January 1, 2008

FROM: Daisy and Doug Layman

SUBJECT: Kadix Update

Dear Friends:

Doug and I wanted to take the opportunity to update you on Kadix Systems' progress and future plans. We founded Kadix in 2001 as an organizational change company dedicated to delivering measurable performance improvements to our customers. At that time, we had three employees and we based our company on the values of integrity, professionalism and quality. Six years later the company has grown dramatically, but our values and mission remain the same!

Managing Kadix's growth effectively has been a challenge. We have invested heavily to ensure that the human capital, processes and information systems necessary for successful growth are in place. In 2007, our investments included:

• Human Capital: Kadix expanded employee career and skills development plans, brought in experienced leadership, and used our twice-yearly Employee Voice survey to measure employee satisfaction.
• Processes: Kadix achieved an externally appraised CMMI Level 3 certification updated our quality assurance processes, and aligned our organization into customer focused groups (figure below).
• Information Systems: Kadix implemented an employee self-service Human Resources system and enhanced KIKS, our proprietary intranet knowledge system and resource management tool.

We believe this is going to be a terrific year for Kadix's employees, customers and partners. The opportunity to become an elite government contractor is achievable and we can't wait to work with you to make it happen.

All the best,

Daisy Layman
CEO