Education & Distance Learning Enthusiasts- Prosoft plans merger with Trinity Learning, gains global reach; Trinity Learning will control board

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Prosoft plans merger with Trinity Learning, gains global reach; Trinity Learning will control board

Lifelong Learning Market Report - March 5, 2004

In a survival move, IT courseware and certification firm ProsoftTraining (Phoenix) on Feb. 23 struck a definitive merger agreement with Trinity Learning Corp. (Berkeley, Calif.), a firm focused on acquiring technology-delivered learning providers in a number of market categories and geographies. The agreement, which has been approved by both company's boards, is subject to separate shareholder votes.

The plan calls for a one-for-one stock swap, and would give Trinity Learning control of the board, with six representatives vs. two for Prosoft. The combined entity would be called Trinity Learning, but Prosoft would retain its corporate and product brand identities, including the ComputerPREP courseware sales division and its flagship Certified Internet Webmaster program. Prosoft, which has been slashing expenses to the bone as revenues plunged over the past two years, cut its net loss down to $110,000 for the first quarter ended Oct. 31, compared to $1.4 million in the prior year's period. Revenues were $2.3 million, down 27.3% from $3.7 million in the first quarter of 2002. Management had been seeking a buyer for over a year.

"We want to create a global learning company by acquiring the best operating companies around the world, specializing in technology-enabled learning, training and certification," said Douglas Cole, CEO of Trinity. "With this merger, we believe we have taken a major step toward fulfilling that vision. Prosoft's content and certifications are extremely complementary and synergistic to the products and services offered by our global operating companies."

Trinity's revenues for the first six months of 2004, ended Dec. 31, were $3.2 million, compared to $62,660 for the same period a year earlier, when it was in its infancy and had one operating unit, Competency Based Learning of Australia, a provider of workplace learning for the mining and power industries. CBL was divested in December via a management buyout, through which a lawsuit brought against its principal owner three months earlier was settled.

Together, Prosoft and Trinity would have about $2.5 million in cash; Prosoft's valuation was $15 million as of the market close March 1.

"Trinity Learning is meeting the growing demand for information and communication skills worldwide," said Prosoft president and CEO Robert Gwinn. "I believe this combination will allow Prosoft to build on our success by expanding our sales and marketing reach to international markets."

Prosoft would be just the latest target in a buying spree for Trinity, which was incorporated less than two years ago. Last fall, it closed on four acquisitions:

* TouchVision (Cypress, Calif.), a provider of technology-enabled information and learning systems for healthcare and financial service firm;

* Riverbend Group Holdings, a South African provider of online degrees to corporations and individuals;

* River Murray Training, an Australian firm specializing in workplace learning for horticulture and food production;

* IRCA, another South Africa firm focused on training and certification in risk mitigation, safety, health, environment and quality assurance.

Trinity also struck a definitive merger agreement Feb. 6 with Virtual Learning Partners AS (Oslo, Norway), an e-learning developer, which has yet to close.

Cris Larson, chief financial officer of Trinity, said the company's strategic focus is on building a global brand name through acquiring firms providing government-mandated workforce training. Prosoft has been evolving into a provider of state-sanctioned IT certification training in high schools and community colleges; to a lesser extent, it sells into the corporate market through authorized IT training centers.

In January, NETg (Naperville, Ill.) became Prosoft's e-learning content partner for the Convergence Technologies Professional certification from the Telecommunications Industry Association (Arlington, Va.), which Prosoft launched in June 2003 through a partnership with TIA.

ProsoftTraining: (602) 794-4199; www.prosofttraining.com

Trinity Learning: (510) 540-9300; www.trinitylearning.com

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