##### Table of Contents





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 June 30, 2009

OR



| ̈ | 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.)



|                                           |  |           
|------------------------------------------ |  | ----------
|111 Speen Street Framingham, Massachusetts |  | 01701     
|(Address of principal executive offices)   |  | (Zip Code)

Registrants telephone number, including area code (508) 663-5050





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   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ̈    No   ̈

Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting
company in Rule 12b-2 of the Exchange Act.



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  | x
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).    Yes   ̈    No  x

The registrant had 33,719,808 shares of $0.01 par value common stock outstanding at August 3, 2009









---

##### Table of Contents

TABLE OF CONTENTS



|           |  |                                    |  |                                                                                       |  |     
|---------- |  | ---------------------------------- |  | ------------------------------------------------------------------------------------- |  | ----
|           |  |                                    |  |                                                                                       |  | Page
|PART I.    |  | FINANCIAL INFORMATION (UNAUDITED): |  | 3                                                                                    
|           |  |                                    | 
|           |  | Item 1.                            |  | Consolidated Financial Statements                                                     |  | 3   
|           |  |                                    | 
|           |  |                                    |  | Consolidated Balance Sheets                                                           |  | 3   
|           |  |                                    | 
|           |  |                                    |  | Consolidated Statements of Operations                                                 |  | 4   
|           |  |                                    | 
|           |  |                                    |  | Consolidated Statement of Stockholders Equity                                        |  | 5   
|           |  |                                    | 
|           |  |                                    |  | Consolidated Statements of Cash Flows                                                 |  | 6   
|           |  |                                    | 
|           |  |                                    |  | Notes to Consolidated Financial Statements                                            |  | 7   
|           |  |                                    | 
|           |  | Item 2.                            |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 15  
|           |  |                                    | 
|           |  | Item 3.                            |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 20  
|           |  |                                    | 
|           |  | Item 4.                            |  | Controls and Procedures                                                               |  | 21  
|           |  |                                   
|PART II.   |  | OTHER INFORMATION                  |  | 22                                                                                   
|           |  |                                    | 
|           |  | Item 1.                            |  | Legal Proceedings                                                                     |  | 22  
|           |  |                                    | 
|           |  | Item 1A.                           |  | Risk Factors                                                                          |  | 22  
|           |  |                                    | 
|           |  | Item 2.                            |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 22  
|           |  |                                    | 
|           |  | Item 3.                            |  | Defaults Upon Senior Securities                                                       |  | 22  
|           |  |                                    | 
|           |  | Item 4.                            |  | Submission of Matters to a Vote of Security Holders                                   |  | 23  
|           |  |                                    | 
|           |  | Item 5.                            |  | Other Information                                                                     |  | 23  
|           |  |                                    | 
|           |  | Item 6.                            |  | Exhibits                                                                              |  | 24  
|           | 
|SIGNATURES |  | 25                                



2



---

##### Table of Contents

PART I. FINANCIAL INFORMATION (UNAUDITED)



|Item 1. | Consolidated Financial Statements
|------- | ---------------------------------

THE PRINCETON REVIEW, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(unaudited)

(in thousands, except
share and per share data)



|                                                                                                                                    |  |              |          |   |                  |   |          |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | -------- | - | ---------------- | - | -------- | -
|                                                                                                                                    |  | June 30,2009 |          |   | December 31,2008 |  
|ASSETS                                                                                                                              |  |              |          |   |                  |   |          |  
|Current assets:                                                                                                                     |  |              |          |   |                  |   |          |  
|Cash and cash equivalents                                                                                                           |  | $            | 9,336    |   |                  | $ | 8,853    |  
|Restricted cash and cash equivalents                                                                                                |  |              | 597      |   |                  |   | 615      |  
|Accounts receivable, net of allowance of $951 and $1,105, respectively                                                              |  |              | 15,479   |   |                  |   | 17,367   |  
|Other receivables, including $1,713 in 2009 and $2,363 in 2008 from related parties                                                 |  |              | 2,102    |   |                  |   | 2,689    |  
|Inventory                                                                                                                           |  |              | 1,688    |   |                  |   | 1,946    |  
|Prepaid expenses                                                                                                                    |  |              | 1,286    |   |                  |   | 1,287    |  
|Other current assets                                                                                                                |  |              | 2,325    |   |                  |   | 2,616    |  
|Assets held for sale                                                                                                                |  |              |         |   |                  |   | 4,019    |  
|                                                                                                                                    |  |              |          |   |                  |   |          |  
|                                                                                                                                    |  |             
|Total current assets                                                                                                                |  |              | 32,813   |   |                  |   | 39,392   |  
|Furniture, fixtures, equipment and software development, net                                                                        |  |              | 17,699   |   |                  |   | 14,646   |  
|Goodwill                                                                                                                            |  |              | 84,584   |   |                  |   | 84,584   |  
|Other intangibles, net                                                                                                              |  |              | 27,949   |   |                  |   | 28,703   |  
|Other assets                                                                                                                        |  |              | 1,330    |   |                  |   | 1,466    |  
|Assets held for sale                                                                                                                |  |              |         |   |                  |   | 5,705    |  
|                                                                                                                                    |  |              |          |   |                  |   |          |  
|Total assets                                                                                                                        |  | $            | 164,375  |   |                  | $ | 174,496  |  
|                                                                                                                                    |  |              |          |   |                  |   |          |  
|                                                                                                                                    |  |             
|LIABILITIES & STOCKHOLDERS EQUITY                                                                                                  |  |              |          |   |                  |   |          |  
|Current liabilities:                                                                                                                |  |              |          |   |                  |   |          |  
|Accounts payable                                                                                                                    |  | $            | 1,264    |   |                  | $ | 1,496    |  
|Accrued expenses                                                                                                                    |  |              | 10,957   |   |                  |   | 10,971   |  
|Current maturities of long-term debt                                                                                                |  |              | 3,643    |   |                  |   | 3,283    |  
|Deferred revenue                                                                                                                    |  |              | 22,140   |   |                  |   | 19,198   |  
|Liabilities held for sale                                                                                                           |  |              |         |   |                  |   | 4,650    |  
|                                                                                                                                    |  |              |          |   |                  |   |          |  
|                                                                                                                                    |  |             
|Total current liabilities                                                                                                           |  |              | 38,004   |   |                  |   | 39,598   |  
|Deferred rent                                                                                                                       |  |              | 1,663    |   |                  |   | 1,712    |  
|Long-term debt                                                                                                                      |  |              | 6,316    |   |                  |   | 17,488   |  
|Other liabilities                                                                                                                   |  |              | 650      |   |                  |   | 710      |  
|Deferred tax liability                                                                                                              |  |              | 6,455    |   |                  |   | 5,912    |  
|Series C Preferred Stock, $0.01 par value; 60,000 shares authorized; 60,000 shares issued and outstanding                           |  |              | 65,062   |   |                  |   | 62,646   |  
|Commitments and contingencies                                                                                                       |  |              |          |   |                  |   |          |  
|Stockholders equity                                                                                                                |  |              |          |   |                  |   |          |  
|Common stock, $0.01 par value; 100,000,000 shares authorized; 33,719,571 and 33,729,462 shares issued and outstanding,
respectively |  |              | 337      |   |                  |   | 337      |  
|Additional paid-in capital                                                                                                          |  |              | 162,978  |   |                  |   | 164,153  |  
|Accumulated deficit                                                                                                                 |  |              | (116,307 | ) |                  |   | (117,239 | )
|Accumulated other comprehensive loss                                                                                                |  |              | (783     | ) |                  |   | (821     | )
|                                                                                                                                    |  |              |          |   |                  |   |          |  
|Total stockholders equity                                                                                                          |  |              | 46,225   |   |                  |   | 46,430   |  
|                                                                                                                                    |  |              |          |   |                  |   |          |  
|Total liabilities and stockholders equity                                                                                          |  | $            | 164,375  |   |                  | $ | 174,496  |  
|                                                                                                                                    |  |              |          |   |                  |   |          |  

See accompanying notes to the consolidated financial statements.



3



---

##### Table of Contents

THE PRINCETON REVIEW, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(unaudited)

(In thousands, except per share data)



|                                                                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|----------------------------------------------------------------- |  | -------------------------- | ------ | - | ------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                  |  | Three Months EndedJune 30, |        |   | Six Months EndedJune 30, |  
|                                                                  |  | 2009                       |        |   | 2008                     |   |        | 2009 |  |   | 2008   |  
|Revenue                                                           |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Test Preparation Services                                         |  | $                          | 25,220 |   |                          | $ | 28,272 |      |  | $ | 52,583 |   |  | $ | 51,422 |  
|SES Services                                                      |  |                            | 6,252  |   |                          |   | 5,780  |      |  |   | 23,712 |   |  |   | 18,372 |  
|                                                                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Total revenue                                                     |  |                            | 31,472 |   |                          |   | 34,052 |      |  |   | 76,295 |   |  |   | 69,794 |  
|                                                                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|                                                                  |  |                            |        |  
|Cost of revenue                                                   |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Test Preparation Services                                         |  |                            | 10,024 |   |                          |   | 8,971  |      |  |   | 19,482 |   |  |   | 17,858 |  
|SES Services                                                      |  |                            | 3,661  |   |                          |   | 2,392  |      |  |   | 11,562 |   |  |   | 8,055  |  
|                                                                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Total cost of revenue                                             |  |                            | 13,685 |   |                          |   | 11,363 |      |  |   | 31,044 |   |  |   | 25,913 |  
|                                                                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Gross profit                                                      |  |                            | 17,787 |   |                          |   | 22,689 |      |  |   | 45,251 |   |  |   | 43,881 |  
|                                                                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|                                                                  |  |                            |        |  
|Operating expenses                                                |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Selling, general and administrative                               |  |                            | 18,451 |   |                          |   | 19,747 |      |  |   | 40,547 |   |  |   | 40,341 |  
|Restructuring                                                     |  |                            | 1,130  |   |                          |   | 1,316  |      |  |   | 4,048  |   |  |   | 1,751  |  
|                                                                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Total operating expenses                                          |  |                            | 19,581 |   |                          |   | 21,063 |      |  |   | 44,595 |   |  |   | 42,092 |  
|                                                                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Operating income (loss) from continuing operations                |  |                            | (1,794 | ) |                          |   | 1,626  |      |  |   | 656    |   |  |   | 1,789  |  
|Interest expense                                                  |  |                            | (216   | ) |                          |   | (39    | )    |  |   | (545   | ) |  |   | (74    | )
|Interest income                                                   |  |                            | 18     |   |                          |   | 73     |      |  |   | 32     |   |  |   | 201    |  
|Other income (expense), net                                       |  |                            | 229    |   |                          |   | (2     | )    |  |   | 254    |   |  |   | (2     | )
|                                                                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Income (loss) from continuing operations before income taxes      |  |                            | (1,763 | ) |                          |   | 1,658  |      |  |   | 397    |   |  |   | 1,914  |  
|Provision for income taxes                                        |  |                            | 179    |   |                          |   | (556   | )    |  |   | (121   | ) |  |   | (634   | )
|                                                                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Income (loss) from continuing operations                          |  |                            | (1,584 | ) |                          |   | 1,102  |      |  |   | 276    |   |  |   | 1,280  |  
|Discontinued operations                                           |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Loss from discontinued operations                                 |  |                            | (168   | ) |                          |   | (888   | )    |  |   | (306   | ) |  |   | (1,592 | )
|Gain (loss) from disposal of discontinued operations              |  |                            | (56    | ) |                          |   |       |      |  |   | 913    |   |  |   |       |  
|Benefit for income taxes                                          |  |                            | 2      |   |                          |   | 51     |      |  |   | 49     |   |  |   |       |  
|                                                                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Income (loss) from discontinued operations                        |  |                            | (222   | ) |                          |   | (837   | )    |  |   | 656    |   |  |   | (1,592 | )
|                                                                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Net income (loss)                                                 |  |                            | (1,806 | ) |                          |   | 265    |      |  |   | 932    |   |  |   | (312   | )
|Dividends and accretion on Preferred Stock                        |  |                            | (1,208 | ) |                          |   | (1,149 | )    |  |   | (2,415 | ) |  |   | (2,298 | )
|                                                                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Loss attributed to common stockholders                            |  | $                          | (3,014 | ) |                          | $ | (884   | )    |  | $ | (1,483 | ) |  | $ | (2,610 | )
|                                                                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Earnings (loss) per share                                         |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Basic and diluted:                                                |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Loss from continuing operations                                   |  | $                          | (0.08  | ) |                          | $ |       |      |  | $ | (0.06  | ) |  | $ | (0.03  | )
|Income (loss) from discontinued operations                        |  |                            | (0.01  | ) |                          |   | (0.03  | )    |  |   | 0.02   |   |  |   | (0.05  | )
|                                                                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Loss attributed to common stockholders                            |  | $                          | (0.09  | ) |                          | $ | (0.03  | )    |  | $ | (0.04  | ) |  | $ | (0.08  | )
|                                                                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Weighted average shares used in computing income (loss) per share |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Basic and diluted                                                 |  |                            | 33,719 |   |                          |   | 32,918 |      |  |   | 33,730 |   |  |   | 31,202 |  

See accompanying notes to the consolidated financial statements.



4



---

##### Table of Contents

THE PRINCETON REVIEW, INC. AND SUBSIDIARIES

Consolidated Statement of Stockholders Equity

(unaudited)

(in thousands)

For the six months ended June 30, 2009



|                                                                      |  |                      |   |                          |        |     |                    |   |         |                                   |  |   |                          |   |  |   |      |   |  |   |        |  
|--------------------------------------------------------------------- |  | -------------------- | - | ------------------------ | ------ | --- | ------------------ | - | ------- | --------------------------------- |  | - | ------------------------ | - |  | - | ---- | - |  | - | ------ | -
|                                                                      |  | Stockholders Equity |  
|                                                                      |  | Common Stock         |   | AdditionalPaid-inCapital |        |     | AccumulatedDeficit |   |         | AccumulatedOtherComprehensiveLoss |  |   | TotalStockholdersEquity |  
|                                                                      |  | Shares               |   |                          | Amount |     |                    |   |        
|Balance at December 31, 2008                                          |  | 33,729               |   |                          | $      | 337 |                    | $ | 164,153 |                                   |  | $ | (117,239                 | ) |  | $ | (821 | ) |  | $ | 46,430 |  
|Vesting of restricted stock                                           |  | 25                   |   |                          |        |    |                    |   |        |                                   |  |   |                         |   |  |   |     |   |  |   |       |  
|Stock option exercises                                                |  | 1                    |   |                          |        |     |                    |   | 2       |                                   |  |   |                          |   |  |   |      |   |  |   | 2      |  
|Stock-based compensation                                              |  |                     |   |                          |        |    |                    |   | 1,401   |                                   |  |   |                         |   |  |   |     |   |  |   | 1,401  |  
|Dividends and accretion of issuance costs on Series C Preferred Stock |  |                     |   |                          |        |    |                    |   | (2,416  | )                                 |  |   |                         |   |  |   |     |   |  |   | (2,416 | )
|Shares received in settlement of note receivable                      |  | (35                  | ) |                          |        |    |                    |   | (162    | )                                 |  |   |                         |   |  |   |     |   |  |   | (162   | )
|Comprehensive income                                                  |  |                      |   |                          |        |     |                    |   |         |                                   |  |   |                          |   |  |   |      |   |  |   |        |  
|Net income                                                            |  |                     |   |                          |        |    |                    |   |        |                                   |  |   | 932                      |   |  |   |     |   |  |   | 932    |  
|Foreign currency gain                                                 |  |                     |   |                          |        |    |                    |   |        |                                   |  |   |                         |   |  |   | 38   |   |  |   | 38     |  
|                                                                      |  |                      |   |                          |        |     |                    |   |         |                                   |  |   |                          |   |  |   |      |   |  |   |        |  
|Comprehensive income                                                  |  |                      |   |                          |        |     |                    |   |         |                                   |  |   |                          |   |  |   |      |   |  |   | 970    |  
|                                                                      |  |                      |   |                          |        |     |                    |   |         |                                   |  |   |                          |   |  |   |      |   |  |   |        |  
|                                                                      |  |                      |   |                          |        |    
|Balance at June 30, 2009                                              |  | 33,720               |   |                          | $      | 337 |                    | $ | 162,978 |                                   |  | $ | (116,307                 | ) |  | $ | (783 | ) |  | $ | 46,225 |  
|                                                                      |  |                      |   |                          |        |     |                    |   |         |                                   |  |   |                          |   |  |   |      |   |  |   |        |  

See accompanying notes to the consolidated financial statements.



5



---

##### Table of Contents

THE PRINCETON REVIEW, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(unaudited)

(In thousands)



|                                                                                                      |  |                                  |         |   |      |   |        |  
|----------------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | - | ---- | - | ------ | -
|                                                                                                      |  | For the Six MonthsEnded June 30, |        
|                                                                                                      |  | 2009                             |         |   | 2008 |  
|Cash flows provided by continuing operating activities:                                               |  |                                  |         |   |      |   |        |  
|Net income (loss)                                                                                     |  | $                                | 932     |   |      | $ | (312   | )
|Less: Income (loss) from discontinued operations                                                      |  |                                  | 656     |   |      |   | (1,592 | )
|                                                                                                      |  |                                  |         |   |      |   |        |  
|Income from continuing operations                                                                     |  |                                  | 276     |   |      |   | 1,280  |  
|Adjustments to reconcile income from continuing operations to net cash used for operating activities: |  |                                  |         |   |      |   |        |  
|Depreciation                                                                                          |  |                                  | 1,106   |   |      |   | 1,241  |  
|Amortization                                                                                          |  |                                  | 2,073   |   |      |   | 893    |  
|Deferred income taxes                                                                                 |  |                                  | 556     |   |      |   | 370    |  
|Stock based compensation                                                                              |  |                                  | 1,401   |   |      |   | 1,573  |  
|Other                                                                                                 |  |                                  | (225    | ) |      |   | (228   | )
|Net change in operating assets and liabilities:                                                       |  |                                  |         |   |      |   |        |  
|Accounts receivable                                                                                   |  |                                  | 2,482   |   |      |   | 7,837  |  
|Inventory                                                                                             |  |                                  | 258     |   |      |   | (210   | )
|Prepaid expenses and other assets                                                                     |  |                                  | 107     |   |      |   | 864    |  
|Accounts payable and accrued expenses                                                                 |  |                                  | (1,847  | ) |      |   | (9,387 | )
|Deferred revenue                                                                                      |  |                                  | 2,942   |   |      |   | 393    |  
|                                                                                                      |  |                                  |         |   |      |   |        |  
|Net cash provided by operating activities                                                             |  |                                  | 9,129   |   |      |   | 4,626  |  
|                                                                                                      |  |                                  |         |   |      |   |        |  
|                                                                                                      |  |                                 
|Cash used for investing activities                                                                    |  |                                  |         |   |      |   |        |  
|Purchases of furniture, fixtures, and equipment                                                       |  |                                  | (636    | ) |      |   | (1,118 | )
|Expenditures for software development                                                                 |  |                                  | (3,636  | ) |      |   | (844   | )
|Restricted cash and cash equivalents                                                                  |  |                                  | 18      |   |      |   | (39    | )
|Purchases of franchises, net of cash acquired                                                         |  |                                  | (60     | ) |      |   | (3,526 | )
|Proceeds from investment sale note receivable                                                         |  |                                  | 169     |   |      |   |       |  
|                                                                                                      |  |                                  |         |   |      |   |        |  
|Net cash used for investing activities                                                                |  |                                  | (4,145  | ) |      |   | (5,527 | )
|                                                                                                      |  |                                  |         |   |      |   |        |  
|                                                                                                      |  |                                 
|Cash flows (used for) provided by financing activities                                                |  |                                  |         |   |      |   |        |  
|Proceeds from borrowings under credit facility revolver                                               |  |                                  | 4,500   |   |      |   |       |  
|Capital lease payments                                                                                |  |                                  | (97     | ) |      |   | (164   | )
|Payments of credit facility revolver and term loan                                                    |  |                                  | (15,169 | ) |      |   |       |  
|Proceeds from exercise of options                                                                     |  |                                  | 2       |   |      |   | 2,246  |  
|Payment of notes payable related to acquisitions                                                      |  |                                  | (156    | ) |      |   | (443   | )
|                                                                                                      |  |                                  |         |   |      |   |        |  
|Net cash (used for) provided by financing activities                                                  |  |                                  | (10,920 | ) |      |   | 1,639  |  
|                                                                                                      |  |                                  |         |   |      |   |        |  
|Effect of exchange rate changes on cash                                                               |  |                                  | 183     |   |      |   | (115   | )
|                                                                                                      |  |                                  |         |   |      |   |        |  
|Net cash flows (used for) provided by continuing operations                                           |  |                                  | (5,753  | ) |      |   | 623    |  
|                                                                                                      |  |                                  |         |   |      |   |        |  
|                                                                                                      |  |                                 
|Cash Flows from Discontinued Operations                                                               |  |                                  |         |   |      |   |        |  
|Net cash (used for) provided by operating activities                                                  |  |                                  | (1,197  | ) |      |   | 2,636  |  
|Net cash provided by investing activities                                                             |  |                                  | 7,433   |   |      |   | 134    |  
|                                                                                                      |  |                                  |         |   |      |   |        |  
|Net cash provided by discontinued operations                                                          |  |                                  | 6,236   |   |      |   | 2,770  |  
|                                                                                                      |  |                                  |         |   |      |   |        |  
|Increase in cash and cash equivalents                                                                 |  |                                  | 483     |   |      |   | 3,393  |  
|Cash and cash equivalents, beginning of period                                                        |  |                                  | 8,853   |   |      |   | 25,281 |  
|                                                                                                      |  |                                  |         |   |      |   |        |  
|Cash and cash equivalents, end of period                                                              |  | $                                | 9,336   |   |      | $ | 28,674 |  
|                                                                                                      |  |                                  |         |   |      |   |        |  
|                                                                                                      |  |                                 
|Supplemental cash flow disclosure:                                                                    |  |                                  |         |   |      |   |        |  
|Net cash proceeds from sale of discontinued operation (note 2)                                        |  | $                                | 7,796   |   |      | $ |       |  

See accompanying notes to the consolidated financial statements.



6



---

##### Table of Contents

THE PRINCETON REVIEW, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

(In thousands, except per share data)

1. Basis of Presentation

The unaudited consolidated financial statements of The Princeton Review,
Inc., and its wholly-owned subsidiaries, The Princeton Review Canada Inc. and Princeton Review Operations, L.L.C., and effective March 7, 2008, Test Services, Inc., and effective July 24, 2008, The Princeton Review of Orange County, LLC,
(together, the Company or Princeton Review) included herein have been prepared in accordance with generally accepted accounting principles (GAAP). In the opinion of management, all material adjustments which are
of a normal and recurring nature necessary for a fair presentation of the results for the periods presented have been reflected.

Certain
information and footnote disclosures normally included in the Companys annual consolidated financial statements have been condensed or omitted and, accordingly, the accompanying financial information should be read in conjunction with the
consolidated financial statements and notes thereto contained in the Companys Annual Report on Form 10-K, filed with the United States Securities and Exchange Commission for the year ended December 31, 2008.

On March 12, 2009, the Company sold substantially all of the assets and liabilities of its K-12 Services division. The unaudited consolidated
financial statements reflect the K-12 Services division as a discontinued operation. Refer to Note (2) to these Notes to Consolidated Financial Statements.

Certain reclassifications have been made in the prior period consolidated financial statements to conform to the current presentation.

Seasonality in Results of Operations

The Company experiences, and is expected to continue to
experience, seasonal fluctuations in its revenue, results of operations and cash flows because the markets in which the Company operates 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 the Companys stock price. The Company typically generates the largest portion of its test preparation revenue in the third quarter. As Supplemental
Educational Services (SES) revenue grows, the Company expects this revenue to be concentrated in the fourth and first quarters to more closely correspond to the after school programs greatest activity during the school year.

New Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141 (revised 2007), Business Combinations, (SFAS
No. 141(R)). SFAS No. 141(R) replaces SFAS No. 141, Business Combinations. SFAS No. 141(R) requires the acquiring entity in a business combination to recognize the full fair value of assets acquired and liabilities
assumed in the transaction, the fair value of certain contingent assets and liabilities acquired on the acquisition date and the fair value of contingent consideration on the acquisition date, with any changes in that fair value to be recognized in
earnings until settled. SFAS No. 141 (R) also requires the expensing of most transaction and restructuring costs and generally requires the reversal of valuation allowances related to acquired deferred tax assets and the recognition of
changes to acquired income tax uncertainties in earnings. The provisions of SFAS No. 141(R) were effective as of January 1, 2009 and did not have a material effect on the Companys consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB
No. 51, (SFAS No. 160). SFAS No. 160 establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the retained interest and gain or loss when a subsidiary is deconsolidated. The
provisions of SFAS No. 160 were effective as of January 1, 2009 and did not have a material effect on the Companys consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS No. 157). This statement defines fair value, establishes a framework for measuring fair value in generally
accepted accounting principles, expands disclosures about fair value measurements and does not require any new fair value measurements. This statement requires quantitative disclosures about fair value measurements for each major category of assets
and liabilities measured at fair value on a recurring and non-recurring basis during a period. SFAS No. 157 was effective as of January 1, 2008. In February 2008, the FASB issued a Staff Position that defers the effective date to
January 1, 2009 for all non-financial assets and liabilities except those that are recognized or disclosed in the financial statements on a recurring basis (that is, at least annually). SFAS No. 157 remained effective on January 1,
2008 for financial assets and liabilities. The adoption of SFAS No. 157 did not impact the Companys financial disclosures as it did not carry any financial assets or liabilities subject to fair value accounting during 2008. The Company
adopted the deferred portions of SFAS No. 157 as of January 1, 2009, which had no impact on the Companys results of operations or financial statement disclosures for the six months ended June 30, 2009 as no fair value
assessments requiring disclosure under the deferred portions of SFAS No. 157 were made.



7



---

##### Table of Contents

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 revenue, uncollectible
accounts receivable, deferred tax valuation allowances, impairment write-downs, useful lives assigned to intangible assets, fair value of assets and liabilities and stock-based compensation. Actual results could differ from those estimated.

Subsequent Events

The Company
adopted SFAS No. 165, Subsequent Events, effective beginning the quarter ended June 30, 2009 and evaluated for disclosure subsequent events that have occurred up to August 7, 2009, the date of issuance of our financial
statements. The Company determined that there were no subsequent events requiring disclosure.

2. Sale of Assets and Discontinued Operations

On March 12, 2009, the Company completed its sale of substantially all of the assets and liabilities of the K-12 Services division
to CORE Education and Consulting Solutions, Inc. (CORE), a subsidiary of CORE Projects and Technologies Limited, an education technology company. The aggregate consideration received consisted of (i) $9.5 million in cash paid on the
closing date and (ii) a purchase price adjustment based on net working capital of the K-12 Services division as of the closing date, to be calculated 180 days after the closing date, and to be paid within a reasonable amount of time thereafter.
During the six months ended June 30, 2009, the Company recorded a gain on the sale of these assets of $913,000 within discontinued operations in the consolidated statement of operations. The gain excludes the net working capital purchase price
adjustment as collection of these proceeds in 180 days cannot be assured.

The following table includes summary income statement
information related primarily to the K-12 Services division, reflected as discontinued operations for the periods presented:



|                                                     |  |                            |      |   |                          |   |       |      |  |   |       |   |  |   |        |  
|---------------------------------------------------- |  | -------------------------- | ---- | - | ------------------------ | - | ----- | ---- |  | - | ----- | - |  | - | ------ | -
|                                                     |  | Three Months EndedJune 30, |      |   | Six Months EndedJune 30, |  
|                                                     |  | (In thousands)             |     
|                                                     |  | 2009                       |      |   | 2008                     |   |       | 2009 |  |   | 2008  |  
|Revenues                                             |  | $                          |     |   |                          | $ | 5,476 |      |  | $ | 2,720 |   |  | $ | 11,105 |  
|Cost of revenues                                     |  |                            |     |   |                          |   | 1,993 |      |  |   | 808   |   |  |   | 4,679  |  
|                                                     |  |                            |      |   |                          |   |       |      |  |   |       |   |  |   |        |  
|Gross margin                                         |  |                            |     |   |                          |   | 3,483 |      |  |   | 1,912 |   |  |   | 6,426  |  
|Operating expenses                                   |  |                            | 168  |   |                          |   | 4,371 |      |  |   | 2,218 |   |  |   | 8,018  |  
|                                                     |  |                            |      |   |                          |   |       |      |  |   |       |   |  |   |        |  
|Loss before income taxes                             |  |                            | (168 | ) |                          |   | (888  | )    |  |   | (306  | ) |  |   | (1,592 | )
|Gain (loss) from disposal of discontinued operations |  |                            | (56  | ) |                          |   |      |      |  |   | 913   |   |  |   |       |  
|Benefit for income taxes                             |  |                            | 2    |   |                          |   | 51    |      |  |   | 49    |   |  |   |       |  
|                                                     |  |                            |      |   |                          |   |       |      |  |   |       |   |  |   |        |  
|Income (loss) from discontinued operations           |  | $                          | (222 | ) |                          | $ | (837  | )    |  | $ | 656   |   |  | $ | (1,592 | )
|                                                     |  |                            |      |   |                          |   |       |      |  |   |       |   |  |   |        |  

There were no assets or liabilities related to discontinued operations as of June 30, 2009.

3. Acquisition of TSI

On
March 7, 2008, the Company acquired Test Services, Inc. (TSI), the operator of eight of the Companys franchises, from Alta Colleges, Inc. (Alta), the parent company of TSI, through a merger in which TSI became a
wholly owned subsidiary of the Company (the TSI Merger) pursuant to a Merger Agreement among the parties (the TSI Merger Agreement). The consideration paid at the effective time of the TSI Merger to Alta consisted of
4,225,000 shares of the Companys common stock (the Alta Shares), and $4,600,000 in cash. In the event that the aggregate value of the Alta Shares, plus $4.6 million, is less than $36.0 million, the Company may become obligated to
pay additional consideration to Alta (the Additional Consideration). The final transaction value determination is to be made upon the earliest of (1) the date on which Alta sells the last of the Alta Shares, (2) the date on
which the Company, by merger or otherwise, is sold in a transaction that results in a change in control of the Company as defined in the TSI Merger Agreement, or a sale of all or substantially all of the Companys assets, or
(3) March 31, 2010. At such time, a final evaluation of the value of the Alta Shares will be made, and if the final per share value of such shares, plus $4.6 million in cash, is less than $36.0 million, a number of additional shares of
Company common stock equal to the shortfall of such value below $36.0 million, calculated



8



---

##### Table of Contents

in accordance with the TSI Merger Agreement, shall be issued to Alta. The Company may also elect to pay any of the Additional Consideration in cash instead
of issuing shares of Company common stock, subject to certain exceptions set forth in the TSI Merger Agreement. The maximum amount of Additional Consideration as determined in accordance with the TSI Merger Agreement is approximately $9.9 million.
If an event triggering the final transaction value determination had occurred as of June 30, 2009, the Company would have been required to pay the maximum amount of Additional Consideration. Any Additional Consideration paid to Alta, whether in
cash or shares of common stock, will be recorded as an adjustment to stockholders equity within the Companys consolidated balance sheet.

4.
Stock-Based Compensation

SFAS No. 123(R), Share-Based Payments, requires the recognition of the fair value of stock-based
compensation in the Companys statements of operations. Stock-based compensation expense primarily relates to stock options and restricted stock under the Companys 2000 Stock Incentive Plan. Compensation expense for awards with only a
service condition is recognized on a straight-line method over the requisite service period. Performance based stock compensation expense is recognized over the service period, if the achievement of performance criteria is considered probable by the
Company. The fair value of stock options is estimated using the Black-Scholes option pricing formula for which we estimated the following assumptions in its fair value calculation at the date of grant for the three and six months ended June 30,
2009 and 2008:



|                        |  |                            |   |  |                          |   |  |      |   |  |      |  
|----------------------- |  | -------------------------- | - |  | ------------------------ | - |  | ---- | - |  | ---- | -
|                        |  | Three Months EndedJune 30, |   |  | Six Months EndedJune 30, |  
|                        |  | 2009                       |   |  | 2008                     |   |  | 2009 |   |  | 2008 |  
|Expected life (years)   |  | 5.0                        |   |  | 5.0                      |   |  | 5.0  |   |  | 5.0  |  
|Risk-free interest rate |  | 1.9                        | % |  | 3.1                      | % |  | 1.9  | % |  | 2.6  | %
|Volatility              |  | 46.0                       | % |  | 38.9                     | % |  | 46.0 | % |  | 36.5 | %

Information concerning all stock option activity for the six months ended June 30, 2009 is
summarized as follows:



|                                            |  |                                             |   |  |                                          |      |                                                     |      |                                        |   |      
|------------------------------------------- |  | ------------------------------------------- | - |  | ---------------------------------------- | ---- | --------------------------------------------------- | ---- | -------------------------------------- | - | -----
|                                            |  | Shares ofCommon StockAttributable toOptions |   |  | Weighted-AverageExercise PriceOf Options |      | Weighted-AverageRemainingContractual Term(in years) |      | AggregateIntrinsic Value(in thousands)
|Outstanding at December 31, 2008            |  | 6,511,521                                   |   |  | $                                        | 6.43 |                                                     |      |                                        |   |      
|Granted at market price                     |  | 230,000                                     |   |  |                                          | 4.61 |                                                     |      |                                        |   |      
|Forfeited                                   |  | (768,288                                    | ) |  |                                          | 7.71 |                                                     |      |                                        |   |      
|Exercised                                   |  | (771                                        | ) |  |                                          | 2.29 |                                                     |      |                                        |   |      
|                                            |  |                                             |   |  |                                          |      |                                                     |      |                                        |   |      
|Outstanding at June 30, 2009                |  | 5,972,462                                   |   |  | $                                        | 6.20 |                                                     | 6.12 |                                        | $ | 1,910
|Vested or expected to vest at June 30, 2009 |  | 5,866,852                                   |   |  | $                                        | 6.20 |                                                     | 6.07 |                                        | $ | 1,873
|Exercisable at June 30, 2009                |  | 3,549,754                                   |   |  | $                                        | 6.38 |                                                     | 4.54 |                                        | $ | 1,043

As of June 30, 2009, the total unrecognized compensation cost related to non-vested stock
option awards amounted to approximately $7.0 million, net of estimated forfeitures that will be recognized over the weighted-average remaining requisite service period of approximately 2.4 years.

A summary of the status of non-vested shares of restricted stock as of June 30, 2009, and changes during the period then ended, is presented below:



|                                                   |  |         |   |  |                                      |     
|-------------------------------------------------- |  | ------- | - |  | ------------------------------------ | ----
|                                                   |  | Shares  |   |  | Weighted-AverageGrant DateFair Value
|Non-vested awards outstanding at December 31, 2008 |  | 25,000  |   |  | $                                    | 6.76
|Awards granted                                     |  | 20,000  |   |  |                                      | 5.41
|Awards vested                                      |  | (25,000 | ) |  |                                      | 6.76
|                                                   |  |         |   |  |                                      |     
|                                                   |  |        
|Non-vested awards outstanding at June 30, 2009     |  | 20,000  |   |  | $                                    | 5.41
|                                                   |  |         |   |  |                                      |     

On June 30, 2009, the Company granted 20,000 restricted shares of stock to certain of its
non-employee directors having a grant fair value of $108,000. These restricted stock awards vest on January 30, 2010.



9



---

##### Table of Contents

Total stock-based compensation expense recorded for the three months ended June 30, 2009 and 2008
was $682,000 and $753,000, respectively and for the six months ended June 30, 2009 and 2008 was $1.4 million and $1.6 million respectively. Stock-based compensation is recorded as operating expense within the accompanying consolidated
statements of operations.

5. Long-term Debt and Line of Credit

Long-term debt consists of the following:



|                          |  |                |       |                  |   |       
|------------------------- |  | -------------- | ----- | ---------------- | - | ------
|                          |  | June 30,2009   |       | December 31,2008
|                          |  | (in thousands)
|Credit facility           |  | $              | 8,331 |                  | $ | 18,958
|Notes payable             |  |                | 1,090 |                  |   | 1,239 
|Capital lease obligations |  |                | 538   |                  |   | 574   
|                          |  |                |       |                  |   |       
|Total debt                |  |                | 9,959 |                  |   | 20,771
|Less current portion      |  |                | 3,643 |                  |   | 3,283 
|                          |  |                |       |                  |   |       
|Long-term debt            |  | $              | 6,316 |                  | $ | 17,488
|                          |  |                |       |                  |   |       

The Credit facility portion of long-term debt in the table above refers to the
Companys outstanding borrowings under its credit agreement (July 2008 Credit Agreement) with Wells Fargo Foothill, LLC, as arranger and administrative agent (Wells Fargo) that is comprised of a $5.0 million revolving
line of credit (Revolving Credit Facility) and a $20.0 million term loan (Term Loan). There were no borrowings outstanding under the Revolving Credit Facility as of June 30, 2009 and December 31, 2008.

The Term Loan is due in 20 consecutive graduating quarterly installments ranging from $500,000 to $1.0 million, which began on October 1, 2008.
The Company is required to make additional installment payments for non-recurring cash receipts of greater than $100,000. On March 13, 2009, the Company made one such installment payment of $9.5 million from the proceeds of the K-12 Services
division sale described in Note 2.

6. Income Taxes

Pursuant to SFAS No. 109, Accounting for Income Taxes (FAS 109), the Company has recorded an income tax provision related to continuing operations for the six months ended June 30, 2009 in
the amount of $121,000. Additionally, a benefit for income taxes for the six months ended June 30, 2009 of $49,000 has been recorded as part of the Companys income from discontinued operations.

Income tax expense for the period varies from the amount that would normally be derived based upon statutory rates in the respective jurisdictions in
which we operate. The significant reasons for this variation are our inability to record a tax benefit on our losses generated in the United States, differences in foreign tax rates, and the effect of tax-deductible goodwill, for which a deferred
tax liability has been recorded.

Internal Revenue Code Section 382 (Section 382) imposes limitations on the amount of net
operating loss carry-forwards an entity may use based on certain ownership changes. During the three months ended June 30, 2009, the Company determined that due to common stock transactions by holders of 5% or more of the Companys capital
stock in May 2009, its future use of net operating loss carry-forwards will be limited under the provisions of Section 382. The limitation did not impact the income tax provision for the six months ended June 30, 2009 as the limitation of
net operating loss carry-forward utilization for fiscal 2009 is greater than the Companys current and expected pre-tax income for 2009. The Company will continue to evaluate the effect of the Section 382 limitation on its income tax
provision and cash tax liabilities.

The Company complies with the provisions of FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance
with FAS No. 109 and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Based on the Companys evaluation, it has
concluded that there are not significant uncertain tax positions requiring recognition in the Companys financial statements. The tax years which remain subject to examination by major tax jurisdictions as of June 30, 2009 are tax years
ended December 31, 2005 and later.



10



---

##### Table of Contents

7. Segment Information

The Company operates in two reportable segments: Test Preparation Services and Supplemental Educational Services (SES). These operating segments are divisions of the Company for which separate financial
information is available and 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.

The majority of the Companys revenue is from 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, independent international franchisees. The SES division
delivers state-aligned research-based academic tutoring instruction to students in schools in need of improvement in school districts throughout the country.

The segment results include EBITDA for the periods indicated. As used in this report, EBITDA is defined as 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 related charges or income. The Companys management uses EBITDA to
measure the operating performance 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, or as an alternative to any
other measure of performance calculated in conformity with GAAP.



|                                                            |  |                                                |         |             |   |       |           |  |   |        |   |  |   |         |  
|----------------------------------------------------------- |  | ---------------------------------------------- | ------- | ----------- | - | ----- | --------- |  | - | ------ | - |  | - | ------- | -
|                                                            |  | Three Months Ended June 30, 2009(in
thousands) |        
|                                                            |  | TestPreparationServices                        |         | SESServices |   |       | Corporate |  |   | Total  |  
|Revenue                                                     |  | $                                              | 25,220  |             | $ | 6,252 |           |  | $ |       |   |  | $ | 31,472  |  
|                                                            |  |                                                |         |             |   |       |           |  |   |        |   |  |   |         |  
|                                                            |  |                                                |         |            
|Operating expense (including depreciation and amortization) |  | $                                              | 13,000  |             |   | 2,942 |           |  | $ | 3,639  |   |  | $ | 19,581  |  
|                                                            |  |                                                |         |             |   |       |           |  |   |        |   |  |   |         |  
|                                                            |  |                                                |         |            
|Operating income                                            |  |                                                | 2,196   |             |   | (351  | )         |  |   | (3,639 | ) |  |   | (1,794  | )
|Depreciation and amortization                               |  |                                                | 1,100   |             |   | 51    |           |  |   | 497    |   |  |   | 1,648   |  
|Other income                                                |  |                                                | 60      |             |   |      |           |  |   | 169    |   |  |   | 229     |  
|                                                            |  |                                                |         |             |   |       |           |  |   |        |   |  |   |         |  
|                                                            |  |                                                |         |            
|Segment EBITDA                                              |  | $                                              | 3,356   |             | $ | (300  | )         |  | $ | (2,973 | ) |  | $ | 83      |  
|                                                            |  |                                                |         |             |   |       |           |  |   |        |   |  |   |         |  
|                                                            |  |                                                |         |            
|Total segment assets                                        |  | $                                              | 139,874 |             | $ | 5,908 |           |  | $ | 18,593 |   |  | $ | 164,375 |  
|                                                            |  |                                                |         |             |   |       |           |  |   |        |   |  |   |         |  
|                                                            |  |                                                |         |            
|Segment goodwill                                            |  | $                                              | 84,584  |             | $ |      |           |  | $ |       |   |  | $ | 84,584  |  
|                                                            |  |                                                |         |             |   |       |           |  |   |        |   |  |   |         |  



11



---

##### Table of Contents

|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|----------------------------------------------------------- |  | ---------------------------------------------- | ------- | ----------- | - | --------- |  | - | ------- | - |  | - | ------- | -
|                                                            |  | Three Months Ended June 30, 2008(in
thousands) |        
|                                                            |  | TestPreparationServices                        |         | SESServices |   | Corporate |  |   | Total   |  
|Revenue                                                     |  | $                                              | 28,272  |             | $ | 5,780     |  | $ |        |   |  | $ | 34,052  |  
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|                                                            |  |                                                |         |            
|Operating expense (including depreciation and amortization) |  | $                                              | 12,801  |             | $ | 2,329     |  | $ | 5,933   |   |  | $ | 21,063  |  
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|                                                            |  |                                                |         |            
|Operating income (loss)                                     |  |                                                | 6,500   |             |   | 1,059     |  |   | (5,933  | ) |  |   | 1,626   |  
|Depreciation and amortization                               |  |                                                | 634     |             |   | 4         |  |   | 574     |   |  |   | 1,212   |  
|Other expense                                               |  |                                                |        |             |   |          |  |   | (2      | ) |  |   | (2      | )
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|                                                            |  |                                                |         |            
|Segment EBITDA                                              |  | $                                              | 7,134   |             | $ | 1,063     |  | $ | (5,361  | ) |  | $ | 2,836   |  
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|                                                            |  |                                                |         |            
|Total segment assets (excluding assets held for sale)       |  | $                                              | 94,480  |             | $ | 7,425     |  | $ | 36,376  |   |  | $ | 138,281 |  
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|                                                            |  |                                                |         |            
|Segment goodwill                                            |  | $                                              | 61,852  |             | $ |          |  | $ |        |   |  | $ | 61,852  |  
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|                                                            | 
|                                                            |  | Six Months Ended June 30, 2009(in thousands)   |        
|                                                            |  | TestPreparationServices                        |         | SESServices |   | Corporate |  |   | Total   |  
|Revenue                                                     |  | $                                              | 52,583  |             | $ | 23,712    |  | $ |        |   |  | $ | 76,295  |  
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|                                                            |  |                                                |         |            
|Operating expense (including depreciation and amortization) |  | $                                              | 27,392  |             | $ | 6,414     |  | $ | 10,789  |   |  | $ | 44,595  |  
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|                                                            |  |                                                |         |            
|Operating income                                            |  |                                                | 5,709   |             |   | 5,736     |  |   | (10,789 | ) |  |   | 656     |  
|Depreciation and amortization                               |  |                                                | 2,074   |             |   | 100       |  |   | 1,005   |   |  |   | 3,179   |  
|Other income (expense)                                      |  |                                                | 63      |             |   |          |  |   | 191     |   |  |   | 254     |  
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|                                                            |  |                                                |         |            
|Segment EBITDA                                              |  | $                                              | 7,846   |             | $ | 5,836     |  | $ | (9,593  | ) |  | $ | 4,089   |  
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|                                                            |  |                                                |         |            
|Total segment assets                                        |  | $                                              | 139,874 |             | $ | 5,908     |  | $ | 18,593  |   |  | $ | 164,375 |  
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|                                                            |  |                                                |         |            
|Segment goodwill                                            |  | $                                              | 84,584  |             | $ |          |  | $ |        |   |  | $ | 84,584  |  
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|                                                            | 
|                                                            |  | Six Months Ended June 30, 2008(in
thousands)   |        
|                                                            |  | TestPreparationServices                        |         | SESServices |   | Corporate |  |   | Total   |  
|Revenue                                                     |  | $                                              | 51,422  |             | $ | 18,372    |  | $ |        |   |  | $ | 69,794  |  
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|                                                            |  |                                                |         |            
|Operating expense (including depreciation and amortization) |  | $                                              | 24,164  |             |   | 5,820     |  | $ | 12,108  |   |  | $ | 42,092  |  
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|                                                            |  |                                                |         |            
|Operating income                                            |  |                                                | 9,400   |             |   | 4,497     |  |   | (12,108 | ) |  |   | 1,789   |  
|Depreciation and amortization                               |  |                                                | 996     |             |   | 9         |  |   | 1,129   |   |  |   | 2,134   |  
|Other income (expense)                                      |  |                                                |        |             |   |          |  |   | (2      | ) |  |   | (2      | )
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|                                                            |  |                                                |         |            
|Segment EBITDA                                              |  | $                                              | 10,396  |             | $ | 4,506     |  | $ | (10,981 | ) |  | $ | 3,921   |  
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|                                                            |  |                                                |         |            
|Total segment assets (excluding assets held for sale)       |  | $                                              | 94,480  |             | $ | 7,425     |  | $ | 36,376  |   |  | $ | 138,281 |  
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  
|                                                            |  |                                                |         |            
|Segment goodwill                                            |  | $                                              | 61,852  |             | $ |          |  | $ |        |   |  | $ | 61,852  |  
|                                                            |  |                                                |         |             |   |           |  |   |         |   |  |   |         |  



12



---

##### Table of Contents

Reconciliation of Segment EBITDA to income from continuing operations before income taxes (in thousands):



|                                                             |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------ |  | --------------------------- | ------ | - | ------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                             |  | Three Months Ended June 30, |        |   | Six Months Ended June 30, |  
|                                                             |  | 2009                        |        |   | 2008                      |   |        | 2009 |  |   | 2008   |  
|Segment EBITDA                                               |  | $                           | 83     |   |                           | $ | 2,836  |      |  | $ | 4,089  |   |  | $ | 3,921  |  
|Depreciation and amortization                                |  |                             | (1,648 | ) |                           |   | (1,212 | )    |  |   | (3,179 | ) |  |   | (2,134 | )
|Interest income (expense)                                    |  |                             | (198   | ) |                           |   | 34     |      |  |   | (513   | ) |  |   | 127    |  
|                                                             |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Income (loss) from continuing operations before income taxes |  | $                           | (1,763 | ) |                           | $ | 1,658  |      |  | $ | 397    |   |  | $ | 1,914  |  
|                                                             |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  

8. Income (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 anti-dilutive.

A reconciliation of net income
(loss) and the number of shares used in computing basic and diluted income (loss) per share is as follows.



|                                                             |  |                                       |        |   |                                       |   |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------ |  | ------------------------------------- | ------ | - | ------------------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                             |  | Three Months EndedJune 30,            |        |   | Six Months EndedJune 30,              |  
|                                                             |  | 2009                                  |        |   | 2008                                  |   |        | 2009 |  |   | 2008   |  
|                                                             |  | (In thousands, except per share data) |        |   | (In thousands, except per share data) |  
|Income (loss) from continuing operations                     |  | $                                     | (1,584 | ) |                                       | $ | 1,102  |      |  | $ | 276    |   |  | $ | 1,280  |  
|Income (loss) from discontinued operations                   |  |                                       | (222   | ) |                                       |   | (837   | )    |  |   | 656    |   |  |   | (1,592 | )
|Less preferred dividends                                     |  |                                       | (1,208 | ) |                                       |   | (1,149 | )    |  |   | (2,415 | ) |  |   | (2,298 | )
|                                                             |  |                                       |        |   |                                       |   |        |      |  |   |        |   |  |   |        |  
|                                                             |  |                                       |        |  
|Loss attributed to common stockholders                       |  | $                                     | (3,014 | ) |                                       | $ | (884   | )    |  | $ | (1,483 | ) |  | $ | (2,610 | )
|                                                             |  |                                       |        |   |                                       |   |        |      |  |   |        |   |  |   |        |  
|                                                             |  |                                       |        |  
|Weighted average common shares outstanding for the period:   |  |                                       |        |   |                                       |   |        |      |  |   |        |   |  |   |        |  
|Basic and diluted weighted average common shares outstanding |  |                                       | 33,719 |   |                                       |   | 32,918 |      |  |   | 33,730 |   |  |   | 31,202 |  
|Basic and diluted earnings (loss) per share                  |  |                                       |        |   |                                       |   |        |      |  |   |        |   |  |   |        |  
|Loss from continuing operations                              |  | $                                     | (0.08  | ) |                                       | $ |       |      |  | $ | (0.06  | ) |  | $ | (0.03  | )
|Income (loss) from discontinued operations                   |  |                                       | (0.01  | ) |                                       |   | (0.03  | )    |  |   | 0.02   |   |  |   | (0.05  | )
|                                                             |  |                                       |        |   |                                       |   |        |      |  |   |        |   |  |   |        |  
|                                                             |  |                                       |        |  
|Net loss attributed to common stockholders                   |  | $                                     | (0.09  | ) |                                       | $ | (0.03  | )    |  | $ | (0.04  | ) |  | $ | (0.08  | )
|                                                             |  |                                       |        |   |                                       |   |        |      |  |   |        |   |  |   |        |  

The following were excluded from the computation of diluted earnings per common share because of
their anti-dilutive effect.



|                                                                               |  |                            |  |                          |  |        |  |       
|------------------------------------------------------------------------------ |  | -------------------------- |  | ------------------------ |  | ------ |  | ------
|                                                                               |  | Three Months EndedJune 30, |  | Six Months EndedJune 30,
|                                                                               |  | 2009                       |  | 2008                     |  | 2009   |  | 2008  
|                                                                               |  | (In thousands)             |  | (In thousands)          
|Shares of common stock issuable upon exercise of stock options                 |  | 6,087                      |  | 6,433                    |  | 6,138  |  | 6,378 
|Shares of common stock issuable upon conversion of convertible preferred stock |  | 11,115                     |  | 10,486                   |  | 11,036 |  | 10,411
|                                                                               |  |                            |  |                          |  |        |  |       
|                                                                               |  | 17,202                     |  | 16,919                   |  | 17,174 |  | 16,789
|                                                                               |  |                            |  |                          |  |        |  |       



13



---

##### Table of Contents

9. Restructuring

The Company announced and commenced a restructuring initiative in the first quarter of 2009 related to the decision to outsource the Companys information technology operations, transfer the majority of remaining
corporate functions located in New York City to the offices located near Boston, Massachusetts, and simplify managements structure following the sale of the K-12 Services Division. For the six months ended June 30, 2009, the Company has
recorded $4.0 million of expenses related to these actions consisting of severance benefits for terminated employees and consulting fees related to transition of information technology operations to a third party. The Company expects to make all
cash payments related to this restructuring initiative by the end of the third quarter of 2009. The following table sets forth an analysis of the components of the restructuring charge and payments made against the reserve for the six months ended
June 30, 2009:



|                                                   |  |                                                 |        |  
|-------------------------------------------------- |  | ----------------------------------------------- | ------ | -
|                                                   |  | Severance,TerminationBenefits andConsultingFees |       
|                                                   |  | (In thousands)                                  |       
|Accrued restructuring balance at December 31, 2008 |  | $                                               | 23     |  
|Restructuring provision                            |  |                                                 | 4,048  |  
|Cash paid                                          |  |                                                 | (3,141 | )
|                                                   |  |                                                 |        |  
|Accrued restructuring balance at June 30, 2009     |  | $                                               | 930    |  
|                                                   |  |                                                 |        |  

10. Commitments and Contingencies

From time to time and in the ordinary course of business, we are subject to various claims, charges and litigation. Although the outcome of litigation
cannot be predicted with certainty and some lawsuits, claims or proceedings may be disposed of unfavorably to us, we do not believe that we are currently a party to any material legal proceedings except as described below.

In August 2008, the Company learned that certain of the Companys web pages that appeared to contain confidential information were available to the
public on the Internet for a short period of time (the Security Incident). The Company discovered that due to an operational error or errors that occurred in connection with a change in information system architecture and concurrent
change of hosting providers, an Internet web page that was intended to be, and historically has been, password protected, had inadvertently ceased to be password protected for a 7-8 week period. Although the web page was shut down the day the
Company learned about the matter, prior to that time some files that contained personal information about students from schools that used the Companys assessment center product (or its predecessor product) under license from the K-12 Services
division were accessible. With the exception of one school district in Sarasota, Florida that included social security numbers for some students, the K-12 student data accessible during the Security Incident did not include financially sensitive
information such as social security numbers, credit card information or other financial information. The Company notified the Sarasota school district as well as Sarasota students who may have had such sensitive data accessible during the incident
and has procured credit monitoring for those students requesting it and for whom such monitoring is available because they are over 18. In some cases, the Company also notified other school districts and students whose information was subject to
compromise, even where the Company was not legally obligated to do so because the nature of the information did not trigger notification statutes. Other than the Security Incident, the Company believes its systems remain secure.

On September 19, 2008, a putative class action captioned Virginia B. Townsend v. The Princeton Review, Inc.(Case
No. 8:08-CIV-1879-T-33TBM) was filed against the Company in the United States District Court for the Middle District of Florida, Tampa Division relating to the Security Incident alleging negligence, breach of contract and unfair trade
practices. The complaint seeks unspecified monetary damages and other relief including the provision of personal data monitoring and identity theft insurance and unspecified enhancement of the security of the Companys computer data systems,
together with attorneys fees and costs. In July 2009 the parties entered into a settlement agreement which was approved preliminarily by the Court on August 5, 2009. Under the settlement agreement, subject to final approval by the Court,
the Company will provide a specified identity protection service to the class members that elect to participate and pay the fees and expenses of plaintiffs counsel as approved by the Court. The Company believes that the full cost of the
settlement will be within the limits of its applicable insurance policies.



14



---

##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

All statements in this Quarterly Report on 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, 2008 filed with the Securities and Exchange Commission. 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 integrated classroom-based, print and online products and services that address the needs of students, parents, educators and educational institutions. We offer one of the leading SAT preparation courses and are among the leading providers
of test preparation courses for most major post-secondary and graduate admissions tests. The Company and its international franchisees provide test preparation courses and tutoring services for the SAT, GMAT, MCAT, LSAT, GRE and other standardized
admissions tests to students throughout the United States and abroad. The Company currently operates through our Test Preparation Services and Supplemental Educational Services (SES) divisions.

Test Preparation Services Division

The Test
Preparation Services division derives the majority of its revenue from classroom-based and Princeton Review online test preparation courses and tutoring services. This division also receives royalties from its independent international franchisees,
which provide classroom-based courses under the Princeton Review brand. As a result of the acquisitions of Test Services, Inc. (TSI) in March 2008, the Princeton Review franchises in several southern California locations, Utah and New
Mexico (SoCal) in July 2008 and the Princeton Review Pittsburgh, Inc. (Pittsburgh) in October 2008, we do not have any remaining domestic franchisees as of June 30, 2009. Additionally, this division receives royalties
and advances from Random House for books authored by The Princeton Review.

The Test Preparation Services division accounted for 69% of our
overall revenue for the six months ended June 30, 2009, and historically has accounted for the majority of our overall revenue.

Supplemental
Educational Services Division

The Supplemental Educational Services (SES) division provides state-aligned research-based
academic tutoring instruction to students in schools in need of improvement in school districts throughout the country which receive funding under the No Child Left Behind Act of 2001 (NCLB). We expect SES revenue and income from
operations to continue to increase in 2009 as a result of the full year benefit of new markets entered over the course of 2008, increased demand in existing markets and expansion into new markets.

Former K-12 Services Division

The Companys
former K-12 Services division provided a number of services to K-12 schools and districts, including assessment, professional development and intervention materials (workbooks and related products). Additionally, this division received college
counseling fees paid by high schools. In March 2009, we sold our K-12 Services division to CORE Education and Consulting Solutions, Inc. (CORE). The Company received $9.5 million of cash from CORE at the close of the transaction and
recognized a gain of $913,000. In connection with the sale of its K-12 Services division, financial results associated with this business have been reclassified as discontinued operations.



15



---

##### Table of Contents

Results of Operations

Comparison of Three Months Ended June 30, 2009 and 2008



|                                         |  |                            |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|---------------------------------------- |  | -------------------------- | ------ | - | --------------------------- | - | ------ | ------------------------- |  | - | ------ | - |  | ------- | --
|                                         |  | Three Months EndedJune 30, |        |   | Amount ofIncrease(Decrease) |   |        | PercentIncrease(Decrease) | 
|                                         |  | 2009                       |        |   | 2008                        |   |        |                          
|Revenue:                                 |  |                            |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|Test Preparation Services                |  | $                          | 25,220 |   |                             | $ | 28,272 |                           |  | $ | (3,052 | ) |  | (11     | )%
|SES Services                             |  |                            | 6,252  |   |                             |   | 5,780  |                           |  |   | 472    |   |  | 8       | % 
|                                         |  |                            |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|Total revenue                            |  |                            | 31,472 |   |                             |   | 34,052 |                           |  |   | (2,580 | ) |  | (8      | )%
|Cost of revenue:                         |  |                            |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|Test Preparation Services                |  |                            | 10,024 |   |                             |   | 8,971  |                           |  |   | 1,053  |   |  | 12      | % 
|SES Services                             |  |                            | 3,661  |   |                             |   | 2,392  |                           |  |   | 1,269  |   |  | 53      | % 
|                                         |  |                            |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|Total cost of revenue                    |  |                            | 13,685 |   |                             |   | 11,363 |                           |  |   | 2,322  |   |  | 20      | % 
|                                         |  |                            |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|Gross profit                             |  |                            | 17,787 |   |                             |   | 22,689 |                           |  |   | (4,902 | ) |  | (22     | )%
|                                         |  |                            |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|                                         |  |                            |        |  
|Operating expenses:                      |  |                            |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|Selling, general and administrative      |  |                            | 18,451 |   |                             |   | 19,747 |                           |  |   | (1,296 | ) |  | (7      | )%
|Restructuring                            |  |                            | 1,130  |   |                             |   | 1,316  |                           |  |   | (186   | ) |  | (14     | )%
|                                         |  |                            |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|Total operating expenses                 |  |                            | 19,581 |   |                             |   | 21,063 |                           |  |   | (1,482 | ) |  | (7      | )%
|                                         |  |                            |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|                                         |  |                            |        |  
|Other income (expense) and other items:  |  |                            |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|Interest expense                         |  |                            | (216   | ) |                             |   | (39    | )                         |  |   | (177   | ) |  | 454     | % 
|Interest income                          |  |                            | 18     |   |                             |   | 73     |                           |  |   | (55    | ) |  | (75     | )%
|Other income                             |  |                            | 229    |   |                             |   | (2     | )                         |  |   | 231    |   |  | (11,550 | )%
|Provision for income taxes               |  |                            | 179    |   |                             |   | (556   | )                         |  |   | 735    |   |  | (132    | )%
|                                         |  |                            |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|(Loss) income from continuing operations |  | $                          | (1,584 | ) |                             | $ | 1,102  |                           |  | $ | (2,686 | ) |  | (244    | )%
|                                         |  |                            |        |   |                             |   |        |                           |  |   |        |   |  |         |   

Revenue

For the three months ended June 30, 2009, total revenue decreased by $2.6 million, or 8%, to $31.5 million from $34.1 million in the three months ended June 30, 2008.

Test Preparation Services revenue decreased by $3.1 million, or 11%, to $25.2 million from $28.3 million in the three months ended June 30, 2008.
Revenue during the three months ended June 30, 2009 includes an increase in revenue of $2.5 million from domestic franchises acquired subsequent to June 30, 2008, offset by a $0.6 million reduction in franchise fees as a direct result of
the same franchise acquisitions. The $5.0 million reduction in revenue excluding the impact of acquisitions and related reduction in franchise fees is due primarily to lower classroom-based and tutoring revenues. Increases in organic classroom-based
enrollments were offset by lower prices charged for our classroom-based courses and a higher percentage of enrollments from lower-priced services. Organic tutoring revenues declined due to lower enrollments and a shift towards lower priced tutoring
packages. We expect these pricing and enrollment trends to continue in 2009.

SES Services revenues increased $472,000, or 8%, to $6.3
million from $5.8 million in the three months ended June 30, 2008. This increase is primarily due to expansion into nine new markets during the 2008-2009 school year.

Cost of Revenue

For the three months ended June 30, 2009, total cost of revenue increased by
$2.3 million, or 20%, to $13.7 million from $11.4 million in the three months ended June 30, 2008.

Test Preparation Services cost of
revenue increased by $1.0 million, or 12%, to $10.0 million from $9.0 million in the three months ended June 30, 2008 due primarily to incremental costs related to the 2008 acquisitions. Gross margin during the period for the Test Preparation
Services division decreased from 68% to 60%, primarily as a result of the lower prices charged for our classroom-based courses, as costs per an instruction session are relatively fixed. We expect the impact of lower prices to continue to negatively
impact gross margin in 2009.

SES Services cost of revenue increased by $1.3 million, or 53%, to $3.7 million from $2.4 million in the
three months ended June 30, 2008 as a result of the increase in revenue and the additional operating regions in the 2008-2009 school year that were not



16



---

##### Table of Contents

included in the results for the three months ended June 30, 2008. Gross margin during the period for the SES Services division decreased from 59% to
41%, due primarily to lower gross margins in new operating regions as average students per class in those new regions were lower than average students per class in existing regions as of the three months ended June 30, 2008.

Selling, General and Administrative Expenses

For the
three months ended June 30, 2009, selling, general and administrative expenses decreased by $1.3 million, or 7%, to $18.4 million from $19.7 million in the three months ended June 30, 2008.

Test Preparation Services selling, general and administrative expenses increased by $200,000, or 2%, to $13.0 million from $12.8 million in the three
months ended June 30, 2008. This increase is primarily due to incremental expenses related to the 2008 franchise acquisitions, including depreciation and amortization, partially offset by a reduction in expenses due to lower advertising and
incentive compensation expense.

SES Services selling, general and administrative expenses increased by $613,000, or 26% to $2.9 million
from $2.3 million in the three months ended June 30, 2008. The increase is primarily attributable to additional personnel, facility and other costs necessary to support entry into nine new markets during the 2008-2009 school year.

Corporate selling, general and administrative expenses decreased by $2.1 million, or 46%, to $2.5 million from $4.6 million in the three months ended
June 30, 2008, due to reductions in corporate headcount, professional staffing fees associated with our efforts to reduce corporate expenses and reduced incentive compensation expense.

Restructuring

The Companys restructuring
charges decreased by $186,000, or 14%, to $1.1 million from $1.3 million in the three months ended June 30, 2008. The restructuring charges incurred during the three months ended June 30, 2009 were attributed to the restructuring
initiative announced and commenced in the first quarter of 2009 related to outsourcing the Companys information technology operations, transferring the majority of remaining corporate functions located in New York City to the offices located
near Boston, Massachusetts, and simplifying managements structure following the sale of the K-12 Services division. The restructuring charges incurred during the three months ended June 30, 2008 were severance expense related to
restructuring activities initiated during 2007 to relocate the Companys finance and certain legal operations from New York City to offices located near Boston, Massachusetts.

Interest Expense

Interest expense increased by $177,000 to $216,000, from $39,000 in the three
months ended June 30, 2008, as a result of borrowings outstanding under the credit facility during the three months ended June 30, 2009. There were no outstanding borrowings under any credit facility at June 30, 2008.

Other Income

Other income for the three months ended
June 30, 2009 primarily consists of additional proceeds received from the sale of stock in a private investment that occurred in September 2008 and a settlement payment received in conjunction with the termination of one of our international
franchises. There was essentially no other income or expense for the three months ended June 30, 2008.

Provision for Income Taxes

The provision for income taxes decreased by $735,000 to a benefit of $179,000, from a provision of $556,000 in the three months ended June 30,
2008. An income tax benefit of $179,000 was recorded during the three months ended June 30, 2009 primarily as a result of the loss from continuing operations for the period. An income tax provision of $556,000 was recorded during the three
months ended June 30, 2008 based on the estimated annual tax liability calculated on a discrete basis for U.S. tax purposes and tax on the income earned in foreign jurisdictions at the foreign effective tax rate.



17



---

##### Table of Contents

Comparison of Six Months Ended June 30, 2009 and 2008



|                                        |  |                          |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|--------------------------------------- |  | ------------------------ | ------ | - | --------------------------- | - | ------ | ------------------------- |  | - | ------ | - |  | ------- | --
|                                        |  | Six Months EndedJune 30, |        |   | Amount ofIncrease(Decrease) |   |        | PercentIncrease(Decrease) | 
|                                        |  | 2009                     |        |   | 2008                        |   |        |                          
|Revenue:                                |  |                          |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|Test Preparation Services               |  | $                        | 52,583 |   |                             | $ | 51,422 |                           |  | $ | 1,161  |   |  | 2       | % 
|SES Services                            |  |                          | 23,712 |   |                             |   | 18,372 |                           |  |   | 5,340  |   |  | 29      | % 
|                                        |  |                          |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|Total revenue                           |  |                          | 76,295 |   |                             |   | 69,794 |                           |  |   | 6,501  |   |  | 9       | % 
|Cost of revenue:                        |  |                          |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|Test Preparation Services               |  |                          | 19,482 |   |                             |   | 17,858 |                           |  |   | 1,624  |   |  | 9       | % 
|SES Services                            |  |                          | 11,562 |   |                             |   | 8,055  |                           |  |   | 3,507  |   |  | 44      | % 
|                                        |  |                          |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|Total cost of revenue                   |  |                          | 31,044 |   |                             |   | 25,913 |                           |  |   | 5,131  |   |  | 20      | % 
|                                        |  |                          |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|Gross profit                            |  |                          | 45,251 |   |                             |   | 43,881 |                           |  |   | 1,370  |   |  | 3       | % 
|                                        |  |                          |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|                                        |  |                          |        |  
|Operating expenses:                     |  |                          |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|Selling, general and administrative     |  |                          | 40,547 |   |                             |   | 40,341 |                           |  |   | 206    |   |  | 1       | % 
|Restructuring                           |  |                          | 4,048  |   |                             |   | 1,751  |                           |  |   | 2,297  |   |  | 131     | % 
|                                        |  |                          |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|Total operating expenses                |  |                          | 44,595 |   |                             |   | 42,092 |                           |  |   | 2,503  |   |  | 6       | % 
|                                        |  |                          |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|                                        |  |                          |        |  
|Other income (expense) and other items: |  |                          |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|Interest expense                        |  |                          | (545   | ) |                             |   | (74    | )                         |  |   | (471   | ) |  | 636     | % 
|Interest income                         |  |                          | 32     |   |                             |   | 201    |                           |  |   | (169   | ) |  | (84     | )%
|Other income                            |  |                          | 254    |   |                             |   | (2     | )                         |  |   | 256    |   |  | (12,800 | )%
|Provision for income taxes              |  |                          | (121   | ) |                             |   | (634   | )                         |  |   | 513    |   |  | (81     | )%
|                                        |  |                          |        |   |                             |   |        |                           |  |   |        |   |  |         |   
|Income from continuing operations       |  | $                        | 276    |   |                             | $ | 1,280  |                           |  | $ | (1,004 | ) |  | (78     | )%
|                                        |  |                          |        |   |                             |   |        |                           |  |   |        |   |  |         |   

Revenue

For the six months ended June 30, 2009, total revenue increased by $6.5 million, or 9%, to $76.3 million from $69.8 million in the six months ended June 30, 2008.

Test Preparation Services revenue increased by $1.2 million, or 2%, to $52.6 million from $51.4 million in the six months ended June 30, 2008. This
increase is primarily due to incremental revenue of $7.6 million from domestic franchises acquired during 2008 as described above. This increase in revenue is partially offset by a $1.7 million reduction in franchise fees as a direct result of the
same franchise acquisitions and a $0.8 million reduction in non-franchise licensing revenue due to the termination of a contract with a marketing partner that has filed for bankruptcy. The increase is further offset by a decrease of $3.9 million due
primarily to lower classroom-based and tutoring revenues during the three months ended June 30, 2009. Increases in classroom-based enrollments were offset by lower prices charged for our classroom-based courses and a higher percentage of
enrollments from lower-priced services. Organic tutoring revenues declined due to lower enrollments and a shift towards lower priced tutoring packages. We expect these pricing and enrollment trends to continue in 2009.

SES Services revenues increased $5.3 million, or 29%, to $23.7 million from $18.4 million in the six months ended June 30, 2008. This increase is
primarily due to expansion into nine new markets during the 2008-2009 school year.

Cost of Revenue

For the six months ended June 30, 2009, total cost of revenue increased by $5.1 million, or 20%, to $31.0 million from $25.9 million in the six
months ended June 30, 2008.

Test Preparation Services cost of revenue increased by $1.6 million, or 9%, to $19.5 million from $17.9
million in the six months ended June 30, 2008. This increase is primarily due to incremental costs of $3.0 million related to the 2008 acquisitions. Excluding the impact of franchises acquired, cost of revenue decreased by $1.4 million due to
improved classroom operating efficiencies which lowered relative teacher, course material and facility costs required to deliver our services. Gross margin during the period for the Test Preparation Services division decreased from 65% to 63%,
primarily as a result of lower prices charged for our classroom-based courses, as costs per an instruction session are relatively fixed. We expect the impact of lower prices to continue to negatively impact gross margin in 2009.

SES Services cost of revenue increased by $3.5 million, or 44%, to $11.6 million from $8.1 million in the six months ended June 30, 2008 as a direct
result of the increase in revenue and the additional operating regions in the 2008-2009 school year that were



18



---

##### Table of Contents

not included in the results for the six months ended June 30, 2008. Gross margin during the period for the SES Services division decreased from 56% to
51% due primarily to lower gross margins in new operating regions as average students per class were lower than existing regions as of the six months ended June 30, 2008.

Selling, General and Administrative Expenses

For the six months ended June 30, 2009, selling,
general and administrative expenses increased by $206,000, or 1%, to $40.5 million from $40.3 million in the six months ended June 30, 2008.

Test Preparation Services selling, general and administrative expenses increased by $3.2 million, or 13%, to $27.4 million from $24.2 million in the six months ended June 30, 2008. This increase is primarily due to incremental expenses
related to the 2008 franchise acquisitions, partially offset by a reduction in expenses due to lower advertising and incentive compensation expense.

SES Services selling, general and administrative expenses increased by $594,000, or 10%, to $6.4 million from $5.8 million in the six months ended June 30, 2008. The increase is primarily attributable to
additional personnel, facility and other costs necessary to support entry into nine new markets during the 2008-2009 school year.

Corporate selling, general and administrative expenses decreased by $3.6 million, or 35%, to $6.7 million from $10.3 million in the six months ended June 30, 2008, due to reductions in corporate headcount, professional staffing fees
associated with our efforts to reduce corporate expenses and reduced incentive compensation expense.

Restructuring

The Companys restructuring charges increased by $2.3 million, or 131%, to $4.0 million from $1.7 million in the six months ended June 30, 2008.
The increase is attributed to the restructuring initiative announced and commenced in the first quarter of 2009 related to outsourcing the Companys information technology operations, transferring the majority of remaining corporate functions
located in New York City to the offices located near Boston, Massachusetts, and simplifying managements structure following the sale of the K-12 Services division. The restructuring charges incurred during the six months ended June 30,
2008 were severance expense related to restructuring activities initiated during 2007 to relocate the Companys finance and certain legal operations from New York City to offices located near Boston, Massachusetts.

Interest Expense

Interest expense increased by
$471,000 to $545,000, from $74,000 in the six months ended June 30, 2008, as a result of borrowings outstanding under the credit facility during the six months ended June 30, 2009. There were no outstanding borrowings under any credit
facility during the six months ended June 30, 2008.

Interest Income

Interest income decreased by $169,000, or 84%, to $32,000 from $201,000 in the six months ended June 30, 2008 due primarily to higher average cash
balances during the six months ended June 30, 2008.

Other Income

Other income for the six months ended June 30, 2009 primarily consists of additional proceeds received from the sale of stock in a private investment that occurred in September 2008 and a settlement payment
received in conjunction with the termination of one of our international franchises. There was essentially no other income or expense for the six months ended June 30, 2008.

Provision for Income Taxes

The provision for income taxes decreased by $513,000 to $121,000, from
$634,000 in the six months ended June 30, 2008. The decrease is due to the utilization of the effective tax rate to calculate the current year provision and the amount of income earned year to date in proportion to the expected income to be
earned for the year. For the six months ended June 30, 2008, the discrete method was used to calculate the provision as the annual effective rate was not considered a reliable estimate of year to date income tax expense.

Liquidity and Capital Resources

Our primary sources
of liquidity during the six months ended June 30, 2009 were cash and cash equivalents on hand, cash flow generated from operations, cash proceeds from the sale of our K-12 Services division (a discontinued operation) and borrowings under our
revolving line of credit. Our primary uses of cash during the six months ended June 30, 2009 were capital expenditures, repayments of borrowings under our revolving line of credit and the required installment payment of a portion of the term
loan under our credit facility in connection with the sale of our K-12 Services division. At June 30, 2009 we had $9.9 million of cash and cash equivalents (including $597,000 of restricted cash) and $5.0 million of unused borrowing capacity
available under the revolving line of credit of our Wells Fargo credit facility.



19



---

##### Table of Contents

We expect to generate positive cash flow from operations in 2009, including payments to fund 2009
restructuring activities, primarily as a result of the continued benefit of operational improvements and cost reductions. Cash flow from operations, currently available cash and borrowings under our revolving line of credit are expected to fund
short-term working capital needs, capital expenditures and scheduled debt obligations of at least the next twelve months. However, our ability to generate positive cash flows from operations is dependent on our future financial performance, which is
subject to many factors beyond our control as outlined in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2008.

In addition to generating positive income from operations, the timing of cash payments received under our customer arrangements is a primary factor impacting our sources of liquidity. Our Test Preparation Services
division generates the largest portion of our cash flow from operations 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 Test Preparation Services and SES, we are generating a greater percentage of our cash from contracts with institutions such as schools and school districts and post secondary institutions 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 flows provided
by operating activities from continuing operations for the six months ended June 30, 2009 were $9.1 million as compared to $4.6 million for the six months ended June 30, 2008. The increase is primarily due to a reduction in restructuring
related payments of $2.3 million for the six months ended June 30, 2009 as compared to the six months ended June 30, 2008. In addition, for the six months ended June 30, 2008 we used $2.6 million of cash from operations for payment of
a legal settlement.

Cash flows used for investing activities from continuing operations during the six months ended June 30, 2009
were $4.1 million as compared to $5.5 million used during the comparable period in 2008. Capital expenditures including the development of internal use software increased by $2.3 million and were offset by a decrease in cash expended for franchise
acquisitions of $3.5 million.

Cash flows used for financing activities from continuing operations for the six months ended June 30,
2009 were $10.9 million as compared to $1.6 million provided by financing activities for the six months ended June 30, 2008. Cash used for financing activities in 2009 primarily consisted of $10.7 million in repayments of our Wells Fargo credit
facility term loan, $9.7 million of which represented required non-recurring installment payments from the cash proceeds of asset sales, including the K-12 Services division sale and the sale of stock in a private investment that occurred in
September 2008. During the three months ended June 30, 2009, we borrowed $4.5 million under our Wells Fargo revolving line of credit for short term working capital purposes which was repaid during the same period. Cash provided by financing
activities in 2008 primarily consisted of proceeds from the exercise of stock options.

Cash flows provided by discontinued operations for
the six months ended June 30, 2009 were $6.2 million as compared to $2.8 million for the six months ended June 30, 2008. The increase is primarily due to $7.8 million of net cash proceeds from the sale of the K-12 Services division on
March 12, 2009, offset by a decrease in cash provided by K-12 Services division operating activities prior to the sale.

Seasonality in Results of
Operations

We experience, and we expect to continue to experience, seasonal fluctuations in our revenue, results of operations and cash
flow 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 to more closely reflect the after
school programs greatest activity during the school year.



|Item 3. | Quantitative and Qualitative Disclosures about Market Risk
|------- | ----------------------------------------------------------

The term loan under our credit facility carries a variable interest rate that fluctuates based primarily on changes in LIBOR rates. We had $8.3 million of outstanding principal under the term loan as of June 30,
2009. A 10% increase in the interest rate on the term loan would increase annual interest expense by approximately $62,000. We do not carry any other variable interest rate debt.

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



20



---

##### Table of Contents

|Item 4. | Controls and Procedures
|------- | -----------------------

We conducted
an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act, (Disclosure Controls) as of the end of the
period covered by this Quarterly Report. The controls evaluation was done under the supervision and with the participation of management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO).

Scope of the Controls Evaluation

The
evaluation of our Disclosure Controls included a review of the controls objectives and design, our implementation of the controls and the effect of the controls on the information generated for use in this Quarterly Report. In the course of
the controls 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 evaluation is performed on a quarterly
basis so that the conclusions of management, including the CEO and CFO, concerning the effectiveness of the 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. A control system can provide only reasonable, not absolute, assurance that the control systems objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or
procedures. Because of inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.

Conclusions

As described in detail in Item 9A of our Annual Report on Form 10-K, for the fiscal year ended
December 31, 2008, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. Managements assessment identified one material weakness in internal control over financial
reporting as of that date. This material weakness was identified in the area of the financial statement close process. In light of this material weakness identified by management, which has not been remediated as of the end of the period covered by
this Quarterly Report, our CEO and CFO concluded, after the evaluation described above, that our Disclosure Controls were not effective, as of the end of the period covered by this Quarterly Report, in ensuring 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 SECs rules and forms.

Changes in Internal Control over Financial Reporting

During the six months ended June 30, 2009, we continued to undertake actions to remediate the material weakness described above. These actions included continuing to increase the level of detail and quality of monthly management
reviews of financial results including comparisons of financial results versus budget and prior periods. We will continue to design and implement additional policies, procedures and controls as required during the remediation of our reported
material weakness.

We believe that the steps outlined above will strengthen our internal control over financial reporting and address the
material weakness described above. As part of our 2009 assessment of internal control over financial reporting, our management will test and evaluate these additional controls to be implemented to assess whether they are operating effectively.

Except as otherwise discussed above, there have not been any changes in our internal control over financial reporting during the six
months ended June 30, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



21



---

##### Table of Contents

PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

From time to time
and in the ordinary course of business, we are subject to various claims, charges and litigation. Although the outcome of litigation cannot be predicted with certainty and some lawsuits, claims or proceedings may be disposed of unfavorably to us, we
do not believe that we are currently a party to any material legal proceedings other than described in Item 1.

In August 2008, the
Company learned that certain of the Companys web pages that appeared to contain confidential information were available to the public on the Internet for a short period of time (the Security Incident). The Company discovered that
due to an operational error or errors that occurred in connection with a change in information system architecture and concurrent change of hosting providers, an Internet web page that was intended to be, and historically has been, password
protected, had inadvertently ceased to be password protected for a 7-8 week period. Although the web page was shut down the day the Company learned about the matter, prior to that time some files that contained personal information about students
from schools that used the Companys assessment center product (or its predecessor product) under license from the K-12 Services division were accessible. With the exception of one school district in Sarasota, Florida that included social
security numbers for some students, the K-12 student data accessible during the Security Incident did not include financially sensitive information such as social security numbers, credit card information or other financial information. The Company
notified the Sarasota school district as well as Sarasota students who may have had such sensitive data accessible during the incident and has procured credit monitoring for those students requesting it and for whom such monitoring is available
because they are over 18. In some cases, the Company also notified other school districts and students whose information was subject to compromise, even where the Company was not legally obligated to do so because the nature of the information did
not trigger notification statutes. Other than the Security Incident, the Company believes its systems remain secure.

On September 19,
2008, a putative class action captioned Virginia B. Townsend v. The Princeton Review, Inc.(Case No. 8:08-CIV-1879-T-33TBM) was filed against the Company in the United States District Court for the Middle District of Florida, Tampa
Division relating to the Security Incident alleging negligence, breach of contract and unfair trade practices. The complaint seeks unspecified monetary damages and other relief including the provision of personal data monitoring and identity theft
insurance and unspecified enhancement of the security of the Companys computer data systems, together with attorneys fees and costs. In July 2009 the parties entered into a settlement agreement which was approved preliminarily by
the Court on August 5, 2009. Under the settlement agreement, subject to final approval by the Court, the Company will provide a specified identity protection service to the class members that elect to participate and pay the fees and expenses of
plaintiffs counsel as approved by the Court. The Company believes that the full cost of the settlement will be within the limits of its applicable insurance policies.



|Item 1A. | Risk Factors
|-------- | ------------

We operate in a
rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. In addition to the other information set forth in this Quarterly
Report on Form 10-Q, the risks and uncertainties that we believe are most important for you to consider are discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31,
2008. 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, 2008. Additional risks and uncertainties not presently known to us, which we currently deem immaterial or
which are similar to those faced by other companies in our industry or business in general, may also impair our business operations. If any of the foregoing risks or uncertainties actually occurs, our business, financial condition and operating
results would likely suffer.



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

Not applicable.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

Not
applicable.



22



---

##### Table of Contents

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

At the annual meeting of our stockholders held June 23, 2009, our stockholders elected David Lowenstein and Richard Katzman as Class II directors of the Company, each to serve on our Board of Directors until the
2012 Annual Meeting of Stockholders and until their successors are duly elected and qualified. The directors were elected by a plurality of the votes cast at the 2009 annual meeting, as follows:



|                 |  |            |  |               
|---------------- |  | ---------- |  | --------------
|Nominee          |  | VotesFor   |  | SharesWithheld
|                 |  |           
|David Lowenstein |  | 26,285,836 |  | 4,787,382     
|Richard Katzman  |  | 29,408,276 |  | 1,664,942     

No other persons were nominated, nor received votes, for election as a director at the 2009 annual meeting.
Following the meeting, the Companys Board of Directors consisted of David Lowenstein, Richard Katzman, Robert E. Evanson, Michael J. Perik, Linda Whitlock, Jeffrey R. Crisan and Michael A. Krupka.



|Item 5. | Other Information
|------- | -----------------

Not applicable.



23



---

##### Table of Contents

|Item 6. | Exhibits
|------- | --------



|              |  |                                                                                                                        
|------------- |  | -----------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                            
|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.



24



---

##### Table of Contents

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/ STEPHEN C. RICHARDSStephen C. RichardsChief Operating Officer and Chief Financial Officer(Duly Authorized Officer and Principal Financial Officer)


August 7, 2009



25



---

##### Table of Contents

Exhibit Index



|              |  |                                                                                                                        
|------------- |  | -----------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                            
|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.



26