<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 AND 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2000
OR
[ ] 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.com
(Exact name of registrant as specified in its charter)
NEVADA 87-0448639
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3001 Bee Caves Road, Suite 100, Austin, Texas 78746
(Address of principal executive offices) (Zip Code)
(512) 328-6140
(Registrant's telephone number, including area code)
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 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes [ ] No
The number of shares of the registrant's common stock, $.001 par value,
outstanding as of March 6, 2000, was 18,415,709 shares.
<PAGE>
ProsoftTraining.com and Subsidiaries
Consolidated Balance Sheets
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
January 31, 2000 July 31, 1999
---------------- -------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents.................................................... $ 3,820,412 $ 1,152,715
Accounts receivable, less allowances of $222,351 and $199,362
at January 31, 2000 and July 31, 1999, respectively........................ 3,077,520 1,993,827
Notes receivable............................................................. 16,800 29,900
Prepaid expenses and other current assets.................................... 297,524 319,943
------------ ------------
Total current assets...................................................... 7,212,256 3,496,385
Property and equipment, net................................................... 395,299 334,001
Goodwill, net of accumulated amortization of $743,549 and
$548,638 at January 31, 2000 and July 31, 1999, respectively................ 1,981,633 2,176,453
License agreements, net of accumulated amortization of
$412,228 and $283,891 at January 31, 2000 and July 31,
1999, respectively.......................................................... 1,384,482 1,512,819
Other assets.................................................................. - 114,718
------------ ------------
Total assets.............................................................. $ 10,973,670 $ 7,634,376
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................. $ 1,164,447 $ 1,415,331
Accrued payroll and related expenses......................................... 716,007 565,322
Current portion of capital lease obligations................................. 929,981 918,680
Accrued restructuring costs.................................................. 706,239 1,230,025
------------ ------------
Total current liabilities................................................. 3,516,674 4,129,358
Capital lease obligations, net of current portion............................. 421,246 847,978
Convertible debentures........................................................ - 1,992,080
Other......................................................................... 223,398 136,040
------------ ------------
Total liabilities......................................................... 4,161,318 7,105,456
------------ ------------
Common stock subject to redemption............................................ 56,649 56,649
Stockholders' equity:
Common shares, par value $.001 per share: shares authorized.................
50,000,000; outstanding 18,083,799 and 14,297,133 at
January 31, 2000 and July 31, 1999, respectively............................ 18,084 14,297
Additional paid-in capital.................................................... 58,577,108 52,380,454
Accumulated deficit........................................................... (51,776,522) (51,857,454)
Accumulated other comprehensive income........................................ 11,781 9,722
Less common stock in treasury, at cost: 11,912 shares......................... (74,748) (74,748)
------------ ------------
Total stockholders' equity................................................ 6,755,703 472,271
------------ ------------
Total liabilities and stockholders' equity................................ $ 10,973,670 $ 7,634,376
============ ============
</TABLE>
See Accompanying Notes
<PAGE>
ProsoftTraining.com and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended January 31, Six Months Ended January 31,
-------------------------------- ------------------------------
<S> <C> <C> <C> <C>
2000 1999 2000 1999
---- ---- ---- ----
Revenue:
Services................................ $ 2,123,095 $ 1,169,853 $ 4,779,752 $ 2,865,866
Courseware.............................. 1,427,182 265,619 2,231,581 578,634
Certification........................... 451,208 70,550 771,080 70,550
----------- ----------- ----------- -----------
Total revenue...................... 4,001,485 1,506,022 7,782,413 3,515,050
----------- ----------- ----------- -----------
Costs and expenses:
Costs of services....................... 2,379,796 2,564,930 4,583,573 5,191,439
Sales and marketing..................... 321,491 336,631 657,740 1,063,621
General and administrative.............. 1,130,362 1,504,969 2,141,552 3,111,909
----------- ----------- ----------- -----------
Total costs and expenses........... 3,831,649 4,406,530 7,382,865 9,366,969
----------- ----------- ----------- -----------
Income (loss) from operations............ 169,836 (2,900,508) 399,548 (5,851,919)
Interest expense, net.................... (149,370) (34,634) (318,616) (44,913)
----------- ----------- ----------- -----------
Net income (loss)........................ $ 20,466 $(2,935,142) $ 80,932 $(5,896,832)
=========== =========== =========== ===========
Net income (loss) per share:
Basic................................... $ 0.00 $ (0.23) $ 0.01 $ (0.48)
=========== =========== =========== ===========
Diluted................................. $ 0.00 $ (0.23) $ 0.00 $ (0.48)
=========== =========== =========== ===========
Weighted average shares outstanding:
Basic................................... 15,928,808 12,620,343 15,129,248 12,330,995
=========== =========== =========== ===========
Diluted................................. 19,104,522 12,620,343 17,867,887 12,330,995
=========== =========== =========== ===========
</TABLE>
See Accompanying Notes
<PAGE>
ProsoftTraining.com and Subsidiaries
Consolidated Statements of Cash Flow
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended January 31,
------------------------------
2000 1999
---- ----
<S> <C> <C>
Operating activities:
Net income (loss)................................................................... $ 80,932 $(5,896,832)
Adjustments to reconcile net income (loss) to cash used in
operating activities:
Depreciation and amortization.................................................. 375,243 1,943,726
Accretion of debt discount..................................................... 99,270 -
Changes in operating assets and liabilities:
Accounts receivable....................................................... (1,088,900) 641,830
Prepaid expenses and other current assets................................. 29,034 (3,980)
Other assets.............................................................. - (103,093)
Accounts payable.......................................................... (314,132) (407,574)
Accrued liabilities....................................................... 317,025 (247,414)
Deferred revenue.......................................................... - (23,105)
Accrued restructuring costs............................................... (510,288) -
----------- -----------
Net cash used in operating activities............................... (1,011,816) (4,096,442)
Investing activities:
Acquisitions of businesses, net of cash acquired............................... - (30,000)
Purchase of property and equipment............................................. (132,254) -
Proceeds from sales of property and equipment.................................. - 15,786
Notes receivable............................................................... 13,100 (61,500)
----------- -----------
Net cash used in investing activities............................... (119,154) (75,714)
Financing activities:
Issuance of convertible debentures and warrants................................. - 3,060,000
Issuance of common stock........................................................ 4,128,098 675,963
Principal payments on capital leases............................................ (413,556) (588,225)
Other........................................................................... 105,640 -
----------- ----------
Net cash provided by financing activities........................... 3,820,182 3,147,738
----------- -----------
Effects of exchange rate changes on cash............................................ (21,515) -
----------- -----------
Net increase (decrease) in cash and cash equivalents................................ 2,667,697 (1,024,418)
Cash and cash equivalents at the beginning of period................................ 1,152,715 3,311,014
----------- -----------
Cash and cash equivalents at the end of period...................................... $ 3,820,412 $ 2,286,596
=========== ===========
</TABLE>
See Accompanying Notes
<PAGE>
ProsoftTraining.com and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. General
The consolidated financial statements do not include footnotes and certain
financial information normally presented annually under generally accepted
accounting principles and, therefore, should be read in conjunction with the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission. The results of operations for the three and six month periods ended
January 31, 2000, are not necessarily indicative of results that can be expected
for the fiscal year ending July 31, 2000. The consolidated financial statements
included herein are unaudited; however, they contain all adjustments (consisting
of normal recurring accruals) which, in the opinion of the Company, are
necessary to present fairly its consolidated financial position, results of
operations, and cash flows as of and for the three and six month periods ended
January 31, 2000 and 1999.
2. Comprehensive income
The components of comprehensive income (loss) are as follows:
<TABLE>
<CAPTION>
Three months ended January 31, Six months ended January 31,
------------------------------- -----------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income (loss) $20,466 $(2,935,142) $80,932 $(5,896,832)
Other comprehensive income:
Foreign currency translation
adjustments 1,241 - 2,059 -
------- ----------- ------- -----------
Comprehensive income (loss) $21,707 $(2,935,142) $82,991 $(5,896,832)
======= =========== ======= ===========
</TABLE>
3. Restructuring
In the quarter ended April 30, 1999, the Company recorded a $3,723,148
charge for restructure and other unusual items associated with the Company's
decision to exit the retail training business. The restructuring charge included
$258,621 for the Dallas leased facility. In the first quarter of fiscal 2000,
the Company negotiated a lease termination agreement with the Dallas landlord
that resulted in a restructuring credit of $150,000 that was included in costs
of services.
Accrued restructuring costs at January 31, 2000 primarily represent accrued
lease expense on closed facilities, equipment and other termination costs.
The unsettled amounts may change when final payments are made. The Company
anticipates that the remaining restructuring actions will be substantially
completed by the end of fiscal 2000.
<PAGE>
4. Supplemental disclosure of cash flow information
Cash paid in the six months ended January 31, 2000 and 1999 for interest
and income taxes was as follows:
2000 1999
---- ----
Interest $173,342 $100,210
Income taxes - -
5. Property and equipment
Property and equipment consist of the following:
<TABLE>
<CAPTION>
January 31, 2000 July 31, 1999
---------------- -------------
<S> <C> <C>
Computer equipment and software $ 850,615 $ 748,089
Office equipment, furniture and fixtures 534,206 510,651
---------- ----------
1,384,821 1,258,740
Less accumulated depreciation 989,522 924,739
---------- ----------
Property and equipment, net $ 395,299 $ 334,001
========== ==========
</TABLE>
6. Convertible debentures
During the second quarter of fiscal 2000, the Company elected to force the
mandatory conversion of its convertible debentures of $2,490,000 into the
Company's common stock. The debentures were converted into 1,556,250 shares of
common stock during the quarter.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Management Discussion and Analysis of Financial Condition and Results
of Operations contains forward-looking statements. For this purpose, any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes", "anticipates", "plans", "expects" and similar expressions are
intended to identify forward-looking statements. In addition, forward-looking
statements include, but are not limited to, statements regarding future
financing needs, changes in business strategy, future profitability, and factors
affecting liquidity. A number of important factors could cause the Company's
actual results to differ materially from those indicated by such forward-looking
statements. These forward-looking statements represent the Company's judgment as
of the date of the filing of this Form 10-Q. The Company disclaims any intent or
obligation to update these forward-looking statements.
OVERVIEW
ProsoftTraining.com, formerly Prosoft I-Net Solutions, Inc., was founded in
1995 as a proprietorship that delivered training in vocational and advanced
technical subjects. The Company initially embarked on a strategy to build a
nationwide network of training centers to teach technical skills for the
emerging Internet market. Overhead costs associated with the "bricks and
mortar" network significantly outpaced revenues. In fiscal 1999, the Company
closed the training center network and focused exclusively on selling its
educational programs and instructional service to the technology training
industry.
<PAGE>
RESULTS OF OPERATIONS
Three Months Ended January 31, 2000 Compared to the Three Months Ended
January 31, 1999
Revenue
Services revenue for the three months ended January 31, 2000, was
$2,123,095 compared to $1,169,853 in the three months ended January 31, 1999, an
increase of $953,242 or 81%. This increase represents a continued and growing
acceptance of the wholesale distribution strategy adopted by the Company during
fiscal 1999. Services revenue for the second quarter of fiscal 2000 primarily
came from instructor rental to training companies with which the Company has
strategic partner relationships. Training sites accessible through these
relationships increased from approximately 600 at January 31, 1999, to over
1,200 at January 31, 2000.
Courseware sales increased to $1,427,182 in the three months ended
January 31, 2000, compared to $265,619 in the three months ended January 31,
1999, an increase of $1,161,563 or 437%. Courseware revenue in both periods came
from courseware licensing and textbook sales. This increase is the result of an
increasing customer base in connection with the Prosoft Certified Training
Center (PCTC) programs and strategic partner distribution relationships. The
Company continued to expand the global marketing of its PCTC programs,
developing new strategic relationships for distribution of its courseware in
India and Korea in the quarter ended January 31, 2000.
Certification revenue increased to $451,208 in the three months ended
January 31, 2000, compared to $70,550 in the three months ended January 31,
1999, an increase of $380,658 or 540%. Certification revenue is derived from
certified training centers and certification testing.
Costs of Services
Costs of services for the three months ended January 31, 2000, were
$2,379,796, compared to $2,564,930 for the three months ended January 31, 1999,
a decrease of $185,134 or 7%.
Gross margin for the quarter ended January 31, 2000, was $1.6 million
compared to a loss of $1.1 million for the quarter ended January 31, 1999, an
increase of $2.7 million. The increase in gross margin in the quarter ended
January 31, 2000 was primarily due to higher sales volume and the absence of
classroom equipment and facilities cost, a result of the Company's change in
distribution strategy from a retail to a wholesale model.
Sales and Marketing
Sales and marketing expenses for the three months ended January 31, 2000,
were $321,491, compared to $336,631 for the three months ended January 31, 1999,
a decrease of $15,140 or 4%. These expenses consist of salaries and travel-
related costs of sales and marketing personnel.
General and Administrative
General and administrative expenses for the three months ended January 31,
2000, were $1,130,362, compared to $1,504,969 for the three months ended
January 31, 1999, a decrease of $374,607 or 25%. This decrease is primarily due
to savings from head count reductions and other cost control initiatives.
<PAGE>
General and administrative expenses as a percentage of revenue were 28% for
the three months ended January 31, 2000, down 72 percentage points compared with
100% for the three months ended January 31, 1999.
Net Interest Expense
Net interest expense was $149,370 for the three months ended January 31,
2000 compared to $34,634 for the three months ended January 31, 1999, an
increase of $114,736. Interest expense consists of interest on the Company's
convertible debentures and capital leases, offset by interest earned on cash
balances. The increase in interest expense relates to the issuance of
convertible debt during the second quarter of 1999. During the second quarter of
fiscal 2000, as a result of increases in the price of the Company's stock, the
Company exercised its right to force conversion on all of the then unconverted
debentures, resulting in the elimination of the debenture obligation.
Six Months Ended January 31, 2000 Compared to the Six Months Ended
January 31, 1999
Revenue
Services revenue for the six months ended January 31, 2000, was $4,779,752
compared to $2,865,866 in the six months ended January 31, 1999, an increase of
$1,913,886 or 67%. This increase represents a continued and growing effect of
the wholesale distribution strategy adopted by the Company during fiscal 1999.
Services revenue for the first two quarters of fiscal 2000 primarily came from
instructor rental to training companies with which the Company has strategic
partner relationships.
Courseware sales increased to $2,231,581 in the six months ended January
31, 2000, compared to $578,634 in the six months ended January 31, 1999, an
increase of $1,652,947 or 286%. Courseware revenue in both periods came from
courseware licensing and textbook sales. This increase is the result of an
increasing customer base in connection with the PCTC programs and strategic
partner distribution relationships.
Certification revenue increased to $771,080 in the six months ended January
31, 2000, compared to $70,550 in the six months ended January 31, 1999, an
increase of $700,530. Certification revenue is derived from the PCTC program
and certification testing. The Company began offering the certification testing
during the second quarter of fiscal 1999.
Costs of Services
Costs of services for the six months ended January 31, 2000, were
$4,583,573, compared to $5,191,439 for the six months ended January 31, 1999, a
decrease of $607,866 or 12%.
Gross margin for the six months ended January 31, 2000 was $3.2 million
compared to a loss of $1.7 million for the six months ended January 31, 1999, an
increase of $4.9 million. The increase in gross margin in the six months ended
January 31, 2000 was primarily due to higher sales volume and the absence of
classroom equipment and facilities cost, a result of the Company's change in
distribution strategy from a retail to a wholesale model.
<PAGE>
Sales and Marketing
Sales and marketing expenses for the six months ended January 31, 2000,
were $657,740, compared to $1,063,621 for the six months ended January 31, 1999,
a decrease of $405,881 or 38%. These expenses consist of salaries and travel-
related costs of sales and marketing personnel. This decrease reflects the
elimination of the Company's public class schedule and direct mail and
telemarketing staff associated with the change in distribution method.
General and Administrative
General and administrative expenses for the six months ended January 31,
2000, were $2,141,552, compared to $3,111,909 for the six months ended January
31, 1999, a decrease of $970,357 or 31%. This decrease is primarily due to
savings from head count reductions and other cost control initiatives.
General and administrative expenses as a percentage of revenue were 28% for
the six months ended January 31, 2000, down 61 percentage points compared with
89% for the six months ended January 31, 1999.
Net Interest Expense
Net interest expense was $318,616 for the six months ended January 31,
2000, and $44,913 for the six months ended January 31, 1999, an increase of
$273,703. Interest expense consists of interest on the Company's convertible
debentures and capital leases, offset by interest earned on cash balances. The
increase in interest expense relates to the issuance of convertible debt during
the second quarter of 1999. During the second quarter of fiscal 2000, as a
result of increases in the price of the Company's stock, the Company exercised
its right to force conversion on all of the then unconverted debentures,
resulting in the elimination of the debenture obligation.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations and capital
expenditure requirements primarily through private placements of common stock,
the sale of convertible debentures and, to a lesser extent, from cash generated
from operations.
Cash and cash equivalents increased from $1,152,715 at July 31, 1999, to
$3,820,412 at January 31, 2000. This increase was primarily from the private
placement of stock in November 1999 and warrant and option exercises throughout
the period for net proceeds of $4,128,098, offset by operating cash outflow of
$1,011,816 and payments on capital lease obligations of $413,556. Cash used in
operations for the period consisted primarily of an increase in accounts
receivable and a reduction in accrued restructure costs offset by depreciation
and amortization. The increase in accounts receivable was related to higher
sales volume in the last month of the quarter.
Cash used in operations for the six months ended January 31, 2000, was
$1,011,816 compared to $4,096,442 for the six months ended January 31, 1999, a
decrease of $3,084,626. This decrease was primarily the result of improving
revenues and operating efficiencies.
In November 1998, the Company entered into an Accounts Receivable Line of
Credit agreement with Silicon Valley Bank whereby up to 80% of the accounts
receivable can be advanced up to $3,500,000. As of January 31, 2000, there have
been no borrowings on this line of credit.
Management expects that cash on hand and funds from operations will be
sufficient to meet reasonably foreseeable minimum working capital, capital
expenditure and capital lease requirements for the next 12 months. There is no
assurance that assumed levels of revenues and expenses will prove to be
accurate. The Company may seek additional funding through public or private
<PAGE>
financing or other arrangements prior to such time. If funding is insufficient
at any time in the future, we may be unable to develop or enhance our products
or services, take advantage of business opportunities or respond to competitive
pressures, any of which could have a negative impact on our business, operating
results and financial condition.
YEAR 2000 ISSUE RISKS
Prior to December 31, 1999, the Company developed and implemented a plan to
ensure the ongoing operation of the Company's business through the turn of the
century and beyond. The Company did not experience any material disruptions in
operations resulting from the transition into the Year 2000. The total cost of
the Year 2000 projects was less than $3,000.
ADDITIONAL FACTORS THAT MAY AFFECT RESULTS OF OPERATIONS OR THE COMPANY
The discussions in this Form 10-Q concerning future financing needs,
changes in business strategy, future profitability, and factors affecting
liquidity contain forward-looking statements. Although management believes that
these statements are reasonable in view of the facts available to it, no
assurance can be given that all of these statements will prove to be accurate.
Numerous factors could have a material effect upon whether these projections
could be realized or whether these trends will continue. Among these factors are
those set forth in the following section, as well as those discussed elsewhere
herein. For purposes of this Form 10-Q, "we" and "our" refer to the Company.
POSSIBILITY OF CONTINUING LOSSES
We have a limited operating history, particularly with the new distribution
strategy, which makes it difficult to predict our future operating results. We
have incurred net losses of approximately $52 million from our inception on
December 5, 1995, through January 31, 2000. For the six months ended January 31,
2000, we reported net income of $80,932. Our ability to continue to generate
revenue growth in the future is subject to uncertainty. In order to maintain
profitability, we must continue to increase our revenues. We cannot assure you
that we will be able to continue to increase revenues or achieve profitability.
UNCERTAINTY OF FUTURE CAPITAL REQUIREMENTS
Since our inception, we have been dependent on outside financing to fund
our operations and growth. We have raised approximately $50 million from private
placements and incurred losses of approximately $52 million since our inception
through January 31, 2000. We experienced revenue growth in the last two quarters
of the fiscal 1999 and the first two quarters of fiscal 2000 as a result of the
implementation of the new business strategy. This shift in our business strategy
has resulted in a reduction in overhead expenses and, if we continue to invest
in our products and brands at current levels and revenues continue to grow as in
the last four quarters, we expect to maintain profitability for the balance of
fiscal 2000. We currently expect that cash on hand and funds from operations
will be sufficient to meet our minimum foreseeable working capital, capital
expenditure and capital lease requirements for the next 12 months. However, if
we do not maintain profitability and generate positive cash flow as anticipated,
our ability to continue as a going concern will be jeopardized unless additional
outside financing can be obtained.
UNCERTAINTY OF FUTURE FUNDING
If we do not maintain profitability and generate positive cash flow as
anticipated, we may need additional outside financing. Even if we do maintain
profitability and
<PAGE>
positive cash flow, we may need outside financing to fund further growth of our
business. We do not know at this time when we may need additional funds, and we
cannot be certain that if we do need additional funds in the future we will be
able to obtain them on terms satisfactory to us, if at all. If we are unable to
raise additional funds when necessary, we may have to reduce planned capital
expenditures, scale back our operations or growth, or enter into financing
arrangements on terms which we would not otherwise accept.
INTENSE COMPETITION IN TRAINING MARKET
We face substantial competition in the training market. Competition in the
Internet/intranet training market is intense, rapidly changing and affected by
the rapidly evolving nature of the Internet/intranet industry. A number of other
companies offer products and services similar to ours, and additional new
competitors may emerge in the future. Many of our existing competitors have
substantially greater capital resources, technical expertise, marketing
experience, research and development status, established customers and
facilities than we do. As a result, there is a risk that we will not be able to
successfully compete with existing and future competitors, which would adversely
affect our financial performance.
NEED TO RESPOND TO RAPID TECHNOLOGICAL CHANGES
In our industry, technology advances rapidly and industry standards change
frequently. To remain competitive and achieve profitability, we must continually
enhance our existing products and services and promptly introduce new products,
services, and technologies to meet the changing demands of our customers. Our
failure to respond to technological changes quickly will adversely affect our
financial performance.
VOLATILITY OF STOCK PRICE
Our Common Stock has experienced substantial price volatility and such
volatility may continue to occur in the future. Additionally, the stock market
from time to time experiences significant price and volume fluctuations that are
unrelated to the operating performance of particular companies. These broad
market fluctuations may also adversely affect the market price of our Common
Stock. In addition to such broad market fluctuations, factors such as the
following may have a significant effect on the market price of our Common Stock:
. fluctuations in our operating results
. the perception by others of our ability to obtain any necessary new
financing
. limited trading market for our Common Stock
. announcements of new ventures or products and services by us or our
competitors
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
c) Recent Sales of Unregistered Securities
On November 22, 1999, the Company issued 1,142,857 shares of Common Stock
and warrants to purchase up to an additional 350,000 shares of Common Stock
at $.01
<PAGE>
per share to the Hunt Capital Growth Fund II, L.P., in exchange for
$3,000,000 in cash. The warrants have an exercise price of $.01 per share
and are generally not exercisable until the earlier of (i) November 22,
2002, (ii) the completion by the Company of a firm commitment underwritten
public offering meeting certain criteria, or (iii) the occurrence of a
sale, merger or liquidation of the Company. In addition, 250,000 of the
warrants will only vest if the Company fails to hit certain targeted
earnings numbers over a 3-year period. The Company believes that the
issuance to this institutional investor was exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Act"), in
reliance on the exemption set forth in Rule 506 of Regulation D promulgated
under the Act.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
The Company's Annual Meeting of Stockholders was held on December 13, 1999.
At the Annual Meeting, the following directors were elected to serve on the
Company's Board of Directors for the Class and term indicated and until their
respective successors are elected and qualified:
<TABLE>
<CAPTION>
Class Term Votes For Votes Withheld
----- ---- --------- --------------
<S> <C> <C> <C> <C>
J. William Fuller I 1 year 9,271,480 5,700
Charles McCusker II 2 years 9,271,480 5,700
J.R. Holland, Jr. III 3 years 9,269,695 7,485
Dr. Edward Walsh III 3 years 9,269,480 7,700
</TABLE>
In addition to the election of directors, the appointment of Grant Thornton
LLP as the Company's independent public accountants for the fiscal year ending
July 31, 2000 was ratified with 9,256,955 votes in favor, 5,100 against and
15,125 abstentions. No other matters were voted on at the Annual Meeting.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Financial Data Schedule
b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended January 31,
2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ProsoftTraining.com
Dated: March 14, 2000
/s/ JERRELL M. BAIRD
---------------------------
Jerrell M. Baird
Chief Executive Officer
and Chairman of the Board
(Duly Authorized Officer)
Dated: March 14, 2000
/s/ WILLIAM J. WERONICK
----------------------------
William J. Weronick
Vice President, Finance
(Principal Financial Officer)
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