MARKET RESEARCH SUMMARY

In May 1994, Independent School Management, Inc., (ISM) of Wilmington, Delaware, was retained to conduct a market and feasibility study in the Kingwood, Atascocita, Humble, Aldine and North Channel area to determine the feasibility of starting a new Episcopal school in the area. This national research firm is considered to be one of the best in the country in determining the feasibility of a new private schools.

ISM was asked to analyze local communities and demographics, local public and private schools, potential leadership groups, and population segments capable of private school support, along with any other factors pertinent to the enterprise. They conducted interviews with local students, clergy, parents, private and public schools administrators, and businesspersons. The following is a summary of their conclusions:

CONCLUSIONS

1. The Greater Houston area is very under populated with quality independent schools.

2. The Atascocita-Kingwood area represents a very significant "pent-up" market for a superior-quality independent school.

3. There is definitely a market for an Episcopal day school, grades K- 12, in the Northeast Harris County.

4. There is not, and in the foreseeable future will not be, any significant competition for a superior-quality independent school within an hour's driving time.

ANALYSIS OF SUBJECT AREA

The Atascocita-Kingwood area of northeast Harris County is a developing region of largely affluent suburban home tracts. Although the primary market area will be Atascocita- Kingwood, the permanent campus site (on Beltway 8 at North Lake Houston) will serve a much larger market. The Summerwood community, Humble, Aldine, the "North Shore" communities, Baytown, Crosby, and Liberty County all lie within 30-minutes' driving time.

Within the Atascocita-Kingwood area alone, the market research showed over 16,000 households with income in excess of $60,000 (median) as a strong anchor to a private school market. The Humble Independent School District, which includes Kingwood and Atascocita, is growing at the rate of 600-800 students per year, and the area population is expected to double by 2020.

Twenty-five years ago, there were only about six private schools in the Houston area: Kinkaid, St. John's, Strake Jesuit, St. Thomas, St. Agnes, and Duchesne. Thirteen years ago, Episcopal High School opened with over 150 students and now enrolls 550. Ten years ago, The John Cooper School opened in The Woodlands and has been one of the fastest growing top-quality independent schools in the country, currently enrolling about 750 students in grades K- 12. Driving time to all of these from the Atascocita-Kingwood area approaches one hour.

Over 200 families in the Atascocita-Kingwood area home-schools their children, which is an unusually high number. Many of these families may welcome a small, private school with both a strong academic program and strong family values.