UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
FORM 8-K
_____________________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 13, 2017 (January 12, 2017)
__________________________________
Learning Tree International, Inc.
(Exact Name of Registrant as Specified in Charter)
_________________________________
Delaware |
0-27248 |
95-3133814 |
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(State or other jurisdiction |
(Commission File Number) |
(IRS Employer |
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of Incorporation) |
Identification Number) |
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13650 Dulles Technology Drive Suite 400 |
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Herndon, Virginia 20171 |
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(Address of principal executive offices) |
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(703) 709-9119 |
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(Registrant’s Telephone Number) |
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On January 12, 2017, Learning Tree International, Inc. (the “Company”) entered into a Financing and Security Agreement (the “Financing Agreement”) with Action Capital Corporation (“Action Capital”) that provides the Company with access to borrow through advances of funds of up to a maximum aggregate principal amount of $3.0 million (the “Maximum Amount”). Pursuant to the Financing Agreement, the amount advanced to the Company will be based upon Action Capital’s agreed advance rate of up to 85% of the net amount of certain customer accounts receivable of the Company that are approved by Action Capital and assigned to it as collateral (the “Acceptable Accounts”). The Financing Agreement shall continue to be in full force and effect until such time as either party terminates the Financing Agreement by providing written notice. Following termination the Company will remain liable for all outstanding indebtedness owed to Action Capital under the Financing Agreement.
Under the Financing Agreement, the Company is required to pay Action Capital (i) interest on the outstanding advances at a rate equal to the prime rate of Wells Fargo Bank, N.A. in effect on the last business day of the prior month plus 1.75%, (ii) a monthly fee equal to 0.70% of the outstanding advances as of the last day of the month, and (iii) a fee of 0.25% of the Maximum Amount, which is payable to Action Capital on the date the Financing Agreement is signed and every 90 days thereafter until the Financing Agreement is terminated and all amounts advanced and other obligations to Action Capital have been fully paid and satisfied. The Company’s obligations under the Financing Agreement are secured by Acceptable Accounts, accounts receivable due from U.S. based account debtors and any contract rights, chattel paper, documents, instruments, general intangibles (excluding general intangibles consisting of intellectual property or intellectual property rights), reserves, reserve accounts, deposit and demand accounts, rebates, and books and records pertaining to the foregoing that are assigned to Action Capital and all proceeds of the foregoing property.
Pursuant to the terms of the Financing Agreement, it is considered an event of default if the Company (i) breaches any representation or warranty, (ii) fails to pay indebtedness to Action Capital when due or (iii) otherwise fails to perform any other covenant under the Financing Agreement or any other agreement between the parties, provided that in each case of (i), (ii) and (iii) that such event is not cured within 10 business days of notice being provided by Action Capital or discovery of such failure by the Company. If any such events of default occur, then Action Capital may take specified actions as set forth in the Financing Agreement, including (w) declaring any indebtedness, including outstanding Acceptable Accounts, immediately due and payable, (x) requiring any customers with Acceptable Accounts to make payments directly to Action Capital, and (y) exercising its power of attorney from the Company to take actions in the Company’s stead with respect to any Acceptable Accounts.
The foregoing brief description of the Financing Agreement does not purport to be complete and is qualified in its entirety by the Financing Agreement itself, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Item 2.02 Results of Operations and Financial Condition.
On January 13, 2017, the Company issued a press release setting forth its results of operations for its fourth quarter and full fiscal year 2016, which ended September 30, 2016. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information furnished under Item 2.02 and Item 9.01 of this Current Report on Form 8-K, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement or other filings of the Company under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.
Item 2. 03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 above with respect to the Financing Agreement is incorporated herein in its entirety.
Item 9. 01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No.
10.1 Financing and Security Agreement between Learning Tree International, Inc. and Action Capital Corporation, dated January 12, 2017.
99.1 Press release, dated January 13, 2017.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: January 13, 2017 |
LEARNING TREE INTERNATIONAL, INC. |
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By: | /s/ David Asai | |
David Asai Chief Financial Officer |
Exhibit 10.1
FINANCING AND SECURITY AGREEMENT
This Financing and Security Agreement is dated for purposes of reference January 12, 2017 (the "Closing Date"), is by and between the undersigned, Learning Tree International, Inc whose address is 13650 Dulles Technology Dr Ste 400 Herndon, VA 20171, and Learning Tree International USA, Inc. whose address is 13650 Dulles Technology Dr. Ste 400 Herndon, VA 20171 (hereinafter each referred to as “CLIENT” and collectively referred to as "CLIENT") and ACTION CAPITAL CORPORATION (hereinafter referred to as "ACTION"), which has its executive office and principal place of business at 230 Peachtree St. NW, Suite 1910, Atlanta, GA 30303. CLIENT and ACTION agree as follows:
I. PURPOSE OF AGREEMENT
CLIENT desires to obtain financing by transferring and assigning to ACTION acceptable accounts receivable. The purpose of this financing is commercial in nature, and not for household, family, and/or personal use. In the event CLIENT and ACTION are currently operating under an earlier agreement, this agreement is and shall be a modification and continuation of such earlier agreement and in the event of any inconsistencies or contradictions within the agreements, CLIENT and ACTION agree that the terms of this agreement shall control.
II. DEFINITIONS
2.1 |
"ACCOUNT" means both present and future accounts, contract rights and other forms of obligations for the payment of money arising out of the sale by CLIENT’s United States operation of goods or the performance of services. |
2.2 "ACCEPTABLE ACCOUNT" means an account offered by CLIENT to ACTION for transfer and assignment which account ACTION has reviewed and has, in its sole discretion, approved for purchase in whole or in part, and which account conforms to the warranties and terms set forth herein and in the Agreement for the Assignment of Invoices form accompanying each offer to transfer and assign.
2.3 "AFFILIATE" means any entity that CLIENT or any officer, shareholder, director or other principal of CLIENT or any spouse or other familial relative of such person shall have the power to direct the management and policies of such entity, directly or indirectly, whether through ownership of voting securities or otherwise.
2.4 "CUSTOMER" means CLIENT's customer or the account debtor.
2.5 |
"INVOICE" means the document evidencing any ACCOUNT referenced in and made subject to any Agreement for the Assignment thereof entered into between the CLIENT and ACTION. |
III. WARRANTIES AND COVENANTS BY CLIENT
3.1 |
CLIENT's business is solvent, and CLIENT is presently paying its debts. CLIENT has never filed for bankruptcy under federal or state law or had an involuntary bankruptcy petition filed against it. CLIENT is presently and shall continue to be compliant with all material required tax payments and payment agreements and shall continue to make timely payment of all material required taxes (other than any such taxes that are being contested in good faith by appropriate proceedings and for which appropriate reserves have been established in accordance with generally accepted accounting principles). |
3.2 |
Each ACCOUNT offered for transfer and assignment to ACTION hereunder is and shall be, as of the time of such offer, (i) a bona fide and existing obligation of CLIENT's CUSTOMER for the payment of money arising out of the sale by CLIENT of goods or the performance by CLIENT of services, which is (ii) owed to CLIENT, and is, (iii) to the best of CLIENT's knowledge, free from any liens, claims, disputes, off-sets or equities of third parties (other than disputes and adjustments occurring in the ordinary course of business or otherwise disclosed to all ACTION in written reports concerning the ACCOUNTs). CLIENT is the lawful owner of and has good and undisputed title to each ACCOUNT constituting an ACCEPTABLE ACCOUNT, and that no such ACCOUNT (i) represents a consigned or guaranteed sale, or (ii) is or shall be due from an AFFILIATE. |
3.3 |
CLIENT has not transferred, pledged or granted a security interest in CLIENT's ACCOUNTs to any other party and CLIENT will not transfer, pledge or grant a security interest to any other party in said ACCOUNTs for the term of this Agreement and for as long as CLIENT is indebted to ACTION hereunder. Additionally, CLIENT will not transfer, assign or grant a security interest in CLIENT's ACCOUNTs except to ACTION for the period of this Agreement, and/or for as long as any indebtedness whatsoever remains owing by CLIENT to ACTION. |
3.4 |
FINANCIAL INFORMATION: CLIENT will furnish ACTION financial statements on a monthly basis within thirty (30) days of each month and annual financial statements within one hundred twenty (120) days after the close of CLIENT's fiscal year end and will furnish ACTION, upon its request, with satisfactory proof of payment and/or compliance with all Federal, State and/or local tax requirements (other than any such taxes that are being contested in good faith by appropriate proceedings and for which appropriate reserves have been established in accordance with generally accepted accounting principles). ACTION will keep any information it receives with respect to the financial or other records of CLIENT or CLIENT's CUSTOMERS strictly confidential. This covenant of confidentially survives this Agreement. |
3.5 |
All financial records, statements, books or other documents shown to ACTION by CLIENT at any time, either before or after the signing of this Agreement, are and will be true and accurate in all material respects, to the best of CLIENT's knowledge. |
3.6 |
ACTION or any person designated by ACTION shall have the right, at any time during normal working hours and upon not less than two business days prior notice, to inspect, audit, check and make copies or extracts from CLIENT's books, records, journals, orders, receipts, and other correspondence and other data relating to CLIENT's business and any other transaction between ACTION and CLIENT without hindrance or delay. ACTION will keep any information it obtains as a result of any such inspection strictly confidential in accordance with Section 3.4 above. |
3.7 |
CLIENT will not, under any circumstances or in any manner whatsoever, interfere with any of ACTION's rights under this Agreement. |
3.8 |
CLIENT will promptly notify ACTION in writing of any change in the location of CLIENT's principal place of business, name, identity, legal entity, or corporate structure. |
3.9 |
CLIENT has full power and authority to execute, deliver and perform this Agreement. |
IV. FURTHER PROMISES
4.1 |
SECURITY INTEREST/COLLATERAL: CLIENT grants to ACTION, as collateral for the repayment of any and all obligations and liabilities whatsoever of CLIENT to ACTION, a security interest, under the Uniform Commercial Code, in the following described property (hereinafter collectively called "Collateral"): All presently existing or hereafter arising, now owned or hereafter acquired accounts, accounts receivable due from U.S. based account debtors, and all contract rights, chattel paper, documents, instruments, general intangibles (excluding general intangibles consisting of intellectual property or intellectual property rights), reserves, reserve accounts, deposit and demand accounts, rebates, and books and records (including without limitation, customer lists, computer programs, print outs, and other computer material and records) pertaining to the foregoing and all proceeds of the foregoing property. CLIENT agrees to not assign or grant a security interest in the collateral described herein to any other person. |
4.2 |
NOTIFICATION: ACTION will have the right to notify any CUSTOMER to make payments directly to ACTION using the form of notification attached hereto as Exhibit B. |
4.3 |
ASSIGNMENT: CLIENT shall from time to time at CLIENT's option, transfer and assign ACCEPTABLE ACCOUNTs to ACTION, to be identified on a form known as ACTION's Agreement for the Assignment of Invoices together with an exact copy of the original invoice and all supporting documents appropriate to CLIENT's business and to the extent required an electronic file of the invoice information. |
4.4 |
INTEREST AND FEES: ACTION agrees to provide financing to CLIENT for the fees as indicated below: |
(a) |
with respect to advances outstanding hereunder, interest at a per annum rate equal to the Prime Rate of Wells Fargo Bank, N.A. (as such rate is announced from time to time, with changes in such rate to be effected on the first day of each month based on the Prime Rate in effect on the last business day of the prior month) plus one and three quarters percent (1.75%) plus a monthly fee equal to seven tenths of one percent (0.70%), both to be billed monthly in arrears with payment due on the billing date. |
(b) |
with respect to the Maximum Amount of $3,000,000, a fee of 0.25% due on the Closing Date and every 90 days thereafter until the time at which this Agreement has been terminated and any and all obligations of CLIENT due to ACTION have been fully paid and satisfied. |
(c) |
all other out of pocket costs and reasonable expenses incurred by ACTION; notwithstanding the foregoing, ACTION as of the date of this Agreement does not anticipate incurring any out-of-pocket costs except for any expenses it incurs relating to searches of public records in the State related to public filings and costs associated with recordation of UCC-1 filings and costs incurred by ACTION for bank wire transfers if requested by CLIENT. |
4.5 |
ADVANCE RATE: CLIENT may obtain from ACTION, subject to ACTION's sole discretion, advances of up to eighty five percent (85%) of the net amount of ACCEPTABLE ACCOUNTs transferred and assigned to ACTION hereunder. Any amounts not advanced by ACTION hereunder may be held by ACTION and applied against charge-backs or any obligation of CLIENT to ACTION, known or anticipated, and shall not be due and payable to CLIENT until any and all obligations of CLIENT to ACTION are fully paid and/or satisfied. . |
4.6 RECOURSE: ACTION shall have full recourse against CLIENT when an ACCOUNT is not paid by CUSTOMER when due, including without limitation, the right to charge-back any such ACCOUNT, if not paid within 90 days of the date of purchase.
4.7 DISPUTED ACCOUNTS: CLIENT will promptly notify ACTION of any ACCOUNT that is subject to a dispute between CUSTOMER and CLIENT of any kind whatsoever.
4.8 HOLD IN TRUST: CLIENT will hold in trust and safekeeping, as the property of ACTION, and immediately turn over to ACTION the identical check or other form of payment received by CLIENT, whenever any payment on any ACCOUNT comes into CLIENT's possession; any failure by CLIENT in this regard constitutes an EVENT OF DEFAULT under this Agreement (pursuant to SECTION V hereinbelow).
4.9 |
RESPONSIBILITY FOR TAXES: All taxes and governmental charges with respect to goods or services represented by ACCOUNTs purchased by ACTION shall be the obligation and responsibility of CLIENT. CLIENT has no obligation for ACTION's income or property taxes or any other taxes with respect to ACTION's business. |
4.10 |
NOTICE OF LEVY: CLIENT will promptly notify ACTION of any material attachment, tax assessment or other legal process levied against CLIENT or any of CLIENT's CUSTOMERS. |
4.11 |
LEGAL FEES: Except as is prohibited by law, CLIENT shall pay to ACTION all reasonable costs and expenses, including without limitation attorney's fees and expenses, and costs incurred by ACTION in the prosecution or enforcement of any of ACTION's rights, claims or courses of action which arise out of, relate to or pertain to this Agreement. |
4.12 |
POWER OF ATTORNEY: CLIENT hereby names, appoints, and constitutes ACTION and its designees as CLIENT's true and lawful attorney-in-fact, and does hereby authorize, empower and direct ACTION or its designee, for and in the name and instead of CLIENT, either in CLIENT's name or ACTION's name to: |
(a) |
compromise, adjust or settle any claim of a customer with respect to an ACCOUNT; |
(b) |
in the EVENT OF DEFAULT, demand, sue for, collect and give release for any and all monies due or to become due on ACCOUNTs; |
(c) |
make any and all corrections or completions on any of the invoices or other documents constituting the ACCOUNTS; |
(d) |
endorse CLIENT's name an any checks, drafts, instruments or other evidences of payment with respect to any ACCOUNT or to otherwise collect the same; |
(e) |
receive, open and dispose of all mail addressed to CLIENT with respect to any ACCOUNT; and |
(f) |
do all other acts and things necessary to carry out the purpose and intent of this agreement. All acts of ACTION as attorney-in-fact are hereby ratified and approved and ACTION shall not be liable for any errors of commission or omission nor for any error of or mistake of law or fact excepting acts constituting gross negligence or willful misconduct. This power of attorneys in coupled with an interest and is irrevocable for so long as CLIENT is indebted to ACTION; provided it shall be exercised only upon an EVENT OF DEFAULT, only as it relates to the actions and rights as detailed in this subsection 4.12 (b), 4.12 (f), and the serving of written notice to CLIENT of ACTION's invoking of the prescribed remedies for an EVENT OF DEFAULT. The authority granted ACTION shall remain in full force and effect until all indebtedness of CLIENT to ACTION is paid in full. |
4.13 |
ACH AUTHORIZATION: In order to satisfy any of the obligations to ACTION under this Agreement, CLIENT hereby authorizes ACTION to initiate electronic debit or credit entries through the Automated Clearing House system to any bank account maintained by CLIENT wherever located. |
V. |
DEFAULT |
5.1 |
EVENTS OF DEFAULT: Any one or more of the following shall be a default hereunder: |
(a) |
CLIENT's (i) breach of any representation or warranty under this Agreement, (ii) failure to pay any indebtedness to ACTION when due, or (iii) failure to perform any other covenant under this Agreement or under any other agreements between CLIENT and ACTION, and any such failure is not cured within ten (10) business days of the earlier of (x) notice of such failure by ACTION or (y) discovery of such failure by CLIENT, or; |
(b) |
the appointment of any receiver or trustee of all or a substantial portion of the assets of CLIENT; insolvency or inability to pay debts as they mature; a general assignment for the benefit of creditors; the voluntary or involuntary filing of a petition for relief under any bankruptcy or similar law; |
(c) |
issuance of any levies of attachment, executions, tax assessments or similar process against the Collateral; |
(d) |
CLIENT's delivery to ACTION of information that is knowingly false or incorrect in any material respect. |
5.2 |
REMEDIES AFTER DEFAULT: In the event of any default, and upon serving written notice to CLIENT of such default and ACTION's intent to avail itself of its remedies hereunder, ACTION may do any one or more of the following: |
(a) |
declare any indebtedness including outstanding ACCOUNTS purchased by ACTION, immediately due and payable; |
(b) |
notify any CUSTOMER of CLIENT to make payments directly to ACTION with respect to any and all ACCOUNTS of CLIENT; |
(c) |
require CLIENT to send copies of records and files pertaining to ACCOUNTs to ACTION and enter the premises of CLIENT and make copies of the COLLATERAL and the records pertaining to the ACCOUNTs and any other COLLATERAL; |
(d) |
hold CLIENT liable for any deficiency. |
(e) |
Invoke its authority under Sections 4.12 (a), (b), (c) and (f) above and exercise its power of attorney in CLIENT's stead to take any action set forth therein ACTION deems necessary. |
VI. MISCELLANEOUS
6.1 |
MAXIMUM AMOUNT: The outstanding amount of CLIENT's account with ACTION (that is, at any time, the unpaid and owing principal amount of advances made by ACTION to CLIENT) shall not exceed $3,000,000. |
6.2 |
TERMINATION: This Agreement shall continue in full force and effect until terminated upon written notice of such termination by either party. |
6.3 |
POST-TERMINATION: After termination CLIENT shall be liable to ACTION for the full and prompt payment of the full amount of all outstanding indebtedness owing by CLIENT to ACTION under this Agreement. ACTION shall continue to have a security interest in the COLLATERAL of CLIENT until all outstanding indebtedness of CLIENT to ACTION is paid in full. |
6.4 |
APPLICABLE LAW: This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia and shall be binding upon the successors, assigns and representatives of the parties hereto. CLIENT and ACTION hereby agree that any suit, action, or proceeding arising out the subject matter hereof, or the interpretation, performance or breach of this Agreement shall be instituted in the Superior Court of the State of Georgia located in Atlanta, Fulton County, Georgia (hereinafter, "Fulton County Superior Court"). CLIENT and ACTION hereby agree that Fulton County Superior Court is convenient to each party hereto and CLIENT and ACTION irrevocably submit to such jurisdiction, irrevocably agree to be bound by any judgment rendered thereby in connection with this Agreement, and forever waive any and all objections to jurisdiction or venue that each party may have under the laws of the State of Georgia or otherwise in those courts in any such suit, action or proceeding. If any such proceeding is initiated in any other jurisdiction, CLIENT hereby waives any right to oppose any motion or application made by ACTION as a consequence of such proceeding having been commenced in a jurisdiction other than Fulton County Superior Court |
6.5 |
ENTIRE AGREEMENT-AMENDMENT: This document contains the entire Agreement between the parties as of the date specified below. This Agreement may be modified only by a written instrument executed by the parties hereto. |
[Signature page follows]
Executed and accepted this 12th day of January, 2017.
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CLIENT: Learning Tree International, Inc. |
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By: /s/ Richard Spires |
Name: Richard Spires | |
Title: Chief Executive Officer |
Attested By:
/ s/ Chris Rettelle
Corporate Secretary
(Affix Corporate Seal)
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ACTION: Action Capital Corporation |
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By: /s/ Patrick A. Thom |
Name: Patrick A. Thom | |
Title: President |
Exhibit 99.1
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FOR IMMEDIATE RELEASE
Contact: David Asai
Chief Financial Officer
Tel: 703/925-6337
Email: david_asai@learningtree.com
LEARNING TREE INTERNATIONAL ANNOUNCES
FOURTH QUARTER and FISCAL YEAR 2016 RESULTS
HERNDON, VA., January 13, 2017 – Learning Tree International, Inc. (OTCQX: LTRE) announced today its revenues and results of operations for its fourth quarter and full fiscal year 2016, which ended September 30, 2016.
In its fourth quarter of fiscal year 2016, Learning Tree reported revenues of $21.7 million, loss from continuing operations before income taxes of $2.0 million, and a net loss of $2.2 million, or $(0.17) per share. The Company recorded a restructuring charge of $1.9 million in the fourth quarter of fiscal year 2016 related to one of its leased facilities. Excluding the restructuring charge, the loss from continuing operations before income taxes would have been $0.1 million. These results compare with revenues of $25.6 million, income from continuing operations before income taxes of $0.8 million, and net income of $0.7 million, or $0.06 per share, in Learning Tree’s fourth quarter of fiscal year 2015.
For the full fiscal year 2016, Learning Tree reported revenues of $81.6 million, loss from continuing operations before income taxes of $12.3 million, and a net loss of $12.7 million, or $(0.96) per share. These results compare with revenues of $94.9 million, loss from continuing operations before income taxes of $9.3 million, and a net loss of $12.6 million, or $(0.95) per share, for the full fiscal year 2015. The results for the full fiscal year 2016 include the $1.9 million restructuring charge described above, while the results for the full fiscal year 2015 include a $2.8 million loss from discontinued operation from the sale of our subsidiary in France.
To address the decline in our revenue, we have been executing upon new strategies to increase the number of attendees in our public courses and expand our overall customer base. We have also been working to reduce our operating expenses and have accelerated our previously announced comprehensive cost reduction program with the goal of significantly reducing our fiscal year 2017 overall expenses. Our liquidity and working capital needs have historically been funded through our cash and cash equivalents. At September 30, 2016, our capital resources consisted of cash and cash equivalents of $8.5 million. To provide additional resources to improve the Company’s liquidity, on January 12, 2017, the Company entered into a financing and security agreement with Action Capital Corporation that provides the Company with access to borrow through advances of funds up to a maximum aggregate principal amount of $3.0 million. While we have and continue to take steps to stabilize revenues and decrease our operating costs and entered into the financing transaction with Action Capital, unless we are able to further improve our liquidity in the future, there is substantial doubt about the Company’s ability to continue as a going concern. Our registered independent public accounting firm’s report on our audited financial statements for the year ended September 30, 2016 that are included as part of our annual report on Form 10-K that was filed with the Securities and Exchange Commission contains an explanatory paragraph related to the Company’s ability to continue as a going concern. The Company is continuing to work to further improve its liquidity position and is evaluating additional sources of capital and financing. However, there is no assurance that additional capital and/or financing will be available to the Company, and even if available, whether it will be on terms acceptable to us or in amounts required.
Conference Call and Webcast
Learning Tree will host an investor conference call to discuss its results for the fourth quarter and full fiscal year 2016 and future outlook at 4:30 p.m. ET, January 18, 2017. To participate, call (888) 419-5570 or +1 (617) 896-9871 (International Callers) and enter pass code: 187 951 57 at least five minutes before 4:30pm (ET) / 1:30pm (PT) on Wednesday, January 18, 2017; or, go to Learning Tree’s Investor website at www.learningtree.com/investor to gain access and listen to the live webcast. A webcast replay of the investor conference call will be available for 90 days via the Internet through the Investor Relations section of Learning Tree’s website at www.learningtree.com/investor . We have also filed our Annual Report on Form 10-K for our fiscal year 2016 with the Securities and Exchange Commission (“SEC”) which is available at the SEC's Internet site ( http://www.sec.gov ).
About Learning Tree International, Inc.
Established in 1974, Learning Tree International is a leading provider of IT training and management training to business and government organizations worldwide. In addition, Learning Tree provides IT Workforce Optimization Solutions – a modern approach that improves the adoption of skills and accelerates the implementation of technical and business processes required to improve IT service delivery.
To support both business and government organizations in their workforce optimization efforts, Learning Tree develops structured learning paths prior to training, and provides implementation services that extend the value of training long after a training event has concluded. These custom services include: needs assessments, skill gaps analyses, blended learning solutions, and project acceleration/process implementation workshops.
Over 2.4 million IT professionals have enhanced their knowledge, skills and abilities from Learning Tree's hands-on instructor-led training by accessing a broad, proprietary library of courses on topics including: web development, cyber security, project management, Agile and best practice adoption, operating systems, database administration and programming, networking, cloud computing, big data, software design and development, business intelligence, activity-based intelligence, leadership, management and business skills, and more. Courses are offered at Learning Tree Education Centers around the world, on-site at client facilities, and live, online using AnyWare™ — Learning Tree's superior, web-based attendance platform.
To learn more, call 1-888-THE-TREE (843-8733) or visit LearningTree.com
Connect with us on Facebook , LinkedIn , Twitter , Google+ or YouTube
Cautionary Statement Regarding Forward Looking Statements
The statements contained herein that are not historical facts are forward-looking statements based on management's current expectations and beliefs concerning future developments and their potential effects on Learning Tree . Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of Learning Tree. There can be no assurance that future developments affecting Learning Tree will be the same as those anticipated. Learning Tree cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. Investors should not put undue reliance on these forward-looking statements, since they are based on key assumptions about future risks and uncertainties. Some of these risks and uncertainties that could affect Learning Tree and its business include, but are not limited to the following: our ability to continue as a going concern; our ability to obtain additional liquidity in amounts and on terms acceptable to the Company; our ability to reverse our trend of declining year over year revenues, and maintain liquidity; our ability to successfully implement our new strategies to increase revenue and to achieve our cost reduction goals; competition; international operations, including currency fluctuations; attracting and retaining qualified personnel; intellectual property, including having to defend potential infringement claims; implementation of partnerships with third party providers of courses and or course material; efficient delivery and scheduling of Learning Tree's courses; technology development and new technology introduction; the timely development, introduction, and customer acceptance of our courses and other products; a majority of our outstanding common stock is beneficially owned by our chairman and his spouse; ; risks associated with cyber security; changing economic and market conditions; and adverse weather conditions, strikes, acts of war or terrorism and other external events. Learning Tree is not undertaking any obligation to update forward-looking statements contained herein to reflect future events, developments or changed circumstances.
In order to help the reader assess the factors and risks in Learning Tree's business that could cause actual results to differ materially from those expressed in the forward looking statements, Learning Tree discusses in its 2016 Annual Report on Form 10-K (“Form 10-K”) , those risks in Item 1A, “Risk Factors”. Please read the Form 10-K, including the Risk Factors included therein, which is filed with the SEC and available at the SEC's Internet site ( http://www.sec.gov ).
# # #
Release Summary: Learning Tree International announced today its revenues and results of operations for its fourth quarter and full fiscal year 2016, which ended September 30, 2016.
Table 1
LEARNING TREE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(all amounts in thousands, except per share data)
Three Months Ended |
Fiscal Year Ended | |||||||||||||||
September 30, | October 2, | September 30, | October 2, | |||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(unaudited) |
(unaudited) |
|||||||||||||||
Revenues |
$ | 21,695 | $ | 25,629 | $ | 81,587 | $ | 94,884 | ||||||||
Cost of revenues |
12,418 | 13,760 | 50,163 | 55,809 | ||||||||||||
Gross profit |
9,277 | 11,869 | 31,424 | 39,075 | ||||||||||||
Operating expenses: |
||||||||||||||||
Course development |
1,138 | 1,751 | 5,128 | 8,146 | ||||||||||||
Sales and marketing |
3,747 | 4,592 | 17,966 | 21,591 | ||||||||||||
General and administrative |
4,494 | 4,754 | 18,902 | 19,029 | ||||||||||||
Restructuring charge |
1,940 | - | 1,940 | - | ||||||||||||
Total operating expenses |
11,319 | 11,097 | 43,936 | 48,766 | ||||||||||||
(Loss) income from operations |
(2,042 | ) | 772 | (12,512 | ) | (9,691 | ) | |||||||||
Other income (expense), net |
53 | 4 | 238 | 350 | ||||||||||||
(Loss) income from continuing operations before income taxes |
(1,989 | ) | 776 | (12,274 | ) | (9,341 | ) | |||||||||
Provision for income tax |
227 | 35 | 422 | 467 | ||||||||||||
(Loss) income from continuing operations |
(2,216 | ) | 741 | (12,696 | ) | (9,808 | ) | |||||||||
Loss from discontinued operations, net of tax |
- | - | - | (264 | ) | |||||||||||
Loss on disposal of discontinued segment |
- | - | - | (2,501 | ) | |||||||||||
Loss from discontinued operations, net of tax |
- | - | - | (2,765 | ) | |||||||||||
Net (loss) income |
$ | (2,216 | ) | $ | 741 | $ | (12,696 | ) | $ | (12,573 | ) | |||||
(Loss) income per share basic and diluted: |
||||||||||||||||
Continuing operations |
$ | (0.17 | ) | $ | 0.06 | $ | (0.96 | ) | $ | (0.74 | ) | |||||
Discontinued operations |
- | - | - | (0.21 | ) | |||||||||||
Basic and diluted (loss) income per share |
$ | (0.17 | ) | $ | 0.06 | $ | (0.96 | ) | $ | (0.95 | ) |
Table 2
LEARNING TREE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(all amounts in thousands)
September 30, |
October 2, |
|||||||
2016 |
2015 |
|||||||
Cash and cash equivalents |
$ | 8,540 | $ | 17,936 | ||||
Trade accounts receivable, net |
9,538 | 10,475 | ||||||
Prepaid expenses and other |
3,548 | 5,018 | ||||||
Total current assets |
21,626 | 33,429 | ||||||
Depreciable assets, net and other |
9,981 | 10,492 | ||||||
Total assets |
$ | 31,607 | $ | 43,921 | ||||
Accounts payable and accrued liabilities |
$ | 11,149 | $ | 12,409 | ||||
Deferred revenues |
21,017 | 22,909 | ||||||
Total current liabilities |
32,166 | 35,318 | ||||||
Other long term liabilities |
9,230 | 5,556 | ||||||
Total liabilities |
41,396 | 40,874 | ||||||
Stockholders' (deficit) equity |
(9,789 | ) | 3,047 | |||||
Total liabilities and stockholders' (deficit)equity |
$ | 31,607 | $ | 43,921 |