VCampus Announces Third Quarter Financial Results.Company derives 74% of its revenues from Certification-related business as it transitions away from pure commodity hosting model RESTON, Va. -- VCampus Corporation (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :VCMP VCMP Vice City Multi-Player (gaming, Grand Theft Auto Online Mod) VCMP Voice Call Management Protocol .OB), a provider of professional certifications Professional certification, trade certification, or professional designation, often called simply certification or qualification, is a designation earned by a person to assure that he/she is qualified to perform a job or task. and e-Learning Portal Services, today announced its financial results for the third quarter ended September 30, 2006. Highlights: * The third quarter of 2006 represents the first full quarter of combined operations For the department of the British War Office during World War II, see . In the military, combined operations are operations conducted by forces of two or more allied nations acting together for the accomplishment of a single mission. See also
v. sig·ni·fied, sig·ni·fy·ing, sig·ni·fies v.tr. 1. To denote; mean. 2. To make known, as with a sign or word: signify one's intent. the completion of the company's strategic transition from a pure e-Learning hosting service provider to a provider of professional certification courses and exams using blended components of print and e-Learning. * The company has reclassified its revenue components into three broad areas to better reflect the changes in its business model: 1) "certification-related revenues" combine all of Prosoft's product revenues and VCampus' Select Partner tuition revenues; 2) "learning portal revenues" consist of online hosting and tuition revenues for third parties; and 3) "development and other revenues" are derived from our delivery of professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. . * Gross margins improved from 60% of total revenues in the third quarter of 2005 to 64% in the third quarter of 2006. Gross margin for the second quarter of 2006 was at 65%. * Product development and operations costs as a percent of total revenues declined from 49% in the third quarter of 2005 to 32% in the third quarter of 2006. Management expects these costs as a percentage of total revenues to decline further in the future. Product development and operations costs represented 48% of revenues for the second quarter of 2006. * Non-cash operating costs operating costs npl → gastos mpl operacionales which include depreciation and amortization, impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of goodwill, and stock-based compensation grew from $352,560 in the third quarter of 2005 to $1,061,156 in the third quarter of 2006. Non-cash operating costs were $567,433 for the second quarter of 2006. * The Company raised $2.7 million in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). in September of 2006 from a $3 million convertible debt offering with a fixed conversion price. These funds will help finance the integration of the recently-acquired Prosoft operations with VCampus, fund expansion of sales and marketing of certification products and enhancement of the testing software to help host proctored exams for Prosoft certifications and retire other company debt obligations. * Using number of exams taken as a barometer of market acceptance, CIW's Academic market exams have grown 132% from 1,032 in the 2004-2005 academic year to 2,396 exams in the 2005-2006 academic year. Much of this growth is driven by the five states with which Prosoft has articulation articulation In phonetics, the shaping of the vocal tract (larynx, pharynx, and oral and nasal cavities) by positioning mobile organs (such as the tongue) relative to other parts that may be rigid (such as the hard palate) and thus modifying the airstream to produce speech agreements: Virginia, Tennessee, Arkansas, Michigan, and Louisiana. Other states like Wisconsin and Washington are coming on stream now. We will be focusing on refining our strategy to grow in this market through community colleges. * The total number of CIW (Certified Internet Webmaster) A program of certification from Prosoft Learning Corporation for professionals specializing in Internet technologies. CIW instructor-led training is offered by authorized training organizations and academic institutions. exams delivered grew 23% from 2,054 exams in Q3-05 to 2,533 exams in Q3-06. The growth was driven partly by increased demand from Japan and Egypt. We now have over 44,000 CIW certified See certification. individuals worldwide who collectively have earned over 85,000 certifications. * CTP CTP (cytidine triphosphate): see cytosine. (1) (Computer-To-Plate) The production of printing plates directly from the computer without requiring film as an intermediate step. certification is gaining ground as we have grown 50% in Q3-06 compared to Q3-05 averaging 100 exams a month since June. The pass rate for these exams is 66%. We now have over 3,000 CTP certified professionals worldwide. * Online tuition through our Select Partner agreements grew 25% from Q2-06 to $200,000 Commenting on the business transition, Nat Kannan, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of VCampus, said, "Three years ago we made a commitment to turn around the company from its total reliance for 100% of its revenues on a pure commoditized, e-Learning model to one where the company had an exclusive position in a growing market for valuable professional certifications worldwide. We have finally made this transition with significant help from our Select Partners and the acquisition of Prosoft Learning. This has been a challenging transition and now our goal is to drive revenues and rationalize ra·tion·al·ize v. 1. To make rational. 2. To devise self-satisfying but false or inconsistent reasons for one's behavior, especially as an unconscious defense mechanism through which irrational acts or feelings are made to appear our cost structure to get to breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations shortly and profitability by mid-2007. We currently derive 74% of our revenues from certification-related business through both outright ownership of certifications and through exclusive relationships with world class certifying bodies in the areas of Finance, Information Security and Healthcare. The two certifications we own through the acquisition of Prosoft, CIW and CTP, have established leadership positions in rapidly emerging Web technologies and the convergence of voice, video, and data over the Internet." The company reported total revenues of $2,524,733 in the third quarter of 2006 compared to total revenues of $1,407,668 in the second quarter of 2006 and $1,244,612 in the third quarter of 2005. The operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the three months ended September 30, 2006 was $1,986,261 compared to $1,332,259 and $905,633 for the three months ended June 30, 2006 and September 30, 2005, respectively. With the adoption of the new equity-based compensation standards under SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R effective January 1, 2006, the non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. for stock-based compensation increased to $215,883 in the third quarter of 2006 from $17,500 in the third quarter of 2005. Stock-based compensation for the second quarter of 2006 was $292,472. During the third quarter of 2006, the company recorded a non-cash deemed dividend of $1,491,666 representing the beneficial conversion feature associated with its Series A-1 Preferred Stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. as a result of the automatic adjustment in the conversion price for such shares and the exercise price of the related warrants to $0.30 per share, following the Company's September 2006 private placement. Also during the third quarter, the company recorded a non-cash charge of approximately $165,000, which represents amortization of debt discount and deferred debt offering costs related to the issuance of approximately $3.6 million (September 30, 2006 principal amount of approximately $1.1 million) of convertible promissory notes promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. in March 2004. Corresponding charges in the second quarter of 2006 and third quarter of 2005 were approximately $109,000 and $285,000, respectively. During the third quarter of 2006, the Company recorded a non-cash goodwill impairment charge of $328,317. Including these non-cash charges, VCampus reported a net loss to common stockholders in the third quarter of 2006 of $3,816,235, or $0.38 per share, compared to a net loss to common stockholders of $1,212,427, or $0.13 per share, for the third quarter of 2005 and $2,624,342, or $0.27 per share, in the second quarter of 2006. For the nine months ended September 30, 2006, the company reported revenue of $5,209,603, compared to $3,466,283 for the same period in 2005. The operating losses for the nine months ended September 30, 2006 and 2005 were $5,030,608 and $3,558,089, respectively. Including a non-cash deemed dividend of $2,523,369 and a goodwill impairment charge of $328,317 in the 2006 period, stock-based compensation of $664,992 and $91,994 for the 2006 and 2005 periods, respectively, and approximately $391,000 and $936,000 of non-cash debt discount and deferred debt offering costs amortization for the 2006 and 2005 periods, respectively, VCampus reported a net loss to common stockholders of $8,347,970 ($0.86 per share) for the nine months of 2006, compared to $4,571,204 ($0.50 per share) for the same period in 2005. The company ended the quarter with approximately $2.4 million in cash compared to approximately $2.1 million in cash on June 30, 2006. Conference Call and Webcast Mr. Kannan and Mr. Nelson will hold a conference call to discuss the third quarter financial results. The call is scheduled for 4:30 PM Eastern Time on November 14, 2006. Interested parties may participate by dialing (866) 831-6243. International callers may dial (617) 213-8855. Please enter the passcode 76763944. This call is also being webcast by Thomson/CCBN and can be accessed at the VCampus web site at www.vcampus.com. The webcast is also being distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at www.fulldisclosure.com, Thomson/CCBN's individual investor portal, powered by StreetEvents. Institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. can access the call via Thomson's password-protected event management site, StreetEvents (www.streetevents.com). A replay of the call will be available via telephone from approximately 6:30 PM Eastern Time on November 14, 2006 until 6:30 PM Eastern Time on November 21, 2006. To listen to the replay, participants in the U.S. and Canada should dial (888) 286-8010, and international participants should dial (617) 801-6888. The conference ID for the replay is 68701683. About VCampus([R]) VCampus Corporation (OTCBB:VCMP.OB), a provider of comprehensive, outsourced e-Learning services, helps organizations that offer professional certifications and credentials unlock the value of their traditional branded course content. Through its innovative Select Partner[R] Program, VCampus repurposes value-added training content for online delivery to enhance and support professional development programs. The Select Partner Program provides custom course development, publishing, hosting, e-commerce, reporting, account support and marketing services. With over a decade of e-Learning experience, VCampus has delivered more than 3.1 million courses to more than 1 million desktops/users in professional credentialing and certification organizations, associations, non-profits, corporations, and government agencies. VCampus distributes a courseware library of more than 3,400 web-based courses. VCampus Corporation is headquartered in Reston, VA. For more information, call 800-915-9298, or visit the VCampus Web site at www.vcampus.com. "VCampus" and "Select Partner" are registered trademarks of VCampus Corporation. About Prosoft Learning, a VCampus Company Prosoft offers content and certifications to enable individuals to develop and validate critical Information and Communications Technology Noun 1. communications technology - the activity of designing and constructing and maintaining communication systems engineering, technology - the practical application of science to commerce or industry (ICT (1) (Information and Communications Technology) An umbrella term for the information technology field. See IT. (2) (International Computers and Tabulators) See ICL. 1. (testing) ICT - In Circuit Test. ) workforce skills. Prosoft is active 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 comprehensive 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 CCNT Constellation Communication and Navigation Transceiver (Certified in Convergent Network Technologies) certification, and manages the CTP (Convergence Technologies Professional The Convergence Technologies Professional certification program is designed to ensure that all convergence workers have a proper foundation for using the technologies associated with Voice over IP. ) vendor-neutral certification for telecommunications. To learn more, visit www.ProsoftLearning.com, www.ComputerPREP.com, www.CIWcertified.com and www.CTPcertified.com. "CIW" and "CTP" are registered trademarks of Prosoft. Forward Looking Statements This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the federal Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Statements contained herein that are not statements of historical fact are forward-looking. Without limiting the foregoing, references to future growth or expansion or scheduled product launch dates are forward-looking, and words such as "anticipates," "believes," "could," "estimate," "designed to," "expect," "intend," "may," "might," "should," "will," and "would" and other forms of these words or similar words are intended to identify forward-looking information. You should read statements that contain these words carefully because they discuss our future expectations, contain projections of our future results of operations or of our financial position or state other forward-looking information. There might be events in the future that we are not able to predict accurately or control, and any forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially. These risks and uncertainties include: (1) our history of losses, projection of future losses and our need to raise additional capital; (2) market acceptance of our new and future products; (3) uncertainties regarding the successful implementation of our Select Partner Program or the timely release of products; (4) uncertainties regarding our ability to achieve growth organically or otherwise and to consummate To carry into completion; to fulfill; to accomplish. A Common-Law Marriage is consummated when the parties live in a manner intended to bring about public recognition of their relationship as Husband and Wife. and integrate any acquisitions, including Prosoft; and (5) growing competition. For additional information regarding risk factors that could affect our future results, please refer to the discussions of "Risk Factors" in our Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2005 and other SEC filings. [TABLE OMITTED] [TABLE OMITTED] |
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