SmartPros Reports First Quarter Results

Company Achieves Strong Revenue Growth and Profitability


HAWTHORNE, N.Y., May 11, 2005 (PRIMEZONE) -- SmartPros Ltd. (AMEX: PED), a leader in the field of accredited professional education and corporate training, today reported first quarter results for the period ended March 31, 2005.

For the three months ended March 31, 2005 compared to the three months ended March 31, 2004:



  --  Revenues increased 28.4% to $2.85 million from $2.22 million.
  --  As a percentage of revenue, operating expenses decreased to
      55.3% from 61.1%.
  --  Net income was $216,000, or $0.04 per share, compared to a
      net loss of $7,360 in the first quarter of 2004.
  --  Net cash generated by operating activities was $248,000
      compared to $230,000.

As of March 31, 2005, the Company had approximately $6.92 million in cash and investments, working capital of $3.70 million and stockholders' equity of approximately $6.64 million.

Allen Greene, Vice Chairman and Chief Executive Officer of SmartPros, noted, "Our first quarter results reflect the ongoing success of our strategy to build our core business while remaining focused on controlling costs. We are particularly pleased with the uptrend we are seeing in year-over-year revenue growth and in overall profitability."

Continuing, Greene added, "Despite its strong organic growth, the Company remains committed to its goal of expanding into new verticals and markets through acquisitions. We continue to evaluate acquisition opportunities that are presented to us. We have specific criteria that must be met and are considering only those opportunities that best fit our needs."

SmartPros will host a teleconference this afternoon beginning at 4:15 p.m. Eastern, and invites all interested parties to join management in a discussion regarding the Company's financial results, corporate progression and other meaningful developments. The conference call can be accessed via telephone by dialing toll free 1-800-240-2134. A replay of the call will be available on the Company's Web site approximately one hour after the live broadcast at http://ir.smartpros.com. A copy of this news announcement is immediately accessible via http://ir.smartpros.com.



                     SMARTPROS LTD. AND SUBSIDIARY
                 Condensed Consolidated Balance Sheets


                                           March 31,     December 31,
                                              2005          2004
                                                (Unaudited)
 ---------------------------------        -----------     -----------
 ASSETS                          
 Current Assets:
  Cash and cash equivalents               $ 2,916,498     $ 1,756,991
  Investment securities 
   available-for-sale                       4,000,000       5,000,000
  Accounts receivable, net 
   of allowance for
   doubtful accounts of $71,000             1,068,525         985,259
  Prepaid expenses and other  
   current assets                             143,395         175,270
                                          -----------     -----------
   Total Current Assets                     8,128,418       7,917,520
                                          -----------     -----------

 Property and equipment, net                  570,708         544,176
 Goodwill                                      53,434          53,434
 Other intangible, net                      2,387,267       2,482,653
 Other assets, including 
  restricted cash of $150,000                 150,000         167,196
                                          -----------     -----------
                                            3,161,409       2,703,283
                                          -----------     -----------
   Total Assets                           $11,289,827     $11,164,979
                                          ===========     ===========

 LIABILITIES AND STOCK
HOLDERS' EQUITY
 Current Liabilities:
  Accounts payable                        $   292,936     $   358,867
  Accrued expenses                            283,627         373,993
  Current portion of capital
   lease and equipment 
   financing obligations                       50,400          56,119
  Deferred revenue                          3,802,676       3,741,466
                                          -----------     -----------
   Total Current Liabilities                4,429,639       4,530,445
                                          -----------     -----------

 Long-Term Liabilities:
  Capital lease and equipment
   financing obligations                       53,671          64,020
  Other liabilities                           163,818         164,907
                                          -----------      -----------
   Total Long-Term Liabilities                217,489         228,927
                                          -----------      -----------

 Commitments and Contingencies
 Stockholders' Equity:
  Convertible preferred 
   stock, $.001 par value,
   authorized 1,000,000 shares,
   no shares issued and   
   outstanding                                    --             --
  Common stock, $.0001 par 
   value, authorized
   30,000,000 shares, 
   5,140,545 issued and
   5,082,539 outstanding                          514             514
  Common stock in treasury, 
   at cost - 58,006 shares                   (220,000)       (220,000)
  Additional paid-in capital               16,407,495      16,407,495
  Accumulated (deficit)                    (9,238,810)     (9,454,902)
                                          -----------     -----------
                                            6,949,199       6,733,107
  Deferred compensation                      (106,500)       (127,500)
  Note receivable from 
   stockholder                               (200,000)       (200,000)
                                          -----------     -----------
   Total Stockholders' Equity               6,642,699       6,405,607
                                          -----------     -----------
   Total Liabilities and 
    Stockholders' Equity                  $11,289,827     $11,164,979
                                          ===========     ===========


                      SMARTPROS LTD. AND SUBSIDIARY
       Condensed Consolidated Statements of Operations (Unaudited)
                  

                                             Three Months Ended
                                                  March 31,
                                          --------------------------
                                              2005           2004
 ---------------------------------        -----------     -----------
 Net Revenues                             $ 2,848,951     $ 2,218,351
 Cost of Revenues                           1,082,709         853,474
                                          -----------     -----------
   Gross Profit                             1,766,242       1,364,877
                                          -----------     -----------
 Operating Expenses:
  Selling, general and 
   administrative                           1,435,160       1,185,190
  Depreciation and 
   amortization                               141,243         170,971
                                          -----------     -----------
                                            1,576,403       1,356,161
                                          -----------     -----------
   Operating Income (Loss)                    189,839           8,716
                                          -----------     -----------
 Other Income (Expense):
  Interest income                              29,554           3,718
  Interest expense                             (3,301)        (19,794)
                                          -----------     -----------
                                               26,253         (16,076)
                                          -----------     -----------
 Income (loss) before 
  provision for income taxes                  216,092          (7,360)

 Provision for Income Taxes                      --              --
                                          -----------     -----------
 Net Income (Loss)                        $   216,092     $    (7,360)
                                          ===========     ===========
 Net Income (Loss) Per 
 Common Share:
  Basic net income (loss)
   per common share                       $      0.04           $-
                                          ===========     ===========
  Diluted net income (loss)
   per common share                       $      0.04           $-
                                          ===========     ===========
 Weighted Average Number   
of Shares Outstanding
  Basic                                     5,082,539       2,604,178
                                          ===========     ===========
  Diluted                                   5,117,294       2,604,178
                                          ===========     ===========

About SmartPros Ltd.

Founded 1981, SmartPros Ltd. is an industry leader in the field of accredited professional education. Its products and services are primarily focused in the accredited professional areas of corporate accounting, financial management, public accounting, governmental and not-for-profit accounting, engineering, and ethics and compliance. SmartPros' customers include over half of Fortune 500 companies, as well as the major firms and associations in each of its professional markets. SmartPros provides education and content publishing and development services in a variety of media including Web, CD-ROM and video. Our subscription libraries feature hundreds of course titles and 1,000+ hours of accredited education. SmartPros' proprietary Professional Education Center (PEC) Learning Management System (LMS) offers enterprise distribution and administration of education content and information. In addition, SmartPros produces a popular news and information portal for accounting and finance professionals that services 300,000+ visitors and 100,000+ subscribers per month. Visit: www.smartpros.com.

Safe Harbor Statement

Statements in this press release that are not statements of historical or current fact constitute "forward-looking statements." Results reported within this press release should not be considered an indication of future performance. Except for any historical information, the matters discussed in this press release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve risks and uncertainties, including activities, events or developments that the Company expects, believes or anticipates will or may occur in the future. In addition to statements that explicitly describe these risks and uncertainties, readers are urged to consider statements that contain terms such as "believes," "belief," "expects," "expect," "intends," "intend," "anticipate," "anticipates," "plans," "plan," to be uncertain and forward-looking. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in our filings with Securities and Exchange Commission.



            

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