Prolong International Corporation Reports Third Quarter 2003 Results

IRVINE, Calif.--Nov. 1, 20034, 2003--Prolong International Corporation (AMEX:PRL), http://www.prolong.com), a technology driven consumer products holding company and parent of Prolong Super Lubricants, Inc., manufacturer and marketer of patented consumer automotive, commercial/industrial and household products, announced today financial results for the third quarter ended September 30, 2003.

The Company reported a net loss of $456,000 or $(0.01) per diluted share, on net sales of $2.2 million, compared to net income of $30,600 or $0.00 per diluted share, on net sales of $2.6 million in the same period a year ago. The net loss for the third quarter included a $490,000 non-cash expense related to increasing the reserve against the Company's deferred tax asset.

Gross profit was $1.4 million, or 65.4% of net sales, compared to $1.7 million, or 64.5% of net sales in the third quarter of 2002. The change in gross margins was attributable mainly to a shift in product mix. Selling and marketing expenses for the quarter were $825,000, or 37.1% of net sales, compared to $974,000, or 37.1% of net sales, for the comparable period a year ago. General and administrative expenses were $632,000, or 28.4% of net sales, compared to $639,000, or 24.3% of net sales, for the comparable period a year ago.

For the nine months ended September 30, 2003, the Company reported a net loss of $1,333,000, including a $790,000 non-cash expense related to increasing the deferred tax asset reserve, or $(0.04) per diluted share, on sales of $6.4 million, compared to a net income of $1.1 million, or $0.03 per diluted share, on sales of $8.0 million for the same period in 2002. The results for nine month period ended September 30, 2002, included the one-time net gain of $983,000 from the sale of the Company's corporate headquarters building and gain from the forgiveness of debt, net of applicable income taxes, of approximately $406,000.

Elton Alderman, Prolong's President and CEO, said, "I am encouraged by the fact that the Company made an operating profit for the quarter, before taking a provision for income taxes. That is a good sign which reflects the continuing effort and hard work by the marketing and sales team to create revenue." Mr. Alderman continued: "Development of Prolong's industrial and commercial sales network is progressing nicely, and while it isn't an overnight event, we anticipate that as these new relationships mature they should create significant new revenues. I have great expectations for the future."

                      PROLONG INTERNATIONAL CORP.
            Consolidated Condensed Statements of Operations

                         Three Months Ended        Nine Months Ended
                             September  30,           September  30,
                            2003        2002         2003        2002
                      (unaudited) (unaudited) (unaudited)  (unaudited)


Net revenues          $2,223,794  $2,627,994   $6,445,707  $8,001,231
Cost of goods sold       769,836     933,626    2,247,007   2,722,030

Gross profit           1,453,958   1,694,368    4,198,700   5,279,201

Selling and marketing
 expenses                824,717     974,343    2,639,377   2,982,209
General and
 administrative
 expenses                632,431     638,521    2,003,016   2,070,059
Other income
 (expenses), net          36,781     (30,933)     (98,905)    863,747


Income (loss) before
 extraordinary item
 and provision for
 income taxes             33,591      50,571     (542,598)  1,090,680
Extraordinary item-
 gain from forgiveness
 of debt, net of
 income taxes                 --          --           --     406,476


Income (loss) before
 provision for income
 taxes                    33,591      50,571     (542,598)  1,497,156
Provision for income
 taxes                   490,000      20,000      790,000     436,000

Net (loss) income      $(456,409)    $30,571  $(1,332,598) $1,061,156

Net (loss) income per
 common share:
  Basic                   ($0.01)      $0.00       ($0.04)      $0.03
  Diluted                 ($0.01)      $0.00       ($0.04)      $0.03

Weighted average
 common shares:
  Basic shares
   outstanding        29,789,598  29,789,598   29,789,598  29,789,598

  Diluted shares
   outstanding        29,789,598  29,789,598   29,789,598  29,789,598




                 Consolidated Condensed Balance Sheets

                                          September 30,   December 31,
                                               2003           2002
                                            (unaudited)

Assets:
Cash and cash equivalents                      $53,097       $261,623
Accounts receivable, net                     1,483,073      1,622,414
Inventories, net                               515,730        512,595
Other current assets                           542,525        566,984

Total current assets                         2,594,425      2,963,616

Property and equipment, net                    258,024        329,985
Intangible assets, net                       6,429,958      6,484,836
Other assets                                 1,334,179      1,871,247

  Total assets                             $10,616,586    $11,649,684

Liabilities and stockholders' equity:
Accounts payable                            $1,158,061       $981,388
Accrued expenses and other current
 liabilities                                 1,226,876        700,740
Line of credit                                 857,393        863,592

Total current liabilities                    3,242,330      2,545,720

Notes payable, noncurrent                      132,079        592,481

Total stockholders' equity                   7,242,177      8,511,483

  Total liabilities and stockholders'
   equity                                  $10,616,586    $11,649,684