SkillSoft records US$15.4m net loss

21 Jan 2003

US-based e-learning technology firm SkillSoft, which merged with a subsidiary of Dublin-based SmartForce in September of last year, has recorded a third-quarter net loss of US$15.4m (€14.4m).

The company recorded a total revenue of US$30.4m for the same period – an increase from US$11.2m for the fiscal year 2002 third-quarter.

The third-quarter loss represents an increase of US$11.6m on the net loss of US$3.8m for the same period a year ago.

There was a delay in publishing the third-quarter results because the company was required to restate some historical financial statements with regard to SmartForce for 1999, 2000 and 2001, ie the years prior to the merger.

SkillSoft says it is continuing to devote significant resources to determining the process of restating these financial results, but said that significant additional time and effort would be required to complete this process.

Last December the company was warned that it would be delisted from the Nasdaq for its failure to file with the Securities and Exchange Commission its quarterly report for the quarter ended 31 October 2002 within the stipulated time period.

A number of accounting irregularities necessitated the restatement of the results – SkillSoft is facing at least three legal suits for damages following the disclosure that SmartForce improperly booked revenues over the three years in question.

Among the complaints include allegations that SmartForce improperly recognised US$3.5m revenue under a reseller agreement resulting in the recording of revenue before it was actually received from the resellers; and that it recognised revenue for software sales upon shipment, even though the payment schedules for those contracts extended over several years and that it improperly accounted for bad debt.

The company predicts that for the fourth-quarter of fiscal year 2003 ending 31 January revenue is expected to be in the region of US$39.5m to US$40m.

By Suzanne Byrne