technology operations and counseling costs and additional customer support costs to administer the marketing services product lines. Gross margin declined from 72.3% to 59.3%. This decrease is primarily related to the additional expense in support of the counseling services contracts entered into during the third quarter of 2005.

Operating Expenses

For the three months ended March 31, 2006 operating expenses, increased by $1.5 million, or 7.0%, from $21.6 million in 2005 to $23.1 million in 2006:

•	Test Preparation Services increased by $2.6 million, or 28.3%, from $9.3 million in 2005 to $11.9 million in 2006. Significant drivers relate to SES support costs, which were higher by $1.1 million. In addition, legal and recruitment expense was higher by approximately $200,000 and bad debt increased by approximately $400,000.

•	Admissions Services decreased by $676,000, or 27.7%, from $2.4 million in 2005 to $1.8 million in 2006. This reduction is driven by the reclassification of technology operations and counseling costs to cost of revenues (from operating expenses in 2005) totaling approximately $700,000. These were partially offset by a $200,000 increase in bad debt expense and $100,000 increase in corporate allocations and decrease in rent and travel related costs at approximately $200,000.

•	K-12 Services decreased by $558,000, or 12.8%, from $4.4 million in 2005 to $3.8 million in 2006.This decrease is driven by lower salaries of approximately $300,000 and approximately $200,000 in additional reclassifications to cost of revenue (due to higher labor utilization).

•	Corporate Services decreased by $100,000 or 1.5%, from $4.0 million in 2005 to $3.9 million in 2006. This decrease relates to a decrease of approximately $700,000 in professional services, offset by increased salaries of $500,000.

Income Taxes

The estimated effective tax rate used in 2006 and 2005 would have been approximately 40%. During the first quarter we continued to record a valuation allowance against the increase in our deferred tax asset. When we achieve profitability, any tax provision recorded as a result of these pre-tax profits will be offset by a reversal of the tax valuation allowance previously recorded, which reversal would be for the same amount as the provision.

Liquidity and Capital Resources

Our primary sources of liquidity are cash and cash equivalents on hand and collections from customers. At March 31, 2006, we had $3.1 million of cash and cash equivalents compared to $8.0 million at December 31, 2005. The $4.9 million decrease in cash from the December 31, 2005 balance is primarily attributed to the net change in operating assets and liabilities of $3.8 million, expenditures related to investing activities of $2.0 million (primarily $1.4 million in fixed assets and software development and $1.0 million in capitalized content) and $380,000 from financing activities.

Our Test Preparation Services division has historically generated, and continues to generate, the largest portion of our cash flow from its retail classroom and tutoring courses. These customers usually pay us in advance or contemporaneously with the services we provide, thereby supporting our short-term liquidity needs. Increasingly, however, across all of our divisions, we are generating a greater percentage of our cash from contracts with institutions such as the schools and school districts serviced by our K-12 Services division and the post-secondary institutions serviced by our Admissions Services division, all of which pay us in arrears. Typical payment performance for these institutional customers, once invoiced, ranges from 60 to 90 days. Additionally, the long contract approval cycles and/or delays in purchase order generation with some of our contracts with large institutions or school districts can contribute to the level of variability in the timing of our cash receipts.

Cash provided by operating activities is our net income (loss) adjusted for certain non-cash items and changes in operating assets and liabilities. During the first three months of 2006, cash used by operating activities was $2.5 million, consisting primarily of increases in accounts receivable of $1.7 million, $1.9 million in deferred income and $762,000 in bad debt reserve, offset by a reduction of $2.7 million in accounts payable and accrued expenses and $2.1 million of depreciation and amortization. During the first three months of 2005, cash used by operating activities was $3.1 million, consisting primarily of increases in accounts receivable of $2.2 million and a $3.1 million decrease in deferred income, offset by $1.7 million in depreciation and amortization.

During the first three months of 2006, we used $2.0 million in cash for investing activities as compared to $2.3 million used during the comparable period in 2005, with investments in furniture, fixtures, equipment, software and content making up most of those balances in both years.

Financing cash flows consist primarily of transactions related to our debt and equity structure. We used approximately $380,000 in the first three months of 2006 compared to a net usage of $2.3 million during the comparable period in 2005. During the first quarter of 2005, we repaid approximately $2.0 million of the indebtedness we had borrowed under a bank credit facility.

On April 10, 2006, we secured a $6 million revolving line of credit to support our working capital requirements. This credit line, combined with our current cash balances and operating cash flow will be sufficient to cover our normal operating requirements for the next 12 months as we implement a number of restructuring initiatives designed to significantly improve operating cash flow. For a description of our line of credit, see Note 8 to our condensed consolidated financial statements included in this Form 10-Q. We are also considering increasing our borrowing capacity by another $5 million to $10 million to provide additional flexibility as we continue to implement our restructuring initiatives.

On May 1, 2006 we received a notice from Fletcher pursuant to which Fletcher elected to redeem 2,000 shares of our Series B-1 Preferred Stock. In accordance with the terms and conditions of the Agreement, dated as of May 28, 2004, pursuant to which we issued the Series B-1 Preferred Stock to Fletcher, we elected to redeem such shares in cash, rather than common stock. On May 3, 2006, we received a second notice from Fletcher pursuant to which Fletcher elected to redeem an additional 2,000 shares of Series B-1 Preferred Stock. Our election to redeem the initial 2,000 shares in cash also applies to the additional 2,000 shares to be redeemed by Fletcher.

These redemptions must be consummated within 30 day’s of Fletcher’s notice to us. We are currently in discussions to secure financing for these redemptions, the total amount of which is anticipated to be $4.2 million.

Impact of Inflation

Inflation has not had a significant impact on our historical operations.

Seasonality in Results of Operations

We experience, and we expect to continue to experience, seasonal fluctuations in our revenue because the markets in which we operate are subject to seasonal fluctuations based on the scheduled dates for standardized admissions tests and the typical school year. These fluctuations could result in volatility or adversely affect our stock price. We typically generate the largest portion of our test preparation revenue in the third quarter. However, as SES revenue grows, we expect this revenue will be concentrated in the fourth and first quarters, or to more closely reflect the after school programs’ greatest activity during the school year. The electronic application revenue recorded in our Admissions Services division is highest in the first and fourth quarters, corresponding with the busiest times of the year for submission of applications to academic institutions. Our K-12 Services division may also experience seasonal fluctuations in revenue, which is dependent on the school year, and it is expected that the revenue from new school sales during the year will be recognized primarily in the fourth quarter and the first quarter of the following year.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Included in our cash and cash equivalents are short-term money market funds. The fair value of these money market funds would not be significantly impacted by either a 100 basis point increase or decrease in interest rates due primarily to the short-term nature of the portfolio. Our Series B-1 Preferred Stock requires the payment of quarterly dividends at the greater of 5% or 1.5% above 90-day LIBOR. During the three months ended March 31, 2006, we paid dividends on the Series B-1 Preferred Stock in an aggregate amount of $157,000 at the rate of 6.3%. A 100 basis point increase in the dividend rate would have resulted in a $25,000 increase in dividends paid during this period. Borrowings under our credit facility, entered into on April 10, 2006, bear interest at rates based on either 350 basis points over the LIBOR rate or 145 basis points over the greater of the prime rate and the Federal Funds Rate, plus 50 basis points, at our election. We do not currently hold or issue derivative financial instruments.

Revenue from our international operations and royalty payments from our international franchisees constitute an insignificant percentage of our revenue. Accordingly, our exposure to exchange rate fluctuations is minimal.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (“Disclosure Controls”), as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (“Exchange Act”) as of March 31, 2006. The evaluation was done under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), and included a review of the controls’ objectives, design and operating effectiveness with respect to the information generated for use in this Quarterly Report. In the course of the evaluation, we sought to identify data errors, control problems or acts of fraud and confirm that appropriate corrective actions, including process improvements, were being undertaken. This type of Disclosure Controls evaluation is performed on a quarterly basis so that the conclusions of management, including the CEO and CFO,

concerning the effectiveness of controls can be reported in our Quarterly Reports on Form 10-Q and in our Annual Reports on Form 10-K. Many of the components of our Disclosure Controls are also evaluated on an ongoing basis by other personnel in our accounting, finance and legal functions. The overall goals of these various evaluation activities are to monitor our Disclosure Controls and to modify them on an ongoing basis as necessary.

Based upon the evaluation of our Disclosure Controls, our CEO and CFO concluded that the Company’s Disclosure Controls were effective as of March 31, 2006 to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the period covered by this Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On September 10, 2003, CollegeNet, Inc. filed suit in Federal District Court in Oregon, alleging that The Princeton Review infringed a patent owned by CollegeNet related to the processing of on-line applications. CollegeNet never served The Princeton Review and no discovery was ever conducted. However, based on adverse rulings in other lawsuits concerning the same patent, CollegeNet dismissed the 2003 case without prejudice on January 9, 2004 against The Princeton Review. Thereafter, on August 2, 2005, the Federal Circuit Court of Appeals issued an opinion favorable to CollegeNet from its appeal from the adverse rulings. Then on August 3, 2005, CollegeNet filed suit again against The Princeton Review alleging an infringement of the same CollegeNet patent related to processing on-line applications. On November 21, 2005, CollegeNet filed an amended complaint, which added a second patent to the lawsuit. The Princeton Review was served with the amended complaint on November 22, 2005, and filed its answer and counterclaim on January 13, 2006. CollegeNet seeks injunctive relief and unspecified monetary damages. The Princeton Review filed a request with the United Stated Patent and Trademark Office (“PTO”) for ex parte reexamination of CollegeNet’s Patent No. 6,460,042 (‘042 Patent) on September 1, 2005 and CollegeNet’s Patent No. 6,910,045 (‘045 Patent) on December 12, 2005. The ‘042 Patent and the ‘045 Patent are the two patents asserted against The Princeton Review in the lawsuit. The PTO granted The Princeton Review’s request and ordered reexamination of all claims of the CollegeNet ‘042 patent on October 31, 2005 and the CollegeNet ‘045 patent on January 27, 2006. On March 29, 2006, the court granted The Princeton Review’s motion to stay all proceedings in the lawsuit pending completion of the PTO’s reexamination of the CollegeNet patents. Because this proceeding is at a very preliminary stage, we are unable to predict its outcome with any degree of certainty. However, The Princeton Review believes that it has meritorious defenses to CollegeNet’s claims and intends to vigorously defend.

Item 1A. Risk Factors

There have been no material changes in the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2005.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 5. Other Information

Approval of 2005 Annual Bonus Awards to Named Executive Officers

On May 5, 2006, the Compensation Committee of the Board of Directors (the “Compensation Committee”) discussed with our President his recommendations for 2005 bonus awards for the named executive officers and approved such awards. The following table reflects the 2005 bonus awards approved for each of our named executive officers listed below and for Andrew J. Bonanni, our Chief Executive Officer, who is not included as a named executive officer because he only joined us in September 2005:

Name and Principal Position		2005 Cash Bonus Award

Mark Chernis,
	President and Chief Operating Officer	$52,451
Andrew J. Bonanni,
	Chief Financial Officer and Treasurer	20,913
Stephen Quattrociocchi,
	Executive Vice President, Test Preparation Services Division	22,537
Margot Lebenberg,
	Executive Vice President, General Counsel and Secretary	67,594
Young Shin,
	Executive Vice President, Admissions Services Division	26,735
Robert Cohen,
	Senior Vice President, Special Projects	47,200

The 2005 bonus awards were granted pursuant to criteria previously established for each of the named executive officers and set forth in such executive officer’s employment agreement, relating to performance of each such executive officer in meeting a combination of individual objectives and company-wide performance objectives during 2005. The criteria used to determine the 2005 bonus awards for each named executive officer are as follows:

The Compensation Committee based its determination of Mr. Chernis’ bonus on the following performance goals: 50% of the bonus was based on the company achieving its financial objectives, 20% of the bonus was based on the success of the company in re-negotiating its franchise contracts, 10% of the bonus was based on the success of the company’s implementation of its Oracle Financial system, and 20% of the bonus was based on improvement in the results of the company’s employee satisfaction surveys.

The Compensation Committee based its determination of Mr. Bonanni’s bonus on the following performance goals: 50% of the bonus was based on the company achieving its financial objectives and 50% of the bonus was based on remediating internal controls, achieving Sarbanes-Oxley Section 404 compliance and driving business performance.

The Compensation Committee based its determination of Mr. Quattrociocchi’s bonus on the success of the Test Preparation Services Division in achieving its annual financial objectives and on Mr. Quattrociocchi’s achievement of certain personal performance objectives.

The Compensation Committee based its determination of Ms. Lebenberg’s bonus on the following performance goals: 50% of the bonus was based on the company achieving its annual financial objectives, 15% of the bonus was based on the success of the company in re-negotiating its franchise contracts, 15% was based on the Legal Department achieving certain performance objectives, 10% of the bonus was based on the company’s achievement of certain objectives related to requirements under the Sarbanes-Oxley Act of 2002, and 10% of the bonus was based on improvement in the results of certain service center satisfaction surveys.

The Compensation Committee based its determination of Mr. Shin’s bonus on the following performance goals: 50% of the bonus was based on the Admissions Services Division achieving its annual financial objectives, 20% of the bonus was based on the company achieving its annual financial objectives, and 30% of the bonus was based on Mr. Shin’s achievement of certain personal performance objectives.

The Compensation Committee based its determination of Mr. Cohen’s bonus on the following performance goals (subject to a minimum bonus of 20% of Mr. Cohen’s base salary required by Mr. Cohen’s employment agreement): 40% of the bonus was based on the K-12 Services division achieving its annual financial objectives, 30% of the bonus was based on the company achieving its annual financial objectives, and 30% of the bonus was based on Mr. Cohen’s achievement of certain personal performance objectives.

Adoption of 2006 G-0 Employee Bonus Policy and Establishment of 2006 Targets

On May 5, 2006, the Compensation Committee approved the adoption of the G-0 Employee Bonus Policy for the Calendar Year 2006 (the “Bonus Policy”), which applies to all of our named executive officers, subject to the terms of any individual agreement with such executive officer. Under the Bonus Policy, the determination of a named executive officer’s bonus is based on the overall performance of the company and the contribution of each named executive officer to the company’s success. For the named executive officers in an Operating Division of the company, the bonus components and weighting are as follows: 50% Divisional/Departmental Financial Performance, 10% Company Financial Performance, 15% Customer Satisfaction/Quality Metrics and 25% Job Specific Objectives. For the named executive officers in a Service Division of the company, the bonus components and weighting are as follows: 30% Divisional Financial Performance, 20% Company Financial Performance, 20% Customer Satisfaction/Quality Metrics and 30% Job Specific Objectives.

The Compensation Committee also established 2006 Company performance targets for the named executive officers. Company financial performance targets for Mr. Quattrociocchi and Mr. Shin are based upon attainments of a percentage of budgeted EBITDA. Performance targets for the other persons named above are based on attainment of earnings per share thresholds.

Stock Option Grants and Deferred Stock Awards to Named Executive Officers

On May 5, 2006, the Compensation Committee approved the grant of stock options and performance-based deferred stock awards to certain of our named executive officers. The following table reflects these awards. The terms of the deferred stock awards are set forth in the Form of Performance-Based Deferred Stock Award Agreement attached hereto as Exhibit 10.46. Vesting of half of the Performance-Based Deferred Stock Awards set forth below is generally dependent upon the attainment by the company of a prescribed level of earnings per share and half on return on assets, each as of a specified measurement date.

	Name and Principal Position	Number of Stock Options Granted (1)	Deferred Stock Grant (shares) (2)

Mark Chernis,
	President and Chief Operating Officer	34,900	19,000
Andrew J. Bonanni (3),
	Chief Financial Officer and Treasurer	20,050	10,900
Stephen Quattrociocchi,
	Executive Vice President, Test Preparation Services Division	15,000	8,150
Margot Lebenberg,
	Executive Vice President, General Counsel and Secretary	13,500	7,350
Young Shin,
	Executive Vice President, Admissions Services Division	11,100	6,050

(1) Exercise price of $6.20 per share.

(2) The actual number of shares that could be awarded at the end of the performance period will range between 50% and 200% of this target based upon the actual attainment by the company of earnings per share and return on assets.

(3) Mr. Bonanni has agreed to relinquish 40,000 options granted to him in 2005 in exchange for the above grants.

Item 6. Exhibits

	Exhibit Number		Description

	10.39		Credit Agreement, dated April 10, 2006, by and among The Princeton Review, Inc., Princeton Review Operations, L.L.C., lenders who become signatory from time to time, and Golub Capital Incorporated (incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K (File No. 000-32469), filed with the Securities and Exchange Commission on April 14, 2006).

	10.40		Security Agreement, dated April 10, 2006, by and among The Princeton Review, Inc., Princeton Review Operations, L.L.C. and Golub Capital Incorporated (incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K (File No. 000-32469), filed with the Securities and Exchange Commission on April 14, 2006).

	10.41		Employment Agreement, dated April 26, 2004, between The Princeton Review, Inc. and Margot Lebenberg.

	10.42		Employment Agreement, dated February 18, 2003, between The Princeton Review, Inc. and Young Shin.

	10.43		Indemnification Agreement, dated December 14, 2004, between The Princeton Review, Inc. and Margot Lebenberg.

	10.44		The Princeton Review, Inc. Bonus Policy for G-0 Employees for Calendar Year 2006.

	10.45		Form of Restricted Stock Agreement pursuant to The Princeton Review, Inc. 2000 Stock Incentive Plan (as amended and restated effective March 24, 2003).

	10.46		Form of Performance Based Deferred Stock Award Agreement pursuant to the Princeton Review, Inc. 2000 Stock Incentive Plan (as amended and restated effective March 24, 2003).

	31.1		Certification Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	31.2		Certification Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	THE PRINCETON REVIEW, INC.


	By:	/s/ ANDREW J. BONANNI

		Andrew J. Bonanni
		Chief Financial Officer and Treasurer
		(Duly Authorized Officer and Principal Financial and Accounting Officer)

May 10, 2006

Exhibit 10.41

E MPLOYMENT A GREEMENT
T HE P RINCETON R EVIEW , I NC .

This Agreement is between Margot Lebenberg (“Exec”) and The Princeton Review, Inc. (“TPR”), and is subject to the terms of the Executive Compensation Policy Statement, the current form of which is attached as Exhibit A (the “Policy Statement”). Terms may be defined in The Princeton Review Glossary dated March l ^st , 2004. This Agreement supersedes any previous employment agreement.

1.	Job Description: Exec shall serve as the Executive Vice President and General Counsel of The Princeton Review. Beginning January 1, 2005, subject to approval by TPR’s Board of Directors, Exec shall serve as Corporate Secretary of TPR in accordance with the duties set forth in the Amended and Restated Bylaws of TPR.

2.	Compensation: TPR shall pay Exec $262,500 per year, increasing annually by 3%. Exec shall also receive those medical, dental, life insurance or other benefits made available by TPR to the other senior executives of TPR as a class. She shall also receive a bonus of up to 50% of base salary, based on the “Bonus Calculation” described below in Appendix A. The amount of the bonus paid shall be based on the Bonus Calculation described below in Appendix A, provided, however, that Exec’s bonus for calendar year 2004 shall be determined as follows: (i) Exec’s 2004 base bonus shall first be calculated in accordance with Appendix A and shall not be less than 30% of the maximum bonus available (the “2004 Base Bonus”) and (ii) Exec shall receive an amount equal to the 2004 Base Bonus as prorated by the number of months employed by TPR in 2004.

3.	Signing Bonus: Provided Exec is still employed by TPR on the six-month anniversary of the commencement of her employment, TPR will pay Exec a one-time signing bonus of $12,500. This bonus will be paid in the first payroll period following such six-month anniversary.

4.	Stock Option Grant: On Exec’s first day of employment, TPR shall grant Exec an option to purchase 55,000 shares of TPR’s Common Stock at fair market value (as indicated by the closing market price of REVU on such date), vesting in 16 equal quarterly installments beginning immediately upon issuance. These options shall be subject to the terms and conditions of The Princeton Review, Inc. Stock Option Grant attached hereto.

5.	Term: Exec’s employment shall commence on June 30 ^th , 2004, and notwithstanding Section 3.1 of the Policy Statement, this Agreement shall expire on June 29 ^th , 2006 but shall be automatically extended for additional two-year periods upon the completion of the initial term and any two-year extension period thereafter until (i) Exec voluntarily terminates employment or (ii) TPR gives contrary written notice to Exec at least 6 months prior to the completion of the initial term or any two-year extension period thereafter. TPR will not be under any obligation to make additional option grants to Exec, such as those described in paragraph 3 above, for any extension terms of this Agreement unless agreed by TPR and Exec.

6.	Severance Payments and Benefits: If TPR terminates Exec’s employment without Cause, then in addition to the payments provided under Section 5.1 of the Policy Statement, but in lieu of the payments provided under Section 5.3 of the Policy Statement, TPR will pay Exec her base salary plus benefits for an additional six months. After six months of employment, Exec’s severance payments and benefits provided in this paragraph 5 shall be extended by one month, up to a maximum of twelve months, for each additional two months of full-time employment.

7.	Change of Control: In addition to any rights granted to Exec under paragraph 6 above or Section 6.1 of the Policy Statement, TPR shall pay Exec her base salary for an additional six months should TPR terminate Exec’s employment following a Change of Control. After twelve months of employment, Exec’s severance payments and benefits provided in this paragraph 6 shall be extended by one month, up to a maximum of twelve months, for each additional three months of full-time employment.

8.	Right to be Connected: Exec will be provided with or be reimbursed for the reasonable cost of cell phone service, DSL or cable modem connection service at her primary residence, and a laptop computer.

9.	Executive Education and Professional Memberships: TPR agrees that, at the Exec’s request, Exec may attend up to an aggregate of one week of educational programs each year, which are generally intended to assist her perform her job, at no charge to her vacation days. TPR shall pay up to $10,000.00 each year for such educational programs (including travel and lodging) at accredited educational institutions. In addition, TPR shall reimburse Exec for her professional membership fees up to $2,500 per year.

10.	Department Structure: TPR agrees that Exec shall have the authority as General Counsel to hire and staff the legal department in order to meet operational needs. TPR and Exec agree that Exec will be able to immediately hire Jackie Cruz, a paralegal, at a salary not to exceed $100,000. In addition, commencing January l ^st , 2005, Exec will have the authority to hire an additional attorney and a legal secretary if deemed needed by Exec. Candidates hired by Exec will be subject to TPR’s customary background check, compensation, and benefits policies.

11.	Professional Liability Policy: Commencing prior to June 30 ^th , 2004 and continuing through the term of this Agreement, TPR will obtain and maintain an appropriate policy of professional liability insurance covering Exec for the services she renders to TPR under this Agreement.

12.	Permission to Sit on Outside Boards and Consult: Notwithstanding Section 2.1 of the Policy Statement, TPR and Exec agree that during the term of this Agreement, (i) Exec shall be entitled to maintain her existing consulting practice at current levels; provided that such activities are not conducted on TPR property and that such activities do not interfere or conflict with the services provided under this Agreement, and (ii) in each case subject to the prior consent of TPR, Exec shall be entitled to serve as a member of the board of

	directors of up to two companies, provided that such activities do not interfere or conflict with the services provided under this Agreement.

13.	Non-solicitation: The restrictions set forth in Section 2.4.2 of the Policy Statement shall not apply to Exec’s solicitation of, communication with or other interaction with Jackie Cruz.


/s/ Mark Chernis			/s/ Margot Lebenberg

Mark Chernis			Margot Lebenberg
President, TPR

INDEMNIFICATION AGREEMENT

This INDEMNIFICATION AGREEMENT (“Agreement”) is effective as of December 14, 2004, by and between THE PRINCETON REVIEW, INC., a Delaware corporation (the “Company”), and MARGOT T. LEBENBERG (“Indemnitee”).

WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve the Company and its related entities;

WHEREAS, pursuant to its Bylaws and Amended and Restated Certificate of Incorporation, the Company indemnifies and holds harmless each of its officers and directors to the fullest extent authorized or permitted by the Delaware General Corporation Law (“DGCL”);

WHEREAS, the Company and Indemnitee are party to an Employment Agreement, dated as of April, 2004 (“Employment Agreement”), pursuant to which the Company agreed, among other things, to obtain and maintain an appropriate policy of professional liability insurance covering Indemnitee for the services she renders to the Company (“Liability Insurance”), such Liability Insurance obligation commencing prior to June 30, 2004 and continuing through the term of the Employment Agreement;

WHEREAS, such Liability Insurance was not obtained by the Company to cover the period prior to October 2, 2004 (the “Uninsured Period”);

WHEREAS, the Company has agreed to provide indemnification to Indemnitee in addition to that set forth in the Company’s Amended and Restated Certificate of Incorporation for acts or omissions of Indemnitee which occurred during the term of this Agreement; and

WHEREAS, in view of the considerations set forth above, the Company desires that Indemnitee shall be additionally indemnified by the Company as set forth herein;

NOW, THEREFORE, the Company and Indemnitee hereby agree as set forth below.

1. Indemnification. The rights and obligations set forth in this Section 1 are subject in their entirety to the limitation set forth in Section 11.

(a) Limitation on Liability. To the fullest extent permitted by law, the Indemnitee shall not be liable to the Company or it stockholders under the laws of any jurisdiction for any act performed, or failure to act, on the request of or on behalf of the Company or for the benefit of the Company, or on behalf of another corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise or person for which or whom the Indemnitee is performing services at the request of the Company (collectively, “Indemnifiable Conduct”). Additionally, the Company hereby releases Indemnitee from Indemnifiable Conduct prior to the date of this Agreement.

(b) Indemnification of Expenses. The Company shall indemnify Indemnitee to the fullest extent permitted by law if Indemnitee was or is or becomes a party to, a subject or a target of, or witness or a participant in, or is threatened to be made party to, a subject or a target of, or a witness of other participant in, any Claim by reason of (or arising in part out of) any Indemnifiable Event against any and all Expenses, including any and all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses. Such payment of Expenses shall be made by the Company as soon as practicable but in any event no later than twenty (20) business days after Indemnitee makes written demand therefor to the Company.

(c) Advancement of Expenses. The Company shall pay all Expenses incurred by Indemnitee in advance of the final disposition of a Claim as soon as practicable after Indemnitee incurs the same, but in any event no later than twenty (20) business days after Indemnitee makes written demand therefor to the Company. Indemnitee hereby undertakes to repay the amount of any Expenses paid in advance, if it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company. The Company may request Indemnitee tore confirm this undertaking in writing prior to paying any Expense in advance. Any obligation of Indemnitee to reimburse the Company for any advance of Expenses shall be unsecured and no interest shall be charged thereon.

(d) Reviewing Party. Notwithstanding the foregoing, (i) the obligations of the Company under Section l(b) and l(c) shall be subject to the condition that the Reviewing Party shall not have determined (in a written opinion in any case in which the Independent Legal Counsel referred to in Section l(e) hereof is involved) that Indemnitee would not be permitted to be indemnified under applicable law, and (ii) the obligation of the Company to make an advance on Expenses shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under applicable law, Indemnitee shall reimburse the Company for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction for a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any advance on Expenses Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal there from have been exhausted or lapsed). If there has not been a Change in Control, the Reviewing Party shall be selected by the Board of Directors, and if there has been a Change in Control (other than a Change in Control which has been approved by a majority of the Company’s Board of Directors who were directors immediately prior to the Change in Control), the Reviewing Party shall be an Independent Legal Counsel. If the Reviewing Party fails to make a determination, within thirty (30) days after written demand to make such a determination, or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence an action for a declaratory judgement or other appropriate relief in a federal or state court located in the City, State and County of New York or in the State of Delaware, seeking a determination by the Reviewing Party or challenging any such determination by the Reviewing Party or any aspect thereof. Any determination by the Reviewing Party shall otherwise be conclusive and binding on the Company and Indemnitee.

(e) Change in Control. The Company agrees that if there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Company’s Board of Directors who were directors immediately prior to such Change in Control), then with respect to all matters thereafter arising concerning the rights of Indemnitee to payment of Expenses and advances of Expenses under this Agreement or any other agreement or under the Company’s Certificate of Incorporation or Bylaws as now or hereafter in effect, Independent Legal Counsel, if desired by Indemnitee, shall be selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld or delayed). Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent Indemnitee would be permitted to be indemnified under applicable law and the Company agrees to abide by such opinion. The Company agrees to pay the reasonable fees of the Independent Legal Counsel referred to above and to indemnify fully such counsel against any and all expenses (including attorneys’ fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

Notwithstanding any other provision of this Agreement, the Company shall not be required to pay Expenses of more than one Independent Legal Counsel in connection with all matters concerning a single Indemnitee, and such Independent Legal Counsel shall be the Independent Legal Counsel for any or all other Indemnitees who are seeking indemnification from the Company with respect to any single event or occurrence or series of related events or occurrences, unless (i) the Company otherwise determines or (ii) any Indemnitee shall provide a written statement setting forth in detail a reasonable objection to such Independent Legal Counsel representing other Indemnitees.

(f) Mandatory Payment of Expenses. Notwithstanding any provision of this Agreement other than Sections 4 and 8 hereof, to the extent that Indemnitee has been successful on the merits or otherwise, including, without limitation, the dismissal of a Claim without prejudice, in defense of any Claim regarding any Indemnifiable Event, the Company shall indemnify Indemnitee against all Expenses incurred by Indemnitee in connection therewith to the extent permitted by law.

2. Indemnification Procedure.

(a) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition precedent to Indemnitee’s right to be indemnified or be advanced Expenses under this Agreement, give the Company notice in writing as soon as practicable of any Claim made against Indemnitee for which indemnification will be sought under this Agreement. Notice to the Company shall be directed to the President of the Company at the Company’s address (or such other address as the Company shall designate in writing to Indemnitee). In addition, Indemnitee shall cooperate with the Company and its insurers and their respective counsel, and provide such information and assistance as it, the insurers and their respective counsel may reasonably require and as shall be with Indemnitee’s power in connection with the defense of the Claim.

(b) No Presumptions: Burden of Proof. For purposes of this Agreement, the termination of any Claim, judgment, order, settlement (whether with or without

court approval) or conviction, or upon a plea of nolo contendere , or its equivalent, shall not, of itself, create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. In addition, neither the failure of the Reviewing Party to have made a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by the Reviewing Party that Indemnitee has not met such standard of conduct or did not have such belief, prior to the commencement of legal proceedings by Indemnitee to secure a judicial determination that Indemnitee should be indemnified under applicable law, shall be a defense to Indemnitee’s claim or create a presumption that Indemnitee has not met any particular standard of conduct or did not have any particular belief. In connection with any determination by the Reviewing Party or otherwise as to whether the Indemnitee is entitled to be indemnified hereunder, the burden of proof shall be on the Company to establish that Indemnitee is not so entitled.

(c) Notice to Insurers. If, at the time of the receipt by the Company of notice of a Claim pursuant to Section 2(a) hereof, the Company has liability insurance in effect which may cover such Claim, the Company shall give prompt notice of the commencement of such Claim to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Claim in accordance with the terms of such policies.

(d) Selection of Counsel. In the event the Company shall be obligated hereunder to pay the Expenses of any Claim, the Company, if appropriate, shall be entitled to assume the defense of such claim with counsel of its selection who shall, nonetheless, be subject to the approval of Indemnitee (which approval shall not be unreasonably withheld or delayed) upon the delivery to Indemnitee of written notice of the Company’s election so to do. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Claim; notwithstanding the foregoing: (i) Indemnitee shall have the right to employ Indemnitee’s separate counsel in any such Claim at Indemnitee’s expense and (ii) the fees and expenses shall be at the Company’s expense if (A) the employment of separate counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense, or (C) the Company shall not continue to retain counsel to defend such Claim.

3. Additional Indemnification Rights: Nonexclusivity.

(a) Scope . The Company hereby agrees to indemnify the Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’s Certificate of Incorporation or Bylaws (as now or hereafter in effect), or by statute. In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of a Delaware corporation to indemnify a member of its board of directors or an officer, manager, member, employee, agent or fiduciary, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits afforded by such change. In the event of any change

in any applicable law, statute or rule which narrows the right of a Delaware corporation to indemnify a member of its board of directors or an officer, manager, employee, agent or fiduciary, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties’ rights and obligations hereunder except as set forth in Section 8(a) hereof.

(b) Nonexclusivity. The indemnification provided by this Agreement shall be in addition to any rights to which Indemnitee may be entitled under the Company’s Certificate of Incorporation or its Bylaws (as now or hereafter in effect), any other agreement, any vote of stockholders or disinterested directors, the DGCL, or otherwise. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity even though Indemnitee may have ceased to serve in such capacity.

4. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any Claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, provision of the Company’s Certificate of Incorporation, Bylaws (as now or hereafter in effect) or otherwise) of the amounts otherwise indemnifiable hereunder.

5. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for a portion of the Expenses incurred in connection with any Claim, but not, however, for the entire total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses to which Indemnitee is entitled.

6. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge that in certain instances, federal law or applicable public policy may prohibit the Company from indemnifying its directors, officers, managers, members, employees, agents or fiduciaries under this Agreement or otherwise. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right under public policy to indemnify Indemnitee. If an Indemnifiable Event occurs during the Uninsured Period and (i) the Company is prohibited by law or public policy from indemnifying Indemnitee in accordance with the terms of this Agreement and (ii) the Indemnifiable Event would have been covered by commercially reasonable insurance if it had been in place during the Uninsured Period, then the waiver set forth in Section 20 shall be deemed null and void.

7. Liability Insurance. To the extent the Company maintains liability insurance applicable to directors, officers, managers, members, employees, agents or fiduciaries, Indemnitee shall be covered by such policies in such a manner as to provide Indemnitee the same rights and benefits as are provided to the most favorably insured (i) of the Company’s directors, if Indemnitee is director; (ii) of the Company’s officers, if Indemnitee is not a director of the Company but is an officer; or (iii) of the Company’s key employees, managers, members, agents or fiduciaries, if Indemnitee is not an officer or director but is a key employee, manager, member, agent or fiduciary.

8. Exceptions. Notwithstanding any other provision of this Agreement, the Company shall not be obligated pursuant to the terms of this Agreement:

(a) Excluded Action or Omissions. To indemnify Indemnitee for acts, omissions or transactions from which Indemnitee may not be indemnified under applicable law;

(b) Claims Initiated by Indemnitee. To indemnify or advance expenses to Indemnitee with respect to Claims initiated or brought voluntarily by Indemnitee and not by way of defense, except (i) with respect to actions or proceedings brought to establish or enforce a right to indemnification under this Agreement or any other agreement or insurance policy or under the Company’s Certificate of Incorporation or Bylaws now or hereafter in effect relating to Claims for Indemnifiable Events, (ii) in specific cases if the Board of Directors has approved the initiation or bringing of such Claim, or (iii) as otherwise required under the DGCL, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expense payment or insurance recovery, as the case may be;

(c) Lack of Good Faith. To indemnify Indemnitee for any expenses incurred by the Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such proceeding was not made in good faith or was frivolous; and

(d) Claims under Section 16(b). To indemnify Indemnitee for expenses and the payment of profits arising from the purchase and sale by Indemnitee of securities in circumstances when such profits are recoverable by the Company under Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute.

9. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against Indemnitee, Indemnitee’s estate, spouse, heirs, executors or personal or legal representatives, for any act performed, or failure to act, on the request of or on behalf of the Company or for the benefit of the Company, or on behalf of another corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise for which the Indemnitee is performing services at the request of the Company, after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided , however , that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.

10. Deposit of Funds in Trust. In the event that the Company decides voluntarily to dissolve or to file a voluntary petition for relief under applicable bankruptcy, moratorium or similar laws, then not later than ten days prior to such dissolution or filing, the Company shall deposit in trust for the exclusive benefit of Indemnitee a cash amount equal to all amounts previously authorized to be paid to Indemnitee hereunder, such amounts to be used to discharge the Company’s obligations to Indemnitee hereunder. Any amounts in such trust not required for such purpose shall be returned to the Company.

11. Effectiveness of Agreement: Term . (a) This Agreement and the limitations of liability and all indemnification rights and obligations set forth herein shall apply to, and be effective with respect to, only those covered acts or omissions of Indemnitee which occurred during the Limited Indemnity Period.

(b) The Company’s obligations under this Agreement shall continuously, irrevocably and perpetually apply to Indemnitee’s covered acts and omissions which occur prior to the date that the Company files its Form 10-K, as amended for the 2004 fiscal year; provided, however, that if such Form 10-K filing does not include all reports required pursuant to the Sarbanes-Oxley Act of 2002 then the Company’s obligations under this Agreement shall continue through such date that the Company finally and fully files all information and reports required pursuant to the Sarbanes-Oxley Act.

12. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original.

13. Binding Effect; Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns (including direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), spouses, heirs and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect, and whether by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part, of the business or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as a director, officer, manager, member, employee, agent or fiduciary (as applicable) of the Company or of any other enterprise at the Company’s request.

14. Attorney’s Fees. In the event that any action is instituted by Indemnitee under this Agreement or under any liability insurance policies maintained by the Company to enforce or interpret any of the terms hereof or thereof, Indemnitee shall be entitled to be paid all Expenses incurred by Indemnitee with respect to such action, regardless of whether Indemnitee is ultimately successful in such action, and shall be entitled to the advancement of Expenses with respect to such action, unless as a part of such action a court of competent jurisdiction over such action determines that each of the material assertions made by Indemnitee as a basis for such action were not made in good faith or were frivolous. In the event of an action instituted by or in the name of the Company under this Agreement to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all Expenses incurred by Indemnitee in defense of such action (including costs and expenses incurred with respect to Indemnitee’s counterclaims and cross-claims-made in such action), and shall be entitled to the advancement of Expenses with respect to such action, unless as a part of such action a court having jurisdiction over such action determines that each of Indemnitee’s material defenses to such action were made in bad faith or were frivolous.

15. Notice. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and signed for by the party addressed, on the date of such delivery, or (ii) if mailed by domestic certified or registered mail with postage prepaid, on the third business day after the date postmarked. Addresses for notice to either party are as shown on the signature page of this Agreement, or as subsequently modified by written notice.

16. Consent to Jurisdiction. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the federal and state courts of the City, County and State of New York or the State of Delaware for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be commenced, prosecuted and continued only in such court.

17. Severability. The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore, to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of this Agreement containing any provision held to be invalid, void or otherwise unenforceable, that is not itself invalid, void or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

18. Choice of Law. This Agreement shall be governed by and its provisions construed and enforced in accordance with the laws of the State of Delaware as applied to contracts between Delaware residents entered into and to be performed entirely within the State of Delaware.

19. Amendment. No amendment, modification, termination or cancellation of this Agreement shall be effective unless it is in writing signed by both the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed to be or shall constitute a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver.

20. Interaction and Entire Agreement. This Agreement sets forth the entire understanding between the parties hereto and supersedes and merges all previous written and oral negotiations, commitments, understandings and agreements relating to the subject matter hereof between the parties hereto. Indemnitee hereby waives any and all claims arising from the Company’s failure to perform its obligation to provide professional liability insurance as set for thin Section 9 of the Employment Agreement up to and including the date hereof.

21. No Construction as Employment Agreement. Nothing contained in this Agreement shall be construed as giving Indemnitee any right to be retained in the employ of the Company or any of its subsidiaries or affiliated entities.

22. Certain Definitions . (a) “Change in Control” shall mean, and shall be deemed to have occurred if, on or after the date of this Agreement, (i) any “person” (as such term

is used in Sections 13(d)and 14(d) of the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company acting in such capacity or corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing more than 15% of the total voting power represented by the Company’s then outstanding Voting Securities, (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and new director whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of related transactions) all or substantially all of the Company’s assets, and (iv) the Company becomes insolvent or bankrupt, is generally not paying its debts as they become due, or makes an assignment for the benefit of creditors, or a trustee or receiver is appointed for the Company or for the greater part of the properties of the Company with the consent of the Company, or if appointed without the consent of the Company, such trustee or receiver is not discharged within forty-five (45) days, or bankruptcy, reorganization, liquidation or similar proceedings are instituted by or against the Company under the laws of any jurisdiction, and if instituted against the Company, are consented to by it or remain undismissed for forty-five (45) days.

(b) “Claim” shall mean any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, or any hearing, inquiry or investigation that Indemnitee in good faith believes might lead to the institution of any such action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal, administrative, investigative or other (other than an action by or in the right of the Company).

(c) References to the “Company” shall include, in addition to Princeton Review Management, L.L.C., Princeton Review Operations, L.L.C., Princeton Review Products, L.L.C., Princeton Review Publishing, L.L.C., Princeton Review Carolinas, LLC, and The Princeton Review Canada, Inc., and any other affiliate and any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger to which The Princeton Review. Inc. (or any of its wholly owned subsidiaries) is a party which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, managers, members, employees, agents or fiduciaries, so that if Indemnitee is or was a director, officer, manager, member, employee, agent or fiduciary of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, manager, member, employee, agent or fiduciary of another corporation, limited liability company,

partnership, joint venture, employee benefit plan, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.

(d) “Expenses” shall mean any and all expenses (including attorneys’ fees and all other costs, expenses and obligations) incurred in connection with investigating, defending, being witness in, or a subject or a target of, or participating in (including on appeal), or preparing to defend, to be a witness in, or a subject or a target of, or to participate in, any action, suit, proceeding, alternative dispute resolution mechanism, hearing, inquiry or investigation; any and all judgment fines, penalties and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) of any Claim regarding any Indemnifiable Event; and any and all federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement.

(e) “Indemnifiable Event” shall mean any event or occurrence related to the fact that Indemnitee is or was a director, officer, manager, member, employee, agent or fiduciary of the Company, or any subsidiary of the Company, or is or was serving at the request of or on behalf of the Company as a director, officer, manager, member, employee, agent or fiduciary of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, or by reason of any action or inaction on the part of Indemnitee while serving in such capacity.

(f) “Independent Legal Counsel” shall mean an attorney or firm of attorneys, selected in accordance with the provisions of Section l(d) hereof, who shall not have otherwise performed services for the Company or Indemnitee (other than with respect to matters concerning the rights of Indemnitee under this Agreement, or of other indemnitees under similar indemnity agreements), within the three years preceding their retention.

(g) References to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to “serving at the request of the Company” shall include any service as a director, officer, employee, manager, member, agent or fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, manager, member, agent or fiduciary with respect to an employee benefit plan, its participants or its beneficiaries.

(h) “Reviewing Party” shall mean any appropriate person or body consisting of a member or members of the Company’s Board of Directors or any other person or body appointed by the Board of Directors who is not a party to the particular Claim for which Indemnitee is seeking indemnification, or Independent Legal Counsel.

(i) “Voting Securities” shall mean any securities of the Company that vote generally in the election of directors.

IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the date first above written.


By:	/s/ Mark Chernis

Name:	Mark Chernis
Title:	President and Chief Operating Officer
		AGREED TO AND ACCEPTED:

		MARGOT T. LEBENBERG



		(signature)

		3 Mountain View Drive Thiells, NY 10984

		(and)

		The current primary address on file with the Company

Exhibit 10.42

E MPLOYMENT A GREEMENT
T HE P RINCETON R EVIEW , I NC .

This employment Agreement is between Young Shin (“Exec”) and The Princeton Review, Inc. (“TPR’’), and is subject to the terms of the current form of the Executive Compensation Policy Statement, a copy of which is attached as Exhibit A (the “Policy Statement”) and of a letter agreement between the parties of even date herewith. Terms may be defined in The Princeton Review Glossary, the current form of which governs this Agreement and is attached as Exhibit B. This Agreement supersedes any previous employment agreement.

1.	Job Description: Commencing on February 18 ^th , Exec shall serve as the General Manager/EVP TPR’s Admissions Division, performing such duties as are reasonable and customary for such positions within a business of this type, and shall report solely and directly to TPR’s President and Chief Operating Officer or Chief Executive Officer. The base office from which Exec shall perform his duties shall be TPR’s New York City (“NYC”) offices (the “Base Office”); provided, however, that Exec shall have the right to also perform his duties from San Francisco (“SF”) subject to the terms of this Agreement.

2.	Compensation: TPR shall pay in cash to Exec a base salary of $210,000 per year, increasing by 3% (or 5% if Exec has permanently relocated from SF to NYC at TPR’s request), each year on February 15 ^th , payable in 26 bi-weekly installments. Exec shall also receive the same medical, dental, life insurance or other health-related benefits as other senior executives of the TPR. He shall also receive a bonus of up to 50% of base salary, based on the “Bonus Calculation” described below in Appendix A. The amount of the bonus paid shall be based on the Bonus Calculation described below in Appendix A, but shall not be less than 33% for the 2003 calendar year, and 25%for the 2004 calendar year of the maximum bonus available.

3.	Stock Option Grant: TPR shall grant Exec an option to purchase 45,000 shares of TPR’s Common Stock, as authorized by TPR’s Compensation Committee, at fair market value as indicated by the closing market price of REVU on Exec’s first day of employment. These options shall be subject to the terms and conditions of The Princeton Review, Inc. Stock Option Grant attached hereto.

4.	Term: Notwithstanding Section 3.1 of the Policy Statement, this Agreement shall expire on February 14 ^th , 2005 but shall be automatically extended for additional two-year periods upon the completion of the initial term and any two-year extension period thereafter until (i) Exec voluntarily terminates employment or (ii) TPR gives contrary written notice to Exec at least 6 months prior to the completion of the initial term or any two-year extension period thereafter. TPR will not be under any obligation to make additional option grams to Exec, such as those described in paragraph 3 above, for any extension terms of this Agreement unless agreed by TPR and Exec.

5.	Severance Payments and Benefits: Except as described in Section 7 below, if TPR terminates Exec’s employment without Cause, then in addition to the payments provided under Section 5.1 of the Policy Statement, but in lieu of the payments provided under Section 5.3 of the Policy Statement, TPR will pay Exec his base salary plus benefits for

	an additional six months. After twelve months of employment, Exec’s severance payments and benefits provided in this paragraph 5 shall be extended by one month, up to a maximum of twelve months, for each additional two months of full-time employment.

6.	Right to Perform From SF: Unless and until TPR requests that Exec permanently relocate to the Base Office, Exec shall have the right to also perform his duties from SF; provided that without the prior consent of TPR, Exec shall spend at least 8 out of every consecutive 60 business days working from the Base Office. Exec represents that he has a residence available to him at no cost to TPR for use during the times that he works from the Base Office. TPR’s reimbursement obligation for Exec’s travels to and from SF to the Base Office shall be limited to economy airfare, ground transportation and, upon prior notice and for good reason, nights in a hotel in NYC. TPR may in its discretion also reimburse meal and other reasonable expenses for Exec incurred during his operations from the Base Office.

7.	Relocation to Base Office: Exec agrees to promptly respond to TPR’s written request made within the first 15 months of this Agreement that he permanently relocate to, and operate solely from, the Base Office. Unless Exec agrees to such a request within thirty days, TPR may terminate Exec, and Exec will receive as his sole remedy one-half of the severance rights he would receive for a termination without Cause notwithstanding any other provision of this Agreement or the Policy Statement. In no event shall such request or relocation constitute being Reassigned under the Policy Statement. Exec agrees that he will be permanently operating from the Base Office within 60 days of any such request, and TPR agrees to reimburse reasonable and documented direct moving expenses approved in advance by TPR in writing in connection with any permanent move of Exec’s residence to the NYC area that occurs within 120 clays of the request and while this Agreement is in place.

8.	Right to be Connected: Exec will be provided with or be reimbursed for the reasonable cost of cell phone service, DSL or cable modem connection service at his primary residence, and a laptop computer.

9.	Executive Education: TPR agrees that, at the Exec’s request, Exec may attend up to an aggregate of one week of educational programs each year, which are generally intended to assist him perform his job, at no charge to his vacation days. TPR shall pay up to $10,000.00 each year for such educational programs (including travel and lodging) at accredited educational institutions.

10.	Indemnity: Exec represents that he is not party to any agreement which restricts or impairs the use of any information now held by Exec or which could in any way restrict or impair Exec’s full performance under this Employment Agreement. Further, Exec agrees not to use or disclose anyone else’s previously obtained trade secrets or proprietary information, however obtained by Exec, in connection with his employment at TPR.

Agreed to this February 18, 2003

/s/ Mark Chernis		/s/ Young Shin

Mark Chernis		Young Shin
President, TPR

Appendix A - Bonus Calculation

Bonus for 2003 shall be awarded according to the following objectives:

(a)	50%	Admissions Services division achieves annual financial objectives as set by 2003 TPR Budget. Bonus will be paid out according to standard TPR financial bonus matrix as determined annually by TPR.

(b)	20%	Company achieves annual financial objectives as set by 2003 TPR Budget Bonus will be paid out according to standard TPR financial bonus matrix as determined annually by TPR.

(c)	30%	Based upon mutually agreed upon job specific objectives determined within 60 days of Exec’s start date or, if no agreement is reached, then based on b) above.

Exhibit 10.44

E XHIBIT A

T HE P RINCETON R EVIEW B ONUS P OLICY

C ALENDAR Y EAR 2006

This document outlines the bonus policy and structure for The Princeton Review, Inc. (the “Company”) G-0 Employees, and it shall be incorporated into, and be deemed a part of, the employee’s Executive Compensation Policy Statement,

The bonus calculations are a direct reflection of the Company/division’s results and the EVP’s contribution to our annual financial success. This two-part structure is intended to accomplish the following: (1) the Company and division must meet or exceed its goals in order to trigger bonus payments, and (2) individuals must meet or exceed their goals in order to share in the bonus program.

The Bonus Process

By the end of March, G-0 Employees will receive the bonus plan that will be in effect for that calendar year. The plan will state the components that factor into the bonus. Specific financial or quality goals will be distributed only once the numbers for the previous year have been tabulated and released. The maximum bonus amount G-0 employees can earn depends on their respective Employment Agreement.

Each plan will be approved by the President and submitted to Human Resources. Bonuses are distributed annually, after the Company’s financial statements have been finalized for the year. Bonuses are based on The Princeton Review’s performance for the year and are not guaranteed.

Every employee will receive performance evaluations twice a year. No bonuses will be approved or processed until the manager completes the review and files the appropriate paperwork with HR. Managers will NOT be given their raises, bonuses, or options until they have completed the performance evaluations for their staff. Unless approved by HR and the President in advance, those managers’ raises and option grants will not be backdated.

Critical Factors behind the Bonus Plan

Divisional and Company Financial and Quality Performance

The plan is primarily based on factors that drive the business; payment of bonuses is based on the overall performance of The Princeton Review and the contribution of each employee to its success.

The financial and quality bonus goals (often called matrices) for each department and/or division is set by the divisional EVP and approved by the President and for Executive Officers the Compensation Committee by the end of March each year. The President will set the bonus matrix for the overall Company performance. These targets reflect the goals of the organization that each person impacts in some way. All employees have financial, customer satisfaction and personal components in their bonus.

The bonus components and weighting for G-0 employees are listed in the chart, below. While these are expected percentages, the numbers may be changed at the discretion of The Compensation Committee:

*Job Category*	Max. Bonus as% of salary	*Minimum Goal Parameters*

		*Operating Division*		*Service Division*

G-0	Plug in% based on Exec Comp Agreement	50%	Divisional/Departmental Financial Performance	30%	Divisional Financial Performance (equally distributed)
		10%	Company Financial Performance	20%	Company Financial Performance
		15%	Customer Satisfaction/Quality Metrics	20%	Customer Satisfaction/Quality Metrics
		25%	Job Specific Objectives	30%	Job Specific Objectives

Personal Performance

We’ve allocated a minimum of 25% of the full-year review rating to personal performance (as indicated in the above chart). Simply put, your performance will be the only factor in determining approx. a quarter of your bonus, regardless of how the Company fares overall.

At reviews, Divisional EVPs will receive performance ratings using the following scale: Exceeds Expectations, Accomplished Goals, Requires Improvement, and Fails to Meet Expectations. EVPs will be rated on the specific goals outlined for them in previous review sessions and will be given an overall rating based on their aggregate performance. The following are the descriptions for each rating and guidelines for the percentage credit EVPs will receive for personal objectives achieved for each performance level.

*Ratings for Job Specific Objectives:*			Estimated Payout for Job Specific Objectives:

E xceeds E xpectations			90%-100%
	•	Produced exceptional work on this objective
	•	Quality of work exceeds expectations and sets new standards of excellence
	•	Required little to no direction or guidance for work on this objective.
	•	Objective completed ahead of schedule and better than budget.
A ccomplished G oals			50%-75%
	•	Expected results produced and some expectations were exceeded
	•	Required minimal guidance and direction
	•	Objective was completed both on time and on budget.
R equires I mprovements to M eet E xpectations			0%-25%
	•	Quality of work on objective did not meet expectations
	•	Required above average levels of guidance and direction.
	•	Objective was not completed on time or was not on budget.
F ails T o M eet E xpectations			0%
	•	Acceptable results we not produced
	•	Unable to complete project without exceptional levels of guidance and direction.

Rules of the Game

Unless otherwise noted in your Employment Agreement and/or Executive Compensation Policy Statement, the following rules will apply:

.	•	Employees must still be with the company when bonuses are paid to receive the bonus. An employee who is on an approved leave of absence (medical, military service, etc.) during the bonus period, will receive a pro-rated bonus that reflects the amount of time actively at work during that bonus period.
	•	Employees who are promoted prior to August 1 to a higher job category will be eligible for the higher bonus potential (if applicable). Bonuses for employees promoted after August 1 will be considered at the original category.
	•	Bonuses for employees who start prior to October 1 ^st shall be pro-rated based on the time they are with the company in the bonus year.
	•	Divisional/Departmental bonus plan goals will be established by the end of March of each year.
	•	Raises will be processed no earlier than March 10, retroactive to February 14.
	•	We may not be able to announce our annual financial performance until after our Q4 conference call with the Wall Street financial analysts. As such, announcement and/or payments of financial bonuses may be delayed until after the release of our financial performance.
	•	Financial performance of the overall Company depends directly on our divisions and departments and could make for difficult choices if one or more of them does not deliver its promises. Should a division or department fall short of its budgeted bottom-line enough to significantly affect the entire Company, bonuses may be lowered or eliminated for employees in that division or department at the discretion of the CEO or President.
	•	In times of poor financial health or extremely poor financial performance, bonuses based on non-financial components may be lowered. This would only be done at the urging of the Board of Directors, and would affect every employee in the Company by an equal percentage.
	•	This bonus policy is not a contract and may be modified at any time by the Company. Employees will be notified of any changes in the event that they are made.
		This bonus agreement supercedes any prior understandings or promises regarding bonuses.
	•	For Executive Officers, all bonus awards and the final determination of goals must be approved by the Compensation Committee.

Exhibit 10.45

R ESTRICTED S TOCK G RANT
T HE P RINCETON R EVIEW , I NC.

Date of Issue:
Granted To:
Social Security No.:

No. of Shares of Restricted Stock:		Total Shares:
Vesting Period:		Vesting Date:

Your Restricted Stock Grant

The definition of any terms used herein may be found in the Princeton Review Glossary dated March 1 ^st , 2004.

Subject to the restrictions, terms and conditions of the Stock Incentive Plan and this Restricted Stock Agreement (this “Agreement”), the Company hereby awards to you _______ shares of validly issued Common Stock (the “Shares”). You shall pay the Company the par value ($0.01) for each Share awarded to you simultaneously with the execution of this Agreement. Pursuant to this Agreement, the Shares are subject to certain restrictions, which restrictions relate to the passage of time as an employee of the Company or a Related Company. While such restrictions are in effect, the Shares subject to such restrictions shall be referred to herein as “Restricted Stock.”

Vesting & Cliff

Except as otherwise provided herein or in the Stock Incentive Plan, the Restricted Stock shall vest and cease to be Restricted Stock on the Vesting Date.

There shall be no proportionate or partial vesting in the periods prior to the vesting date and all vesting shall occur only on the Vesting Date; provided that no termination of employment has occurred prior to such date.

In the event of a Change in Control, the Shares of Restricted Stock will be treated in accordance with Section 11 of the Stock Incentive Plan.

Payment Methods

When the Shares of Restricted Stock become vested, the Company shall promptly issue and deliver to you a new stock certificate registered in your name for such Shares, without the legend discussed below, and deliver to you any related other RS Property (as defined below), subject to applicable withholding.

You shall pay, or make arrangements to pay, in a manner satisfactory to the Company, an amount equal to the amount of all applicable federal, state and local taxes that the Company is required to withhold at any time. In the absence of such arrangements, the Company or a Related Company shall have the right to withhold such taxes from your normal pay or other amounts payable to you, including, but not limited to, the right to withhold Shares otherwise deliverable to you hereunder. In addition, any statutorily required withholding obligation may be satisfied, in whole or in part, at your election, in the form and manner prescribed by the Committee, by delivery of Shares of Common Stock (including Shares issuable under this Agreement).

Conditions of Award of Restricted Stock

The grant of Restricted Stock is subject to the following terms and conditions:

(1)	You shall not sell, transfer, pledge, hypothecate, assign or otherwise dispose of the Shares, except as set forth in the Stock Incentive Plan or this Agreement. Any attempted sale, transfer, pledge, hypothecation, assignment or other disposition of the Shares in violation of the Stock Incentive Plan or this Agreement shall be void and of no effect and the Company shall have the right to disregard the same on its books and records and to issue “stop transfer” instructions to its transfer agent.

(2)	Promptly after the date of this Agreement, the Company shall issue stock certificates representing the Restricted Stock. The stock certificates shall be registered in your name and shall bear any legend required by the Committee to assure compliance with any federal or state securities laws. Such stock certificates shall be held in custody by the Company (or its designated agent) until the restrictions thereon shall have lapsed. Upon the Company’s request, you shall deliver to the Company a duly signed stock power, endorsed in blank, relating to the Restricted Stock.

(3)	In the event you receive a dividend on the Restricted Stock or the Shares of Restricted Stock are split or you receive any other shares, securities, moneys or property representing a dividend on the Restricted Stock or representing a distribution or return of capital upon or in respect of the Restricted Stock or any part thereof, or resulting from a split-up, reclassification or other like changes of the Restricted Stock, or otherwise received in exchange therefor, and any warrants, rights or options issued to you in respect of the Restricted Stock (collectively “RS Property”), you will also immediately deposit with and deliver to the Company any of such RS Property, including any certificates representing shares duly endorsed in blank or accompanied by stock powers duly executed in blank, and such RS Property shall be subject to the same restrictions, including vesting, as the Restricted Stock with regard to which they are issued and shall herein be encompassed within the term “Restricted Stock.”

(4)	You will have the right to vote the Restricted Stock, to receive and retain any dividends payable to holders of Shares of record on and after the transfer of the Restricted Stock (although such dividends shall be treated, to the extent required by applicable law, as additional compensation for tax purposes if paid on Restricted Stock), and to exercise all other rights, powers and privileges of a holder of Common Stock with respect to the

	Restricted Stock set forth in the Stock Incentive Plan, with the exceptions that: (a) you will not be entitled to delivery of the stock certificate or certificates representing the Restricted Stock until the Restricted Stock vests; (b) the Company (or its designated agent) will retain custody of the stock certificate or certificates representing the Restricted Stock and the other RS Property (as defined below) until the Restricted Stock vests; (c) no RS Property shall bear interest or be segregated in separate accounts during the Vesting Period; (d) any dividends will be subject to the vesting restrictions provided in this Agreement; and (e) you may not sell, assign, transfer, pledge, exchange, encumber or dispose of the Restricted Stock until the Restricted Stock vests.

(5)	Except as otherwise provided herein, you shall forfeit to the Company, without compensation, other than repayment of any par value paid by you for such Shares (if any), any and all Restricted Stock (but no vested Shares) and RS Property upon your termination of employment for any reason.

(6)	If take the option to elect (as required by Section 83(b) of the Code) within 30 days after the issuance of the Restricted Stock to include in gross income for federal income tax purposes in the year of issuance the fair market value of such Shares of Restricted Stock, you shall pay to the Company or make arrangements satisfactory to the Company to pay to the Company upon such election, any federal, state or local taxes required to be withheld with respect to the Restricted Stock. If you shall fail to make such payment, the Company shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to you any federal, state or local taxes of any kind required by law to be withheld with respect to the Restricted Stock, as well as the withholding rights set forth above. You acknowledge that it is your sole responsibility, and not the Company’s, to file timely and properly the election under Section 83(b) of the Code and any corresponding provisions of state tax laws if you elect to utilize such election.

(7)	The Shares are being issued to you, and this Agreement is being made by the Company, in reliance upon the following express representations and warranties. You acknowledge, represent and warrant that: (a) you have been advised that you may be an “affiliate” within the meaning of Rule 144 under the Securities Act of 1933, as amended (the “Act”) and in this connection the Company is relying in part on your representations set forth in this section; (b) if you are deemed an affiliate within the meaning of Rule 144 of the Act, the Shares must be held indefinitely unless an exemption from any applicable resale restrictions is available or the Company files an additional registration statement (or a “re-offer prospectus”) with regard to such Shares and the Company is under no obligation to register the Shares (or to file a “re-offer prospectus”); and (c) if you are deemed an affiliate within the meaning of Rule 144 of the Act, you understand that the exemption from registration under Rule 144 will not be available unless (i) a public trading market then exists for the Common Stock of the Company, (ii) adequate information concerning the Company is then available to the public, and (iii) other terms and conditions of Rule 144 or any exemption therefrom are complied with; and that any sale of the Shares may be made only in limited amounts in accordance with such terms and conditions.

(8)	This Agreement is not an agreement of employment. This Agreement does not guarantee that the Company or a Related Company will employ or retain, or to continue to, employ or retain you during the entire, or any portion of the, term of this Agreement, including but not limited to any period during which the Restricted Stock is outstanding, nor does it modify in any respect the Company or a Related Company’s right to terminate or modify your employment or compensation.

(9)	The Company, its successors and assigns, is hereby appointed your attorney-in-fact, with full power of substitution, for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instruments which such attorney-in-fact may deem necessary or advisable to accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled with an interest. The Company, as attorney-in-fact for you, may in your name and stead, make and execute all conveyances, assignments and transfers of the Restricted Stock, Shares and property provided for herein, and you hereby ratifies and confirms all that the Company, as said attorney-in-fact, shall do by virtue hereof. Nevertheless, you shall, if so requested by the Company, execute and deliver to the Company all such instruments as may, in the judgment of the Company, be advisable for the purpose.

(10)	You shall have no rights as a stockholder with respect to any Shares covered by the Restricted Stock unless and until you have become the holder of record of the Shares, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such Shares, except as otherwise specifically provided for in this Agreement.

(11)	This Agreement is subject to all the terms, conditions and provisions of the Stock Incentive Plan, including, without limitation, the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Stock Incentive Plan as may be adopted by the Committee and as may be in effect from time to time. The Stock Incentive Plan is incorporated herein by reference. If and to the extent that this Agreement conflicts or is inconsistent with the terms, conditions and provisions of the Stock Incentive Plan, the Stock Incentive Plan shall control, and this Agreement shall be deemed to be modified accordingly. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes any prior agreements between the Company and you with respect to the subject matter hereof.

(12)	To the extent applicable, the Board or the Committee may at any time and from time to time amend, in whole or in part, any or all of the provisions of this Agreement to comply with Section 409A of the Code and the regulations thereunder or any other applicable law and may also amend, suspend or terminate this Agreement subject to the terms of the Stock Incentive Plan. The award of Restricted Stock pursuant to this Agreement is not intended to be considered “deferred compensation” for purposes of Section 409A of the Code.

(13)	You shall forfeit the Restricted Stock if you do not execute this Agreement with a period of 60 days from the date you receive this Agreement (or such other period as the Committee shall provide).

(14)

Miscellaneous: (a) this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, legal representatives, successors and assigns; (b) this Agreement shall be governed and construed in accordance with the laws of New York (regardless of the law that might otherwise govern under applicable New York principles of conflict of laws); (c) this Agreement may be executed in one or more counterparts, all of which taken together shall constitute one contract; (d) the failure of any party hereto at any time to require performance by another party of any provision of this Agreement shall not affect the right of such party to require performance of that provision, and any waiver by any party of any breach of any provision of this Agreement shall not be construed as a waiver of any continuing or succeeding breach of such provision, a waiver of the provision itself, or a waiver of any right under this Agreement; and [(e) you hereby acknowledge and agree that by executing this Agreement, all rights, benefits or privileges to which you are entitled with respect to any stock options granted to you under the Stock Incentive Plan in 2005 that are unvested on the date hereof shall be forfeited as of the date hereof and such options shall be of no further force and effect. In accordance with the foregoing and in consideration for the award(s) granted to you on the date hereof, you hereby release the Company from any and all of the obligations relating to the forfeited options.] ¹

Please retain this copy for your files.

THE PRINCETON REVIEW, INC.



By:
Title:

¹ Applicable only to those employees who received stock options in 2005.

Exhibit 10.46

P ERFORMANCE -B ASED D EFERRED S TOCK G RANT
T HE P RINCETON R EVIEW , I NC .

Date of Issue:
Granted To:
Social Security No.:

Grant No.:
Deferral Period: 1/1/06 through 12/31/07	Target Award: _______ Shares
	Vesting Date: December 31, 2007

Your Performance-Based Deferred Stock Grant

The definition of any terms used herein may be found in the Princeton Review Glossary dated March 1 ^st , 2004.

Subject to the restrictions, terms and conditions of the Stock Incentive Plan and this agreement (this “ Agreement ”), the Company hereby awards to you a deferred stock award for the right to receive a target amount of ________ shares of Common Stock (the “ Award ”), subject to adjustment based on the achievement of the financial performance goals set forth herein, in respect of the period from January 1, 2006 through December 31, 2007 (the “ Deferral Period ”). One-half of the target award shall be earned based on the achievement of Budgeted Earnings Per Share for the Deferral Period and one-half of the target award shall be earned based on the achievement of Budgeted Return on Assets for the Deferral Period.

Vesting of Award

The Award shall vest based on the achievement of the financial performance goals set forth below measured as of December 31, 2007 (the “ Vesting Date ”), subject to your continued employment with the Company or any Related Company through the Vesting Date. There shall be no proportionate or partial vesting of the Award during the Deferral Period prior to the Vesting Date; provided that upon the occurrence of a Change in Control during the Deferral Period while you are employed by the Company or a Related Company, the Award shall become fully and immediately vested at the maximum performance levels, and shall be payable in accordance with the payment provisions set forth below.

P ERFORMANCE C RITERION I – B UDGETED E ARNINGS P ER S HARE FOR THE D EFERRAL P ERIOD

Performance Level	Cumulative EPS for Deferral Period	Shares Payable as a % of Target

Threshold	$___	25%
Target	$___	50%
Maximum	$___	100%

P ERFORMANCE C RITERION II – B UDGETED R ETURN ON A SSETS FOR THE D EFERRAL P ERIOD

Performance Level	Budgeted ROA for Deferral Period	Shares Payable as a % of Target

Threshold	__%	25%
Target	__%	50%
Maximum	__%	100%

Termination of Employment

In the event that you experience a termination of employment with the Company or any Related Company for any reason prior to the Award becoming vested in accordance with the terms hereof, the Award shall be immediately forfeited and automatically cancelled without further action of the Company.

Payment of Award

Subject to the provisions of the following paragraph, any payment in respect of the Award hereunder shall be made in shares of Common Stock as soon as practicable in 2008 following the date on which the Committee, in its sole discretion, certifies the level of achievement of the financial performance goals of the Company for the Deferral Period. The actual number of shares paid to you for the achievement of performance levels falling between the threshold, target and maximum levels (as set forth above) shall be determined based on straight-line interpolation, rounded up to the nearest whole share.

Upon the occurrence of a Change in Control of the Company, the Award shall be immediately payable in shares of Common Stock at the maximum performance levels set forth above.

You shall pay, or make arrangements to pay, in a manner satisfactory to the Company, an amount equal to the amount of all applicable foreign, federal, state, provincial and local taxes that the Company is required to withhold at any time in respect of the Award hereunder. In the absence of such arrangements, the Company or one of its Related Companies shall have the right to withhold such taxes from your normal pay or other amounts payable to you, including, but not limited to, the right to withhold shares otherwise deliverable to you hereunder. In addition, any statutorily required withholding obligation may be satisfied, in whole or in part, at your election, in the form and manner prescribed by the Committee, by delivery of shares of Common Stock (including shares issuable under this Agreement).

Conditions to Award

This Award is subject to the following terms and conditions:

(1)	You shall not sell, transfer, pledge, hypothecate, assign or otherwise dispose of the Award hereunder. Any attempted sale, transfer, pledge, hypothecation, assignment or other disposition of the Award in violation of the Stock Incentive Plan or this Agreement shall be void and of no effect and the Company shall have the right to disregard the same.

(2)	The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing shares of Common Stock issued pursuant to this Agreement. You shall, at the request of the Company, promptly present to the Company any and all certificates representing shares of Common Stock acquired pursuant to this Agreement in your possession in order to carry out the provisions of this section.

(3)	Any shares of Common Stock issued to you hereunder will be issued by the Company in reliance upon the following express representations and warranties. You acknowledge, represent and warrant that: (a) you have been advised that you may be an “affiliate” within the meaning of Rule 144 under the Securities Act of 1933, as amended (the “ Act ”), and in this connection the Company is relying in part on your representations set forth in this section; (b) if you are deemed an affiliate within the meaning of Rule 144 of the Act, any shares of Common Stock issued hereunder must be held indefinitely unless an exemption from any applicable resale restrictions is available or the Company files an additional registration statement (or a “re-offer prospectus”) with regard to such shares and the Company is under no obligation to register the shares (or to file a “re-offer prospectus”); and (c) if you are deemed an affiliate within the meaning of Rule 144 of the Act, you understand that the exemption from registration under Rule 144 will not be available unless (i) a public trading market then exists for the Common Stock of the Company, (ii) adequate information concerning the Company is then available to the public, and (iii) other terms and conditions of Rule 144 or any exemption therefrom are complied with; and that any sale of the shares may be made only in limited amounts in accordance with such terms and conditions.

(4)	You shall not have any privileges of a stockholder of the Company with respect to the shares of Common Stock payable hereunder, including without limitation any right to vote such shares or to receive dividends or other distributions in respect thereof, until the date of the issuance to you of a share certificate evidencing such shares. No adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such shares, except as otherwise specifically provided for in the Stock Incentive Plan. Nothing in this Agreement shall confer upon you any right to continue as an employee of the Company or any Related Company or to interfere in any way with any right of the Company to terminate your employment at any time.

(5)	This Agreement is subject to all the terms, conditions and provisions of the Stock Incentive Plan, including, without limitation, the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Stock Incentive Plan or the Award as may be adopted by the Committee and as may be in effect from time to time. The Stock Incentive Plan is incorporated herein by reference. If and to the extent that this Agreement conflicts or is inconsistent with the terms, conditions and provisions of the Stock Incentive Plan, the Stock Incentive Plan shall control, and this Agreement shall be deemed to be modified accordingly. This Agreement and the Stock Incentive Plan contain the entire understanding of the parties with respect to the subject matter hereof and supersede any prior agreements between you and the Company with respect to the subject matter hereof, whether written or oral.

(6)	To the extent applicable, the Board or the Committee may at any time and from time to time amend, in whole or in part, any or all of the provisions of this Agreement to comply with section 409A of the Code and the regulations thereunder or any other applicable law, and may also amend, suspend or terminate this Agreement subject to the terms of the Stock Incentive Plan. This Agreement is intended to comply with the applicable requirements of section 409A of the Code and shall be limited, construed and interpreted in a manner so as to comply therewith.

(7)	You shall forfeit the Award hereunder if you do not execute this Agreement within a period of 60 days from the date that you receive this Agreement (or such other period as the Committee shall provide).

(8)	Miscellaneous.

	(a)	This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, legal representatives, successors and assigns.

	(b)	This Agreement shall be governed and construed in accordance with the laws of New York (regardless of the law that might otherwise govern under applicable New York principles of conflict of laws).

	(c)	This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one contract.

	(d)	The failure of any party hereto at any time to require performance by another party of any provision of this Agreement shall not affect the right of such party to require performance of that provision, and any waiver by any party of any breach of any provision of this Agreement shall not be construed as a waiver of any continuing or succeeding breach of such provision, a waiver of the provision itself, or a waiver of any right under this Agreement.

	(e)	[You hereby acknowledge and agree that by executing this Agreement, all rights, benefits and privileges to which you are entitled with respect to any stock options granted to you under the Stock Incentive Plan in 2005 that are unvested on the date hereof shall be forfeited as of the date hereof and such options shall be of no further force and effect. In accordance with the foregoing and in consideration for the award(s) granted to the you on the date hereof, you hereby release the Company from any and all of the obligations relating to such forfeited options.] ¹

Please retain this copy for your files.

THE PRINCETON REVIEW, INC.



By:
Title:


¹	Applicable only to those employees who received stock options in 2005.

EXHIBIT 31.1

CERTIFICATION

I, John Katzman, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of The Princeton Review, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ JOHN KATZMAN

	John Katzman
Date: May 10, 2006	Chairman and Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION

I, Andrew J. Bonanni, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of The Princeton Review, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ ANDREW J. BONANNI

	Andrew J. Bonanni
Date: May 10, 2006	Chief Financial Officer

Exhibit 32.1

CERTIFICATION OF PERIODIC REPORT

Each of the undersigned, in his capacity as an officer of The Princeton Review, Inc. (the “Company”), hereby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), that:

	(1)	the Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2006 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

	(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	By:	/s/ JOHN KATZMAN

	Name:	John Katzman
Date: May 10, 2006	Title:	Chief Executive Officer

	By:	/s/ ANDREW J. BONANNI

	Name:	Andrew J. Bonanni
Date: May 10, 2006	Title:	Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to The Princeton Review, Inc. and will be retained by The Princeton Review, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.