Workstream Inc. Revises Fiscal 2008 First Quarter Results to Account for the Treatment of Recently Issued Warrants

    Revision reflects revised interpretation of recent accounting guidelines
as it relates to warrants issued in connection with the recent financing
during the first quarter

    BURLINGAME, CALIF., October 15 /CNW/ - On October 3, 2007, Workstream
Inc. (NASDAQ:   WSTM), a leading provider of on-demand compensation, performance
and talent management solutions, issued a press release announcing its fiscal
2008 first quarter results for the period ended August 31, 2007. In connection
with Workstream's anticipated filing today of its Quarterly Report on Form
10-Q for the first quarter of fiscal 2008, Workstream has revised the
financial results contained in the press release issued on October 3, 2007 to
reflect our revised interpretation of recent accounting guidelines as it
relates to warrants issued in connection with the recent financing during the
first quarter. The revisions are due to an updated calculation of the fair
market value of the special warrants based on the company's stock price which
created an increase in interest income of approximately $1.5 million for the
first quarter. The impact resulting from these changes is an increase in
interest income for the quarter on the statement of operations as well as a
reduction of the common stock warrant liability and additional paid-in capital
on the balance sheet. There is no cash effect or impact on business operations
due to these revisions. The revised financial results are included below.


    EBITDA and EBITDA per share are non-GAAP financial measures within the
meaning of Regulation G promulgated by the Securities and Exchange Commission.
EBITDA is commonly defined as earnings before interest, taxes, depreciation
and amortization. We believe that EBITDA provides useful information to
investors as it excludes transactions not related to the core cash operating
business activities. We believe that excluding these transactions allows
investors to meaningfully trend and analyze the performance of our core cash
operations. All companies do not calculate EBITDA in the same manner, and
EBITDA as presented by Workstream may not be comparable to EBITDA presented by
other companies. Workstream defines EBITDA as earnings or loss before
interest, taxes, depreciation amortization, non-cash equity compensation and
non-recurring goodwill impairment, if applicable. Following the financial
statements attached is a reconciliation of net loss to EBITDA loss and EBITDA
per share that should be read in conjunction with the financial statements.

    About Workstream Inc.

    Workstream provides on-demand compensation, performance and talent
management solutions and services that help companies manage the entire
employee lifecycle - from recruitment to retirement. Workstream's TalentCenter
provides a unified view of all Workstream products and services including
Recruitment, Performance, Compensation, Development and Transition. Access to
TalentCenter is offered on a monthly subscription basis under an on-demand
software delivery model to help companies build high performing workforces,
while controlling costs. With offices across North America, Workstream
services customers including Chevron, Kaiser Permanente, and Wells Fargo. For
more information visit or call toll free 1-866-470-WORK.

    This press release contains forward-looking statements within the meaning
of the "safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995. These statements are based on the current expectations or beliefs
of Workstream's management and are subject to a number of factors and
uncertainties that could cause actual results to differ materially from those
described in the forward-looking statements. The following factors, among
others, could cause actual results to differ materially from those described
in the forward-looking statements: inability to grow our client base and
revenue because of the number of competitors and the variety of sources of
competition we face; client attrition; inability to offer services that are
superior and cost effective when compared to the services being offered by our
competitors; inability to further identify, develop and achieve success for
new products, services and technologies; increased competition and its effect
on pricing, spending, third-party relationships and revenues; as well as the
inability to enter into successful strategic relationships and other risks
detailed from time to time in filings with the Securities and Exchange

                               WORKSTREAM INC.


                                              August 31, 2007 May 31, 2007
    Current assets:
      Cash and cash equivalents                   $10,723,083   $2,752,601
      Restricted cash                                 529,383      524,497
      Short-term investments                           66,341       65,851
      Accounts receivable, net                      4,253,812    3,789,838
      Other receivable                              1,000,000            -
      Prepaid expenses and other assets               686,515      848,359
           Total current assets                    17,259,134    7,981,146
    Property and equipment, net                     2,552,984    2,715,494
    Other assets                                       85,122       85,122
    Acquired intangible assets, net                 1,666,168    2,602,590
    Goodwill                                       45,276,411   45,276,411

    TOTAL ASSETS                                  $66,839,819  $58,660,763

    Current liabilities:
      Accounts payable                             $1,882,425   $2,259,010
      Accrued liabilities                           2,467,822    2,961,928
      Accrued compensation                          1,483,834    1,378,444
      Notes payable                                              4,557,395
      Current portion of long-term
       obligations                                    647,437      639,445
      Deferred revenue                              2,808,828    2,699,461
           Total current liabilities                9,290,346   14,495,683
    Long-term obligations                             650,700      742,025
    Deferred revenue - long term                      234,293      236,492
    Common Stock Warrant Liability                 11,855,112            -
           Total liabilities                       22,019,139   15,474,200

      Common stock, no par value: 51,531,152
       and 50,960,845 shares issued and
       outstanding, respectively                  112,588,377  112,549,178
      Additional paid-in capital                   18,004,452   10,907,755
      Accumulated other comprehensive loss          (868,032)    (867,288)
      Accumulated deficit                        (84,904,117) (79,403,082)
                   Total stockholders' equity      44,820,680   43,186,563

     EQUITY                                       $66,839,819  $58,660,763

                               WORKSTREAM INC.


                                                    Three Months ended
                                                        August 31,
                                                     2007         2006

    Enterprise Workforce Services                  $4,871,062   $4,808,544
    Career Networks                                 2,497,098    2,118,552
        Revenues, net                               7,368,160    6,927,096
        Cost of revenues (exclusive of
         amortization and depreciation expense
         noted below)                               1,735,157    1,792,621
           Gross profit                             5,633,003    5,134,475

    Operating expenses:
    Selling and marketing                           2,648,744    1,847,424
    General and administrative                      5,108,127    3,520,646
    Research and development                        1,484,637    1,038,215
    Amortization and depreciation                   1,300,417    1,643,924
       Total operating expenses                    10,541,925    8,050,209

          Operating loss                          (4,908,922)  (2,915,734)

    Interest and other income                       1,528,567      125,369
    Interest and other expense                    (1,968,758)     (52,213)
       Other income (expense), net                  (440,191)       73,156

    Loss before income tax                        (5,349,113)  (2,842,578)
      Current income tax expense                    (151,922)     (47,198)
    NET LOSS FOR THE PERIOD                      $(5,501,035) $(2,889,776)

    Weighted average number of common shares
     outstanding                                   51,532,456   50,960,845

    Basic and diluted net loss per share              $(0.11)      $(0.06)

                               WORKSTREAM INC.


                                                 Three Months ended Aug 31
                                                     2007         2006
    Cash provided by (used in) operating
    Net loss for the year                        $(5,501,035) $(2,889,776)
    Adjustments to reconcile net loss to net
     cash (used in) provided by operating
      Amortization and depreciation                 1,300,417    1,643,924
      Leasehold inducement amortization               (8,971)            -
      (Gain)/Loss on sale or disposal of fixed
       asset                                           12,623            -
      Provision for bad debt                          289,206      100,889
      Non-cash compensation and payments to
       consultants                                    571,065      192,354
      Non-cash interest income                    (1,494,255)            -
      Change in long-term portion of deferred
       revenue                                              -     (96,174)
    Net change in operating components of
     working capital:
      Accounts receivable                         (1,753,180)    (343,116)
      Prepaid expenses and other assets               161,843       21,817
      Accounts payable and accrued liabilities      (320,693)    (746,308)
      Accrued compensation                            105,391
      Deferred revenue                                109,366     (66,251)
    Net cash used in operating activities         (6,528,223)  (2,182,641)

    Cash provided by (used in) investing
    Purchase of property and equipment              (182,731)     (33,817)
    Decrease in restricted cash                       (4,886)      171,533
    Sale of short-term investments                      (490)       28,577
    Net cash provided by (used in) investing
     activities                                     (188,107)      166,293

    Cash provided by (used in) financing
    Payment of Hilco guaranteed financing costs     (550,000)
    Proceeds from warrant financing                19,875,000
    Repayment of other long-term obligations        (164,594)     (92,220)
    Proceeds from exercise of options and
     warrants                                          39,200
    Line of credit, net activity                  (4,498,619)     (14,524)
    Net cash (used in) provided by financing
     activities                                    14,700,987    (106,744)

    Effect of exchange rate changes on cash and
     cash equivalents                                (14,175)       14,358

    Net decrease in cash and cash equivalents       7,970,482  (2,108,734)
    Cash and cash equivalents, beginning of year    2,752,601    4,577,040

    Cash and cash equivalents, end of year        $10,723,083   $2,468,306
    Non-cash investing and financing activities:
      Distribution of restricted stock                $83,333


                                                    Three Months ended
                                                  8/31/2007    8/31/2006

    Net loss, per GAAP                           $(5,501,035) $(2,889,776)
    Income tax expense                                151,922       47,198
    Interest and other income                     (1,528,567)       52,213
    Interest and other expense                      1,968,758    (125,369)
    Amortization and depreciation                   1,300,417    1,643,924
    Non-cash compensation                             571,065      192,354
    EBITDA (loss)                                $(3,037,440) $(1,079,456)

    Weighted average number of common shares
     outstanding                                   51,532,456   50,960,845

    Basic and diluted loss per share, per GAAP        $(0.11)      $(0.06)

     Basic and diluted EBITDA loss per share          $(0.06)      $(0.02)

For further information:

For further information: Workstream Inc. Phil Oreste, 866-953-8800 ext.

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