UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the fiscal quarter ended April 30, 2003 |
| ¨ | 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 000-21535
ProsoftTraining
(Exact name of Registrant as specified in its charter)
| NEVADA | 87-0448639 | |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) | |
410 N. 44th Street, Suite 600, Phoenix, AZ 85008
(Address of principal executive offices) (Zip Code)
(602) 794-4199
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.001 Per Share
(Title of class)
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 twelve (12) months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety (90) days. YES x NO ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
The number of shares of the registrants’ common stock, $.001 par value, outstanding as of June 6, 2003 was 24,221,326 shares.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
PROSOFTTRAINING AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended April 30, |
Nine Months Ended April 30, |
|||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| Revenues: |
||||||||||||||||
| Content |
$ | 2,023 | $ | 3,538 | $ | 7,235 | $ | 10,380 | ||||||||
| Certification |
663 | 924 | 1,936 | 2,768 | ||||||||||||
| Services |
10 | 104 | 85 | 434 | ||||||||||||
| Total revenues |
2,696 | 4,566 | 9,256 | 13,582 | ||||||||||||
| Costs and expenses: |
||||||||||||||||
| Costs of revenues |
966 | 2,610 | 3,802 | 7,091 | ||||||||||||
| Content development |
293 | 512 | 1,250 | 1,577 | ||||||||||||
| Sales and marketing |
616 | 1,548 | 2,806 | 4,686 | ||||||||||||
| General and administrative |
592 | 1,433 | 2,986 | 4,545 | ||||||||||||
| Depreciation and amortization |
165 | 861 | 666 | 2,631 | ||||||||||||
| Gain on settlement of liability |
(370 | ) | — | — | — | |||||||||||
| Impairment of goodwill |
— | 22,500 | — | 22,500 | ||||||||||||
| Write-down of courseware and licenses |
— | 1,452 | — | 1,452 | ||||||||||||
| Special charge |
— | — | — | 762 | ||||||||||||
| Total costs and expenses |
2,262 | 30,916 | 11,510 | 45,244 | ||||||||||||
| Income (loss) from operations |
434 | (26,350 | ) | (2,254 | ) | (31,662 | ) | |||||||||
| Interest income |
— | 12 | 5 | 54 | ||||||||||||
| Interest expense |
(73 | ) | (68 | ) | (216 | ) | (157 | ) | ||||||||
| Income (loss) before income taxes |
361 | (26,406 | ) | (2,465 | ) | (31,765 | ) | |||||||||
| Deferred income tax expense |
— | (925 | ) | — | (925 | ) | ||||||||||
| Net income (loss) |
$ | 361 | $ | (27,331 | ) | $ | (2,465 | ) | $ | (32,690 | ) | |||||
| Net income (loss) per share: basic and diluted |
$ | 0.01 | $ | (1.13 | ) | $ | (0.10 | ) | $ | (1.36 | ) | |||||
| Weighted average shares outstanding: |
||||||||||||||||
| Basic |
24,209 | 24,158 | 24,203 | 23,958 | ||||||||||||
| Diluted |
24,695 | 24,158 | 24,203 | 23,958 | ||||||||||||
See accompanying notes.
3
PROSOFTTRAINING AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| April 30, 2003 |
July 31, 2002 |
|||||||
| (Unaudited) | ||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 1,625 | $ | 3,526 | ||||
| Accounts receivable, less allowances of $496 and $478 |
956 | 1,995 | ||||||
| Prepaid expenses and other current assets |
237 | 379 | ||||||
| Total current assets |
2,818 | 5,900 | ||||||
| Property and equipment, net |
565 | 1,166 | ||||||
| Goodwill, net of accumulated amortization of $5,506 |
6,745 | 6,745 | ||||||
| Courseware and licenses, net of accumulated amortization of $4,756 and $4,302 |
562 | 981 | ||||||
| Other assets |
179 | 315 | ||||||
| Total assets |
$ | 10,869 | $ | 15,107 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable, trade |
$ | 1,078 | $ | 2,239 | ||||
| Accrued expenses |
1,206 | 2,266 | ||||||
| Current portion of capital lease obligations |
39 | 59 | ||||||
| Other |
375 | 151 | ||||||
| Total current liabilities |
2,698 | 4,715 | ||||||
| Long-term debt |
2,899 | 2,698 | ||||||
| Obligations under capital leases, net of current portion |
97 | 118 | ||||||
| Total liabilities |
5,694 | 7,531 | ||||||
| Stockholders’ equity: |
||||||||
| Common shares, par value $.001 per share; authorized shares: 75,000,000; issued: 24,221,326 shares and 24,209,326 shares |
24 | 24 | ||||||
| Additional paid-in capital |
104,422 | 104,421 | ||||||
| Accumulated deficit |
(99,317 | ) | (96,853 | ) | ||||
| Accumulated other comprehensive income |
121 | 59 | ||||||
| Less common stock in treasury, at cost: 11,912 shares |
(75 | ) | (75 | ) | ||||
| Total stockholders’ equity |
5,175 | 7,576 | ||||||
| Total liabilities and stockholders’ equity |
$ | 10,869 | $ | 15,107 | ||||
See accompanying notes.
4
PROSOFTTRAINING AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Nine Months Ended April 30, |
||||||||
| 2003 |
2002 |
|||||||
| Operating activities: |
||||||||
| Net loss |
$ | (2,465 | ) | $ | (32,690 | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: |
||||||||
| Depreciation and amortization |
946 | 3,557 | ||||||
| Gain on settlement of liability |
(370 | ) | — | |||||
| Non-cash interest |
201 | — | ||||||
| Write-down of goodwill, courseware and licenses |
— | 23,952 | ||||||
| Loss on the disposal of fixed assets |
113 | 14 | ||||||
| Deferred income taxes |
— | 925 | ||||||
| Special charge |
— | 175 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable, net |
928 | 1,585 | ||||||
| Prepaid expenses and other current assets |
297 | 252 | ||||||
| Accounts payable |
(1,185 | ) | (410 | ) | ||||
| Accrued expenses |
(571 | ) | 274 | |||||
| Other |
230 | 157 | ||||||
| Net cash used in operating activities |
(1,876 | ) | (2,209 | ) | ||||
| Investing activities: |
||||||||
| Purchase of property and equipment |
(14 | ) | (196 | ) | ||||
| Courseware and license purchases |
(35 | ) | (317 | ) | ||||
| Net cash used in investing activities |
(49 | ) | (513 | ) | ||||
| Financing activities: |
||||||||
| Issuance of long-term debt |
— | 2,500 | ||||||
| Issuance of common stock |
2 | 208 | ||||||
| Principal payments on capital leases |
(40 | ) | (81 | ) | ||||
| Other |
— | (38 | ) | |||||
| Net cash (used in) provided by financing activities |
(38 | ) | 2,589 | |||||
| Effects of exchange rate changes on cash |
63 | 30 | ||||||
| Net decrease in cash and cash equivalents |
(1,900 | ) | (103 | ) | ||||
| Cash and cash equivalents at the beginning of period |
||||||||