Prolong International Corp. Reports Second-Quarter Results

    IRVINE, Calif.--Aug. 13, 2001--Prolong International Corp. (AMEX:PRL) today reported financial results for the quarter ended June 30, 2001.
    For the second quarter of 2001, the company reported a net loss of $20,000, or $0.00 per diluted share, on net sales of $3.9 million. In the second quarter of 2000, the company reported a net loss of $511,000, or $0.02 per diluted share, on net sales of $5.2 million.
    For the six months ended June 30, 2001, the company reported net income of $25,000, or $0.00 per diluted share, on sales of $8.1 million, compared with net income of $130,000, or $0.00 per diluted share on sales of $13 million in the first six months of 2000.
    Second-quarter gross profit was $2.8 million, or 70.4% of net sales, compared with $3.9 million, or 73.8% of net sales, a year ago. A reduction in selling and marketing expenses to $1.8 million from $3.2 million in the second quarter of 2000 was primarily the result of lower expenses for endorsement and sponsorship payments, activities to promote product awareness, salaries and television airtime purchases.
    A reduction in general and administrative expenses to $900,000 from $1.3 million in the second quarter of 2000 reflects decreases in legal expenses and salaries.
    "Even though we reported a small loss for the second quarter, we are pleased that we reported a profit for the six-month period ended June 30, 2001, as it evidences results of our ongoing drive to balance operating expenses and anticipated sales," said Elton Alderman, president and CEO of Prolong International.
    "This year's second-quarter results are a substantial improvement over second quarter 2000. We improved the bottom line by over one-half million dollars even though we booked lower net sales this period. We believe that our results illustrate the success of our dedicated staff to manage expenses in a difficult to predict selling environment.
    "Our mission now, and the continuing focus for our management team, is to increase the top line numbers."
    Prolong International, through its operating subsidiaries, manufactures, markets and distributes a complete line of patented lubricant and proprietary automotive appearance products. The company's products are marketed and sold under the brand name Prolong Super Lubricants(R) and are used in automotive, industrial and consumer applications. Prolong products are sold throughout the United States and in selected international markets.

                      PROLONG INTERNATIONAL CORP.
            Consolidated Condensed Statements of Operations

                    Three Months Ended           Six Months Ended
                         June 30,                    June 30,
                     2001        2000            2001         2000
                 (unaudited)  (unaudited)    (unaudited)   (unaudited)

Net sales        $3,929,116   $5,219,521     $8,081,061   $12,976,720
Cost of sales     1,164,630    1,367,184      2,471,881     3,094,095
Gross profit      2,764,486    3,852,337      5,609,180     9,882,625

Selling and 
 marketing 
 expenses         1,759,720    3,178,945      3,329,647     6,491,496
General and        
 administrative 
 expenses           914,033    1,266,933      1,891,189     2,695,086

Other (expenses), 
 net               (142,988)    (125,524)      (259,898)     (277,445)

Income (loss)
 before taxes       (52,255)    (719,065)       128,446       418,598
Provision
 (benefit) for    
 income taxes       (32,685)    (207,985)       103,456       288,858
Net income (loss)  $(19,570)   $(511,080)       $24,990      $129,740

Net income (loss) 
 per common share:
  Basic              $(0.00)      $(0.02)         $0.00         $0.00
  Diluted            $(0.00)      $(0.02)         $0.00         $0.00

Weighted average 
 common shares: 
Basic shares
 outstanding     28,438,903   28,445,835     28,438,903    28,445,835
Diluted shares    
 outstanding     28,438,903   28,445,835     28,438,903    28,520,196


                 Consolidated Condensed Balance Sheets

                                            June 30,        Dec. 31,
                                              2001            2000
                                          (unaudited)

Assets:
Cash and cash equivalents                   $114,268         $126,917
Accounts receivable, net                   4,824,252        3,245,892
Inventories, net                             858,804          970,236
Other current assets                         817,682        1,453,514
Total current assets                       6,615,006        5,796,559
Property and equipment, net                3,037,904        3,193,109
Intangible assets, net                     6,276,644        6,529,986
Other assets                               2,473,243        2,195,546

  Total assets                           $18,402,797      $17,715,200

Liabilities and stockholders' equity:
Accounts payable                          $2,482,499       $2,183,482
Accrued expenses and other current
 liabilities                               1,299,934        1,663,060
Line of credit                             2,804,381        2,050,716
Total current liabilities                  6,586,814        5,897,258

Notes payable, noncurrent                  2,250,181        2,277,130

Total stockholders' equity                 9,565,802        9,540,812

 Total liabilities and stockholders'  
  equity                                 $18,402,797      $17,715,200