SOURCE: Scientific Learning Corporation

May 25, 2005 16:05 ET

Scientific Learning Receives Nasdaq Notice of Noncompliance for Delay in Filing Form 10-Q

Company to Request Hearing

OAKLAND, CA -- (MARKET WIRE) -- May 25, 2005 -- Scientific Learning (NASDAQ: SCIL) today announced that it received a Staff Determination notice from the Nasdaq Stock Market on May 24, 2005 stating that the Company is not in compliance with Nasdaq's Marketplace Rule 4310(c)(14) because the Company has not yet filed its Report on Form 10-Q for the quarter ended March 31, 2005. Therefore, the Company's securities are subject to delisting. However, the Company intends to request a hearing to review this determination, and the Company's stock will continue to be listed on the Nasdaq National Market pending the outcome of the hearing. At the opening of business on May 26, 2005, the trading symbol for the Company's securities will be changed from SCIL to SCILE.

The delay in filing the Form 10-Q resulted from a previously announced error in certain 2004 balance sheets relating to the classification of deferred revenue. In preparing the first quarter 2005 financial statements, the Company's management determined that the balance sheets at June 30, September 30, and December 31, 2004 incorrectly classified certain deferred revenue as long term deferred revenue, when it should have been classified as current deferred revenue.

"We are working diligently with our outside auditors to complete the work related to this reclassification as quickly as possible. We are determined to complete our work, announce our results, and bring our filings up to date as soon as possible," said Robert C. Bowen, Chairman and Chief Executive Officer.

As permitted by Nasdaq, the Company intends to request a hearing before a Nasdaq Listing Qualifications Panel to review the Staff Determination. Requesting a hearing will stay the delisting until the hearing panel has rendered a decision. There can be no assurance that the hearing panel will grant the Company's request for continued listing.

The Company intends to file, as soon as possible, an amended Report on Form 10-K/A for the year ended December 31, 2004 that includes a restatement of the Company's audited balance sheet at December 31, 2004 and provides the corrected balance sheet information for June 30, 2004 and September 30, 2004. Therefore, the Registrant's unaudited balance sheets at June 30, 2004 and September 30, 2004 and audited balance sheet at December 31, 2004, which were included in the Registrant's previously filed Quarterly Reports on Forms 10-Q and 10-Q/A and Annual Report on Form 10-K, should not be relied upon.

About Scientific Learning

Scientific Learning produces the patented Fast ForWord® family of products, a series of computer-delivered reading intervention products that complement reading instruction. Based on more than 30 years of neuroscience and cognitive research, Fast ForWord products help children, adolescents, and adults build the cognitive skills critical for improving reading and language skills. For more information about Scientific Learning and its products, visit our Web sites at www.scientificlearning.com and www.brainconnection.com, or call toll-free 888-452-7323.

This press release contains projections and other forward-looking statements that are subject to the safe harbor created by the federal securities laws. Such statements include, among others, statements relating to the Company's financial results, the timing of the Company's filing of its Forms 10-Q and 10-K/A and the outcome of the Nasdaq delisting proceedings. Such statements are subject to substantial risks and uncertainties. Actual events or results may differ materially as a result of many factors, including but not limited to the following. The Company may be unable to complete its SEC filings as quickly as it presently intends and the Company's appeal to the Nasdaq panel may be unsuccessful. The Company's financial condition is impacted by general economic conditions; the extent of acceptance and purchase of the Company's products by target customers; seasonality and sales cycles in Scientific Learning's markets; competition; availability of funding to purchase the Company's products and generally available to schools; the extent to which the Company's marketing, sales and implementation strategies are successful; the Company's ability to continue to demonstrate the efficacy of its products, which depends on how the programs are administered, the demography of participants and other factors; the Company's ability to recruit and retain key personnel; the Company's ability to timely execute its new product development strategies; pricing pressures; expense levels at the Company; risks associated with litigation and intellectual property; and other risks detailed in the Company's SEC reports, including but not limited to the Report on Form 10-K filed April 15, 2005 (Part I, Item 1, Factors That May Affect Our Results or Stock Price and Part II, Item 7, Management's Discussion and Analysis).

Contact Information

  • Contact:
    Jane A. Freeman
    Senior Vice President and
    Chief Financial Officer
    Scientific Learning Corporation
    (510) 625-2284
    jfreeman@scilearn.com