POSO Prosoft Learning (MM)

Prosoft Learning Corporation (Nasdaq:POSO) today reported financial results for its fourth fiscal quarter ended July 31, 2005. Revenue in the fourth quarter of fiscal 2005 was $1.77 million, compared to $1.75 million in the fourth quarter of fiscal 2004, marking the first time the Company has achieved year-over-year revenue improvement since the third quarter of fiscal 2001. Gross profit, as a percentage of revenue, was 73 percent for the fourth quarter of fiscal 2005, compared to 66 percent for the fourth quarter of the previous fiscal year. Net loss for the fourth quarter of fiscal 2005 was $0.49 million or $0.11 per share, compared to a net loss of $0.64 million or $0.16 per share for the fourth quarter of fiscal 2004. "Clearly we are delighted to achieve the improvements in revenue, gross profit and net loss compared to the fourth quarter of 2004," stated Benjamin Fink, Prosoft's president and CEO. "Although our market remains challenging, our efforts in restructuring our product mix and sales focus, combined with the execution of our academic strategy, are beginning to show tangible results." Fink continued, "While our team continues to focus on improving our operating performance, our capital structure needs to be addressed in the near term. Although our long-term debt does not begin to mature until mid-2006, an event of default under our debt agreements would arise if the Company loses its listing status on the Nasdaq SmallCap market, which could occur on or after November 2, 2005. We are aggressively seeking resolution of this issue with our noteholders." Fink also noted that the Company had retained East Wind Advisors, LLC to act as its advisor as it explores strategic alternatives. Content development, sales and marketing, and general and administrative expenses were $1.43 million in the fourth quarter of fiscal 2005, compared to $1.60 million for the same quarter of the previous fiscal year, a decrease of $0.17 million or 11 percent. Days Sales Outstanding of receivables were at 29 days, consistent with recent performance. About Prosoft Learning Corporation Prosoft Learning Corporation (Nasdaq:POSO) offers content and certifications to enable individuals to develop and validate critical Information and Communications Technology (ICT) workforce skills. Prosoft is a leader in the workforce development arena, working with state and local governments and school districts to provide ICT education solutions for high school and community college students. Prosoft has created and distributes a complete library of classroom and e-learning courses. Prosoft distributes its content through its ComputerPREP division to individuals, schools, colleges, commercial training centers and corporations worldwide. Prosoft owns the CIW job-role certification program for Internet technologies and the CCNT (Certified in Convergent Network Technologies) certification, and manages the CTP (Convergence Technologies Professional) vendor-neutral certification for telecommunications. To learn more, visit www.ProsoftLearning.com, www.ComputerPREP.com, www.CIWcertified.com and www.CTPcertified.com. Forward-Looking Statements Except for historical information contained herein, the matters discussed in this press release are statements of a forward-looking nature that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, without limitation, the Company's dependence on the timely development, introduction and acceptance of courses, proprietary certifications and other products; the acceptance of ICT certifications in general; the continued and improved penetration of the academic, learning center and corporate markets; the successful implementation of strategic relationships; the ability of the Company to maintain its NASDAQ SmallCap listing and avoid defaults under certain debt agreements; the effect of changing economic conditions; and the other risks and uncertainties outlined in the Company's filings with the Securities and Exchange Commission, including, but not limited to, the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The Company undertakes no obligation to update this forward-looking information. -0- *T Prosoft Learning Corporation and Subsidiaries Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) Three Months Ended July 31, --------------------------- 2005 2004 ---- ---- Revenues: Content $ 1,444 $ 1,331 Certification 321 422 ------------- ------------- Total revenues 1,765 1,753 ------------- ------------- Costs and expenses: Costs of revenues 470 601 Content development 169 189 Sales and marketing 580 624 General and administrative 678 787 Depreciation and amortization 86 112 ------------- ------------- Total costs and expenses 1,983 2,313 ------------- ------------- (Loss) income from operations (218) (560) ------------- ------------- Interest expense, net (272) (76) ------------- ------------- --------------------------- Net (loss) income $ (490) $ (636) =========================== Net (loss) income per share: Basic and diluted $ (0.11) $ (0.16) ============= ============= Weighted average shares outstanding: Basic and Diluted 4,379 4,052 ============= ============= Prosoft Learning Corporation and Subsidiaries Consolidated Balance Sheets (In thousands, except share data) July 31, July 31, 2005 2004 ----------- ----------- ASSETS ------ Current assets: Cash and cash equivalents $ 759 $ 502 Accounts receivable, net 562 644 Prepaid expenses and other current assets 254 117 ----------- ----------- Total current assets 1,575 1,263 Property and equipment, net 123 283 Goodwill, net 6,745 6,745 Licenses, net -- 229 Other 57 102 ----------- ----------- Total assets $ 8,500 $ 8,622 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $ 424 $ 591 Accrued expenses 710 768 Current portion of capital lease obligations -- 98 Other 26 64 ----------- ----------- Total current liabilities 1,160 1,521 Long-term debt 3,849 3,264 ----------- ----------- Total liabilities 5,009 4,785 ----------- ----------- Stockholders' equity: Common shares, par value $.001 per share; authorized shares: 75,000,000; issued: 4,635,481 and 4,053,554 5 24 Additional paid-in capital 106,737 104,436 Accumulated deficit (103,334) (100,727) Accumulated other comprehensive income 158 179 Less common stock in treasury, at cost: 1,985 shares (75) (75) ----------- ----------- Total stockholders' equity 3,491 3,837 ----------- ----------- Total liabilities and stockholders' equity $ 8,500 $ 8,622 =========== =========== *T