VCampus Restructures, Reduces Workforce by 30 Percent

VCampus Corp. is restructuring its company by reducing its workforce by 39 employees and focusing on the high-margin online services it delivers to its base of corporate, government and higher education customers. The restructuring is based on management expectations that next year the Reston, Va.-based company will achieve profitability by the fourth quarter and be EBITDA positive by the third quarter.

The company also expects to achieve online revenues of $10-12 million and total revenues of $12-14 million. VCampus expects to need an additional $2 million in additional financing to reach profitability.

The restructuring VCampus has implemented will mean a de-emphasis on classroom-based training and an increase in the amount of Instructor-lead training the company delivers via its Internet-based service platform. In addition, the company will increasingly rely on third party production houses and courseware providers.

It also eliminates 39 positions, or 30 percent of the company’s personnel. The positions eliminated were concentrated in its Instructor Services Unit (also known as HTR) and its Courseware Production Unit. The Instructor Services and Courseware Production units of VCampus have been merged under company veteran, Michael Anderson, senior vice president of the company’s content group. VCampus will close its classroom training facilities in Rockville, Md., and the District of Columbia.

VCampus expects restructuring charges to be $300,000, which will be taken in the fourth quarter of this year.

Regarding the company’s outlook for next year, President and Chief Executive Officer Daniel Neal said, “With our new management team in place and the restructuring we put into effect today, we are confident we can more than double our online revenues in 2001 and reach profitability by the fourth quarter of 2001. We plan to do this by substantially reducing our net operating burn rate and by putting our complete focus on the expansion of our relationships with our existing online customer base and the acquisition of new online customers.”

Neal added, “Our estimates suggest online revenues in the current quarter will exceed online revenues achieved in Q3 of 2000 by approximately 10 percent, and exceed by 50 percent online revenues of Q4 1999. Our pipeline is strengthening appreciably. Many of our existing customers are renewing their contracts. Usage from our existing base is trending steadily upward. All of these factors make us bullish about our online business. Our confidence is reflected by the fact that management recently led a round of financing from current investors totaling $800,000 to back up its faith in the excellent prospects of VCampus.”

Commenting on increasing concerns of an economic slowdown, Neal said, “We believe that a slowdown in economic growth plays to our strengths, and to the substantial value we deliver to our many customers. Our Internet-based training and development solutions have proven to be much more efficient and far less costly than traditional, classroom-based training. Our hosted, end-to-end courseware creation, delivery and user-management solutions are highly flexible, possess carrier-grade scalability, can generally be implemented in under two weeks, and require limited capital to launch. This means that our customers do not have to wait for hordes of consultants to log a slew of billable hours before they can realize the substantial value of VCampus’ robust Internet-based e-Learning solutions.”

VCampus develops, manages and hosts turnkey, web-based learning solutions for corporations, government agencies, and higher education institutions. VCampus’ e-Learning solutions help clients improve the performance of their distribution channels and suppliers; measure and develop their employees’ knowledge, skills, and abilities; and increase their customers’ satisfaction and loyalty. VCampu

s distributes a courseware library of more than 400 web-based courses and has delivered more than 1.6 million courses to over 360,000 adult learners.

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