PROSOFTTRAINING COM - 10-Q Quarterly Report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal quarter ended April 30, 2004

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. 44^th Street, Suite 600, Phoenix, AZ 85008

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (602) 794-4199

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 ¨ NO x

The number of shares of the registrants’ common stock, $.001 par value, outstanding as of June 10, 2004 was 24,309,414 shares.

PROSOFTTRAINING

TABLE OF CONTENTS


		Page
	PART I
Item 1.	Financial Statements
	Consolidated Statements of Operations for the Three Months Ended April 30, 2004 and 2003 and for the Nine Months Ended April 30, 2004 and 2003	3
	Consolidated Balance Sheets at April 30, 2004 and July 31, 2003	4
	Consolidated Statements of Cash Flows for the Nine Months Ended April 30, 2004 and 2003	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of the Results of Operations and Financial Condition	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	13
Item 4.	Controls and Procedures	13
	PART II
Item 5.	Other Information	14
Item 6.	Exhibits and Reports on Form 8-K	14
Signatures		15
Certification of Chief Executive Officer and Chief Financial Officer		16

PART I

Item 1. Financial Statements

PROSOFTTRAINING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended April 30,						Nine Months Ended April 30,
	2004			2003			2004			2003
Revenues:
Content	$	1,552		$	2,023		$	4,929		$	7,235
Certification		416			663			1,366			1,936
Services		—			10			—			85

Total revenues		1,968			2,696			6,295			9,256

Costs and expenses:
Costs of revenues		662			966			2,093			3,802
Content development		147			293			443			1,250
Sales and marketing		704			616			2,009			2,806
General and administrative		792			592			2,078			3,356
Depreciation and amortization		121			165			375			666
Gain on settlement of liability		—			(370	)		—			(370	)

Total costs and expenses		2,426			2,262			6,998			11,510

Income (loss) from operations		(458	)		434			(703	)		(2,254	)
Interest income		—			—			—			5
Interest expense		(76	)		(73	)		(227	)		(216	)

Net income (loss)	$	(534	)	$	361		$	(930	)	$	(2,465	)

Net income (loss) per share: basic and diluted	$	(0.02	)	$	0.01		$	(0.04	)	$	(0.10	)

Weighted average shares outstanding:
Basic		24,229			24,209			24,216			24,203

Diluted		24,229			24,695			24,216			24,203

The accompanying notes are an integral part of these consolidated statements.

PROSOFTTRAINING AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


	April 30, 2004			July 31, 2003
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	680		$	1,567
Accounts receivable, less allowances of $544 and $494		704			1,023
Prepaid expenses and other current assets		133			157

Total current assets		1,517			2,747

Property and equipment, net of accumulated depreciation of $3,204 and $3,013		325			483
Goodwill, net of accumulated amortization of $5,506		6,745			6,745
Licenses, net of accumulated amortization of $2,691 and $2,499		294			486
Other		99			118

Total assets	$	8,980		$	10,579


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, trade	$	602		$	1,061
Accrued expenses		621			826
Current portion of capital lease obligations		61			54
Other		11			255

Total current liabilities		1,295			2,196
Long-term debt		3,189			2,968
Obligations under capital leases, net of current portion		33			64

Total liabilities		4,517			5,228


Stockholders’ equity:
Common shares, par value $.001 per share; authorized shares: 75,000,000; issued: 24,321,326 shares		24			24
Additional paid-in capital		104,436			104,422
Accumulated deficit		(100,091	)		(99,161	)
Accumulated other comprehensive income		169			141
Less common stock in treasury, at cost: 11,912 shares		(75	)		(75	)

Total stockholders’ equity		4,463			5,351

Total liabilities and stockholders’ equity	$	8,980		$	10,579

The accompanying notes are an integral part of these consolidated statements.

PROSOFTTRAINING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended April 30,
		2004			2003

Operating activities:
Net loss	$	(930	)	$	(2,465	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		372			946
Non-cash interest		221			201
Gain on settlement of liability		—			(370	)
Loss on the disposal of fixed assets		—			113
Changes in operating assets and liabilities:
Accounts receivable, net		325			928
Prepaid expenses and other current assets		43			297
Accounts payable		(451	)		(1,185	)
Accrued expenses		(212	)		(571	)
Other		(244	)		230


Net cash used in operating activities		(876	)		(1,876	)


Investing activities:
Purchase of property and equipment		(18	)		(14	)
Courseware and license purchases		—			(35	)


Net cash used in investing activities		(18	)		(49	)


Financing activities:
Issuance of common stock		14			2
Principal payments on capital leases		(25	)		(40	)


Net cash used in financing activities		(11	)		(38	)


Effects of exchange rate changes on cash		18			63


Net decrease in cash and cash equivalents		(887	)		(1,900	)
Cash and cash equivalents at the beginning of period		1,567			3,525

Cash and cash equivalents at the end of period	$	680		$	1,625


Supplementary disclosure of cash paid during the period for:
Interest	$	5		$	15

The accompanying notes are an integral part of these consolidated statements.

PROSOFTTRAINING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share data)

1. General

These interim consolidated financial statements do not include certain footnotes and financial information normally presented annually under accounting principles generally accepted in the United States of America and, therefore, should be read in conjunction with the Consolidated Financial Statements and the Notes thereto contained in the Company’s 2003 Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC. The results of operations for any interim period are not necessarily indicative of results that can be expected for the fiscal year ending July 31, 2004. The interim consolidated financial statements are unaudited but contain all adjustments, consisting of normal recurring adjustments management considers necessary to present fairly its consolidated financial position, results of operations, and cash flows as of and for the interim periods. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Certain reclassifications have been made in the prior-period consolidated financial statements to conform with the current-period presentation.

2. Comprehensive Income (Loss)

The components of comprehensive income for the three and nine months ended April 30, 2004 and 2003 are as follows:


	Three months ended April 30					Nine months ended April 30
	2004			2003		2004			2003
Net income (loss)	$	(534	)	$	361	$	(930	)	$	(2,465	)
Other comprehensive income (loss):
Foreign currency translation adjustments		(29	)		26		28			63

Comprehensive income (loss)	$	(563	)	$	387	$	(902	)	$	(2,402	)

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