~~Table~~SECURITIES ofAND ~~Contents~~EXCHANGE COMMISSION

~~SECURITIES~~WASHINGTON, ~~AND~~D.C. ~~EXCHANGE COMMISSION~~ 20549

~~WASHINGTON,~~FORM ~~D.C.~~10-Q ~~20549~~

~~FORM~~QUARTERLY ~~10-Q~~REPORT PURSUANT TO SECTION 13 OR 15(d)

xOF ~~QUARTERLY~~THE ~~REPORT~~SECURITIES ~~PURSUANT~~EXCHANGE TOACT ~~SECTION~~OF 131934 ~~OR 15(d)~~

OFFor ~~THE~~the ~~SECURITIES~~quarterly ~~EXCHANGE~~period ~~ACT~~ended OFDecember ~~1934~~31, 2002

~~For~~Commission ~~the~~File ~~quarterly~~Number: ~~period~~000-23989 ~~ended September 30, 2002~~

~~Commission~~PROVANT, ~~File~~Inc. ~~Number: 000-23989~~

~~PROVANT,~~(Exact ~~Inc.~~name of Registrant as Specified in its Charter)

(Exact name of Registrant as Specified in its Charter)

DELAWARE

04-3395167

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification Number)

DELAWARE		04-3395167
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
67 BATTERYMARCH STREET, SUITE 600
BOSTON, MA		02110
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (617) 261-1600

Indicate by check mark whether the Registrant (~~617~~1) ~~261-1600~~has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

~~Indicate~~Number ~~by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d)~~ of ~~the~~shares ~~Securities Exchange Act~~ of ~~1934~~common ~~during~~stock ~~the~~outstanding ~~preceding~~at March 1214, ~~months~~2003: ~~(or for such shorter period that the Registrant was required to file such reports)~~27,251,595 ~~and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨~~

~~Number of shares of common stock outstanding at November 13~~PROVANT, ~~2002:~~INC. ~~27,251,595~~AND SUBSIDIARIES

~~Table~~INDEX ~~of Contents~~

~~PROVANT,~~PART ~~INC~~I. – FINANCIAL INFORMATION

INDEX

		Page
Item 1. Financial Statements

Consolidated Balance Sheets as of December 31, 2002 (unaudited)and June 30, 2002		3

Consolidated Statements of Operations for the three and six months ended December 31, 2002 and 2001 (unaudited)		4

Consolidated Statements of Cash Flows for the six months ended December 31, 2002 and 2001 (unaudited)		6

Notes to Interim Unaudited Consolidated Financial Statements		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17

Item 3. Quantitative and Qualitative Disclosure about Market Risk		28

Item 4. Controls and Procedures		28

PART II. – OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds		29

Item 3. Defaults Upon Senior Securities		29

Item 6. Exhibits and Reports on Form 8-K		29

Signature		30

		Page
PART I.—FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2002 (unaudited) and June 30, 2002		3
Consolidated Statements of Operations for the three months ended September 30, 2002 and 2001 (unaudited)		4
Consolidated Statements of Cash Flows for the three months ended September 30, 2002 and 2001 (unaudited)		5
Notes to Interim Unaudited Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3. Quantitative and Qualitative Disclosure about Market Risk		21
Item 4. Controls and Procedures		21
PART II. – OTHER INFORMATION
Item 3. Defaults upon Senior Securities		22
Item 5. Other Information		22
Item 6. Exhibits and Reports on Form 8-K		22
Signature		23

2PART I. FINANCIAL INFORMATION

~~Table~~ITEM of1. ~~Contents~~FINANCIAL STATEMENTS

~~PART~~ PROVANT, IINC. ~~FINANCIAL~~AND ~~INFORMATION~~SUBSIDIARIES

~~ITEM~~CONSOLIDATED ~~1. FINANCIAL~~BALANCE ~~STATEMENTS~~SHEETS

~~PROVANT~~(IN THOUSANDS, ~~INC.~~EXCEPT SHARE DATA)

CONSOLIDATED BALANCE SHEETS

	December 31, 2002			June 30, 2002
	(unaudited)			(unaudited)
Assets
Current Assets:
Cash and cash equivalents	$	1,080		$	2,435
Accounts receivable, net of allowance for doubtful accounts of $0 and $22 respectively		16,048			17,916
Inventory		293			338
Costs in excess of billings		4,384			4,605
Prepaid expenses and other current assets		1,420			1,512
Current assets of discontinued operations		—			22,143

Total current assets		23,225			48,949
Property and equipment, net		1,802			1,924
Other assets		644			207
Capitalized computer and educational software development costs, net		9			9
Goodwill		5,722			6,992
Non-current assets of discontinued operations		—			40,716

Total assets	$	31,402		$	98,797

Liabilities and Stockholders’ Equity
Current Liabilities:
Line of credit	$	20,366		$	45,484
Current portion of long-term debt		285			304
Accounts payable		3,827			2,978
Accrued expenses		4,593			4,470
Accrued compensation		3,653			3,703
Billings in excess of costs		2,963			2,992
Income taxes payable		3,491			—
Current liabilities of discontinued operations		—			16,416

Total current liabilities		39,178			76,347
Non-current liabilities of discontinued operations		—			1,500

Total liabilities		39,178			77,847

Stockholders’ Equity (Deficit):
Preferred stock, $.01 par value; 5,000,000 shares authorized; none issued and outstanding		—			—
Common stock, $.01 par value; 40,000,000 shares authorized; 27,251,595 and 21,500,796 shares issued and outstanding, respectively		273			215
Additional paid-in capital		205,276			201,736
Common stock issuable as contingent consideration		—			3,600
Retained deficit		(213,325	)		(184,601	)

Total stockholders’ equity (deficit)		(7,776	)		20,950

Total liabilities and stockholders’ equity (deficit)	$	31,402		$	98,797

~~(IN~~See accompanying ~~THOUSANDS,~~notes ~~EXCEPT~~to ~~SHARE~~consolidated ~~DATA~~financial statements.

	September 30, 2002 (unaudited)			June 30, 2002 (audited)
Assets
Current Assets:
Cash and cash equivalents	$	192		$	3,558
Accounts receivable, net of allowance for doubtful accounts of $831 and $932, respectively		32,120			34,307
Inventory		3,498			3,897
Costs in excess of billings		3,637			4,165
Prepaid expenses and other current assets		3,037			3,022
Total current assets		42,484			48,949
Property and equipment, net		5,577			6,108
Other assets		640			350
Capitalized computer and educational software development costs, net		7,004			7,315
Goodwill		36,075			36,075
Total assets	$	91,780		$	98,797
Liabilities and Stockholders’ Equity
Current Liabilities:
Line of credit	$	45,484		$	45,484
Current portion of long-term debt		3,846			3,946
Accounts payable		4,842			5,107
Accrued expenses		6,241			8,195
Accrued compensation		5,676			5,638
Billings in excess of costs		3,366			4,207
Deferred revenue		1,145			1,370
Income taxes payable		266			—
Accrued contingent consideration		2,400			2,400
Total current liabilities		73,266			76,347
Other long-term liabilities		675			700
Long-term debt, net of current portion		800			800
Total liabilities		74,741			77,847
Stockholders’ Equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized; none issued and outstanding		—			—
Common stock, $.01 par value; 40,000,000 shares authorized; 21,500,796 and 21,500,796 shares issued and outstanding, respectively		215			215
Additional paid-in capital		201,736			201,736
Common stock issuable as contingent consideration		3,600			3,600
Retained deficit		(188,512	)		(184,601	)
Total stockholders’ equity		17,039			20,950
Total liabilities and stockholders’ equity	$	91,780		$	98,797

~~See~~ PROVANT, ~~accompanying~~INC. ~~notes~~AND toSUBSIDIARIES ~~consolidated financial statements.~~

3CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

~~Table~~(IN ofTHOUSANDS, ~~Contents~~EXCEPT SHARE AND PER SHARE DATA)

PROVANT, INC.

	Three months ended December 31,						Six months ended December 31,
	2002			2001			2002			2001
Total revenue	$	21,137		$	20,986		$	42,272		$	45,049
Cost of revenue		12,911			11,301			26,634			23,108

Gross profit		8,226			9,685			15,638			21,941
Selling, general and administrative expenses		11,657			9,075			21,746			18,569

Income (loss) from operations		(3,431	)		610			(6,108	)		3,372
Other income (expense), net		(3	)		3			(18	)		5
Interest expense		(1,342	)		(1,125	)		(2,912	)		(2,308	)

Income (loss) from continuing operations before income taxes, extraordinary item and cumulative effect of a change in accounting principle		(4,776	)		(512	)		(9,038	)		1,069
Provision for income taxes		300			324			600			302

Income (loss) from continuing operations before extraordinary item and cumulative effect of a change in accounting principle		(5,076	)		(836	)		(9,638	)		767
Discontinued operations (net of taxes of $0):
Income (loss) from discontinued operations		(19,737	)		1,017			(19,086	)		(117,556	)

Income (loss) before extraordinary item and cumulative effect of a change in accounting principle		(24,813	)		181			(28,724	)		(116,789	)
Extraordinary item:
Loss on sale of business (net of taxes of $0)		—			(14,542	)		—			(14,542	)

Net loss before cumulative effect of a change in accounting principle		(24,813	)		(14,361	)		(28,724	)		(131,331	)
Cumulative effect of a change in accounting principle (net of tax benefit of $778)		—			—			—			(47,862	)

Net loss	$	(24,813	)	$	(14,361	)	$	(28,724	)	$	(179,193	)

~~CONSOLIDATED~~4 ~~STATEMENTS OF OPERATIONS (UNAUDITED)~~

(IN THOUSANDS, EXCEPT SHARE DATA)

Earnings (loss) per common share:
Earnings (loss) from continuing operations before extraordinary item and cumulative effect of a change in accounting principle:
Basic	$	(0.21	)	$	(0.04	)	$	(0.42	)	$	0.04

Diluted	$	(0.21	)	$	(0.04	)	$	(0.42	)	$	0.02

Earnings (loss) from discontinued operations:
Basic	$	(0.81	)	$	0.05		$	(0.83	)	$	(5.43	)

Diluted	$	(0.81	)	$	0.05		$	(0.83	)	$	(3.51	)

Earnings (loss) before extraordinary item and cumulative effect of a change in accounting principle:
Basic	$	(1.02	)	$	0.01		$	(1.25	)	$	(5.39	)

Diluted	$	(1.02	)	$	0.01		$	(1.25	)	$	(3.49	)

Extraordinary item—Loss on sale of business, net:
Basic	$	—		$	(0.68	)	$	—		$	(0.67	)

Diluted	$	—		$	(0.68	)	$	—		$	(0.43	)

Cumulative effect of a change in accounting principle
Basic	$	—		$	—		$	—		$	(2.21	)

Diluted	$	—		$	—		$	—		$	(1.43	)

Net loss:
Basic	$	(1.02	)	$	(0.67	)	$	(1.25	)	$	(8.27	)

Diluted	$	(1.02	)	$	(0.67	)	$	(1.25	)	$	(5.35	)

Weighted average common shares outstanding:
Basic		24,376,196			21,520,636			22,938,496			21,662,089
Diluted		24,376,196			21,520,636			22,938,496			33,500,755

	Three months ended September 30,
	2002			2001
Total revenue	$	38,448		$	46,075
Cost of revenue		21,415			22,018
Gross profit		17,033			24,057
Selling, general and administrative expenses		19,034			22,255
Income (loss) from operations		(2,001	)		1,802
Other income (expense), net		(15	)		5
Interest expense		(1,594	)		(1,214	)
Income (loss) before income taxes and cumulative effect of a change in accounting principle		(3,610	)		593
Provision (benefit) for income taxes		300			(22	)
Income (loss) before cumulative effect of a change in accounting principle		(3,910	)		615
Cumulative effect of a change in accounting principle (net of tax benefit of $778)		—			(165,447	)
Net loss	$	(3,910	)	$	(164,832	)
Earnings (loss) per common share:
Earnings (loss) before cumulative effect of a change in accounting principle
Basic	$	(0.18	)	$	0.03
Diluted	$	(0.18	)	$	0.02
Cumulative effect of a change in accounting principle, net
Basic and diluted	$	—		$	(7.59	)
Net loss
Basic and diluted	$	(0.18	)	$	(7.56	)
Weighted average common shares outstanding:
Basic		21,500,796			21,803,542
Diluted		21,500,796			39,201,663

See accompanying notes to consolidated financial statements.

~~See~~5 ~~accompanying notes to consolidated financial statements.~~

4 PROVANT, INC. AND SUBSIDIARIES

~~Table~~CONSOLIDATED ofSTATEMENTS ~~Contents~~OF CASH FLOWS (UNAUDITED)

~~PROVANT,~~(IN ~~INC.~~THOUSANDS)

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

	Six Months Ended December 31,
	2002			2001
Cash flows from operating activities of continuing operations:
Net loss	$	(28,724	)	$	(179,193	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		4,393			3,154
Write-off of accounts receivable		—			(471	)
Loss on sale of business		19,976			14,542
Impairment of goodwill		1,270			165,447
Changes in operating assets and liabilities:
Accounts receivable		7,333			5,925
Inventory		45			(94	)
Costs in excess of billings		(2,867	)		1,297
Prepaid expenses and other current assets		92			2,817
Other assets		(437	)		(91	)
Accounts payable and accrued expenses		265			(2,646	)
Accrued compensation		(50	)		(3,054	)
Billings in excess of costs		(29	)		902
Deferred revenue		—			(1,812	)
Accrued reorganization costs		—			(724	)
Income taxes payable		1,114			(780	)

Total adjustments		31,105			184,412

Net cash provided by operating activities of continuing operations		2,381			5,219

Cash flows from investing activities of continuing operations:
Payment of acquisition related costs		—			(141	)
Proceeds from sale of business		29,612			18,350
Additions to property and equipment		(346	)		(487	)
Additions to capitalized product development costs		(442	)		(2,413	)
Payment of contingent consideration		—			(2,000	)

Net cash provided by investing activities of continuing operations		28,824			13,309

Cash flows from financing activities of continuing operations:
Issuance of common stock, net of offering costs		—			49
Net repayments on line of credit		(25,118	)		(4,262	)
Net repayments of notes payable		(6,552	)		(7,823	)

Net cash used in financing activities of continuing operations		(31,670	)		(12,036	)

Net cash provided used for discontinued operations		(890	)		(29	)
Net increase (decrease) in cash and cash equivalents		(1,355	)		6,463
Cash and cash equivalents, beginning of period		2,435			767

Cash and cash equivalents, end of period	$	1,080		$	7,230

~~(IN~~See accompanying ~~THOUSANDS)~~notes to consolidated financial statements.

	Three Months Ended September 30,
	2002			2001
Cash flows from operating activities:
Net loss	$	(3,910	)	$	(164,832	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		1,993			1,439
Write-off of accounts receivable		(101	)		(770	)
Impairment of goodwill					165,447
Changes in operating assets and liabilities:
Accounts receivable		2,288			3,286
Inventory		150			(178	)
Costs in excess of billings		528			877
Prepaid expenses and other current assets		(478	)		3,646
Other assets		(290	)		529
Accounts payable and accrued expenses		(2,219	)		(4,039	)
Accrued compensation		38			(2,254	)
Billings in excess of costs		(841	)		1,611
Deferred revenue		(225	)		(2,076	)
Income taxes payable		266			(1,104	)
Total adjustments		1,109			166,414
Net cash provided by (used in) operating activities		(2,801	)		1,582
Cash flows from investing activities:
Payment of acquisition related costs		—			(141	)
Additions to property and equipment		(140	)		(524	)
Additions to capitalized product development costs		(300	)		(1,338	)
Net cash used in investing activities		(440	)		(2,003	)
Cash flows from financing activities:
Issuance of common stock, net of offering costs		—			(7	)
Net repayments on line of credit		—			(500	)
Cash overdraft		—			3,228
Net repayments of notes payable		(125	)		(3,067	)
Net cash used in financing activities		(125	)		(346	)
Net decrease in cash and cash equivalents		(3,366	)		(767	)
Cash and cash equivalents, beginning of period		3,558			767
Cash and cash equivalents, end of period	$	192		$	—
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	2,676		$	1,042
Cash paid for income taxes	$	5		$	558

~~See~~PROVANT, ~~accompanying~~INC. ~~notes~~AND toSUBSIDIARIES ~~consolidated financial statements.~~

5CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

~~Table~~(IN ofTHOUSANDS) ~~Contents~~

PROVANT, INC.

	Six Months Ended December 31,
	2002		2001
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	3,566	$	2,504

Cash paid for income taxes	$	201	$	561

NON CASH INVESTING ACTIVITIES:
Original value of shares issued as contingent consideration	$	3,600	$	—

See ~~NOTES~~accompanying TOnotes ~~INTERIM~~to ~~UNAUDITED~~consolidated ~~CONSOLIDATED~~financial ~~FINANCIAL~~statements. ~~STATEMENTS~~

~~(UNAUDITED)~~7

1 PROVANT, INC. ~~ORGANIZATION~~ AND ~~BASIS~~SUBSIDIARIES ~~OF PRESENTATION~~

~~ORGANIZATION~~NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~Provant, Inc., a Delaware corporation~~ (~~collectively, with its subsidiaries, “Provant” or the “Company”~~UNAUDITED), provides a broad range of performance improvement training services and products to Fortune 1000 companies, other large and medium-sized corporations and government entities. The Company’s objective is to enhance its position as a leading provider of high-quality performance improvement training services and products that are distributed through multiple delivery methods.

On May 4, 1998, Provant completed the initial public offering (the “IPO”) of its common stock (the “Common Stock”) and simultaneously acquired in separate merger transactions seven companies engaged in providing performance improvement training services and products (collectively, referred to as the “Founding Companies”)1. ~~Since~~ORGANIZATION ~~the~~AND ~~completion~~BASIS ofOF ~~the~~PRESENTATION IPO, the Company acquired in separate transactions 16 additional businesses (the “Subsequent Acquisitions”) engaged in providing performance improvement training services and products (collectively, such companies are referred to with the Founding Companies as the “Operating Companies”). In November 2001, the Company sold three businesses included above under Subsequent Acquisitions (see Note 7).

~~On December~~ORGANIZATION 14, 1999, Provant acquired Senn-Delaney Leadership Consulting Group, Inc. and Senn-Delaney Leadership Consulting U.K., Ltd. (together, “Senn-Delaney Leadership”) in an acquisition accounted for as a pooling-of-interests. As required under the pooling-of-interests method of accounting, the results for all periods presented include the combined results of Provant and Senn-Delaney Leadership.

~~BASIS~~Provant, OFInc., ~~PRESENTATION~~a Delaware corporation (collectively, with its subsidiaries, “Provant” or the “Company”), provides training and leadership consulting services and other services to government entities, Fortune 1000 companies and other large and medium-sized corporations.

~~The~~On ~~information~~May ~~contained~~4, in1998, Provant completed the initial public offering ~~following~~(the ~~notes~~“IPO”) toof its common stock (the ~~accompanying~~“Common ~~consolidated~~Stock”) ~~financial~~and ~~statements~~simultaneously isacquired ~~condensed~~in ~~from~~separate ~~that~~merger ~~which~~transactions ~~would~~seven ~~appear~~companies engaged in ~~the~~providing ~~annual~~performance ~~consolidated~~improvement ~~audited~~training ~~financial~~services ~~statements;~~and ~~accordingly~~products (collectively, referred to as the ~~consolidated~~“Founding ~~financial~~Companies”). ~~statements~~Since ~~included~~the ~~herein~~completion ~~should~~of ~~be reviewed~~the IPO, the Company acquired in ~~conjunction~~separate ~~with~~transactions 16 additional businesses (the ~~consolidated~~“Subsequent ~~financial~~Acquisitions”) ~~statements~~engaged in providing performance improvement training services and ~~related~~products ~~notes~~(collectively, ~~thereto~~such ~~contained~~companies inare ~~the~~referred ~~Annual~~to ~~Report~~with onthe ~~Form~~Founding ~~10-K~~Companies ~~for~~as the ~~year~~“Operating ~~ended~~Companies”). ~~June~~In 30November 2001, the Company sold three businesses included above under Subsequent Acquisitions (see Note 6). In December 2002, ~~filed~~the byCompany ~~Provant~~sold ~~with~~six of the ~~Securities~~Founding ~~and~~Companies ~~Exchange~~as ~~Commission.~~well ~~All~~as ~~intercompany balances~~all ~~have~~but ~~been~~four ~~eliminated~~of inits ~~consolidation~~remaining businesses included above under Subsequent Acquisitions (see Note 6).

InOn ~~the~~December ~~opinion~~14, ~~of the Company~~1999, ~~the~~Provant ~~accompanying~~acquired ~~unaudited consolidated~~Senn-Delaney ~~financial~~Leadership ~~statements~~Consulting ~~contain~~Group, ~~all~~Inc. ~~adjustments~~and ~~considered~~Senn-Delaney Leadership ~~necessary~~Consulting toU.K., ~~present~~Ltd. ~~fairly~~(together, ~~the~~“Senn-Delaney ~~financial~~Leadership”) ~~position~~in ofan ~~the~~acquisition ~~Company~~accounted for as a pooling-of-interests. ~~September~~As ~~30,~~required ~~2002~~under ~~and~~ the ~~results~~ pooling-of-interests ~~operations~~method ~~and~~of ~~cash~~accounting, ~~flows~~the results for ~~the~~all periods presented~~. The Company~~ ~~prepares~~include ~~its interim financial information in accordance with accounting principles generally accepted in~~ the ~~United~~combined ~~States of America. Interim~~ results ~~are not necessarily indicative~~ of ~~results~~Provant toand beSenn-Delaney ~~expected for the entire year~~Leadership.

~~SUMMARY~~On OFDecember ~~CRITICAL~~31, ~~ACCOUNTING~~2002, ~~POLICIES~~Provant ~~AND~~completed ~~SIGNIFICANT~~the ~~JUDGEMENTS~~sale ~~AND~~to ~~ESTIMATES~~Novations Group Inc. (“Novations”), a subsidiary of Drake Beam Morin-Japan (“DBM-J”), of Provant’s Performance Solutions, Technology and Development, Vertical Markets and Project Management groups and Learning and Strategic Alliances businesses (the “Businesses”). The Businesses were transferred to Novations by the sale of the stock of Provant Performance Solutions, Inc., Provant Media, Inc. and Provant Canada, Inc. and the sale of tangible and intangible assets used in connection with the conduct of the Learning and Strategic Alliances businesses. Provant’s remaining businesses are its Government and Leadership Consulting groups, consisting principally of Star Mountain and Senn-Delaney Leadership.

~~Our~~BASIS ~~discussion~~OF ~~and~~PRESENTATION analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These items are regularly monitored and analyzed by management for changes in facts and circumstances. Material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the applicable circumstances. Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, allowance for doubtful accounts, impairment of intangible assets, and accounting for income taxes. A summary of those accounting policies that we believe are most critical to fully understanding and evaluating our financial results is outlined below. This summary should be read in conjunction with our 2002 Annual Report on Form 10-K.

~~Revenue~~The ~~Recognition~~information contained in the following notes to the accompanying consolidated financial statements is condensed from that which would appear in the annual consolidated audited financial statements; accordingly, the consolidated financial statements included herein should be reviewed in conjunction with the consolidated financial statements and related notes thereto contained in the Annual Report on Form 10-K for the year ended June 30, 2002 filed by Provant with the Securities and Exchange Commission. All intercompany balances have been eliminated in consolidation.

~~The~~In the opinion of the Company, ~~recognizes~~the ~~revenue~~accompanying ~~from~~unaudited consolidated ~~five~~financial ~~main~~statements ~~sources:~~contain ~~(i)~~all ~~instructor-led~~adjustments ~~and~~considered ~~train-the-trainer~~necessary ~~seminars,~~to ~~(ii)~~present ~~licensing~~fairly ~~its~~the ~~intellectual property,~~financial ~~(iii)~~position ~~custom~~of ~~services~~the ~~and~~Company ~~products,~~as ~~(iv)~~of ~~consulting~~December 31, 2002 and ~~training~~the ~~management~~results ~~services,~~of operations and ~~(v)~~cash ~~standardized~~flows ~~products~~for the periods presented. The Company prepares ~~recognizes~~its ~~revenue~~interim ~~from~~financial ~~instructor-led~~information ~~training~~in ~~and~~accordance ~~train-~~with accounting principles generally accepted in the~~-trainer~~ ~~seminars,~~United ~~usually~~States onof aAmerica. ~~per-participant basis,~~Interim ~~when~~results are not necessarily indicative of results to be expected for the entire year.

6SUMMARY OF CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGEMENTS AND ESTIMATES

~~Table~~Our discussion and analysis of ~~Contents~~our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These items are regularly monitored and analyzed by management for changes in facts and circumstances. Material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the applicable circumstances. Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, allowance for doubtful accounts, impairment of goodwill and other intangible assets, and accounting for income taxes. A summary of those accounting policies that we believe are most critical to fully understanding and evaluating our financial results is outlined below. This summary should be read in conjunction with our 2002 Annual Report on Form 10-K.

~~training~~8 is delivered. The Company recognizes revenue from site and user licenses when: (1) there is persuasive evidence that an arrangement exists, (2) delivery has occurred, (3) the fee is fixed or determinable, and (4) collectibility is probable. Amounts received in advance of delivery are reported as deferred revenue and recognized as revenue upon meeting the aforementioned criteria.

~~The Company generally recognizes revenue from sales of its custom services and products under long-term contracts in one of three ways.~~ Revenue ~~on fixed price contracts is recognized using the percentage of completion method based on costs incurred in relation to total estimated costs. The Company’s failure~~ toRecognition estimate accurately the resources required for a project, or the Company’s failure to complete its contractual obligations in a manner consistent with the project plan upon which our fixed-price contract was based, could adversely affect our overall profitability and could have a material adverse effect on our business, financial condition and results of operations. The Company’s business unit finance personnel continually review costs incurred and total estimated costs for fixed price contracts, resulting in revisions to the amount of recognized revenue for a contract. If the Company does not accurately estimate the resources required or the scope of work to be performed for a contract or the Company does not manage the project properly within the planned time period, then the Company may recognize a loss on the contract. Provisions for estimated losses on uncompleted contracts are made on a contract-by-contract basis and are recognized in the period in which such losses are determined. Revenue on time-and-materials contracts is recognized to the extent of fixed billable rates for hours delivered. Revenue on cost-plus-fee contracts is recognized based on reimbursable costs incurred plus estimated fees earned thereon. Deferred revenue is recognized for payments received prior to services being performed. The Company recognizes revenue from fees for its consulting services on a time and materials basis, and monies received in excess of time and materials earned is recorded as billings in excess of costs. The Company recognizes maintenance fees on training management services ratably over the life of the contract. The Company recognizes revenue for standardized products, such as books or videotapes, when the products are delivered. We also incur “out-of-pocket” expenses which are reimbursable by the client. Through June 30, 2002 these expenses were accounted for as a reduction of the related costs. Effective July 1, 2002, reimbursements received for out-of-pocket expenses incurred have been characterized as revenue in our statement of operations, and all prior periods presented have been reclassified to conform to the current presentation.

For ~~multiple~~the ~~element~~periods ~~arrangements involving products~~presented, ~~services and support elements, we recognize revenue in accordance with~~ the ~~residual~~ ~~method~~Company ~~when~~recognized ~~objective~~revenue ~~evidence~~from offive ~~fair~~main ~~value~~sources: ~~does~~(i) ~~not~~instructor-led ~~exist~~and ~~for~~ train-the-trainer ~~delivered~~seminars, ~~element.~~(ii) ~~Under~~licensing ~~the~~its ~~residual~~intellectual ~~method~~property, ~~the~~(iii) ~~fair~~custom ~~value~~services ofand ~~the~~products, ~~undelivered~~(iv) ~~elements~~consulting ~~are deferred~~ and ~~subsequently~~training ~~recognized.~~management Weservices, ~~have~~and ~~established~~(v) standardized ~~sufficient~~products. ~~objective~~The ~~evidence of~~Company ~~fair~~recognizes ~~value~~revenue ~~for~~from ~~the~~instructor-led ~~applicable~~training ~~services~~ and ~~support~~train-the-trainer ~~elements~~seminars, ~~based~~usually on ~~the~~a ~~price~~per-participant ~~charged~~basis, when ~~these~~the ~~elements~~training ~~are~~is ~~sold separately~~delivered. ~~Accordingly,~~The ~~product~~Company ~~license~~recognizes revenue ~~sold~~from assite ~~part~~and ofuser alicenses ~~multiple~~when: (1) ~~element~~there ~~arrangement~~ is ~~recognized~~persuasive ~~under~~evidence ~~the~~that ~~residual method~~an inarrangement ~~arrangements~~exists, in(2) ~~which~~delivery ~~the~~has ~~product~~occurred, is(3) ~~sold with one or both of~~ the ~~other~~fee ~~elements.~~is ~~Revenue~~fixed ~~from~~or ~~license~~determinable, ~~agreements that require significant customizations~~ and ~~modifications~~(4) tocollectibility ~~the product~~ is ~~deferred and recognized using the percentage of completion method~~probable. ~~For~~Amounts ~~license~~received ~~arrangements~~in ~~involving~~advance ~~customizations for which the amount~~ of ~~customization~~delivery ~~effort~~are ~~cannot~~reported beas ~~reasonably~~deferred ~~estimated~~revenue orand ~~when~~recognized as ~~product license arrangements provide for customer acceptance, we recognize~~ revenue ~~under~~upon meeting the ~~completed~~ ~~contract~~aforementioned ~~method of accounting~~criteria.

~~Allowance~~The Company generally recognizes revenue from sales of its custom services and products under long-term contracts in one of three ways. Revenue on fixed price contracts is recognized using the percentage of completion method based on costs incurred in relation to total estimated costs. The Company’s failure to estimate accurately the resources required for ~~Doubtful~~a ~~Accounts~~project, or the Company’s failure to complete its contractual obligations in a manner consistent with the project plan upon which our fixed-price contract was based, could adversely affect our overall profitability and could have a material adverse effect on our business, financial condition and results of operations. The Company’s business unit finance personnel continually review costs incurred and total estimated costs for fixed price contracts, resulting in revisions to the amount of recognized revenue for a contract. If the Company does not accurately estimate the resources required or the scope of work to be performed for a contract or the Company does not manage the project properly within the planned time period, then the Company may recognize a loss on the contract. Provisions for estimated losses on uncompleted contracts are made on a contract-by-contract basis and are recognized in the period in which such losses are determined. Revenue on time-and-materials contracts is recognized to the extent of fixed billable rates for hours delivered. Revenue on cost-plus-fee contracts is recognized based on reimbursable costs incurred plus estimated fees earned thereon. Deferred revenue is recognized for payments received prior to services being performed. The Company recognizes revenue from fees for its consulting services on a time and materials basis, and monies received in excess of time and materials earned is recorded as billings in excess of costs. The Company recognizes maintenance fees on training management services ratably over the life of the contract. The Company recognizes revenue for standardized products, such as books or videotapes, when the products are delivered. We also incur “out-of-pocket” expenses which are reimbursable by the client. Through June 30, 2002 these expenses were accounted for as a reduction of the related costs. Effective July 1, 2002, reimbursements received for out-of-pocket expenses incurred have been characterized as revenue in our statement of operations, and all prior periods presented have been reclassified to conform to the current presentation.

~~The~~For ~~allowance~~multiple ~~for~~element ~~doubtful~~arrangements ~~accounts~~involving isproducts, ~~based~~services onand ~~our~~support ~~assessment~~elements, ofwe ~~the~~recognize ~~collectibility~~revenue ofin ~~specific~~accordance ~~customer~~with ~~accounts~~the ~~and~~residual ~~the~~method ~~aging~~when objective evidence of ~~our accounts~~fair ~~receivable~~value ~~balances.~~does Ifnot ~~there~~exist isfor athe ~~deterioration~~delivered ofelement. aUnder the ~~major~~residual ~~customer’s~~method, ~~credit~~the ~~worthiness~~fair orvalue ~~actual~~of ~~defaults~~the undelivered elements are ~~higher~~deferred ~~than~~and ~~our~~subsequently ~~historical~~recognized. ~~experience,~~We ~~our~~have ~~estimates~~established ofsufficient ~~the~~objective ~~recoverability~~evidence of ~~amounts~~fair ~~due~~value tofor usthe applicable services and ~~our~~support ~~anticipated~~elements ~~cash~~based on the price charged ~~collections~~when ~~could~~these beelements ~~adversely~~are ~~affected~~sold separately. ~~Measurement~~Accordingly, ofproduct ~~such~~license ~~losses~~revenue ~~requires~~sold ~~consideration~~as part of ~~historical~~a ~~loss~~multiple ~~experience~~element byarrangement ~~entity,~~is ~~including~~recognized under the ~~need~~residual tomethod ~~adjust~~in ~~for~~arrangements ~~current~~in ~~conditions,~~which ~~including~~the ~~present~~product ~~economic~~is ~~conditions~~sold ~~such~~with asone ~~delinquency~~or ~~rates,~~both of the other elements. Revenue from license agreements that require significant customizations and modifications to the ~~financial~~product ~~health~~is deferred and recognized using the percentage of ~~specific~~completion ~~customers~~method. ~~and~~For ~~market~~license ~~sectors~~arrangements ininvolving customizations for which the ~~Company~~amount ~~and~~of customization ~~its~~effort ~~subsidiaries~~cannot ~~operate~~be reasonably estimated or when product license arrangements provide for customer acceptance, we recognize revenue under the completed contract method of accounting.

~~Impairment~~Allowance offor ~~Intangible~~Doubtful ~~Assets~~Accounts

In July 2001, the Financial Accounting Standards Board (the “FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. The ~~Company~~allowance ~~adopted~~for ~~SFAS~~doubtful ~~141~~accounts ~~immediately~~is ~~and~~based ~~SFAS~~on ~~142~~our asassessment of ~~July 1, 2001. SFAS 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized but instead tested for impairment at least annually in accordance with~~ the ~~provisions~~collectibility of ~~SFAS~~specific ~~142.~~customer ~~SFAS~~accounts ~~142 also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values,~~ and ~~reviewed for impairment in accordance with SFAS 121, Accounting for~~ the ~~Impairment~~aging of ~~Long-Lived Assets~~our ~~and~~accounts ~~for~~receivable ~~Long-Lived Assets to Be Disposed Of~~balances. ~~SFAS~~If ~~141~~there ~~required,~~is ~~upon~~a ~~adoption~~deterioration of ~~SFAS~~a ~~142,~~major ~~that~~customer’s ~~the~~credit ~~Company~~worthiness ~~evaluate~~or ~~its~~actual ~~existing~~defaults ~~intangible~~are ~~assets~~higher ~~and~~than ~~goodwill~~our ~~that~~historical ~~were acquired in a prior purchase business combination~~experience, ~~and make any~~ ~~necessary~~our ~~reclassifications~~estimates inof ~~order to conform with~~ the ~~new~~recoverability ~~criteria in SFAS 141 for recognition apart from goodwill. Upon adoption~~ of ~~SFAS~~amounts ~~142,~~due ~~the Company was required~~ to ~~reassess~~us ~~the~~and ~~useful~~our ~~lives~~anticipated ofcash ~~all~~collections ~~intangible~~could ~~assets~~be ~~acquired~~adversely inaffected. ~~purchase business~~Measurement ~~combinations,~~of ~~and~~such ~~make~~losses ~~any~~requires ~~necessary~~consideration ~~amortization period adjustments by the end~~ of ~~the~~historical ~~first~~loss ~~interim~~experience ~~period~~by ~~after adoption. In addition~~entity, toincluding the ~~extent~~need ~~an intangible asset was identified as having an indefinite useful life, the Company was required~~ to ~~test~~adjust ~~the intangible asset~~ for current ~~impairment~~conditions, inincluding ~~accordance~~present ~~with~~economic ~~the~~conditions ~~provisions~~such ofas ~~SFAS~~delinquency ~~142~~rates, ~~within~~and the ~~first~~financial ~~interim~~health ~~period. Impairment loss was measured as~~ of ~~the~~specific ~~date~~customers ~~of adoption~~ and ~~recognized~~market assectors ~~the cumulative effect of a change~~ in ~~accounting~~ ~~principle~~which in the ~~first~~Company ~~interim~~and ~~period~~its ofsubsidiaries ~~fiscal 2002~~operate.

7Impairment of Goodwill and Other Intangible Assets

~~Table~~In June 2001, the Financial Accounting Standards Board (the “FASB”) issued Statement of ~~Contents~~Financial Accounting Standards (“SFAS”) No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. The Company adopted SFAS 141 immediately and SFAS 142 as of July 1, 2001. SFAS 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized but instead tested for impairment at least annually in accordance with the provisions of SFAS 142. SFAS 142 also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. SFAS 141 required, upon adoption of SFAS 142, that the Company evaluate its existing intangible assets and goodwill that were acquired in a prior purchase business combination, and make any necessary reclassifications in order to conform with the new criteria in SFAS 141 for recognition apart from goodwill. Upon adoption of SFAS 142, the Company

In9 connection with the transitional goodwill impairment evaluation, SFAS 142 required the Company to perform an assessment of whether there was an indication that goodwill was impaired on July 1, 2001. This assessment involved the identification of the Company’s reporting units and the determination of the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units as of the date of adoption. The Company has 14 reporting units. The Company then had up to six months from the date of adoption to determine the fair value of each reporting unit and compare it to the reporting unit’s carrying amount. The calculation of the fair value of each reporting unit involves estimates that are typical of valuation procedures and include the selection of both qualitative and quantitative valuation measures. Management determines fair value based on a combination of the discounted cash flow methodology, which is based upon converting expected future cash flows to present value, and the market approach, which includes analysis of market price multiples of companies engaged in lines of business similar to the company being evaluated. The market price multiples are selected and applied to the company based on the relative performance, future prospects and risk profile of the company in comparison to the guideline companies. Management predominately utilizes third-party valuation reports in its determination of fair value. The impairment policy will be consistently applied in evaluating impairment for each of the Company’s reporting units in the fourth quarter of each fiscal year, at a minimum.

Towas ~~the~~required ~~extent~~to areassess ~~reporting~~the ~~unit’s~~useful ~~carrying~~lives ~~amount~~of ~~exceeds~~all ~~its~~intangible ~~fair~~assets ~~value,~~acquired anin ~~indication~~purchase ~~exists~~business combinations, ~~that~~and ~~the~~make ~~reporting~~any ~~unit’s~~necessary ~~goodwill~~amortization ~~may~~period beadjustments ~~impaired~~by ~~and~~ the ~~Company must~~end ~~perform~~of the ~~second~~first ~~step~~interim ofperiod ~~the~~after ~~transitional impairment test~~adoption. In ~~the~~addition, ~~second~~to ~~step~~the ofextent ~~the~~an ~~analysis,~~intangible ~~the~~asset ~~Company~~was ~~must~~identified ~~compare~~as ~~the~~having ~~implied~~an ~~fair~~indefinite ~~value~~useful oflife, the ~~reporting~~Company ~~unit’s~~was ~~goodwill,~~required to ~~determined~~test ~~by allocating~~ the ~~reporting~~intangible ~~unit’s~~asset ~~fair value~~for toimpairment ~~all~~in ofaccordance ~~its~~with ~~assets~~the ~~(recognized~~provisions ~~and~~of ~~unrecognized)~~SFAS ~~and~~142 ~~liabilities~~within inthe afirst ~~manner~~interim ~~similar~~period. toImpairment aloss ~~purchase~~was ~~price~~measured ~~allocation~~as inof ~~accordance~~the ~~with~~date ~~SFAS~~of ~~141,~~adoption toand ~~its~~recognized ~~carrying~~as ~~amount,~~the ~~both~~cumulative effect of ~~which~~a ~~are~~change ~~measured~~in asaccounting principle ofin the ~~date~~first interim period of ~~adoption~~fiscal 2002.

~~The~~In ~~Company~~connection ~~completed~~with the transitional ~~analysis~~goodwill inimpairment ~~fiscal~~evaluation, ~~2002~~SFAS ~~and~~142 ~~determined~~required ~~that~~the ~~due~~Company to ~~the~~perform ~~continued~~an ~~weakness~~assessment inof ~~the economy,~~whether ~~operating~~there ~~results~~was ~~and~~an ~~cash~~indication ~~flows~~that ~~were~~goodwill ~~lower~~was ~~than~~impaired ~~expected~~on inJuly ~~fiscal~~1, 2001. ~~which~~This ~~resulted~~assessment ininvolved anthe identification ~~impairment~~of inthe Company’s reporting units and the determination of the carrying ~~amount~~value of ~~its~~each ~~goodwill~~reporting inunit by assigning the ~~amount~~assets ofand ~~$165.4~~liabilities, ~~million~~including the existing goodwill and intangible assets, ~~net~~to those reporting units as of the $0date of adoption.8 ~~million~~At the date of ~~taxes~~the transitional impairment, ~~which~~the ~~spread~~Company ~~across~~had ~~all~~14 ~~operating segments~~reporting units. The ~~transitional~~Company ~~impairment~~then ~~loss~~had ~~was~~up ~~recognized~~to assix months from the ~~cumulative~~date ~~effect~~of adoption to determine the fair value of aeach ~~change~~reporting inunit ~~accounting~~and ~~principle~~compare init to the ~~fiscal~~reporting unit’s ~~2002~~carrying ~~statement~~amount. The calculation of ~~operations~~the fair value of each reporting unit involves estimates that are typical of valuation procedures and include the selection of both qualitative and quantitative valuation measures. ~~The~~Management determines ~~Company’s~~fair ~~prior~~value ~~year~~based ~~annual~~on ~~impairment~~a ~~analysis~~combination of the discounted cash flow methodology, ~~performed~~which onis ~~April~~based 30upon converting expected future cash flows to present value, ~~2002~~and the market approach, ~~resulted~~ inwhich anincludes ~~additional~~analysis ~~reduction~~of inmarket ~~goodwill~~price multiples of ~~$5.6~~companies engaged ~~million.~~in Itlines isof ~~reasonably~~business ~~possible~~similar ~~that~~to the ~~impairment~~company ~~factors~~being evaluated. byThe ~~management~~market ~~will~~price ~~change~~multiples inare ~~subsequent~~selected ~~periods~~and applied to the company based on the relative performance, ~~given~~future ~~that~~prospects and risk profile of the ~~Company~~company ~~operates~~in comparison to the guideline companies. Management predominately utilizes third-party valuation reports in aits ~~volatile~~determination ~~business~~of ~~environment~~fair value. ~~This~~ ~~could~~The ~~result~~impairment policy will be consistently applied in ~~material~~evaluating impairment ~~charges~~for each of the Company’s reporting units in the ~~future~~fourth ~~periods~~quarter of each fiscal year, at a minimum.

AsTo of the ~~date~~extent ofa ~~adoption~~reporting ~~(July~~unit’s 1carrying amount exceeds its fair value, ~~2001)~~an indication exists that the reporting unit’s goodwill may be impaired and the Company must perform the second step of the transitional impairment ~~June~~test. ~~30,~~In ~~2002~~the second step of the analysis, the Company ~~had~~must ~~unamortized~~compare the implied fair value of the reporting unit’s goodwill, indetermined by allocating the ~~amount~~reporting unit’s fair value to all of ~~$242.8~~its ~~million~~assets (recognized and ~~$36.1~~unrecognized) ~~million,~~and liabilities ~~respectively,~~in ~~and~~a atmanner ~~each~~similar ~~date~~to ~~had~~a nopurchase ~~unamortized~~price ~~identifiable~~allocation ~~intangible~~in ~~assets~~accordance ~~which~~with ~~were~~SFAS ~~subject~~141, to ~~the~~its ~~transition~~carrying ~~provisions~~amount, both of ~~SFAS~~which ~~141~~are ~~and SFAS~~measured ~~142~~as of the date of adoption.

~~Accounting~~The ~~for~~Company ~~Income~~completed ~~Taxes~~the transitional analysis in fiscal 2002 and determined that due to the continued weakness in the economy, operating results and cash flows were lower than expected in fiscal 2001 which resulted in an impairment in the carrying amount of its goodwill in the amount of $165.4 million, net of $0.8 million of taxes, which spread across all operating segments. The transitional impairment loss was recognized as the cumulative effect of a change in accounting principle in the fiscal 2002 statement of operations. The Company’s prior year annual impairment analysis, performed on April 30, 2002, resulted in an additional reduction in goodwill of $5.6 million. It is reasonably possible that the impairment factors evaluated by management will change in subsequent periods, given that the Company operates in a volatile business environment. This could result in material impairment charges in future periods.

WeThe ~~record~~Company ~~income~~performed ~~taxes~~an ~~using~~interim ~~the~~impairment ~~asset~~analysis ~~and~~as ~~liability~~of ~~method.~~December ~~Deferred~~31, ~~income~~2002. ~~tax~~Based ~~assets~~on ~~and~~the ~~liabilities~~results ~~are recognized~~ for the ~~future~~six ~~tax~~months ~~consequences~~ended ~~attributable~~December ~~to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases~~31, ~~and operating loss and tax credit carryforwards. Our financial statements contain certain deferred tax assets~~ ~~which~~2002 ~~have arisen as a result of temporary differences between book~~ and ~~tax~~the ~~accounting.~~forecast ~~SFAS 109, Accounting~~ for ~~Income Taxes, requires~~ the ~~establishment~~remaining ofsix amonths ~~valuation allowance to reflect the likelihood~~ of realization of deferred tax assets. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. In establishing the ~~valuation allowance at the end of each reporting period~~year, ~~we evaluate~~ the ~~weight~~Company ofrecorded ~~all~~an ~~available~~additional ~~evidence~~goodwill toimpairment ~~determine~~loss ~~whether it is more likely than not that some portion or all~~ of ~~the deferred income tax assets will not be realized~~$1.2 ~~The~~million ~~amount~~through ~~of the deferred tax asset considered realizable is based on significant estimates of future operating performance and results~~selling, ~~and~~general ~~it is reasonably possible that changes in these estimates in the near term could materially affect our financial condition~~ and ~~results~~administrative ofexpenses ~~operations.~~for ~~Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss, changes to~~ the ~~valuation~~quarter ~~allowance,~~ended ~~changes~~December ~~to federal or state tax laws~~31, ~~or as a result of future acquisitions or dispositions~~2002.

2As of the date of adoption (July 1, 2001) and June 30, 2002, the Company had unamortized goodwill in the amount of $242. ~~LIQUIDITY~~8 ~~AND~~million ~~PLAN~~and OF$36.1 ~~OPERATION~~million, respectively, (of which $53.9 and $7.0 million relates to continuing operations at each date) and at each date had no unamortized identifiable intangible assets which were subject to the transition provisions of SFAS 141 and SFAS 142.

AsAccounting offor ~~September~~Income ~~30,~~Taxes 2002, the Company had approximately $0.2 million of cash and cash equivalents, $45.5 million outstanding under a credit facility agreement with a group of banks, $2.4 million outstanding under a contingent consideration arrangement related to a Subsequent Acquisition, and $3.6 million outstanding under promissory notes issued in connection with certain other Subsequent Acquisitions. The Company reported a working capital deficit of $30.8 million and $27.4 million at September 30, 2002 and June 30, 2002, respectively. The Company is currently in default on amounts outstanding under the credit facility but is in continuing discussions with the group of banks to extend the payment due date of the credit facility to April 15, 2003 based upon a term sheet from the banks. Under the terms of the extension, the Company would be required to take certain actions to facilitate repayment of the credit facility by that date, including the sale of certain of the Company’s assets. Additionally, the Company is in discussions with certain Subsequent Acquisition junior debt holders to extend their payment due dates.

~~During~~We ~~fiscal~~record ~~2002,~~income taxes using the ~~Company~~asset ~~had~~and ~~difficulty~~liability ~~maintaining~~method. ~~compliance~~Deferred ~~with~~income ~~several~~tax ~~financial~~assets ~~covenants~~and ~~under~~liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of ~~credit~~existing ~~facility~~assets ~~agreement~~and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards. AsOur financial statements contain certain deferred tax assets which have arisen as a result of temporary differences between book and tax accounting. SFAS 109, Accounting for Income Taxes, requires the ~~Company~~establishment ~~executed~~of a ~~series~~valuation allowance to reflect the likelihood of ~~amendments~~realization of deferred tax assets. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. In establishing the valuation allowance at the end of each reporting period, we evaluate the weight of all available evidence to determine whether it is more likely than not that some portion or all of the ~~credit~~deferred ~~facility~~income ~~agreement~~tax assets will not be realized. The amount of the deferred tax asset considered realizable is based on significant estimates of future operating performance and results, and it is reasonably possible that changes in these estimates in the near term could materially affect our financial condition and results of operations. Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss, ~~among~~changes ~~other~~to ~~things~~the valuation allowance, changes to federal or state tax laws, or as a result of future acquisitions or dispositions.

810

~~Table~~2. ofLIQUIDITY ~~Contents~~AND PLAN OF OPERATION

~~reduced~~As ~~the~~of ~~availability~~December ~~under~~31, 2002, the ~~agreement~~Company ~~from~~had approximately $651.1 million toof cash and cash equivalents, $4820.4 million, ~~increased~~outstanding ~~the~~under ~~interest rate~~a ~~from~~credit ~~prime~~facility ~~plus~~agreement ~~.5%~~with toa ~~prime~~group ~~plus~~of ~~8.5%~~banks, and ~~required~~$0.3 ~~the~~million outstanding under promissory notes issued in connection with a Subsequent Acquisition. The Company toreported ~~pay~~a ~~more~~working ~~than~~capital deficit of $116.0 million inand ~~waiver~~$27.4 ~~and~~million ~~amendment~~at ~~fees.~~December In31, ~~addition~~2002 and June 30, ~~the~~2002, ~~banks~~respectively. ~~required~~Although the Company tohas ~~take~~not ~~certain~~received ~~actions~~a ~~that~~notice ~~would~~of ~~result~~default under inits credit facility, the ~~repayment~~Company ofis ~~the~~not in compliance with several covenants under its credit facility agreement. The Company is in ~~advance~~discussions with its banks to waive these defaults and extend the payment due date of the ~~July~~credit 31facility from April 15, ~~2002~~2003 ~~expiration~~to ~~date~~June 30, 2003. ~~The~~Under the terms of the extension, the Company’s ~~efforts~~would be required to dotake socertain ~~proved~~actions ~~unsuccessful~~to facilitate repayment of amounts outstanding under the credit facility, including the sale of Company assets.

~~Since~~During ~~July~~fiscal 1, 2002, the Company ~~has~~had ~~executed~~difficulty ~~amendments~~maintaining compliance towith several financial covenants under the credit facility agreement. ~~that~~As a result, ~~among~~the ~~other~~Company ~~things,~~executed ~~extended~~a series of amendments to the credit facility ~~expiration~~agreement ~~date~~that, toamong ~~November~~other 8things, ~~2002,~~ reduced the availability under the ~~facility~~agreement from $4865 million to $~~45.5~~48 million, ~~and~~increased ~~required~~ the ~~Company~~interest torate ~~pay~~from ~~$50,000~~prime inplus ~~waiver and amendment fees~~.5% ~~The~~to ~~Company~~prime isplus ~~currently~~8.5% inand ~~default~~required onthe ~~its~~Company ~~obligation~~ to pay ~~amounts~~more ~~outstanding~~than ~~under~~$1 ~~the~~million ~~credit~~in ~~facility.~~waiver ~~The~~and ~~Company~~amendment ~~has~~fees. ~~received~~In ~~a term sheet from~~addition, ~~and is currently negotiating with,~~ the banks torequired ~~amend~~ the ~~credit~~Company ~~facility~~to ~~agreement~~take ~~to,~~certain ~~among~~actions that ~~other~~would ~~things,~~result ~~extend~~in the ~~expiration~~repayment ~~date~~of tothe ~~April~~credit ~~15,~~facility ~~2003~~in ~~and~~advance ~~reduce~~of the ~~interest~~July ~~rate~~31, ~~subject~~2002 toexpiration ~~the~~date. The Company’s ~~continued~~efforts ~~obligation~~ to ~~take~~do ~~actions, including~~so ~~the~~proved ~~sale of certain assets that would result in the repayment of the indebtedness to the banks~~unsuccessful.

AsAfter ~~of September~~July 301, 2002, the Company ~~was~~executed ~~obligated~~amendments to ~~pay~~the ~~$6.0~~credit ~~million~~facility asagreement ~~contingent~~that, ~~consideration~~among ~~pursuant~~other things, toextended the ~~October~~facility ~~1998~~expiration ~~acquisition~~date ~~agreement~~to ~~relating~~November 8, 2002, reduced availability under the facility from $48 million to $45.5 million, and required the ~~acquisition~~Company ofto SIpay $50,000 in waiver and amendment fees. ~~Under~~In November, 2002, the ~~October~~Company executed ~~1998~~an ~~acquisition~~amendment to the agreement, asthat, ~~amended~~among other things, extended the facility expiration date until April 15, 2003 and outlined certain strategic initiatives that the Company must achieve. The Company was required to pay the banks an extension fee of $450,000 and issue warrants to ~~the~~purchase ~~former~~an SIaggregate ~~stockholders~~of ~~contingent~~5,132,250 ~~consideration~~shares of $2Common Stock, subject to adjustment under certain circumstances (the “Warrant Shares”).4 ~~million~~The inwarrants ~~cash~~have ~~and~~an exercise price of $3.601 ~~million~~per inshare ~~cash~~and expire oron 5November 21, 2012.8 ~~million~~Warrants ~~shares~~with respect to one-fifth of ~~common~~the ~~stock~~Warrant onShares orbecame ~~before~~exercisable ~~September~~on 16November 21, 2002. ~~The~~Warrants ~~Company~~with isrespect ~~currently~~to inone-fifth ~~discussions~~of the Warrant Shares expired on December 31, 2002. Warrants will become exercisable with respect to one-fifth of the ~~former~~ SIWarrant ~~stockholders~~Shares toon ~~extend~~March 31, 2003 if the ~~payment~~outstanding ~~due~~principal ~~date~~balance ~~for~~under the Company’s credit facility is in excess of $222.495 million inon ~~cash~~that ~~owed~~date and with respect to ~~them~~two-fifths ~~until~~of the ~~earlier~~Warrant toShares ~~occur~~on of April 15, 2003 orif the outstanding principal balance under the Company’s ~~receipt~~credit offacility ~~net~~is ~~proceeds~~not ~~from~~paid ~~certain~~in ~~sales~~full ofby ~~assets~~that ~~should~~date. ~~any~~The ~~such~~Company ~~sales~~has ~~occur.~~the ~~In November~~right ~~2002,~~to pay the ~~Company~~credit ~~issued~~facility ~~5.8~~banks ~~million~~a ~~shares~~fee ofin ~~common~~lieu ~~stock~~of toany ~~the~~warrant ~~former~~vesting SIor ~~stockholders~~becoming exercised in ~~satisfaction~~an amount equal to $100,000 per one-fifth of the ~~obligation~~Warrant Shares that are currently exercisable, subject to ~~pay~~adjustment under certain circumstances. The Company has valued the warrants at $30.61 million, which has been accounted for as additional interest expense associated with the extension of ~~contingent~~the ~~consideration~~credit facility.

On ~~September~~December 2931, ~~2001~~2002, the Company ~~paid~~used $321.3 million ~~to Executive Education Institute, Inc. (“EEI”), which is owned by Flory Netsch Hiatrides, a Vice President~~ of ~~Provant,~~ ~~under~~ the ~~terms~~proceeds offrom ~~a promissory note issued in connection with~~ the ~~Company’s~~sale ~~September 2000 acquisition~~ of the ~~EEI~~Businesses ~~business~~to ~~(which~~Novations isto apermanently ~~part~~paydown of the ~~Vertical~~line ~~Markets group). As~~ of ~~September 30~~credit, ~~2002,~~which reduced the Company’s ~~owed~~availability ~~EEI an additional $3.3 million~~ under the ~~terms~~credit offacility ~~a second promissory note payable on September 29, 2002 that was issued by the Company in connection with the EEI acquisition. The Company is currently in discussions with EEI~~ to ~~extend the payment due date for the~~ ~~second~~$24.1 ~~note~~million ~~until~~(see ~~the~~Note ~~earlier to occur of April 15, 2003 or the Company’s receipt of net proceeds from certain sales of assets should any such sales occur~~6).

As of ~~September~~December 3031, 2002, the Company owed the former stockholders of Hughes Research Corporation an aggregate of $0.3 million under promissory notes due on September 28, 2002 that were issued two years earlier in connection with the Company’s acquisition of that company. The Company is currently in discussions with these stockholders to extend the payment due date for the notes until the earlier to occur of April 15, 2003 or the Company’s receipt of net proceeds from certain sales of assets should any such sales occur.

~~These~~The ~~factors raise~~ability ~~substantial~~of ~~doubt about~~ the Company’s ~~ability~~ to continue as a going concern. ~~The ultimate success of the Company~~ is dependent on ~~restructuring~~its ~~the~~ability to restructure its outstanding debt, orobtain ~~obtaining~~ adequate financing from another source. ~~The~~or ~~Company anticipates~~sell ~~that~~certain ifof ~~the~~its ~~renegotiation~~remaining ofassets. ~~the~~There ~~terms~~is no guarantee that any of ~~the~~these ~~credit~~initiatives ~~facility~~will ~~and~~be ~~its~~successful. ~~obligations~~The Company toanticipates ~~its~~that ~~junior~~if ~~debt~~these ~~holders~~initiatives are not completed in a timely manner or to the Company’s satisfaction, existing resources will not be sufficient to satisfy its obligations to its debt holders over the next twelve months. The Company has retained ~~Jefferies~~Quarterdeck &Investment ~~Co.~~Partners, LLC, an investment banking firm, to assist it in ~~reviewing~~the ~~its strategic alternatives, including a~~ possible sale of ~~the Company or certain of~~ its ~~assets~~Government group. The Company has ~~also~~been ~~retained~~in ~~Quarterdeck~~discussions ~~Investment~~with ~~Partners,~~various anpotential ~~investment~~strategic ~~banking~~and ~~firm,~~financial tobuyers ~~assist~~and itis pursuing those discussions. The Company also is in the ~~possible~~process of negotiating a sale of its ~~Government~~Leadership Consulting group to that group’s management. ~~The~~No ~~Company~~assurance ~~has~~can ~~been~~be ingiven ~~discussions~~that ~~with~~these ~~various~~sales ~~potential~~efforts ~~strategic~~will ~~and~~be ~~financial buyers~~successful. ~~and~~If isthey ~~pursuing~~are, ~~those~~the ~~discussions~~Company would ~~aggressively.~~expect ~~There~~to isliquidate noand ~~guarantee~~distribute ~~that~~the ~~any~~net ofproceeds ~~these~~from ~~initiatives~~the ~~will~~sales beto ~~successful~~its stockholders.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern and, as such, do not include any adjustments that may result from the outcome of these uncertainties.

3. CONTINGENT CONSIDERATION

As of ~~September~~June 30, 2002, the Company had accrued $6.0 million of contingent consideration of which $2.4 million was beassumed ~~paid~~by inDBM-J ~~cash~~on December 31, 2002 and $3.6 million was paid by the issuance of 5.8 million shares of ~~common~~Common ~~stock~~Stock in November 2002 in accordance with the terms of the agreement.

911

~~Table~~4. ofEARNINGS ~~Contents~~PER SHARE

~~4. EARNINGS~~The ~~PER~~following ~~SHARE~~table sets forth the computation of basic and diluted earnings per common share (dollars in thousands, except share and per share data):

The following table sets forth the computation of basic and diluted earnings (loss) per common share (dollars in thousands, except per share data):

	Three months ended December 31,						Six months ended December 31,
	2002			2001			2002			2001
Numerator:
Income (loss) from continuing operations before extraordinary item and cumulative effect of a change in accounting principle	$	(5,076	)	$	(836	)	$	(9,368	)	$	767
Income (loss) from discontinued operations	$	(19,737	)	$	1,017		$	(19,086	)	$	(117,556	)
Income (loss) before extraordinary item and cumulative effect of a change in accounting principle	$	(24,813	)	$	181		$	(28,724	)	$	(116,789	)

Extraordinary item—loss on sale of business		—		$	(14,542	)		—		$	(14,542	)

Cumulative effect of a change in accounting principle		—			—			—		$	(47,862	)

Net loss	$	(24,813	)	$	(14,361	)	$	(28,724	)	$	(179,193	)

Denominator:
Basic weighted average common shares outstanding		24,376,196			21,520,636			22,938,496			21,662,089
Shares to be issued as contingent consideration		—			—			—			11,778,727
Effect of dilutive securities: stock options, warrants and convertible notes payable		—			—			—			59,939

Diluted weighted average common shares outstanding		24,376,196			21,520,636			22,938,496			33,500,755


Basic earnings (loss) per common share from continuing operations before extraordinary item and cumulative effect of a change in accounting principle	$	(0.21	)	$	(0.04	)	$	(0.42	)	$	0.04

Diluted earnings (loss) per common share from continuing operations before extraordinary item and cumulative effect of a change in accounting principle	$	(0.21	)	$	(0.04	)	$	(0.42	)	$	0.02


Basic earnings (loss) per common share from discontinued operations	$	(0.81	)	$	0.05		$	(0.83	)	$	(5.43	)

Diluted earnings (loss) per common share from discontinued operations	$	(0.81	)	$	0.05		$	(0.83	)	$	(3.51	)


Basic earnings (loss) per common share before extraordinary item and cumulative effect of a change in accounting principle	$	(1.02	)	$	0.01		$	(1.25	)	$	(5.39	)

Diluted earnings (loss) per common share before extraordinary item and cumulative effect of a change in accounting principle	$	(1.02	)	$	0.01		$	(1.25	)	$	(3.49	)


Basic loss per common share—extraordinary item		—		$	(0.68	)		—		$	(0.67	)

Diluted loss per common share—extraordinary item		—		$	(0.68	)		—		$	(0.43	)


Basic loss per common share—cumulative effect of a change in accounting principle		—			—			—		$	(2.21	)

Diluted loss per common share—cumulative effect of a change in accounting principle		—			—			—		$	(1.43	)


Basic loss per common share	$	(1.02	)	$	(0.67	)	$	(1.25	)	$	(8.27	)

Diluted loss per common share	$	(1.02	)	$	(0.67	)	$	(1.25	)	$	(5.35	)

	Three months ended September 30,
	2002			2001
Numerator:
Net income (loss) before cumulative effect of a change in accounting principle	$	(3,910	)	$	615
Cumulative effect of a change in accounting principle, net		—			(165,447	)
Net loss	$	(3,910	)	$	(164,832	)
Denominator:
Basic weighted average common shares outstanding		21,500,796			21,803,542
Shares that may be issued as contingent consideration		—			17,012,000
Effect of dilutive securities: stock options, warrants and convertible notes payable		—			386,121
Diluted weighted average common shares outstanding		21,500,796			39,201,663
Basic earnings (loss) per common share before cumulative effect of a change in accounting principle	$	(0.18	)	$	0.03
Diluted earnings (loss) per common share before cumulative effect of a change in accounting principle	$	(0.18	)	$	0.02
Cumulative effect of a change in accounting principle, net		—		$	(7.59	)
Basic and diluted (loss) per share	$	(0.18	)	$	(7.56	)

In accordance with SFAS No. 128, Earnings per Share, the Company has used income from continuing operations as the control number in determining whether potential common shares are dilutive or antidilutive. Therefore, in certain periods presented in which the Company has reported income from continuing operations, the same number of potential common shares used in computing the

~~The~~12 following securities that could potentially dilute future basic earnings per common share were not included in the computation of diluted earnings per common share because to do so would have been anti-dilutive:

	Three months ended September 30,
	2002	2001
Stock options	3,392,056	4,102,930
Warrants	569,686	877,262
Estimated contingent shares to be issued	5,750,799	—
Total	9,712,541	4,980,192

diluted per-share amount for income from continuing operations are used in computing all other reported diluted per-share amounts even if those amounts will be antidilutive to their respective basic per-share amounts.

~~5. LINE~~The OFfollowing ~~CREDIT~~securities ~~FACILITY~~that could potentially dilute future basic earnings per common share were not included in the computation of diluted earnings per common share because to do so would have been anti-dilutive:

As of September 30, 2002, the Company had outstanding indebtedness of $45.5 million under the credit facility that expired on July 31, 2002. The credit facility provided a revolving line of credit for working capital and general corporate purposes, with certain limitations. The credit facility (i) generally prohibits us from paying dividends and other distributions, (ii) generally does not permit us to incur or assume other indebtedness, (iii) requires us to comply with certain financial covenants and (iv) requires us to obtain approval to draw on the facility to pay contingent consideration. The credit facility is guaranteed by all of the Company’s subsidiaries and secured by a pledge of all of the assets of the Company and the assets of each of its subsidiaries. As of September 30, 2002, the Company was in default under the credit facility and was paying a default rate of interest of prime plus 6.5% per annum.

	Three months ended December 31,		Six months ended December 31,
	2002	2001	2002	2001
Stock options	2,746,018	2,637,069	3,069,037	3,370,000
Warrants	5,858,638	726,388	5,858,638	726,388

Total	8,604,656	3,363,457	8,927,675	4,096,388

65. ~~SEGMENT~~ ~~REPORTING~~LINE OF CREDIT FACILITY

~~During~~As of ~~fiscal~~December ~~2001~~31, 2002, the Company ~~organized~~had ~~its~~outstanding ~~operating~~indebtedness ~~entities~~of ~~into~~$20.4 ~~six~~million ~~operating~~under ~~segments~~the credit facility that expires on April 15, 2003. ~~Operating~~The ~~segments~~credit ~~are~~facility ~~defined~~provided asa ~~components~~ revolving line of ancredit ~~enterprise~~for ~~about~~working ~~which~~capital ~~separate~~and general corporate purposes, with certain limitations. The credit facility (i) generally prohibits us from paying dividends and other distributions, (ii) generally does not permit us to incur or assume other indebtedness, (iii) requires us to comply with certain financial covenants ~~information~~and is(iv) ~~available~~requires ~~that~~us to obtain approval to draw on the facility to pay contingent consideration. The credit facility is ~~evaluated~~guaranteed ~~regularly~~by the Company’s subsidiary and secured by a pledge of all of the ~~chief~~assets ~~operating~~of ~~decision~~the ~~maker,~~Company orand ~~decision~~the ~~making~~assets of ~~group~~its subsidiary. As of December 31, 2002, the Company was in ~~deciding~~default ~~how~~under the credit facility. The Company is currently working with the bank to ~~allocate~~amend ~~resources~~the current agreement and ~~assess~~extend ~~performance.~~the expiration date until June 30, 2003 (see Note 2).

The Company’s six reportable segments are: Performance Solutions group, Government group, Leadership group, Project Management group (which is managed under our Government group), Technology & Development group, and Vertical Markets group6. ~~The~~DISPOSITIONS ~~“Other”~~

10On December 31, 2002, the Company completed the sale of the Businesses to Novations, a subsidiary of DBM-J. The Businesses were transferred to Novations by the sale of the stock of Provant Performance Solutions, Inc., Provant Media, Inc. and Provant Canada, Inc. and the sale of tangible and intangible assets used in connection with the conduct of the Learning and Strategic Alliances businesses. The $30.0 million sales price paid at closing consisted of $23.4 million cash, subject to a working capital adjustment, which we have preliminarily estimated up to $1.8 million that is payable to Novations, and the assumption by Novations of $6.6 million of Provant’s non-bank indebtedness and other acquisition related obligations. Provant used the cash proceeds less expenses to reduce its bank debt by $21.3 million on December 31, 2002. After the closing until March 31, 2003, Novations and Provant (including its subsidiary, Star Mountain, Inc.) will provide certain transitional services to each other on an as required basis. Provant’s remaining businesses are its Government and Leadership Consulting groups, consisting principally of Star Mountain and Senn-Delaney Leadership. Under the provisions of SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the businesses sold are required to be presented as discontinued operations.

~~Table~~Summarized offinancial ~~Contents~~information for the discontinued operations is as follows:

column includes the Company’s corporate expenses which are not allocated to the operating segments as they are not utilized by the chief operating decision maker as a measure of performance.

	Three months ended December 31,					Six months ended December 31,
	2002			2001		2002			2001
Results of operations:
Total revenue	$	17,384		$	20,707	$	34,697		$	42,719
Total expenses		17,145			19,690		33,807			42,690

Net income before income taxes		239			1,017		890			29
Loss on sale		(19,976	)		—		(19,976	)		—
Cumulative effect of a change in accounting principle		—			—		—			(117,585	)

Net income (loss) from discontinued operations	$	(19,737	)	$	1,017	$	(19,086	)	$	(117,556	)


	June 30, 2002
Financial position:
Current assets	$	22,143
Property and equipment, net		4,184
Other assets		36,532
Total liabilities		(17,916	)

Net assets of discontinued operations	$	44,943

~~The~~13 Company’s reportable segments are organized in separate business units with different management, customers, and services. The respective segments account for their respective businesses using the same accounting policies as described in Note 2 to the consolidated financial statements contained in the Annual Report on Form 10-K for the year ended June 30, 2002. Summarized financial information concerning the Company’s reportable segments, net of inter-company transactions, is shown in the following tables (in thousands):

	For the quarter ended September 30, 2002
	Performance Solutions		Government		Leadership			Project Management			Technology & Development			Vertical Markets			Other			Total
External revenue	$	6,814	$	15,933	$	5,202		$	2,217		$	4,077		$	4,205		$	-		$	38,448
Cost of revenue		2,053		11,078		2,645			1,079			2,366			2,194			—			21,415
Gross profit		4,761		4,855		2,557			1,138			1,711			2,011			—			17,033
SG&A expenses		4,080		3,722		2,920			1,605			1,980			1,451			3,276			19,034
Income (loss) from operations	$	681	$	1,133	$	(363	)	$	(467	)	$	(269	)	$	560		$	(3,276	)	$	(2,001	)
Total assets at 9/30/02	$	19,489	$	18,000	$	9,686		$	6,752		$	15,704		$	14,032		$	8,117		$	91,780
	For the quarter ended September 30, 2001
	Performance Solutions		Government		Leadership			Project Management			Technology & Development			Vertical Markets			Other			Total
External revenue	$	11,688	$	11,625	$	7,222		$	4,741		$	5,015		$	5,784		$	-		$	46,075
Cost of revenue		3,736		7,512		3,064			2,963			1,401			3,342			—			22,018
Gross profit		7,952		4,113		4,158			1,778			3,614			2,442			—			24,057
SG&A expenses		6,297		3,303		2,936			2,540			2,676			2,892			1,611			22,255
Income (loss) from operations	$	1,655	$	810	$	1,222		$	(762	)	$	938		$	(450	)	$	(1,611	)	$	1,802
Total assets at 9/30/01	$	87,224	$	63,406	$	14,432		$	54,605		$	42,865		$	47,862		$	11,210		$	321,604

On November 6, 2001, the Company consummated the sale of Sales Performance International, Inc. (including Resolution Software, Inc. and Solution Selling, Inc.) (“SPI”) to a company controlled by the former majority stockholder of Sales Performance International, Inc., which former stockholder was an officer, director and employee of Sales Performance International, Inc. at the time of the sale. The purchaser paid the Company approximately $19.5 million in cash and returned 517,325 shares of Provant’s Common Stock originally received by the former majority stockholder when SPI was acquired. Included in the assets of the companies sold was $1.2 million in cash. The Company’s obligation to pay any contingent consideration, either cash or stock, pursuant to the June 1999 Sales Performance International, Inc. acquisition agreement was terminated. The Company used $4.4 million of the proceeds of the sale to prepay a seller note to the former owner of the Solution Selling, Inc. business and used $2.0 million of the proceeds to satisfy in full all remaining obligations to pay contingent consideration, whether cash or stock, under the June 1999 Solution Selling, Inc. acquisition agreement. The remaining $12 million of the net proceeds from the sale were used to pay down the Company’s credit facility. As a result of the sale of the Sales Performance International, Inc. and Solution Selling, Inc. businesses, the Company recognized in the second quarter of fiscal 2002 an extraordinary loss, net of taxes, of approximately $14.5 million, primarily due to the elimination of related goodwill. In accordance with Accounting Principles Board Opinion No. 16 (“APB 16”), the loss was presented as an extraordinary item in the accompanying financial statements as the sale of SPI occurred within two years of a business combination accounted for as a pooling-of-interests.

78. ~~DISPOSITIONS~~ SEGMENT REPORTING

OnManagement ~~November~~evaluates ~~6, 2001,~~ the ~~Company~~performance ~~consummated the sale~~ of the ~~Sales~~Company ~~Performance~~through ~~unit (including Sales Performance International, Inc, Resolution Software, Inc. and Solution Selling, Inc.) (“SPI”) to a company controlled by~~ the ~~former~~use ~~majority stockholder~~ of ~~Sales~~operating ~~Performance International, Inc~~segments., ~~which~~Operating ~~former stockholder was an officer, director and employee of Sales~~segments ~~Performance~~are ~~International,~~defined ~~Inc.~~as atcomponents ~~the time~~ of ~~the~~an ~~sale.~~enterprise ~~The~~about ~~decision~~which toseparate ~~sell~~financial ~~SPI~~information ~~was~~is ~~based,~~available ~~in part, upon the determination~~ that ~~the~~is ~~niche~~evaluated ~~high-end~~regularly ~~sales training provided~~ by ~~these operating companies through~~ the ~~Solution~~chief ~~Selling~~operating ~~methodology~~decision ~~does not fit well with the Company’s long-term strategic plan. The purchaser paid the Company approximately $19.5 million in cash and returned 517~~maker,~~325~~ ~~shares~~or ofdecision ~~Provant’s~~making ~~common stock originally received by the former majority stockholder when Sales Performance International~~group, ~~Inc. was acquired. Included~~ in ~~the~~deciding ~~assets~~how ~~of SPI was $1.2 million in cash. The Company’s obligation~~ to ~~pay~~allocate ~~any~~resources contingent consideration, either cash or stock, pursuant to the June 1999 Sales Performance International, Inc. acquisition agreement has been terminated. The Company used $4.4 million of the proceeds of the sale to prepay a seller note to the former owner of the Solution Selling, Inc. business and ~~used $2.0 million of the proceeds to~~assess ~~satisfy in full all remaining obligations to pay contingent consideration, whether cash or stock, under the June 1999 Solution Selling, Inc~~performance. acquisition agreement. The remaining $12 million of the net proceeds from the sale were used to pay down the Company’s credit facility. As a result of the sale of SPI, the Company recognized in the second quarter of fiscal 2002 an extraordinary loss, net of taxes, of approximately $14.3 million, primarily due to the elimination of related goodwill. In accordance with Accounting Principles Board Opinion No. 16, the loss was presented as an extraordinary item in the accompanying financial statements as the sale of SPI occurred within two years of a business combination accounted for as a pooling-of-interests.

11As a result of the sale of the Businesses to Novations in December 2002, the Company’s only two reportable segments are: Government group and Leadership group. The “Other” column includes the Company’s corporate expenses which are not allocated to the operating segments as they are not utilized by the chief operating decision maker as a measure of segment performance. In addition to its two current operating segments, the Company continues to report a Performance Solutions segment that consists of the operations of SPI, as this entity does not meet the aggregation criteria under SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, with respect to the Company’s current reporting segments. As described in Note 7, SPI was sold during November 2001.

~~Table~~The Company’s reportable segments are organized in separate business units with different management, customers, and services. The respective segments account for their respective businesses using the same accounting policies as described in Note 2 to the consolidated financial statements contained in the Annual Report on Form 10-K for the year ended June 30, 2002. Summarized financial information concerning the Company’s reportable segments, net of ~~Contents~~inter-company transactions, is shown in the following tables (in thousands):

8. RECENT ACCOUNTING PRONOUNCEMENTS

	For the Quarter Ended December 31, 2002
	Govern- ment		Leader- ship			Perform- ance		Other			Total
External revenue	$	15,504	$	5,633		$	—	$	—		$	21,137
Cost of revenue		10,182		2,729								12,911

Gross profit		5,322		2,904								8,226
SG&A expenses		4,455		4,161					3,041			11,657

Income (loss) from operations	$	867	$	(1,257	)	$	—	$	(3,041	)	$	(3,431	)

Total assets at 12/31/02	$	22,215	$	9,002		$	—	$	185		$	31,402

In14 October 2001, the FASB issued SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, effective for fiscal years beginning after December 15, 2001. Under the new rules, the criteria required for classifying an asset as held-for-sale have been changed. Assets held-for-sale are stated at the lower of their fair values less estimated selling costs or carrying amounts, and depreciation is no longer recognized. In addition, the expected future operating losses from discontinued operations will be displayed in discontinued operations in the period in which the losses are incurred rather than as of the measurement date. More dispositions will qualify for discontinued operations treatment in the income statement under the new rules. The adoption of SFAS 144 did not have a material effect on the Company’s financial position or results of operations.

In November 2001, the FASB issued Topic Number D-103 regarding Income Statement Characterization of Reimbursements Received for “Out-Of-Pocket” Expenses Incurred. This announcement requires that reimbursements received for out-of-pocket expenses incurred be characterized as revenue in the statement of operations. We incur expenses in the delivery of services to our clients that are commonly referred to as “out-of-pocket” expenses. These expenses include, but are not limited to, travel and related charges. Comparative financial statements for prior periods should be reclassified to comply with the guidance of this staff announcement. The provisions of this announcement are effective for fiscal years beginning after December 15, 2001, and were therefore adopted by us, as required, on July 1, 2002 and all prior periods presented have been reclassified to conform to the current presentation.

	For the Quarter Ended December 31, 2001
	Govern- ment		Leader- ship		Perform- ance		Other			Total
External revenue	$	11,308	$	8,311	$	1,367	$	—		$	20,986
Cost of revenue		7,347		3,676		278					11,301

Gross profit		3,961		4,635		1,089					9,685
SG&A expenses		3,202		3,465		390		2,018			9,075

Income (loss) from operations	$	759	$	1,170	$	699	$	(2,018	)	$	610

Total assets at 12/31/01	$	63,812	$	14,677	$	—	$	14,896		$	93,385

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. The standard rescinds Statement 4 which required all gains and loses from extinguishment of debt to be aggregated and, when material, classified as an extraordinary item net of related income tax effect. The Company adopted the provisions of the standard related to the rescission of Statement 4 on July 1, 2002. The adoption of this Statement did not have a material effect on the Company’s financial position or results of operations.

	For the Six Months Ended December 31, 2002
	Govern- ment		Leader- ship			Perform- ance		Other			Total
External revenue	$	31,437	$	10,835		$	—	$	—		$	42,272
Cost of revenue		21,260		5,374								26,634

Gross profit		10,177		5,461								15,638
SG&A expenses		8,034		7,080					6,632			21,746

Income (loss) from operations	$	2,143	$	(1,619	)	$	—	$	(6,632	)	$	(6,108	)

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities which addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF Issue 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). The standard requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. The provisions of this Statement are required to be applied to exit or disposal activities that are initiated after December 31, 2002. The Company is currently evaluating the impact this Statement may have on its financial position or results of operations.

	For the Six Months Ended December 31, 2001
	Govern- ment		Leader- ship		Perform- ance		Other			Total
External revenue	$	22,933	$	15,533	$	6,583	$	—		$	45,049
Cost of revenue		14,877		6,431		1,800					23,108

Gross profit		8,056		9,102		4,783					21,941
SG&A expenses		6,505		6,386		1,837		3,841			18,569

Income (loss) from operations	$	1,551	$	2,716	$	2,946	$	(3,841	)	$	3,372

129. RECENT ACCOUNTING PRONOUNCEMENTS

~~Table~~In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of ~~Contents~~Long-Lived Assets, effective for fiscal years beginning after December 15, 2001. Under the new rules, the criteria required for classifying an asset as held-for-sale have been changed. Assets held-for-sale are stated at the lower of their fair values less estimated selling costs or carrying amounts, and depreciation is no longer recognized. In addition, the expected future operating losses from discontinued operations will be displayed in discontinued operations in the period in which the losses are incurred rather than as of the measurement date. More dispositions will qualify for discontinued operations treatment in the income statement under the new rules. The adoption of SFAS 144 did not have a material effect on the Company’s financial position or results of operations.

~~ITEM~~In 2accordance with the provisions of EITF Issue No. ~~MANAGEMENT’S~~01-14, ~~DISCUSSION~~the ~~AND~~Company ~~ANALYSIS~~is OFrequired ~~FINANCIAL~~to ~~CONDITION~~characterize reimbursements ~~AND~~received ~~RESULTS~~for OFout-of-pocket ~~OPERATIONS~~expenses incurred as revenue in the statement of operations. We incur expenses in the delivery of services to our clients that are commonly referred to as “out-of-pocket” expenses. These expenses include, but are not limited to, travel and related charges. Comparative financial statements for prior periods should be reclassified to comply with the guidance of this staff announcement. The provisions of this announcement are effective for fiscal years beginning after December 15, 2001, and were therefore adopted by us, as required, on July 1, 2002 and all prior periods presented have been reclassified to conform to the current presentation.

~~This~~15 report on Form 10-Q contains statements which constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “estimates,” “will,” “should,” “plans” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements as a result of any number of factors, many of which are beyond the control of management. These factors include risks related to our ability to generate sufficient cash flow from operations, our ability to satisfy the requirements of our lenders and junior creditors, our ability to conclude meaningful strategic alternatives, government contracting risks, our dependence on key personnel, our ability to implement appropriate cost-cutting efforts without materially and adversely affecting our operations and prospects, general economic conditions and fluctuations in quarterly results, to name a few, and are discussed under “Factors That May Affect Future Results” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2002 as filed with the Securities and Exchange Commission.

~~All~~In ~~references~~April to2002, the ~~years~~FASB issued SFAS No. 145, ~~unless~~Rescission ~~otherwise~~of ~~noted~~FASB Statements No. 4, ~~refer~~44, toand ~~our~~64, ~~fiscal~~Amendment ~~year~~of FASB Statement No. 13, and Technical Corrections. The standard rescinds Statement 4 which ~~ends~~required onall ~~June~~gains ~~30.~~and ~~For~~loses from extinguishment of debt to ~~example~~be aggregated and, awhen ~~reference~~material, toclassified ~~2003~~as ~~means~~an extraordinary item net of related income tax effect. The Company adopted the ~~12-month~~provisions ~~period~~of ~~that~~the ~~ends~~standard related to the rescission of Statement 4 on ~~June~~July 301, ~~2003~~2002. ~~All~~The ~~references~~adoption toof ~~quarters,~~this ~~unless~~Statement ~~otherwise~~did not ~~noted,~~have ~~refer~~a tomaterial effect on the ~~quarters~~Company’s offinancial ~~our~~position ~~fiscal~~or ~~year~~results of operations.

~~Our~~In ~~discussion~~June ~~and~~2002, ~~analysis~~the ofFASB ~~our~~issued ~~financial~~SFAS ~~condition~~No. ~~and results of operations are based upon our consolidated financial statements~~146, ~~which~~Accounting ~~have~~for ~~been~~Costs ~~prepared~~Associated ~~in accordance~~ with ~~accounting~~Exit ~~principles~~or ~~generally~~Disposal ~~accepted~~Activities inwhich ~~the~~addresses ~~United States of America. The preparation of these~~ financial ~~statements~~accounting ~~requires us to make significant estimates~~ and ~~judgments~~reporting ~~that~~for ~~affect~~costs ~~the~~associated ~~reported~~with ~~amounts~~exit ~~of assets, liabilities,~~or ~~revenues~~disposal ~~and~~activities ~~expenses,~~ and ~~related~~nullifies ~~disclosure~~EITF ofIssue ~~contingent~~94-3, ~~assets~~Liability ~~and~~Recognition ~~liabilities.~~for ~~These~~Certain ~~items~~Employee ~~are~~Termination ~~regularly~~Benefits ~~monitored~~ and ~~analyzed~~Other byCosts ~~management~~to ~~for~~Exit ~~changes~~an inActivity ~~facts~~(including ~~and~~Certain ~~circumstances.~~Costs ~~Material~~Incurred ~~changes~~ in ~~these~~a ~~estimates~~Restructuring). ~~could~~The ~~occur~~standard inrequires ~~the~~companies ~~future.~~to ~~Changes~~recognize incosts ~~estimates~~associated ~~are~~with ~~recorded~~exit inor ~~the~~disposal ~~period~~activities inwhen ~~which~~ they ~~become~~are ~~known.~~incurred Werather ~~base~~than ~~our~~at ~~estimates~~the ondate ~~historical~~of ~~experience~~a ~~and~~commitment ~~various other assumptions that we believe~~ to bean ~~reasonable~~exit ~~under~~or ~~the~~disposal ~~applicable circumstances~~plan. ~~Actual~~Examples ~~results~~of ~~may~~costs ~~differ from~~covered ~~our~~by ~~estimates~~the ifstandard ~~past~~include ~~experience~~lease ortermination ~~other~~costs ~~assumptions~~and docertain ~~not~~employee severance ~~turn~~costs ~~out~~that toare beassociated ~~substantially~~with ~~accurate.~~a Onrestructuring, andiscontinued ~~ongoing basis~~operation, weplant ~~evaluate our estimates~~closing, ~~including~~or ~~those~~other ~~related~~exit toor ~~revenue~~disposal ~~recognition,~~activity. ~~allowance~~The ~~for~~provisions ~~doubtful accounts, impairment~~ of ~~intangible~~ ~~assets,~~this ~~and~~Statement ~~accounting~~are ~~for~~required ~~income~~to ~~taxes.~~be Aapplied ~~summary~~to ofexit ~~those~~or ~~accounting~~disposal ~~policies~~activities that ~~we believe~~ are ~~most~~initiated ~~critical~~after December to31, ~~fully~~2002. ~~understanding~~The ~~and~~Company ~~evaluating our financial results~~ is ~~outlined~~currently ~~below.~~evaluating ~~This~~the ~~summary~~impact ~~should~~this beStatement ~~read~~may inhave ~~conjunction with~~on ~~our~~its ~~2002~~financial ~~Annual~~position ~~Report~~or onresults ~~Form~~of ~~10-K~~operations.

~~Summary~~In November 2002, a consensus was reached on EITF Issue No. 00-21 with respect to when a revenue arrangement with multiple deliverables should be divided into separate units of ~~Critical~~accounting ~~Accounting~~and, ~~Policies~~if separation is appropriate, how the arrangement consideration should be allocated to the identified accounting units. The guidance in this Issue will be effective for revenue arrangements entered into by the Company beginning on July 1, 2003. The Company has not yet determined the impact of this Issue, if any, on its consolidated financial statements.

~~Revenue~~In ~~Recognition~~November 2002, the FASB issued Interpretation No. 45 (FIN45), Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, which clarifies disclosure recognition / measurement requirements related to certain guarantees. The disclosure requirements are effective for financial statements issued after December 15, 2002 and the recognition / measurement requirements are effective on a prospective basis for guarantees issued or modified after December 31, 2002. The disclosure requirements of FIN 45 did not have a material impact on the Company’s financial position or results of operations upon adoption.

~~The~~In ~~Company~~December ~~recognizes~~2002, ~~revenue~~the ~~from~~FASB ~~five~~issued ~~main~~SFAS ~~sources:~~No. ~~(i)~~148, ~~instructor~~Accounting for Stock-~~led~~Based Compensation – Transition and ~~train~~Disclosure. SFAS 148 amends SFAS No. 123, Accounting for Stock-Based Compensation to provide alternative methods of transition for a voluntary change to the~~-trainer~~ ~~seminars,~~fair ~~(ii)~~value ~~licensing~~based ~~its~~method ~~intellectual~~of ~~property,~~accounting ~~(iii)~~for ~~custom~~stock-based ~~services~~employee ~~and~~compensation. ~~products~~In addition, ~~(iv)~~SFAS ~~consulting~~148 ~~and~~amends ~~training~~the ~~management~~disclosure requirements of SFAS 123 to require prominent ~~services,~~disclosures in both annual and ~~(v)~~interim ~~standardized~~financial ~~products.~~statements ~~The~~about ~~Company~~the ~~recognizes~~method ~~revenue~~of ~~from~~accounting ~~instructor~~for stock-~~led~~based ~~training~~employee compensation and ~~train-~~the~~-trainer~~ ~~seminars,~~effect ~~usually~~of the method used on areported ~~per-participant~~results. ~~basis,~~The ~~when~~transition ~~the~~guidance ~~training~~and isannual ~~delivered~~disclosure provisions of SFAS 148 are effective for fiscal years ending after December 15, 2002. The ~~Company~~interim ~~recognizes~~disclosure ~~revenue~~provisions ~~from~~are ~~site~~effective ~~and user~~for ~~licenses~~financial ~~when:~~reports ~~(1)~~containing ~~there~~financial isstatements ~~persuasive~~for ~~evidence~~interim ~~that~~periods anbeginning ~~arrangement~~after ~~exists~~December 15, ~~(2)~~2002. ~~delivery~~As ~~has~~the ~~occurred,~~Company ~~(3)~~did ~~the~~not make ~~fee~~a isvoluntary ~~fixed~~change orto ~~determinable,~~the ~~and~~fair ~~(4)~~value ~~collectibility~~based ismethod ~~probable.~~of ~~Amounts~~accounting ~~received~~for stock-based employee compensation in ~~advance~~2002, ofthe ~~delivery~~adoption ~~are~~of ~~reported~~SFAS as148 ~~deferred revenue~~did ~~and~~not ~~recognized~~have asa ~~revenue~~material ~~upon~~impact ~~meeting~~on the ~~aforementioned~~Company’s ~~criteria.~~financial position and results of operations.

~~The~~16 Company generally recognizes revenue from sales of its custom services and products under long-term contracts in one of three ways. Revenue on fixed price contracts is recognized using the percentage of completion method based on costs incurred in relation to total estimated costs. The Company’s failure to estimate accurately the resources required for a project, or the Company’s failure to complete its contractual obligations in a manner consistent with the project plan upon which our fixed-price contract was based, could adversely affect our overall profitability and could have a material adverse effect on our business, financial condition and results of operations. The Company’s business unit finance personnel continually review costs incurred and total estimated costs for fixed price contracts, resulting in revisions to the amount of recognized revenue for a contract. If the Company does not accurately estimate the resources required or the scope of work to be performed for a contract or the Company does not manage the project properly within the planned time period, then the Company may recognize a loss on the contract. Provisions for estimated losses on uncompleted contracts are made on a contract-by-contract basis and are recognized in the period in which such losses are determined. Revenue on time-and-materials contracts is recognized to the extent of fixed billable rates for hours delivered. Revenue on cost-plus-fee contracts is recognized based on reimbursable costs incurred plus estimated fees earned thereon. Deferred revenue is recognized for payments received prior to services being performed. The Company recognizes revenue from fees for its consulting services on a time and materials basis, and monies received in excess of time and materials earned is recorded as billings in excess of costs. The Company recognizes maintenance fees on training management services ratably over the life of the contract. The Company recognizes revenue for standardized products, such as books or videotapes, when the products are delivered. We also incur “out-of-pocket” expenses which are reimbursable by the client. Through June 30, 2002 these expenses were accounted for as a reduction of the related costs.

13 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Table~~This report on Form 10-Q contains statements which constitute “forward-looking statements” within the meaning of ~~Contents~~the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “estimates,” “will,” “should,” “plans” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements as a result of any number of factors, many of which are beyond the control of management. These factors include risks related to our ability to generate sufficient cash flow from operations, our ability to satisfy the requirements of our lenders and junior creditors, our ability to conclude meaningful strategic alternatives, government contracting risks, our dependence on key personnel, our ability to implement appropriate cost-cutting efforts without materially and adversely affecting our operations and prospects, general economic conditions and fluctuations in quarterly results, to name a few, and are discussed under “Factors That May Affect Future Results” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2002 as filed with the Securities and Exchange Commission.

~~Effective~~All ~~July~~references 1to years, ~~2002~~unless otherwise noted, ~~reimbursements~~refer ~~received~~to ~~for~~our ~~out-of-pocket~~fiscal ~~expenses incurred~~year, ~~have~~which ~~been~~ends ~~characterized~~on asJune ~~revenue~~30. inFor ~~our~~example, ~~statement~~a ofreference ~~operations,~~to ~~and~~2003 ~~all~~means ~~prior~~the ~~periods~~12-month ~~presented~~period ~~have~~that ~~been~~ends ~~reclassified~~on June 30, 2003. All references to ~~conform~~quarters, unless otherwise noted, refer to the ~~current~~quarters ~~presentation.~~of our fiscal year.

~~For~~Our ~~multiple~~discussion ~~element~~and ~~arrangements~~analysis ~~involving~~of ~~products,~~our ~~services~~financial condition and ~~support~~results ~~elements~~of operations are based upon our consolidated financial statements, wewhich ~~recognize~~have ~~revenue~~been prepared in accordance with accounting principles generally accepted in the ~~residual~~United ~~method~~States ~~when~~of ~~objective~~America. ~~evidence~~The preparation of these financial ~~fair~~statements ~~value~~requires ~~does~~us ~~not~~to ~~exist~~make ~~for~~significant ~~the~~estimates ~~delivered~~and ~~element.~~judgments ~~Under~~that affect the ~~residual~~reported ~~method~~amounts of assets, ~~the~~liabilities, ~~fair~~revenues ~~value~~and expenses, and related disclosure of ~~the~~contingent ~~undelivered~~assets ~~elements~~and liabilities. These items are ~~deferred~~regularly monitored and analyzed ~~subsequently~~by ~~recognized.~~management Wefor ~~have~~changes ~~established~~in ~~sufficient~~facts ~~objective~~and ~~evidence~~circumstances. ofMaterial ~~fair~~changes ~~value~~in ~~for~~these estimates could occur in the ~~applicable services~~future. ~~and~~Changes ~~support~~in ~~elements~~estimates ~~based~~are onrecorded in the ~~price~~period ~~charged~~in ~~when~~which ~~these~~they ~~elements~~become ~~are~~known. ~~sold~~We ~~separately.~~base ~~Accordingly,~~our ~~product~~estimates ~~license~~on ~~revenue~~historical ~~sold~~experience and asvarious ~~part~~other ofassumptions athat ~~multiple~~we ~~element~~believe ~~arrangement~~to isbe ~~recognized~~reasonable under the ~~residual~~applicable ~~method~~circumstances. inActual ~~arrangements~~results inmay ~~which the~~differ ~~product~~from isour ~~sold~~estimates ~~with~~if ~~one~~past experience or ~~both~~other ofassumptions ~~the~~do ~~other~~not ~~elements~~turn out to be substantially accurate. ~~Revenue~~On ~~from~~an ~~license~~ongoing basis, ~~agreements~~we ~~that~~evaluate ~~require~~our ~~significant~~estimates, ~~customizations~~including ~~and~~those ~~modifications~~related to ~~the~~revenue ~~product~~recognition, isallowance ~~deferred~~for ~~and~~doubtful ~~recognized~~accounts, ~~using~~impairment ~~the~~of ~~percentage~~intangible ofassets, ~~completion~~and ~~method~~accounting for income taxes. ~~For~~A ~~license arrangements~~summary ~~involving~~of ~~customizations~~those ~~for~~accounting ~~which~~policies ~~the~~that ~~amount~~we ofbelieve ~~customization~~are ~~effort~~most critical ~~cannot~~to befully ~~reasonably~~understanding ~~estimated~~and orevaluating ~~when~~our ~~product~~financial ~~license~~results ~~arrangements~~is ~~provide~~outlined ~~for~~below. ~~customer~~This ~~acceptance,~~summary weshould ~~recognize~~be ~~revenue~~read ~~under~~in ~~the~~conjunction ~~completed~~with ~~contract~~our ~~method~~2002 ~~of accounting~~Annual Report on Form 10-K.

~~Allowance~~On December 31, 2002, Provant, Inc. completed the sale to Novations Group Inc. (“Novations”), a subsidiary of Drake Beam Morin-Japan (DBM-J), of Provant’s Performance Solutions, Technology and Development, Vertical Markets and Project Management groups and Learning and Strategic Alliances businesses (the “Businesses”). The Businesses were transferred to Novations by the sale of the stock of Provant Performance Solutions, Inc., Provant Media, Inc. and Provant Canada, Inc. and the sale of tangible and intangible assets used in connection with the conduct of the Learning and Strategic Alliances businesses. The $30 million purchase price consisted of $23.4 million cash, subject to a working capital adjustment, which we have preliminarily estimated at $1.8 million, and the assumption by Novations of $6.6 million of Provant’s non-bank indebtedness and other acquisition related obligations. Provant used the cash proceeds less expenses to reduce its bank debt by $21.3 million. Under the provisions of SFAS 144, Accounting for ~~Doubtful~~the ~~Accounts~~Impairment or Disposal of Long-Lived Assets, the businesses sold are required to be presented as discontinued operations.

~~The~~Summary ~~allowance for doubtful accounts is based on our assessment~~ of ~~the~~Critical ~~collectibility~~Accounting ofPolicies specific customer accounts and the aging of our accounts receivable balances. If there is a deterioration of a major customer’s credit worthiness or actual defaults are higher than our historical experience, our estimates of the recoverability of amounts due to us and our anticipated cash collections could be adversely affected. Measurement of such losses requires consideration of historical loss experience by entity, including the need to adjust for current conditions, including present economic conditions such as delinquency rates, and the financial health of specific customers and market sectors in which the Company and its subsidiaries operate.

~~Impairment~~Revenue ~~of Intangible~~Recognition ~~Assets~~

InFor ~~July 2001,~~ the ~~Financial~~periods ~~Accounting~~presented, ~~Standards Board (~~the ~~“FASB”)~~Company ~~issued Statement~~recognized ofrevenue ~~Financial~~from ~~Accounting~~five ~~Standards~~main sources: (~~“SFAS”~~i) ~~No.~~instructor-led ~~141, Business Combinations,~~ and ~~SFAS~~train-the-trainer ~~No. 142~~seminars, ~~Goodwill~~(ii) ~~and~~licensing ~~Other~~its ~~Intangible~~intellectual ~~Assets.~~property, ~~The~~(iii) ~~Company~~custom ~~adopted~~services ~~SFAS 141 immediately~~ and ~~SFAS 142 as of July 1~~ products, ~~2001.~~(iv) ~~SFAS~~consulting ~~142 requires that goodwill~~ and ~~intangible~~training ~~assets~~management with indefinite useful lives no longer be amortized but instead tested for impairment at least annually in accordance with the provisions of SFAS 142. SFAS 142 also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual valuesservices, and ~~reviewed~~(v) ~~for~~standardized ~~impairment~~products. inThe ~~accordance~~Company ~~with~~recognizes ~~SFAS~~revenue ~~121,~~from ~~Accounting for the Impairment of Long~~instructor-~~Lived~~led ~~Assets~~training and ~~for Long~~train-~~Lived Assets~~the-trainer ~~to Be Disposed Of. Furthermore~~seminars, ~~any~~usually ~~goodwill~~on ~~and any intangible asset determined to have an indefinite useful life that are acquired in~~ a ~~purchase~~per-participant ~~business combination completed after June 30~~basis, ~~2001~~when ~~will not be amortized, but will continue to be evaluated for impairment in accordance with~~ the ~~appropriate~~training ~~pre-SFAS 142 accounting literature~~is delivered. ~~SFAS~~The ~~141~~Company ~~required,~~recognizes ~~upon~~revenue ~~adoption~~from ofsite ~~SFAS~~and ~~142,~~user ~~that~~licenses ~~the~~when: ~~Company~~(1) ~~evaluate~~there ~~its~~is ~~existing~~persuasive ~~intangible~~evidence ~~assets and goodwill~~ that ~~were~~an ~~acquired~~arrangement ~~in a prior purchase business combination~~exists, ~~and~~(2) ~~make~~delivery ~~any~~has ~~necessary reclassifications in order to conform with the new criteria in SFAS 141 for recognition apart from goodwill. Upon adoption of SFAS 142~~occurred, ~~the~~(3) ~~Company was required to reassess~~ the ~~useful~~fee ~~lives~~is ~~of all~~fixed ~~intangible~~or ~~assets acquired in purchase business combinations~~determinable, and ~~make~~(4) ~~any~~collectibility ~~necessary~~is ~~amortization period adjustments by the end of the first interim period after adoption~~probable. ~~In addition, to the extent an intangible asset was identified as having~~Amounts anreceived ~~indefinite useful life, the Company was required to test the intangible asset for impairment~~ in ~~accordance~~advance ~~with the provisions~~ of ~~SFAS~~delivery ~~142~~are ~~within~~reported ~~the first interim period. Impairment loss was measured~~ as ofdeferred ~~the~~revenue ~~date of adoption~~ and recognized as ~~the~~ ~~cumulative~~revenue ~~effect~~upon ofmeeting ~~a change in accounting principle in~~ the ~~first~~aforementioned ~~interim period of fiscal 2002~~criteria.

~~In connection~~The ~~with~~Company ~~the~~generally ~~transitional~~recognizes ~~goodwill~~revenue ~~impairment~~from ~~evaluation,~~sales ~~SFAS~~of ~~142~~its ~~required~~custom ~~the~~services ~~Company~~and toproducts ~~perform~~under anlong-term ~~assessment~~contracts ofin ~~whether~~one ~~there~~of ~~was~~three anways. Revenue ~~indication that goodwill was impaired~~ on ~~July~~fixed 1,price ~~2001.~~contracts ~~This~~is ~~assessment~~recognized ~~involved~~using the ~~identification~~percentage of ~~the Company’s~~completion ~~reporting~~method ~~units~~based ~~and~~on ~~the~~costs ~~determination~~incurred ofin ~~the~~relation ~~carrying~~to ~~value~~total ofestimated ~~each~~costs. ~~reporting~~The ~~unit~~Company’s byfailure ~~assigning~~to ~~the~~estimate ~~assets~~accurately ~~and~~the ~~liabilities,~~resources ~~including~~required ~~the~~for ~~existing~~a ~~goodwill~~project, ~~and~~or ~~intangible~~the Company’s ~~assets,~~failure to ~~those~~complete ~~reporting~~its ~~units~~contractual asobligations ofin ~~the~~a ~~date~~manner ofconsistent ~~adoption. The~~with ~~Company~~the ~~has~~project 14plan ~~reporting~~upon ~~units.~~which ~~The~~our ~~Company~~fixed-price ~~then~~contract ~~had~~was upbased, tocould ~~six~~adversely ~~months~~affect ~~from~~our ~~the~~overall ~~date~~profitability ofand ~~adoption~~could tohave ~~determine~~a ~~the~~material ~~fair~~adverse ~~value~~effect ofon our ~~each~~business, ~~reporting~~financial ~~unit~~condition and ~~compare~~results itof tooperations. ~~the~~The ~~reporting unit~~Company’s ~~carrying~~business ~~amount.~~unit ~~The~~finance ~~calculation~~personnel ofcontinually ~~the~~review ~~fair~~costs ~~value~~incurred ~~of each~~and ~~reporting~~total ~~unit~~estimated ~~involves~~costs ~~estimates~~for ~~that~~fixed ~~are~~price ~~typical~~contracts, ofresulting ~~valuation~~in ~~procedures~~revisions ~~and~~to ~~include~~ the ~~selection~~amount of ~~both~~recognized revenue ~~qualitative~~for ~~and~~a ~~quantitative valuation measures~~contract. ~~Management~~If ~~determines~~the ~~fair~~Company ~~value~~does ~~based~~not onaccurately aestimate ~~combination of~~ the ~~discounted~~resources ~~cash~~required ~~flow methodology,~~or ~~which~~the isscope ~~based~~of ~~upon~~work ~~converting~~to ~~expected~~be ~~future~~performed ~~cash~~for ~~flows~~a tocontract ~~present~~or ~~value, and~~ the ~~market~~Company ~~approach,~~does ~~which~~not ~~includes~~manage ~~analysis~~the ofproject ~~market~~properly ~~price~~within ~~multiples~~the ofplanned ~~companies~~time ~~engaged~~period, inthen ~~lines~~the ofCompany ~~business~~may recognize ~~similar~~a toloss on the ~~company being evaluated~~contract. ~~The market~~Provisions ~~price~~for ~~multiples~~estimated ~~are~~losses ~~selected~~on ~~and~~uncompleted ~~applied~~contracts toare ~~the~~made ~~company based~~ on ~~the~~a ~~relative~~contract-by-contract ~~performance,~~basis ~~future prospects~~ and ~~risk~~are ~~profile~~recognized ofin the ~~company~~period in ~~comparison~~which tosuch ~~the~~losses ~~guideline~~are ~~companies~~determined. ~~Management~~Revenue ~~predominately~~on ~~utilizes third~~time-~~party~~and-materials ~~valuation~~contracts is ~~reports~~recognized into ~~its~~the ~~determination~~extent of ~~fair~~fixed ~~value.~~billable ~~The~~rates ~~impairment policy will be consistently applied in evaluating impairment~~ for ~~each~~hours ofdelivered. ~~the~~Revenue ~~Company’s~~on ~~reporting~~cost-plus- ~~units in the fourth quarter of each fiscal year, at a minimum.~~

To17 the extent a reporting unit’s carrying amount exceeds its fair value, an indication exists that the reporting unit’s goodwill may be impaired and the Company must perform the second step of the transitional impairment test. In the second step of the analysis, the Company must compare the implied fair value of the reporting unit’s goodwill, determined by allocating the reporting unit’s fair value to all of its assets (recognized and unrecognized) and liabilities in a manner similar to a purchase price allocation in accordance with SFAS 141, to its carrying amount, both of which are measured as of the date of adoption.

14fee contracts is recognized based on reimbursable costs incurred plus estimated fees earned thereon. Deferred revenue is recognized for payments received prior to services being performed. The Company recognizes revenue from fees for its consulting services on a time and materials basis, and monies received in excess of time and materials earned is recorded as billings in excess of costs. The Company recognizes maintenance fees on training management services ratably over the life of the contract. The Company recognizes revenue for standardized products, such as books or videotapes, when the products are delivered. We also incur “out-of-pocket” expenses which are reimbursable by the client. Through June 30, 2002 these expenses were accounted for as a reduction of the related costs.

~~Table~~Effective July 1, 2002, reimbursements received for out-of-pocket ~~Contents~~expenses incurred have been characterized as revenue in our statement of operations, and all prior periods presented have been reclassified to conform to the current presentation.

~~The~~For ~~Company~~multiple ~~completed~~element ~~the~~arrangements ~~transitional~~involving ~~analysis~~products, services and support elements, we recognize revenue in ~~fiscal~~accordance ~~2002~~with ~~and~~the ~~determined that~~residual ~~due~~method towhen objective evidence of fair value does not exist for the ~~continued~~delivered ~~weakness~~element. inUnder the ~~economy~~residual method, ~~operating~~the ~~results~~fair ~~and~~value ~~cash~~of ~~flows~~the ~~were~~undelivered ~~lower~~elements ~~than~~are ~~expected~~deferred inand subsequently ~~fiscal~~recognized. ~~2001~~We ~~which~~have ~~resulted~~established insufficient anobjective ~~impairment~~evidence inof fair value for the ~~carrying~~applicable ~~amount~~services ofand ~~its~~support ~~goodwill~~elements inbased on the ~~amount~~price ofcharged ~~$165.4~~when ~~million,~~these ~~net~~elements ofare $0sold separately.8 ~~million of taxes~~Accordingly, ~~which~~product ~~spread~~license ~~across~~revenue ~~all~~sold as ~~operating~~part ~~segments.~~of ~~The~~a ~~transitional~~multiple ~~impairment~~element ~~loss~~arrangement is recognized asunder the ~~cumulative~~residual ~~effect~~method ofin aarrangements ~~change~~ in ~~accounting~~which ~~principle~~the inproduct ~~the~~is ~~fiscal~~sold ~~2002~~with ~~statement~~one or both of ~~operations~~the other elements. ~~The~~Revenue ~~Company’s~~from ~~annual~~license ~~impairment analysis,~~agreements ~~performed~~that onrequire ~~April~~significant ~~30,~~customizations ~~2002,~~and modifications ~~resulted~~to inthe anproduct ~~additional~~is ~~reduction~~deferred inand ~~goodwill~~recognized using the percentage of ~~$5.6~~completion ~~million~~method. ItFor islicense ~~reasonably~~arrangements ~~possible~~involving ~~that~~customizations ~~the~~for ~~impairment~~which ~~factors~~the ~~evaluated~~amount byof ~~management~~customization ~~will~~effort ~~change~~cannot inbe ~~subsequent~~reasonably ~~periods,~~estimated ~~given~~or ~~that~~when ~~the~~product ~~Company operates~~license inarrangements aprovide ~~volatile~~for ~~business~~customer ~~environment.~~acceptance, ~~This~~we ~~could~~recognize ~~result~~revenue inunder ~~material~~the ~~impairment~~completed ~~charges~~contract inmethod ~~future~~of ~~periods~~accounting.

AsAllowance offor ~~the date~~Doubtful ofAccounts adoption (July 1, 2001) and June 30, 2002, the Company had unamortized goodwill in the amount of $242.8 million and $36.1 million, respectively, and at each date had no unamortized identifiable intangible assets which were subject to the transition provisions of SFAS 141 and SFAS 142. The Company’s policy is to test impairment annually in the fourth quarter of each fiscal year.

~~Accounting~~The allowance for ~~Income~~doubtful ~~Taxes~~accounts is based on our assessment of the collectibility of specific customer accounts and the aging of our accounts receivable balances. If there is a deterioration of a major customer’s credit worthiness or actual defaults are higher than our historical experience, our estimates of the recoverability of amounts due to us and our anticipated cash collections could be adversely affected. Measurement of such losses requires consideration of historical loss experience by entity, including the need to adjust for current conditions, including present economic conditions such as delinquency rates, and the financial health of specific customers and market sectors in which the Company and its subsidiaries operate.

WeImpairment record income taxes using the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of ~~existing~~Goodwill ~~assets~~ and ~~liabilities~~Other ~~and~~Intangible ~~their respective~~Assets income tax bases, and operating loss and tax credit carryforwards. Our financial statements contain certain deferred tax assets which have arisen as a result of temporary differences between book and tax accounting. SFAS 109, Accounting for Income Taxes, requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. In establishing the valuation allowance at the end of each reporting period, we evaluate the weight of all available evidence to determine whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The amount of the deferred tax asset considered realizable is based on significant estimates of future operating performance and results, and it is reasonably possible that changes in these estimates in the near term could materially affect our financial condition and results of operations. Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss, changes to the valuation allowance, changes to federal or state tax laws, or as a result of future acquisitions or dispositions

~~Results~~In June 2001, the Financial Accounting Standards Board (the “FASB”) issued Statement of ~~Operations~~Financial Accounting Standards (“SFAS”) No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. The Company adopted SFAS 141 immediately and SFAS 142 as of July 1, 2001. SFAS 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized but instead tested for impairment at least annually in accordance with the provisions of SFAS 142. SFAS 142 also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. Furthermore, any goodwill and any intangible asset determined to have an indefinite useful life that are acquired in a purchase business combination completed after June 30, 2001 will not be amortized, but will continue to be evaluated for impairment in accordance with the appropriate pre-SFAS 142 accounting literature. SFAS 141 required, upon adoption of SFAS 142, that the Company evaluate its existing intangible assets and goodwill that were acquired in a prior purchase business combination, and make any necessary reclassifications in order to conform with the new criteria in SFAS 141 for recognition apart from goodwill. Upon adoption of SFAS 142, the Company was required to reassess the useful lives of all intangible assets acquired in purchase business combinations, and make any necessary amortization period adjustments by the end of the first interim period after adoption. In addition, to the extent an intangible asset was identified as having an indefinite useful life, the Company was required to test the intangible asset for impairment in accordance with the provisions of SFAS 142 within the first interim period. Impairment loss was measured as of the date of adoption and recognized as the cumulative effect of a change in accounting principle in the first interim period of fiscal 2002.

~~The~~In ~~following~~connection ~~historical~~with ~~consolidated~~the ~~financial~~transitional ~~information~~goodwill impairment evaluation, SFAS 142 required the Company to perform an assessment of whether there was an indication that goodwill was impaired on July 1, 2001. ~~represents~~This assessment involved the ~~operations~~identification of ~~Provant~~the Company’s reporting units and ~~its~~the ~~subsidiaries.~~determination ~~For~~of ~~acquisitions~~the ~~accounted~~carrying ~~for~~value ~~under~~of each reporting unit by assigning the ~~purchase~~assets ~~method~~and liabilities, including the existing goodwill and intangible assets, to those reporting units as of ~~accounting~~the date of adoption. At the time of the transitional impairment, the ~~operating~~Company ~~results~~had ~~have~~14 ~~been~~reporting ~~included~~units. The Company then had up to six months from the date of ~~acquisition~~adoption to determine the fair value of each reporting unit and compare it to the reporting unit’s carrying amount. ~~For~~The calculation of the ~~Senn-Delaney~~fair ~~Leadership~~value ~~acquisition,~~of each reporting unit involves estimates that are typical of valuation procedures and include the selection of both qualitative and quantitative valuation ~~accounted~~measures. ~~for~~Management ~~under~~determines fair value based on a combination of the ~~pooling-~~discounted cash flow methodology, which is based upon converting expected future cash flows to present value, and the market approach, which includes analysis of~~-interests~~ ~~method~~market price multiples of ~~accounting~~companies engaged in lines of business similar to the company being evaluated. The market price multiples are selected and applied to the company based on the relative performance, future prospects and risk profile of the ~~operating~~company ~~results~~in comparison ~~have~~to ~~been~~the ~~included~~guideline companies. Management predominately utilizes third-party valuation reports in its determination of fair value. The impairment policy will be consistently applied in evaluating impairment for ~~all~~each ~~periods~~of ~~presented~~the Company’s reporting units in the fourth quarter of each fiscal year, at a minimum.

~~Results~~18 ~~of Operations for the Three Months Ended September 30, 2002 and 2001~~

~~This~~To the extent ~~consolidated~~a ~~information~~reporting ~~has~~unit’s ~~been~~carrying ~~derived~~amount ~~from~~exceeds ~~our~~its ~~financial~~fair ~~statements~~value, ~~included~~an ~~elsewhere~~indication ~~herein~~exists that the reporting unit’s goodwill may be impaired and the Company must perform the second step of the transitional impairment test. In the second step of the analysis, the Company must compare the implied fair value of the reporting unit’s goodwill, determined by allocating the reporting unit’s fair value to all of its assets (recognized and unrecognized) and liabilities in a manner similar to a purchase price allocation in accordance with SFAS 141, to its carrying amount, both of which are measured as of the date of adoption.

	Three months ended September 30,
	2002			Percentage Of revenue		2001			Percentage Of revenue
	(dollars in thousands)
Total revenue	$	38,448		100.0	%	$	46,075		100.0	%
Cost of revenue		21,415		55.7			22,018		47.8
Gross profit		17,033		44.3			24,057		52.2
Selling, general and administrative expenses		19,034		49.5			22,255		48.3
Income (loss) from operations		(2,001	)	(5.2	)		1,802		3.9
Other income (expense), net		(15	)	—			5		—
Interest expense, net		1,594		4.1			1,214		2.6
Income (loss) before income taxes and cumulative effect of a change in accounting principle		(3,610	)	(9.4	)		593		1.3
Provision (benefit) for income taxes		300		(0.8	)		(22	)	—
Income (loss) before cumulative effect of a change in accounting principle		(3,910	)	(10.2	)		615		1.3
Cumulative effect of a change in accounting principle (net of tax benefit of $778)		—		—			(165,447	)	(359.1	)
Net loss	$	(3,910	)	(10.2	)%	$	(164,832	)	(357.7	)%

The Company completed the transitional analysis in fiscal 2002 and determined that due to the continued weakness in the economy, operating results and cash flows were lower than expected in fiscal 2001 which resulted in an impairment in the carrying amount of its goodwill in the amount of $165.4 million, net of $0.8 million of taxes, which spread across all operating segments. The transitional impairment loss is recognized as the cumulative effect of a change in accounting principle in the fiscal 2002 statement of operations. The Company’s annual impairment analysis, performed on April 30, 2002, resulted in an additional reduction in goodwill of $5.6 million. It is reasonably possible that the impairment factors evaluated by management will change in subsequent periods, given that the Company operates in a volatile business environment. This could result in material impairment charges in future periods.

15The Company performed an interim impairment analysis as of December 31, 2002. Based on the results for the six months ended December 31, 2002 and the forecast for the remaining six months of the year, the Company recorded an additional goodwill impairment loss of $1.2 million through selling, general and administrative expenses for the quarter ended December 31, 2002.

~~Table~~As of ~~Contents~~the date of adoption (July 1, 2001) and June 30, 2002, the Company had unamortized goodwill in the amount of $242.8 million and $36.1 million, respectively, and at each date had no unamortized identifiable intangible assets which were subject to the transition provisions of SFAS 141 and SFAS 142. The Company’s policy is to test impairment annually in the fourth quarter of each fiscal year.

~~Revenue~~Accounting byfor ~~Operating~~Income Taxes ~~Segment~~

	Three Months Ended September 30,
	2002		2001		Percent Change
	(dollars in thousands)
Performance Solutions	$	6,814	$	11,688	(41.7	)%
Government		15,933		11,625	37.1
Leadership Consulting		5,202		7,222	(28.0	)
Project Management		2,217		4,741	(53.2	)
Technology and Development		4,077		5,015	(18.7	)
Vertical Markets		4,205		5,784	(27.3	)
Total Revenue	$	38,448	$	46,075	(16.6	)%

We record income taxes using the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards. Our financial statements contain certain deferred tax assets which have arisen as a result of temporary differences between book and tax accounting. SFAS 109, Accounting for Income Taxes, requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. In establishing the valuation allowance at the end of each reporting period, we evaluate the weight of all available evidence to determine whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The amount of the deferred tax asset considered realizable is based on significant estimates of future operating performance and results, and it is reasonably possible that changes in these estimates in the near term could materially affect our financial condition and results of operations. Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss, changes to the valuation allowance, changes to federal or state tax laws, or as a result of future acquisitions or dispositions

~~Revenues~~19 for the first quarter of 2003 were $38.4 million, a decrease of $7.6 million, or 16.6%, from the first quarter of 2002. A significant portion of the decrease was due to the loss of revenue from SPI (part of the Performance Solutions group), which was sold in November 2001 and previously included in the segment. Revenues from this unit were $5.2 million for the first quarter of 2002. The remaining revenue decrease, which is spread across all of our operating groups except the Performance Solution and Government groups, resulted primarily from the difficult economic conditions that many of our clients’ industries are experiencing, which led many of our clients to decrease spending on workplace improvement solutions.

~~The~~Results ~~Performance Solution group’s revenues decreased by $4.9 million, or 41.7%, for the first quarter~~ of ~~2003 primarily due to the sale in the second quarter of 2002 of~~Operations ~~SPI, which accounted for approximately $5.2 million of the first quarter of 2001 revenues, offset by an increase within the Diversity and Inclusion business unit’s training classes.~~

The ~~Government~~following ~~group’s~~historical ~~revenues~~consolidated financial ~~increased~~information byrepresents ~~$4.3~~the ~~million,~~operations orof 37Provant and its subsidiaries.~~1%,~~ For acquisitions accounted for under the ~~first~~purchase ~~quarter~~method of ~~2003~~accounting, ~~primarily~~the operating results have been included from the ~~addition~~date of aacquisition. ~~few~~For ~~significant~~the ~~contracts, which~~Senn-Delaney ~~were~~Leadership ~~obtained~~acquisition, inaccounted ~~part,~~for asunder athe ~~result~~ pooling-of-interests ~~the~~method ~~increased~~of ~~training~~accounting, ~~efforts~~the ~~mandated~~operating byresults ~~government~~have ~~entities,~~been ~~specifically~~included infor ~~airport~~all ~~security~~periods presented.

~~The~~Results ~~Leadership~~of ~~Consulting~~Operations ~~group’s revenues decreased by $2.0 million, or 28.0%,~~ for the ~~first~~Three ~~quarter~~and ofSix ~~2003~~Months ~~primarily~~Ended ~~due~~December to31, ~~client~~2002 ~~delays~~and in2001 ~~commencing new projects.~~

The Project Management group’s revenues decreased by $2.5 million, or 53.2%, for the first quarter of 2003 primarily due to continued weakness in the airline, telecommunication and technology segments of the national economy, which segments have been the principal users of our project management services.

	Three months ended December 31,										Six months ended December 31,
	2002					2001					2002					2001
Total revenue	$	21,137		100.0	%	$	20,986		100.0	%	$	42,272		100.0	%	$	45,049		100.0	%
Cost of revenue		12,911		61.1			11,301		53.8			26,634		63.0			23,108		51.3

Gross profit		8,226		38.9			9,685		46.2			15,638		37.0			21,941		48.7
Selling, general and administrative expenses		11,657		55.2			9,075		43.4			21,746		51.4			18,569		41.2

Income (loss) from operations		(3,431	)	(7.8	)		610		3.0			(6,108	)	(14.4	)		3,372		7.5
Other income (expense), net		(3	)	—			3		—			(18	)	—			5		—
Interest expense, net		(1,342	)	(6.3	)		(1,125	)	(5.4	)		(2,912	)	(6.9	)		(2,308	)	(5.1	)
Provision for income taxes		(300	)	(1.4	)		(324	)	(1.5	)		(600	)	(1.4	)		(302	)	(0.6	)

Income (loss) from continuing operations before extraordinary item and cumulative effect of a change in accounting principle		(5,076	)	(24.0	)		(836	)	(3.9	)		(9,638	)	(22.8	)		767		1.7
Income (loss) from discontinued operations		(19,737	)	(93.4	)		1,017		4.8			(19,086	)	(45.2	)		(117,556	)	(261.0	)

Income (loss) before extraordinary item and cumulative effect of a change in accounting principle		(24,813	)	(117.4	)		181		0.9			(28,724	)	(68.0	)		(116,789	)	(259.2	)
Extraordinary item – loss on sale of business (net of taxes of $0)		—		—			(14,542	)	(69.3	)		—		—			(14,542	)	(32.2	)

Net loss before cumulative effect of a change in accounting of principle		(24,813	)	(117.4	)		(14,361	)	(68.4	)		(28,724	)	(68.0	)		(131,331	)	(291.5	)
Cumulative effect of a change in accounting principle (net of tax benefit of $778)		—		—			—		—			—		—			(47,862	)	(106.2	)
Net loss	$	(24,813	)	(117.4	)%	$	(14,361	)	(68.4	)%	$	(28,724	)	(68.0	)%	$	(179,193	)	(397.8	)%

~~The~~20 Technology and Development group’s revenues decreased by $0.9 million, or 18.7%, for the first quarter of 2003, primarily as a result of the current economic conditions and decreased demand for our products.

~~The~~RESULTS ~~Vertical~~FOR ~~Market~~THE ~~group’s~~THREE MONTHS ~~revenues~~ENDED ~~decreased~~DECEMBER ~~by $1.6 million~~31, or2002 ~~27.3%,~~COMPARED ~~for~~TO ~~the~~THE ~~first~~THREE ~~quarter~~MONTHS ofENDED ~~2003~~DECEMBER ~~primarily~~31, ~~due~~2001 ~~to contracts being cancelled or deferred in the telecommunication and retail segments of our customer base.~~

~~Gross~~Revenue ~~Profit~~ by Operating Segment

	Three Months Ended September 30,
	Three Months Ended December 31,
	2002		~~Gross Margin~~2001		~~2001~~Percent Change		~~Gross Margin~~		~~Percent change~~
	(dollars in thousands)
Performance Solutions	$	4,761	69.9	%	$	7,952	68.0	%	(40.1	)%
Government	$	15,404	$	11,308	36.2	%
Government		4,855	30.5			4,113	35.4		18.0
Leadership Consulting		5,633		8,311	(32.2	)
Leadership Consulting		2,557	49.2			4,158	57.6		(38.5	)
Performance Solutions		—		1,367	(100.0	)
Project Management		1,138	51.3			1,778	37.5		(36.0	)
Total Revenue	$	21,137	$	20,986	0.7	%
Technology and Development		1,711	42.0			3,614	72.1		(52.7	)
Vertical Markets		2,011	47.8			2,442	42.2		(17.6	)
Total Gross Profit	$	17,033	44.3	%	$	24,057	52.2	%	(29.2	)%

~~Overall,~~Revenues for ~~our gross profit in~~ the ~~first~~second quarter of 2003 ~~was~~were $1721.0 1 million, aan ~~decrease~~increase of $7.0.1 million, or 290.27%, from the ~~$24.1~~second ~~million reported in the first~~ quarter of 2002. AThe ~~significant~~Government ~~portion~~group’s ~~of the decrease was due to the loss of~~ revenue ~~from~~increased ~~SPI, which was sold in November 2001. Gross profit from this unit was~~ $34.91, million ~~for~~or ~~the first quarter of 2002~~36.2%, ~~The remaining reduction~~ in ~~gross profit resulted from~~ the ~~revenue~~second ~~reduction~~quarter ~~associated with the difficult economic conditions that many~~ of ~~our~~fiscal ~~clients’~~2003 ~~industries~~as ~~are~~compared ~~experiencing, coupled with our delay in reducing certain fixed costs. Gross margin decreased~~ to ~~44.3% in~~ the same ~~first~~ quarter ofin ~~2003~~fiscal ~~compared to 52~~2002.2% inThis ~~the~~increase ~~first~~is ~~quarter of 2002~~ primarily due to ~~the~~increased ~~combination~~work ofassociated ~~lower~~with ~~revenues~~airport and ~~largely~~homeland ~~fixed~~security ~~costs~~assignments. ~~as well as the increase in the Government group’s lower margin revenues as a percentage of our total revenues from 25% of total revenues in the~~

16Revenues of the Leadership Consulting group decreased by $2.7 million, or 32.2%, in the second quarter of fiscal 2003 due to continued deferral of client spending as well as continued weakness in the telecommunications, energy and retail segments of the national economy, which historically have been large users of our leadership offerings.

~~Table~~Revenues from the Performance Solution group decreased by $1.3 million, or 100%, in the second quarter of ~~Contents~~2003, compared to the same period in 2002, due to the sale, in the second quarter of 2002, of Sales Performance International, Inc. and related businesses.

~~first quarter of 2002 to 41% of total revenues in the first quarter of 2003.~~ Gross ~~margins~~Profit ~~also decreased~~by ~~due~~Operating toSegment ~~a $3.4 million reduction in higher margin licensing fees from all operating groups.~~

The Performance Solutions group’s gross profit decreased by $3.2 million, or 40.1%, and gross margin increased slightly to 69.9% in the first quarter of 2003 from 68.0% in the first quarter of 2002. The reduction in gross profit was due principally to the decrease in revenue and the sale in the second quarter of 2002 of SPI offset by an increase in revenue from the Diversity and Inclusion business unit.

	Three Months Ended December 31,
	2002		Gross Margin		2001		Gross Margin		Percent Change
	(dollars in thousands)
Government	$	5,322	34.5	%	$	3,961	35.0	%	34.4	%
Leadership Consulting		2,904	51.6			4,635	55.8		(37.3	)
Performance Solutions		—	—			1,089	79.7		(100.0	)

Total Gross Profit	$	8,226	38.9	%	$	9,685	46.2	%	(15.1	)%

~~The~~Gross profit ~~Government~~in ~~group’s~~the ~~gross~~second ~~profit~~quarter ~~increased~~of by2003 was $08.72 million, ora ~~18.0%,~~decrease ~~and~~of ~~gross~~$1.5 ~~margin~~million, ~~decreased~~or ~~to 30~~15.51%, infrom the ~~first~~$9.7 ~~quarter~~million ofreported ~~2003 from 35.4%~~ in the ~~first~~second quarter of 2002. The ~~increase~~Government in group’s gross profit inincreased ~~absolute~~$1.4 ~~dollars~~million, ~~was~~or ~~attributable~~34.4% toin the ~~increase~~second quarter inof ~~revenues~~2003 ~~and~~compared to the ~~decrease~~second inquarter ~~margins~~of ~~was~~2002. ~~attributable~~This toincrease anis ~~increase~~due into the ~~lower~~increased ~~margin~~revenues ~~contracts~~primarily from airport and homeland security assignments.

The Leadership Consulting group’s gross profit decreased by $1.67 million, or 3837.53%, ~~and~~in ~~gross~~the ~~margin~~second ~~decreased~~quarter of to2003 ~~49.2%~~compared into the ~~first~~second quarter of ~~2003~~2002. ~~from~~The ~~57.6%~~decrease inis due to the ~~first~~ ~~quarter~~decrease ofin ~~2002.~~revenues ~~The~~coupled ~~reduction~~with delay in ~~both~~implementing ~~gross~~cost-cutting measures. Gross profit ~~and~~margins ~~gross~~decreased ~~margin~~from ~~was~~55.8% ~~due~~for ~~principally~~the second quarter of 2002 to 51.6% for the second ~~decrease~~quarter inof 2003 primarily due to the revenue shortfall and the delay in ~~reducing~~implementing ~~certain~~cost-cutting ~~fixed costs~~measures.

The ~~Project~~Performance ~~Management~~Solutions group’s gross profit decreased by $01.60 million, or ~~36.0~~100%, ~~and gross margin increased to 51.3%~~ in the ~~first~~second quarter of 2003 ~~from~~compared ~~37.5%~~to ~~for~~ the ~~first~~ second quarter of 2002. ~~The decline in gross profit in absolute dollars was a result of lower revenues~~ due to ~~continued~~the ~~weakness~~sale, in the ~~airline,~~second ~~telecommunication~~quarter ~~and technology segments~~ of ~~the national economy~~2002, ~~which segments have been the principal users~~ of ~~our~~Sales ~~project~~Performance ~~management~~International, ~~services~~Inc. ~~The~~and ~~increase~~related ~~in the profit margin was primarily due to a shift from a relatively fixed cost staffing structure to greater reliance on per-diem staffing during the second half of 2002~~businesses.

~~The~~Selling, ~~Technology~~General and ~~Development~~Administrative ~~group’s~~Expenses ~~gross profit decreased~~ by ~~$1.9~~Operating ~~million,~~Segment or 52.7%, and the group’s gross margin decreased to 42.0% in the first quarter of 2003 from 72.1% in the first quarter of 2002, primarily as a result of decreased revenue and a delay in reducing certain fixed costs.

The Vertical Markets group’s gross profit decreased by $0.4 million, or 17.6%, and the group’s gross margin increased to 47.8% in the first quarter of 2003 from 42.2% in the first quarter of 2002. The reduction in gross margin was primarily due to continued weakness in the telecommunication and retail segments of the national economy, which led many of our clients to decrease spending on workplace improvement solutions. The increase in the profit margin is primarily due to a shift from a relatively fixed cost staffing structure to greater reliance on per-diem staffing during the second half of 2002.

	Three Months Ended December 31,
	2002		Percent of Segment Revenue		2001		Percent of Segment Revenue		Percent Change
	(dollars in thousands)
Government	$	4,455	28.7	%	$	3,202	28.3	%	39.1	%
Leadership Consulting		4,161	143.3			3,465	41.7		20.1
Performance Solutions		—	—			390	28.5		(100.0	)
Corporate Office		3,041	N/A			2,018	N/A		50.7

Total	$	11,657	55.2	%	$	9,075	43.4	%	28.5	%

~~Selling,~~21 ~~General and Administrative Expenses by Operating Segment~~

	Three Months Ended September 30,
	2002		Percent of Segment Revenue		2001		Percent of Segment Revenue		Percent change
	(dollars in thousands)
Performance Solutions	$	4,080	59.9	%	$	6,297	57.1	%	(35.2	)%
Government		3,722	23.4			3,303	28.4		12.7
Leadership Consulting		2,920	56.1			2,936	43.9		(0.5	)
Project Management		1,605	72.4			2,540	53.6		(36.8	)
Technology and Development		1,980	48.6			2,676	54.1		(26.0	)
Vertical Markets		1,451	34.5			2,892	52.1		(49.8	)
Corporate Office		3,276	N/A			1,611	N/A		103.4
Total	$	19,034	49.5	%	$	22,255	49.9	%	(14.5	)%

Selling, general and administrative (“SG&A”) expense increased $2.6 million, or 28.5%, for the second quarter of 2003 compared to the second quarter of 2002. SG&A as a percentage of revenue increased from 43.4% in the second quarter of 2002 to 55.2% in the second quarter of 2003. The Government group’s SG&A increased $1.3 million, or 39.1% from the $3.2 million reported in the second quarter of 2002. This increase is primarily due to the selling costs associated with the increased business primarily from airport and homeland security assignments. As a percentage of revenue, SG&A increased slightly from 28.3% in 2002 to 28.7% in 2003.

~~Total~~The ~~selling,~~Leadership ~~general~~Consulting ~~and~~group’s ~~administrative (“~~SG&A~~”) expenses~~ ~~decreased~~increased by $30.27 million, or 1420.51%, tofrom the $193.05 million reported in the ~~first~~second quarter of ~~2003,~~2002. ~~from~~The increase is attributable to a $221.32 million ingoodwill ~~the~~impairment ~~first~~determined ~~quarter~~as of ~~2002.~~quarter ~~SG&A~~end asbased aon ~~percentage~~the general state of ~~revenue~~the ~~decreased~~business offset by decreases from ~~49.9%~~certain incost ~~the~~cutting ~~first~~initiatives, ~~quarter~~including headcount ofreductions, ~~2002~~that were beginning to ~~49.5%~~be inimplemented during the ~~first~~ quarter ofin ~~2003.~~light ~~The~~of the decrease in ~~SG&A~~revenue. ~~expenses~~As ~~was~~a ~~primarily~~percentage ~~due~~of torevenue, ~~reductions in general and administrative (“G~~SG&A”) ~~personnel,~~increased ~~other~~from ~~cost~~2002 ~~containment~~to ~~activities~~2003 ~~and~~due ~~lower~~to ~~selling~~the ~~expenses~~goodwill ~~offset~~impairment byand ~~increases~~delay in implementing the ~~Government and~~cost ~~Corporate~~cutting ~~segments~~initiatives.

The Performance Solutions group’s SG&A ~~expenses~~ decreased by $20.24 million, or ~~35.2~~100%, ~~for~~ in the ~~first~~second quarter of 2003, ~~and~~compared ~~as a percent of revenue increased~~ to ~~59.9%, from 57.1% for~~ the ~~first~~second quarter of 2002. ~~The reduction in SG&A expenses was primarily~~ due to ~~reductions in G&A personnel, other cost containment activities and lower selling expenses as well as~~ the sale, in the second quarter of 2002, of ~~SPI~~Sales Performance International, Inc. and related businesses.

The ~~Government~~Corporate ~~group’s~~ SG&A ~~expenses~~ increased by $01.40 million, or 1250.7%, ~~for~~in the ~~first~~second quarter of 2003, ~~and~~compared ~~as a percent of revenue decreased~~ to ~~23.4%, from 28.4% for~~ the ~~first~~second quarter of 2002. ~~Overall~~The ~~expenses~~increase ~~increased~~is ~~as a~~primarily ~~result~~due ofto ~~the~~severance ~~overall~~expense ~~increase~~and inbank ~~revenues.~~and ~~The~~restructuring ~~decrease~~fees aspaid ain ~~percentage~~order ofto ~~revenue~~facilitate ~~resulted~~the ~~from~~extension ~~various~~of ~~cost~~our ~~containment~~line ~~activities~~of ~~that we have undertaken~~credit.

17Income (loss) from operations

~~Table~~Loss from continuing operations before income taxes and extraordinary item was $4.8 million in the second quarter of ~~Contents~~2003, compared to $0.5 million in the second quarter of 2002, a decrease as a result of the factors previously discussed.

~~The~~Interest ~~Leadership Consulting group’s SG&A expenses decreased by $0.02 million~~Expense, ornet 0.5%, for the first quarter of 2003, and as a percent of revenue increased to 56.1%, from 43.9% for the first quarter of 2002. The increase as a percentage of revenue resulted principally from the decrease in revenue and delay in reducing certain fixed costs.

~~The~~Interest ~~Project~~expense, ~~Management~~net ~~group’s~~increased ~~SG&A expenses decreased by~~ $0.92 million, ~~or 36~~to $1.83 %,million ~~for~~in the ~~first~~second quarter of 2003, ~~and as a percent of revenue increased to 72.4%~~ from 53$1.6%1 million in the ~~first~~second quarter of 2002. The ~~decrease~~increase in ~~SG&A~~interest ~~expenses~~expense is primarily due to ~~reductions~~interest inpaid ~~G&A~~on ~~personnel,~~contingent ~~other~~consideration ~~cost~~due ~~containment~~for ~~activities and~~a ~~lower~~prior ~~selling~~acquisition ~~expenses.~~and As$100,000 ~~a percentage~~ of ~~revenue,~~interest ~~SG&A~~expense ~~expenses~~for ~~increased~~warrants ~~over~~issued ~~2002 due~~ to ~~various~~the ~~fixed~~banks ~~costs~~as ~~coupled~~part ~~with~~of ~~the~~an ~~decreased~~extension ~~revenue~~fee.

~~The~~Income ~~Technology~~Taxes and Development group’s SG&A expenses decreased by $0.7 million, or 26.0%, for the first quarter of 2003, and as a percent of revenue decreased to 48.6% from 54.1% in the first quarter of 2002. The decrease in SG&A expenses and percentage of revenue was due to reductions in G&A personnel, other cost containment activities and lower selling expenses.

~~The~~Provision ~~Vertical~~for ~~Markets~~income ~~group’s~~taxes ~~SG&A expenses decreased by $1.4 million, or 49.8%,~~ for the ~~first~~ quarter of ~~2003, and as a percent of revenue decreased to 34~~$0.~~5%,~~3 ~~from~~million ~~52.1%~~was ~~for~~consistent with the ~~first~~prior year quarter of ~~2002~~$0.3 ~~The~~million, ~~decrease~~which inrelate ~~SG&A expenses was primarily due~~ to ~~reductions~~state ~~in G&A personnel, other cost containment activities~~ and ~~lower~~foreign ~~selling expenses~~taxes.

~~The~~Discontinued ~~corporate~~Operations office’s SG&A expenses increased by $1.7 million, or 103.4%, to $3.3 million for the first quarter of 2003, primarily due to severance expense incurred from staffing reductions, the increase in expenses related to the review of our strategic alternatives, our efforts to renegotiate our existing credit facility and the reversal of certain reserves of approximately $0.7 million deemed to be in excess of our requirements during the first quarter of 2002.

~~Income~~On December 31, 2002, the Company completed the sale to Novations, a subsidiary of DBM-J, of Provant’s Performance Solutions, Technology and Development, Vertical Markets and Project Management groups and Learning and Strategic Alliances businesses (~~loss~~the “Businesses”). ~~from~~The Businesses were transferred to Novations by the sale of the stock of Provant Performance Solutions, Inc., Provant Media, Inc. and Provant Canada, Inc. and the sale of tangible and intangible assets used in connection with the conduct of the Learning and Strategic Alliances businesses. Under the provisions of SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the businesses sold are required to be presented as discontinued operations.

~~Loss~~Summarized ~~from~~financial ~~operations~~information ~~was~~for ~~$2.0 million in~~ the ~~first~~discontinued ~~quarter~~operations ofis ~~2003, compared to income of $1.8 million in the first quarter of 2002, a decrease of 11.0%~~ as afollows: ~~result of the factors previously discussed.~~

Interest Expense

	Three months ended December 31,
	2002			2001
Results of operations:
Total revenue	$	17,384		$	20,707
Total expenses		17,145			19,690

Net income before income taxes		239			1,017
Loss on sale		(19,976	)		—
Cumulative effect of a change in accounting principle		—			—

Net income (loss) from discontinued operations	$	(19,737	)	$	1,017

~~Interest~~22 expense, net increased $0.4 million to $1.6 million in the first quarter of 2003 from $1.2 million in the first quarter of 2002. The increase in interest expense is primarily due to increased interest rates on our line of credit borrowings due to our current default status.

~~Income~~RESULTS ~~Taxes~~FOR THE SIX MONTHS ENDED DECEMBER 31, 2002 COMPARED TO THE SIX MONTHS ENDED DECEMBER 31, 2001

~~Provision~~Revenue ~~for~~by ~~income~~Operating ~~taxes~~Segment increased from a benefit of $0.02 million in the first quarter of 2002 to a provision of $0.3 million in the first quarter of 2003. The increase in the income tax provision was primarily due to an accrual for state and foreign taxes in the first quarter of 2003. Historically, the effective tax rate has been higher than the statutory tax rate primarily due to the nondeductibility of our goodwill amortization for tax purposes.

Liquidity and Capital Resources

	Six Months Ended December 31,
	2002		2001		Percent Change
	(dollars in thousands)
Government	$	31,437	$	22,933	37.1	%
Leadership Consulting		10,835		15,533	(30.2	)
Performance Solutions		—		6,583	(100.0	)

Total Revenue	$	42,272	$	45,049	(6.2	)%

WeRevenues for ~~used~~the ~~net~~first ~~cash~~six inmonths ~~operating~~of ~~activities~~2003 ofwere ~~approximately~~ $242.83 million, ~~during~~a ~~the~~decrease ~~first quarter~~ of ~~2003, while generating approximately~~ $12.68 million, inor ~~cash~~6.2%, infrom ~~operating activities during~~ the first ~~quarter~~six months of 2002. ~~Net~~The ~~cash~~Government ~~used~~group’s inrevenue ~~investing~~increased ~~activities was~~ $08.45 million ~~in the first quarter of 2003~~, ~~for product~~or ~~development expenditures and purchases of property and equipment~~37.1%, ~~and $2.0 million~~ in the first ~~quarter~~six ofmonths ~~2002, for product development expenditures, purchases~~ of ~~property~~2003 ~~and~~as ~~equipment,~~compared ~~and~~to the ~~payment of acquisition related costs. Net~~ ~~cash~~same ~~used~~quarter in ~~financing~~fiscal ~~activities was $0~~2002.1 ~~million~~This inincrease ~~the~~is ~~first quarter of 2003, for the repayment of notes payable, and $0.3 million in the first quarter of 2002,~~ primarily ~~from~~due ato ~~cash~~increased ~~overdraft~~work ~~balance~~associated ~~offset~~with byairport ~~the repayment of our line of credit~~ and ~~notes~~homeland ~~payable~~security assignments.

AsRevenues offrom ~~September~~the ~~30,~~Leadership ~~2002,~~Consulting wegroup ~~had~~decreased ~~cash~~by ~~of approximately~~ $04.27 million, ~~and~~or ~~outstanding indebtedness of $45.5 million under our credit facility that was due to expire on September~~ 30.2%, ~~2002.~~in ~~The~~the ~~credit~~first ~~facility~~six ~~provided~~months ~~a revolving line~~ of ~~credit~~2003 ~~for~~due working capital and general corporate purposes, with certain limitations. The credit facility (i) generally prohibits us from paying dividends and other distributions, (ii) generally does not permit us to ~~incur or assume other indebtedness, (iii) requires us to comply with certain financial covenants and (iv) requires us to obtain~~continued ~~approval~~deferral ~~to draw on the facility to pay contingent consideration. The credit facility is guaranteed by all~~ of ~~Provant’s~~client ~~subsidiaries~~spending ~~and~~as ~~secured~~well byas acontinued ~~pledge~~weakness ofin ~~all of~~ the ~~assets~~telecommunications, ofenergy ~~Provant~~ and ~~the~~retail ~~assets~~segments of ~~each~~the ofnational ~~its subsidiaries. As of September 30~~economy, ~~2002,~~which wehistorically ~~were~~have inbeen ~~default~~large ~~under~~users ~~the credit facility and were paying a default rate~~ of ~~interest~~our ofleadership ~~prime plus 6~~offerings.5% ~~per annum.~~

~~Since~~Revenues ~~July~~from 1,the ~~2002,~~Performance weSolutions ~~have~~group ~~executed~~decreased ~~amendments~~by $6.6 ~~to the credit facility agreement that~~million, ~~among~~or ~~other things~~100%, ~~extended~~in the ~~facility~~first ~~expiration~~six ~~date~~months toof ~~November 8~~2003, ~~2002,~~compared ~~reduced~~to ~~availability under~~ the ~~facility~~same ~~from~~period ~~$48~~in ~~million to $45.5 million~~2002, ~~and~~due ~~required us~~ to ~~pay~~the ~~$50~~sale,~~000~~ in ~~waiver~~the ~~and~~second ~~amendment~~quarter ~~fees.~~of We2002, ~~are~~of ~~currently~~Sales inPerformance ~~default~~International, onInc. ~~amounts~~and ~~outstanding~~related ~~under the credit facility~~businesses. ~~We have received~~

18Gross Profit by Operating Segment

	Six Months Ended December 31,
	2002		Gross Margin		2001		Gross Margin		Percent Change
	(dollars in thousands)
Government	$	10,177	32.4	%	$	8,056	35.1	%	26.3	%
Leadership Consulting		5,461	50.4			9,102	58.6		(40.0	)
Performance Solutions		—	—			4,783	72.7		(100.0	)

Total Gross Profit	$	15,638	37.0	%	$	21,941	48.7	%	(28.7	)%

aGross profit ~~term~~for ~~sheet~~the ~~from~~first six months of 2003 was $15.6 million, ~~and~~a ~~are~~decrease ~~currently~~of $6.3 million, ~~negotiating~~or ~~with~~28.7%, from the ~~banks~~$21.9 tomillion ~~amend~~reported for the ~~credit~~first ~~facility~~six ~~agreement to,~~months ~~among~~of ~~other~~2002. ~~things,~~The ~~extend~~Government ~~the~~group’s ~~expiration~~gross ~~date~~profit toincreased ~~April~~$2.1 15million, ~~2003~~or ~~and~~26.3% ~~reduce~~for the first ~~interest~~six ~~rate,~~months ~~subject~~of 2003 compared to ~~our~~the ~~continued~~first ~~obligation~~six tomonths ~~take~~of ~~actions,~~2002. ~~including~~This increase is due to the ~~sale~~increased ofrevenues ~~certain~~primarily offrom ~~our~~airport ~~assets~~and ~~that~~homeland ~~would~~security ~~result~~assignments. inGross profit margins decreased from 35.1% for the ~~repayment~~first six months of ~~our~~2002 to ~~indebtedness~~32.4% for the first six months of 2003 primarily due to the ~~banks~~lower margin contracts that were performed during 2003.

AsThe ofLeadership ~~September~~Consulting ~~30,~~group’s ~~2002,~~gross weprofit ~~were~~decreased ~~obligated to pay~~ $63.06 million, asor ~~contingent consideration~~40.0%, ~~pursuant~~for to the ~~October~~first ~~1998~~six ~~acquisition~~months ~~agreement relating to our acquisition~~ of ~~SI.~~2003 ~~Under~~compared ~~the October 1998 acquisition agreement, as amended, we were required~~ to ~~pay to~~ the ~~former SI stockholders contingent consideration of $2.4~~ ~~million~~first insix ~~cash~~months ~~and $3.6 million in cash or 5.8 million shares~~ of ~~common stock on or before September 16,~~ 2002. WeThe ~~are~~decrease ~~currently~~is indue ~~discussions~~to ~~with~~ the ~~former~~overall SIdecrease ~~stockholders~~in torevenues ~~extend~~from the ~~payment~~continued ~~due~~weakness ~~date for the $2.4 million~~ in ~~cash owed to them until~~ the ~~earlier~~economy tocoupled ~~occur~~with ofdelay ~~April~~in ~~15,~~implementing ~~2003~~cost-cutting ormeasures. ~~our~~Gross ~~receipt~~profit ofmargins ~~net~~decreased ~~proceeds~~ from ~~certain~~58.6% ~~sales~~for ofthe ~~our~~six ~~assets~~months ~~should~~of 2002 ~~any~~to ~~such sales occur~~50.4% Infor ~~November~~the ~~2002,~~six wemonths ~~issued 5.8 million shares~~ of ~~common~~2003 ~~stock~~due to the ~~former~~revenue SIshortfall ~~stockholders~~and inthe ~~satisfaction~~delay ~~of our~~in ~~obligation~~implementing tocost-cutting ~~pay them $3~~measures.6 ~~million of contingent consideration.~~

OnThe ~~September~~Performance ~~29,~~Solutions ~~2001,~~group wegross ~~paid~~profit decreased $34.38 million ~~to Executive Education Institute~~, ~~Inc.~~or ~~(“EEI”)~~100%, ~~which~~for isthe ~~owned~~first bysix ~~Flory~~months ~~Netsch Hiatrides, a Vice President~~ of ~~Provant,~~2003 ~~under~~compared ~~the~~to ~~terms of a promissory note issued by us in connection with our September 2000 acquisition of~~ the ~~EEI~~first ~~business~~six ~~(which~~months ~~is a part~~ of ~~our Vertical Markets group). As of September 30,~~ 2002, wedue ~~owed~~to ~~EEI an additional $3.3 million under~~ the ~~terms of a second promissory note payable on September 29~~sale, ~~2002 that was issued by us~~ in ~~connection with~~ the ~~EEI acquisition. We are currently in discussions with EEI to extend the payment due date for the~~ second ~~note~~quarter ~~until the earlier to occur~~ of ~~April 15~~2002, ~~2003 or our receipt~~ of ~~net~~Sales ~~proceeds~~Performance ~~from~~International, ~~certain~~Inc. ~~sales~~and ofrelated ~~our assets should any such sales occur~~businesses.

~~As of September 30~~Selling, ~~2002,~~General weand ~~owed~~Administrative ~~the~~Expenses ~~former~~by ~~stockholders~~Operating ofSegment Hughes Research Corporation an aggregate of $0.3 million under promissory notes due on September 28, 2002 that were issued two years earlier in connection with our acquisition of that company. We are currently in discussions with certain of these stockholders to extend the payment due date for the notes until the earlier to occur of April 15, 2003 or our receipt of net proceeds from certain sales of our assets should any such sales occur.

We have retained Jefferies & Co., an investment banking firm, to assist us in reviewing our strategic alternatives, including a possible sale of Provant or certain of our assets. We have also retained Quarterdeck Investment Partners, an investment banking firm, to assist us in the possible sale of our Government group. We have been in discussions with various potential strategic and financial buyers and are pursuing those discussions aggressively.

	Six Months Ended December 31,
	2002		Percent of Segment Revenue		2001		Percent of Segment Revenue		Percent Change
	(dollars in thousands)
Government	$	8,034	25.6	%	$	6,505	28.4	%	23.5	%
Leadership Consulting		7,080	65.3			6,386	41.1		10.9
Performance Solutions		—	—			1,837	27.9		(100.0	)
Corporate Office		6,632	N/A			3,841	N/A		72.7

Total	$	21,746	51.4	%	$	18,569	41.2	%	17.1	%

We23 have three effective shelf registration statements on Form S-4. The first two registration statements each relate to the issuance of up to 3,000,000 shares of common stock in connection with acquisitions. On November 1, 2002, we filed a third shelf registration statement relating to an additional 4,350,147 shares that were necessary to fulfill our obligation to issue 5,750,799 shares of common stock to the former stockholders of SI. This registration statement became effective on November 13, 2002. On November 14, 2002, the Company issued 5,750,799 shares of common stock to the former stockholders of SI. As of November 14, 2002, an aggregate of 9,693,229 shares of common stock have been issued under our three shelf registration statements on Form S-4. We do not intend to issue any more shares of common stock under these registration statements.

~~Recent~~Selling, general ~~Accounting~~and ~~Pronouncements~~administrative (“SG&A”) expense increased $3.2 million, or 17.1% for the first six months of 2003 compared to the first six months of 2002. SG&A as a percentage of revenue increased from 41.2% for the first six months of 2002 to 51.4% for the first six months of 2003. The Government group’s SG&A increased $1.5 million, or 23.5% from the $6.5 million reported for the first six months of 2002. This increase is principally due to the selling costs associated with the increased business primarily from airport and homeland security assignments. As a percentage of revenue, SG&A decreased from 28.4% in 2002 to 25.6% in 2003.

InThe ~~October~~Leadership ~~2001,~~Consulting ~~the~~group’s ~~FASB~~SG&A ~~issued~~increased ~~SFAS~~$0.7 ~~144~~million, ~~Accounting for the Impairment~~ or ~~Disposal~~10.9%, offrom ~~Long-Lived~~the ~~Assets,~~$6.4 ~~effective~~million reported for ~~fiscal~~the ~~years~~first ~~beginning~~six ~~after~~months ~~December~~of ~~15, 2001~~2002. ~~Under~~The ~~the~~increase ~~new~~is ~~rules,~~attributable ~~the~~to ~~criteria~~a ~~required~~$1.2 ~~for~~million ~~classifying~~goodwill animpairment ~~asset~~determined as ~~held-for-sale~~of ~~have~~quarter ~~been~~end ~~changed.~~based ~~Assets~~on ~~held-for-sale~~the ~~are~~general ~~stated~~state atof the ~~lower~~business ofoffset ~~their~~by ~~fair~~decreases ~~values~~from ~~less~~certain ~~estimated~~cost ~~selling~~cutting ~~costs or carrying amounts~~initiatives, ~~and depreciation is no~~ ~~longer~~including ~~recognized.~~headcount ~~In addition~~reductions, ~~the~~that ~~expected~~were ~~future~~beginning ~~operating~~to ~~losses from discontinued operations will~~ be ~~displayed~~implemented induring ~~discontinued operations in~~ the ~~period~~latter inpart ~~which~~of the ~~losses~~first ~~are~~six ~~incurred~~months ~~rather~~in ~~than~~light as of the ~~measurement~~decrease ~~date~~in revenue. ~~More~~As ~~dispositions will~~a ~~qualify~~percentage ~~for~~of ~~discontinued~~revenue, ~~operations~~SG&A ~~treatment~~increased infrom ~~the~~41.1% ~~income~~in ~~statement~~2002 ~~under~~to ~~the new rules~~65.3% ~~The~~primarily ~~adoption~~due ofto ~~SFAS~~the goodwill ~~144~~impairment ~~did~~and ~~not~~delay ~~have~~in aimplementing ~~material effect on~~ the ~~Company’s~~cost ~~financial~~cutting ~~position or results of operations~~initiatives.

InThe ~~November~~Performance ~~2001,~~Solutions ~~the~~group’s ~~FASB~~SG&A ~~issued~~decreased ~~Topic Number D-103 regarding Income Statement Characterization of Reimbursements Received for “Out-Of-Pocket” Expenses Incurred~~$1.8 ~~This~~million, ~~announcement~~or ~~requires~~100%, ~~that reimbursements received~~ for ~~out-of-pocket~~the ~~expenses~~first ~~incurred~~six bemonths ~~characterized as revenue in the statement~~ of ~~operations.~~2003 Wecompared ~~incur~~to ~~expenses in~~ the ~~delivery~~first ofsix ~~services~~months ~~to our clients that are commonly referred to as “out-~~of~~-pocket”~~ ~~expenses. These expenses include~~2002, ~~but~~due ~~are~~to ~~not~~the ~~limited to~~sale, ~~travel~~in ~~and related charges. Comparative financial statements for prior periods should be reclassified to comply with~~ the ~~guidance~~ ofsecond ~~this~~quarter ~~staff announcement. The provisions~~ of ~~this announcement are effective for fiscal years beginning after December 15~~ 2002, ~~2001,~~of ~~and~~Sales ~~were~~Performance ~~therefore adopted by us~~International, asInc. ~~required, on July 1, 2002~~ and ~~all~~related ~~prior periods presented have been reclassified to conform to the current presentation~~businesses.

InThe ~~April~~Corporate ~~2002,~~SG&A ~~the~~increased ~~FASB issued SFAS No~~$2.8 ~~145~~million, ~~Rescission of~~or ~~FASB Statements No~~72. 47%, ~~44,~~for ~~and~~the ~~64,~~first ~~Amendment~~six ofmonths ~~FASB Statement No. 13, and Technical Corrections. The standard rescinds Statement 4 which required all gains and loses from extinguishment~~ of ~~debt~~2003 compared to bethe ~~aggregated~~first ~~and,~~six ~~when~~months ~~material, classified as an extraordinary item net~~ of ~~related income tax effect~~2002. The ~~Company~~increase ~~adopted~~is ~~the~~primarily ~~provisions~~due ~~of the standard related~~ to ~~the~~severance ~~rescission~~expense ofand ~~Statement~~bank 4and onrestructuring ~~July~~fees 1,paid ~~2002.~~in order ~~The~~to ~~adoption~~facilitate ~~of this Statement did not have a material effect on~~ the ~~Company’s~~ ~~financial~~extension ~~position~~of orour ~~results~~line of ~~operations~~credit.

19Income (loss) from operations

~~Table~~Loss from continuing operations before income taxes, extraordinary item and cumulative effect of ~~Contents~~a change in accounting principle was $9.0 million for the first six months of 2003, compared to income of $1.1 million for the first six months of 2002 as a result of the factors previously discussed.

InInterest ~~June~~Expense 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities which addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF Issue 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). The standard requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. The provisions of this Statement are required to be applied to exit or disposal activities that are initiated after December 31, 2002. The Company is currently evaluating the impact this Statement may have on its financial position or results of operations.

20Interest expense, net increased $0.6 million to $2.9 million for the first six months of 2003 from $2.3 million for the first six months of 2002. The increase in interest expense is primarily due to the increased interest rates on our line of credit as well as interest paid on contingent consideration due for a prior acquisition.

~~Table~~Income ofTaxes ~~Contents~~

~~Item~~Provision for income taxes increased from $0.3 million for the first six months of 2002 to $0. ~~Quantitative~~6 ~~and~~million ~~Qualitative~~for ~~Disclosures~~the ~~about~~first ~~Market~~six ~~Risk~~months of 2003. The increase in the income tax provision was primarily due to the reduction of certain tax reserves that were deemed to be in excess of our requirements during the first quarter of 2002.

WeDiscontinued ~~invest~~Operations our cash in money market instruments. These investments are denominated in U.S. dollars. Due to the conservative nature of these instruments, we do not believe that we have a material exposure to interest rate, foreign exchange rate, or market risk. The investment portfolio is used to preserve our capital until it is required to fund operations or acquisitions. None of these instruments are held for trading purposes. We do not own derivative financial instruments.

WeOn ~~are~~December ~~exposed~~31, to2002, ~~interest~~the ~~rate~~Company ~~risk~~completed in the ~~ordinary~~sale ~~course~~to Novations, a subsidiary of ~~business.~~DBM-J, ~~For~~of ~~fixed~~Provant’s ~~rate~~Performance ~~debt~~Solutions, ~~interest~~Technology ~~rate changes~~and ~~affect~~Development, ~~the~~Vertical ~~fair~~Markets ~~value~~and ~~but~~Project doManagement groups ~~not~~and ~~affect~~Learning ~~earnings~~and orStrategic ~~cash~~Alliances ~~flow.~~businesses ~~Conversely,~~(the ~~for~~“Businesses”). ~~floating~~The ~~rate~~Businesses ~~debt,~~were ~~interest~~transferred ~~rate~~to ~~changes~~Novations ~~generally~~by dothe ~~not~~sale ~~affect~~of the ~~fair~~stock ~~market~~of ~~value~~Provant Performance Solutions, ~~but~~Inc., doProvant ~~affect~~Media, ~~future~~Inc. ~~earnings~~and orProvant ~~cash~~Canada, ~~flow~~Inc. Aand ~~one-percentage point~~the ~~increase~~sale inof ~~interest~~tangible ~~rates~~and ~~would~~intangible ~~have~~assets aused ~~material~~in ~~effect~~connection onwith ~~our~~the ~~future~~conduct ~~earnings~~of orthe ~~cash~~Learning ~~flow.~~and ~~Based~~Strategic onAlliances ~~our borrowings of $45~~businesses.5 ~~million~~Under ~~under~~ the ~~credit~~provisions ~~facility as~~ of ~~September~~SFAS 30144, ~~2002,~~Accounting afor ~~one-percent~~the ~~increase~~Impairment inor ~~interest~~Disposal ~~rates~~of ~~would~~Long-Lived ~~decrease~~Assets, ~~cash~~the businesses ~~flow~~sold ~~and~~are ~~earnings,~~required ~~net~~to ofbe ~~taxes,~~presented byas ~~approximately~~discontinued $0operations.3 ~~million.~~

~~Item~~Summarized ~~4. Controls~~financial ~~and~~information ~~Procedures~~for the discontinued operations is as follows:

(a) Evaluation of disclosure controls and procedures. Under new Securities and Exchange Commission (SEC) regulations implementing portions of the Sarbanes-Oxley Act of 2002, our chief executive officer and our chief financial officer are required to certify in this quarterly report their responsibility for establishing and maintaining disclosure controls and procedures designed to ensure that that material information in relation to our Company is made known to them. Our CEO and CFO are also required to certify that they have evaluated the effectiveness of our disclosure controls and procedures as of a date within 90 days prior to the filing of this report, and that they have presented in this report their conclusions about the effectiveness of the disclosure controls and procedures as a result of the evaluation. Based on their evaluation, our CEO and CFO have concluded that our disclosure controls and procedures are effective, providing them with material information relating to the Company as required to be disclosed in the reports we file with the SEC on a timely basis.

	Six months ended December 31,
	2002			2001
Results of operations:
Total revenue	$	34,697		$	42,719
Total expenses		33,807			42,690

Net income before income taxes		890			29
Loss on sale		(19,976	)		—
Cumulative effect of a change in accounting principle		—			(117,585	)

Net income (loss) from discontinued operations	$	(19,086	)	$	(117,556	)

~~(b)~~24 Changes in internal controls. There were no significant changes in the Company’s internal controls or in other factors that could significantly affect the Company’s disclosure controls and procedures subsequent to the date of the CEO and CFO’s evaluation, nor were there any significant deficiencies or material weaknesses in the Company’s internal controls.

21Extraordinary item

~~Table~~On November 6, 2001, we consummated the sale of ~~Contents~~Sales Performance International, Inc. (including Resolution Software, Inc. and Solution Selling, Inc.) (“SPI”) to a company controlled by the former majority stockholder of Sales Performance International, Inc., which former stockholder was an officer, director and employee of Sales Performance International, Inc. at the time of the sale. As a result of the sale of Sales Performance International, Inc. and the Solution Selling, Inc. businesses, we recognized in the second quarter of fiscal 2002 an extraordinary loss of approximately $14.5 million, primarily due to the elimination of related goodwill. In accordance with Accounting Principles Board Opinion No. 16, the loss was presented as an extraordinary item in the accompanying financial statements as the sale of SPI occurred within two years of a business combination accounted for as a pooling-of-interests.

~~PART~~Liquidity ~~II. OTHER~~and ~~INFORMATION~~Capital Resources

We generated approximately $2.4 million of net cash from continuing operations in operating activities during the first six months of 2003 ~~Item~~while generating approximately $5.2 million in net cash during the first six months of 2002. Net cash provided by investing activities was $28.8 million in the first six months of 2003, primarily from the cash received from the sale of the Businesses to Novations. Net cash provided by investing activities was $13.3 million in the first six months of 2002, primarily from the net proceeds of the sale of SPI partially offset by the purchases of property and equipment and payment of contingent consideration. ~~Defaults~~ ~~Upon~~Net ~~Senior~~cash ~~Securities~~used in financing activities was $31.7 million for the first six months of fiscal 2003 for the repayment of our credit facility of $25.1 million and for the payment of $6.6 million of other acquisition indebtedness, as compared to net cash used in financing activities of $12.0 million for the first six months of fiscal 2002 for the repayment of our credit facility of $4.2 million and for the payment of $7.8 million of other acquisition indebtedness.

~~Provant~~As isof ~~currently~~December in31, 2002, we had ~~default~~outstanding indebtedness under our $24.1 million credit facility of ~~its~~$20.4 ~~obligations~~million. toThe ~~pay~~credit ~~its~~facility ~~lenders~~is ~~under~~guaranteed by Provant’s subsidiary and secured by a pledge of all of the assets of Provant and the assets of its ~~senior~~subsidiary. We can use the credit facility for working capital and general corporate purposes, with certain limitations. The credit facility (i) generally prohibits us from paying dividends and other distributions, (ii) generally does not permit us to incur or assume other indebtedness, (iii) requires us to comply with certain financial covenants and (iv) requires us to obtain approval to draw on the facility to pay contingent consideration. On November 15, 2002, the Company executed an amendment to the credit facility agreement that, among other things, required the Company to take certain ~~acquisition~~actions ~~related~~to ~~indebtedness~~facilitate refinancing the credit facility and required the payment of an additional fee to the ~~former~~banks ~~owners~~if any of ~~certain~~these ~~businesses~~actions ~~acquired~~were bynot ~~Provant~~performed in a timely manner and extended the due date to April 15, 2003. ~~See~~The Company paid the banks a $0.5 million fee in November 2002 and issued warrants to purchase an aggregate of 5,132,250 shares of our Common Stock, subject to adjustment under circumstances (the “~~Management’s~~Warrant ~~Discussion~~Shares”). The warrants have an exercise price of $.01 per share and ~~Analysis~~expire on November 21, 2012. Warrants with respect to one-fifth of the Warrant Shares became exercisable on November 21, 2002. Warrants with respect to one-fifth ~~Financial~~of ~~Condition~~the Warrant Shares expired on December 31, 2002. Warrants will become exercisable with respect to one-fifth of the Warrant Shares on March 31, 2003 if the outstanding principal balance under our credit facility is in excess of $22.95 million on that date and ~~Results~~with respect to two-fifths of ~~Operations~~the Warrant Shares on April 15, 2003 if the outstanding principal balance under our credit facility is not paid in full by that date.” We have the right to pay the credit facility banks a fee in lieu of any warrant vesting or becoming exercised in an amount equal to $100,000 per one-fifth of the Warrant Shares, subject to adjustment under certain circumstances. We have valued the warrants that are currently exercisable at $0.1 million, which has been accounted for as additional interest expense associated with the extension of our credit facility. Although we have not received a notice of default under the credit facility, we are not in compliance with several covenants under the credit facility agreement. We are in the process of negotiating a new amendment with our credit facility banks, which we anticipate, among other things, will waive the defaults and extend the due date until June 30, 2003. On February 19, 2003, the outstanding balance under the credit facility was $21.7 million. There are no guarantees that we will be successful in amending the credit facility on terms favorable to the Company.

~~Item~~As 5of December 31, 2002, we owed the former stockholders of Hughes Research Corporation an aggregate of $0. ~~Other~~3 million ~~Information~~under promissory notes due on September 28, 2002 that were issued two years earlier in connection with our acquisition of that company.

~~Provant~~On ~~received~~December ~~notification~~31, ~~from~~2002, we completed the ~~Nasdaq~~sale ~~Stock~~of ~~Market~~the onBusinesses ~~November~~to 12Novations, ~~2002~~a ~~that~~subsidiary ~~the~~of ~~Nasdaq~~DBM-J. ~~Listing~~The ~~Qualifications~~Businesses ~~Panel~~were ~~determined~~transferred to ~~delist~~Novations ~~Provant’s~~by ~~common~~the sale of the stock ~~from~~of Provant Performance Solutions, Inc., Provant Media, Inc. and Provant Canada, Inc. and the ~~Nasdaq~~sale ~~SmallCap~~of ~~Market~~tangible ~~effective~~and intangible assets used in connection with the ~~open~~conduct of ~~business~~the onLearning ~~November~~and 13Strategic Alliances businesses. The $30.0 million purchase price paid at closing consisted of $23.4 million cash, ~~2002~~subject to a working capital adjustment, which we have preliminarily estimated up to $1.8 million that is payable to Novations, and the assumption by Novations of $6.6 million of our non-bank indebtedness and other acquisition related obligations. We used the cash proceeds less expenses to reduce its bank debt by $21.3 million. After the closing until March 31, 2002, Novations and Provant’s (including ~~common~~our ~~stock~~subsidiary, isStar ~~now~~Mountain, ~~traded~~Inc.) will provide certain transition services to each other on ~~the~~an ~~OTC~~as ~~Bulletin~~required ~~Board~~basis.

~~ITEM~~Following 6the closing of the sale of the Businesses to Novations, our remaining businesses are our Government and Leadership Consulting groups. ~~EXHIBITS~~ ~~AND~~We ~~REPORTS~~derived ONapproximately ~~FORM~~27% ~~8-K~~of our revenue for the year ended June 30, 2002 from services and

A.25 ~~Exhibits:~~

99products provided to numerous U.1S. ~~Certification~~federal government entities. As a result of ~~Chief~~the ~~Executive~~sale ~~Officer~~of ~~and~~the ~~Chief~~Businesses to ~~Financial~~Novations, ~~Officer~~we ~~under~~expect ~~Section~~the ~~906~~percentage of our revenue from government contracts to increase significantly from our last fiscal year. The level of our business with the ~~Sarbanes-Oxley~~U.S. ~~Act~~federal government subjects us to additional risks related to government business. Many of our government contracts are subject to termination at the election of the government. Contracts with the U.S. federal government entail other risks including potential government audits and retroactive downward repricing of sales. Any of these risks, if realized, could have an adverse effect on our results of operations. See “Factors That May Affect Future Results” in our 2002 Annual Report on Form 10-K for other risks associated with our government contracts business.

BOn November 6, 2001, we consummated the sale of our Solutions Selling business consisting of Sales Performance International, Inc. ~~Reports~~(including onResolution ~~Form~~Software, 8Inc. and Solution Selling, Inc.) (“SPI”) to a company controlled by the former majority stockholder of Sales Performance International, Inc., which former stockholder was an officer, director and employee of Sales Performance International, Inc. at the time of the sale. The decision to sell these businesses was based, in part, upon the determination that the niche high-K:end sales training provided by these operating companies through the Solution Selling, Inc. methodology did not fit well with the Company’s long-term strategic plan. The purchaser paid us approximately $19.5 million in cash and returned 517,325 shares of our Common Stock originally received by the former majority stockholder when SPI was acquired. Included in the assets of the companies sold was $1.2 million in cash. Our obligation to pay any contingent consideration, either cash or stock, pursuant to the June 1999 Sales Performance International, Inc. acquisition agreement was terminated. We used $4.4 million of the proceeds of the sale to prepay a seller note to the former owner of the Solution Selling, Inc. business and used $2.0 million of the proceeds to satisfy in full all remaining obligations to pay contingent consideration, whether cash or stock, under the June 1999 Solution Selling, Inc. acquisition agreement. The remaining $12 million of the net proceeds from the sale were used to pay down our credit facility.

~~Provant~~We ~~filed~~have athree ~~Current~~effective ~~Report~~shelf registration statements on Form 8S-K,4. ~~dated~~The ~~August~~first 15two registration statements each relate to the issuance of up to 3,000,000 shares of common stock in connection with acquisitions. On November 1, 2002, we filed a third shelf registration statement relating to ~~announce~~an additional 4,350,147 shares that were necessary to fulfill our obligation to issue 5,750,799 shares of common stock to the ~~transfer~~former stockholders of ~~its~~SI. This registration statement became effective on November 13, 2002. On November 14, 2002, we issued 5,750,799 shares ~~from~~of common stock to the ~~Nasdaq~~former ~~National~~stockholders ~~Market~~of SI. As of February 14, 2003, an aggregate of 9,693,229 shares of common stock have been issued under our three shelf registration statements on Form-S-4. We do not intend to ~~the~~issue ~~Nasdaq~~any ~~SmallCap~~more ~~Market~~shares of common stock under these registration statements.

~~Provant~~As ~~filed~~previously aannounced, ~~Current~~we ~~Report~~were notified on ~~Form~~November ~~8-K~~12, ~~dated~~2002 ~~September~~that 6,the ~~2002,~~Nasdaq Listing Qualifications Panel determined to ~~announce~~delist ~~the~~our common ~~notification~~stock from the Nasdaq SmallCap Market. Our stock is currently traded on the OTC Bulletin Board. Our common stock is currently held of ~~Provant’s~~record ~~noncompliance~~by fewer than 300 persons. In order to save the high cost of compliance with ~~Nasdaq’s~~the federal securities ~~shareholder~~laws ~~approval~~and ~~requirements~~regulations asapplicable to registered companies, we have filed a ~~result~~Form 15 with the Securities and Exchange Commission that will have the effect of ~~Provant’s~~terminating ~~acquisition~~the registration of ~~Strategic~~our ~~Interactive~~common stock under the Securities Exchange Act of 1934. The termination of registration is expected to take effect on May 19, ~~Inc~~2003. Notwithstanding the termination of registration of our common stock, unless the SEC decides otherwise, we will continue to be required to file with the SEC periodic reports, including quarterly and annual reports, with respect to periods ending on or before June 30, 2003.

22As previously announced, we have retained Quarterdeck Investment Partners, an investment banking firm, to assist us in the sale of our Government group. We also are in the process of negotiating a sale of our Leadership Consulting group to the management of that Group. No assurance can be given that those sales efforts will be successful. If they are, we would expect to liquidate and distribute the net proceeds from the sales to our shareholders.

~~Table~~26 ~~of Contents~~

In January ~~SIGNATURE~~2003 the Government group received notice that a small portion of a large staffing contract with the federal government was being discontinued, which we estimate will result in an annual loss of revenue of $3.5 million. We believe that the contract was discontinued due to the Government group’s failure to pay subcontractors on a timely basis.

~~Pursuant~~The toCompany is aware that the ~~requirements~~consequences of a failure to satisfy government contracting regulations can be severe and could adversely affect the ~~Securities~~Company’s ~~Exchange~~ongoing ~~Act~~operations ofand ~~1934~~financial condition. As a result, the Government group is taking aggressive efforts to address the subcontractor payment issue, government cost accounting and other government contracting compliance ~~Registrant~~issues. It has ~~duly~~retained ~~caused~~specialized ~~this~~accounting ~~report~~and legal expertise to beassist ~~signed~~it onand has made changes in its ~~behalf~~management. byOn February 10, 2003, Joseph Swerdzewski was appointed the ~~undersigned~~Chief ~~thereunto~~Operating ~~duly~~Officer ~~authorized~~of the Government group, and on March 4, 2003, he became Chief Executive Officer of the Government group. Mr. Swerdzewski will have responsibility for the operations of each of the Government group’s three divisions and compliance with government regulations. Mr. Swerdzewski will continue to head the Company’s Human Resources Solutions and Staffing Division and will oversee the Government Training Solutions and Star Media Divisions.

~~Date:~~Recent ~~November~~Accounting ~~14,~~Pronouncements ~~2002~~

~~PROVANT~~In October 2001, ~~INC~~the FASB issued SFAS No. ~~By:~~144, ~~/S/~~Accounting ~~JANET~~for Mthe Impairment or Disposal of Long-Lived Assets, effective for fiscal years beginning after December 15, 2001. ~~HOEY~~Under ~~Janet~~the Mnew rules, the criteria required for classifying an asset as held-for-sale have been changed. ~~Hoey~~Assets ~~Vice~~held-for-sale ~~President~~are stated at the lower of their fair values less estimated selling costs or carrying amounts, ~~Chief~~and ~~Financial~~depreciation ~~Officer~~is ~~andChief~~no ~~Accounting~~longer ~~Officer~~recognized. In addition, the expected future operating losses from discontinued operations will be displayed in discontinued operations in the period in which the losses are incurred rather than as of the measurement date. More dispositions will qualify for discontinued operations treatment in the income statement under the new rules. The adoption of SFAS 144 did not have a material effect on the Company’s financial position or results of operations.

~~CERTIFICATIONS~~In accordance with the provisions of EITF Issue No. 01-14, the Company is required to characterize reimbursements received for out-of-pocket expenses incurred as revenue in the statement of operations. We incur expenses in the delivery of services to our clients that are commonly referred to as “out-of-pocket” expenses. These expenses include, but are not limited to, travel and related charges. Comparative financial statements for prior periods should be reclassified to comply with the guidance of this staff announcement. The provisions of this announcement are effective for fiscal years beginning after December 15, 2001, and were therefore adopted by us, as required, on July 1, 2002 and all prior periods presented have been reclassified to conform to the current presentation.

IIn April 2002, ~~John~~the FASB Hissued SFAS No. ~~Zenger~~145, ~~certify~~Rescission ~~that:~~of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. The standard rescinds Statement 4 which required all gains and loses from extinguishment of debt to be aggregated and, when material, classified as an extraordinary item net of related income tax effect. The Company adopted the provisions of the standard related to the rescission of Statement 4 on July 1, 2002. The adoption of this Statement did not have a material effect on the Company’s financial position or results of operations.

1In June 2002, the FASB issued SFAS No. I146, ~~have~~Accounting ~~reviewed~~for ~~this~~Costs ~~quarterly~~Associated ~~report~~with onExit ~~Form~~or 10Disposal Activities which addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF Issue 94-Q3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). The standard requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of ~~Provant~~a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, ~~Inc~~discontinued operation, plant closing, or other exit or disposal activity.; The provisions of this Statement are required to be applied to exit or disposal activities that are initiated after December 31, 2002. The Company is currently evaluating the impact this Statement may have on its financial position or results of operations.

2.In ~~Based~~November 2002, a consensus was reached on myEITF ~~knowledge,~~Issue ~~this~~No. ~~quarterly~~00-21 ~~report~~with ~~does~~respect ~~not~~to ~~contain~~when ~~any~~a ~~untrue~~revenue ~~statement~~arrangement with multiple deliverables should be divided into separate units of aaccounting ~~material~~and, ~~fact~~if orseparation ~~omit~~is toappropriate, ~~state~~how athe ~~material~~arrangement ~~fact~~consideration ~~necessary~~should tobe ~~make~~allocated to the ~~statements~~identified ~~made,~~accounting units. The guidance in ~~light~~this ofIssue ~~the~~will ~~circumstances~~be ~~under~~effective ~~which~~for ~~such~~revenue ~~statements~~arrangements entered ~~were~~into ~~made~~by the Company beginning on July 1, ~~not~~2003. ~~misleading~~The ~~with~~Company ~~respect~~has tonot ~~the~~yet ~~period~~determined ~~covered~~the byimpact of this ~~quarterly~~Issue, ~~report;~~if any, on its consolidated financial statements.

3.In ~~Based~~November ~~on my knowledge~~2002, the ~~financial~~FASB ~~statements~~issued Interpretation No. 45 (FIN45), Guarantor’s Accounting and Disclosure ~~other~~Requirements ~~financial~~for ~~information~~Guarantees, ~~included~~Including inIndirect ~~this~~Guarantees ~~quarterly~~of ~~report~~Indebtedness of Others, ~~fairly~~which ~~present~~clarifies indisclosure ~~all~~recognition ~~material~~/ ~~respects~~measurement ~~the~~requirements ~~financial~~related ~~condition,~~to ~~results~~certain ofguarantees. ~~operations~~The ~~and~~disclosure ~~cash~~requirements ~~flows~~are ofeffective ~~the~~for financial ~~registrant~~statements asissued ofafter December 15, 2002 and the recognition / measurement requirements are effective on a prospective basis for guarantees issued or modified after December 31, 2002. The disclosure requirements of FIN 45 did not have a material impact on the ~~periods~~Company’s ~~presented~~financial inposition ~~this~~or ~~quarterly~~results ~~report;~~of operations upon adoption.

4In December 2002, the FASB issued SFAS No. ~~The~~148, ~~registrant’s~~Accounting ~~other~~for ~~certifying~~Stock-Based ~~officers~~Compensation – Transition and IDisclosure. ~~are~~SFAS ~~responsible~~148 amends SFAS No. 123, Accounting for ~~establishing~~Stock-Based ~~and~~Compensation to ~~maintaining~~provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure ~~controls~~requirements ~~and~~of ~~procedures~~SFAS ~~(as~~123 ~~defined~~to require prominent disclosures in ~~Exchange~~both ~~Act~~annual ~~Rules~~and ~~13a~~interim financial statements about the method of accounting for stock-14based employee compensation and ~~15d-14)~~the ~~for~~effect of the ~~registrant~~method ~~and~~used weon ~~have:~~reported

a)27 designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)results. ~~evaluated~~The ~~the~~transition ~~effectiveness~~guidance and annual disclosure provisions of ~~the~~SFAS ~~registrant’s~~148 are effective for fiscal years ending after December 15, 2002. The interim disclosure ~~controls~~provisions ~~and~~are ~~procedures~~effective asfor offinancial areports ~~date~~containing ~~within~~financial 90statements ~~days~~for ~~prior~~interim periods beginning after December 15, 2002. As the Company did not make a voluntary change to the fair ~~filing~~value ~~date~~based method of ~~this~~accounting ~~quarterly~~for ~~report~~stock-based (employee compensation in 2002, the ~~“Evaluation~~adoption ~~Date”);~~of SFAS 148 did not have a material impact on the Company’s financial position and results of operations.

c) Item ~~presented~~3. inQuantitative ~~this~~and ~~quarterly~~Qualitative ~~report~~Disclosures ~~our conclusions~~ about ~~the~~Market ~~effectiveness~~Risk ~~of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;~~

5We invest our cash in money market instruments. ~~The~~These ~~registrant’s~~investments ~~other~~are ~~certifying~~denominated ~~officers~~in ~~and~~U.S. Idollars. ~~have~~Due ~~disclosed~~to the conservative nature of these instruments, ~~based~~we ondo ~~our~~not ~~most~~believe ~~recent~~that ~~evaluation~~we have a material exposure to interest rate, foreign exchange rate, or market risk. The investment portfolio is used to ~~the~~preserve ~~registrant’s~~our ~~auditors~~capital ~~and~~until ~~the~~it ~~audit~~is ~~committee~~required ofto ~~registrant’s~~fund ~~board~~operations or acquisitions. None of ~~directors~~these ~~(or~~instruments ~~persons~~are ~~performing~~held ~~the~~for ~~equivalent~~trading ~~function):~~purposes. We do not own derivative financial instruments.

a)We ~~all~~are exposed ~~significant~~to ~~deficiencies~~interest rate risk in the ~~design~~ordinary orcourse ~~operation~~ of ~~internal~~business. ~~controls~~For ~~which~~fixed ~~could~~rate ~~adversely~~debt, interest rate changes affect the ~~registrant’s~~fair ~~ability~~value tobut ~~record~~do not affect earnings or cash flow. Conversely, ~~process~~for floating rate debt, ~~summarize~~interest ~~and~~rate ~~report~~changes ~~financial~~generally ~~data~~do ~~and~~not affect the fair market value, but do affect future earnings or cash flow. A one-percentage point increase in interest rates would have ~~identified~~a ~~for~~material effect on our future earnings or cash flow. Based on our borrowings of $20.4 million under the ~~registrant’s~~credit facility ~~auditors~~as ~~any~~of ~~material~~December ~~weaknesses~~31, 2002, a one-percent increase in ~~internal~~interest ~~controls;~~rates would decrease annual cash flow and earnings, net of taxes, by approximately $0.2 million

b) Item ~~any~~4. ~~fraud,~~Controls ~~whether~~and orProcedures ~~not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and~~

6(a) Evaluation of Disclosure Controls and Procedures. ~~The~~Our ~~registrant~~CEO and CFO are responsible for establishing and maintaining disclosure controls and procedures for the Company and have evaluated the Company’s ~~other~~disclosure controls ~~certifying~~and ~~officers~~procedures as of a date within 90 days prior to the filing date of this report (the “Evaluation Date”). Based on their evaluation, our CEO and ICFO have ~~indicated~~concluded inthat, except with respect to the timing of the filing of this Quarterly ~~quarterly~~Report ~~report~~on ~~whether~~Form 10-Q, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act, as amended, is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. The Company was not ~~there~~able ~~were~~to ~~significant~~timely ~~changes~~file this Quarterly Report on Form 10-Q as a result of delays in ~~internal~~completing ~~controls~~the required orfinancial statements and related disclosure due, in ~~other~~large ~~factors~~part, ~~that~~to ~~could~~the ~~significantly~~recent ~~affect~~sale ~~internal~~by ~~controls~~the ~~subsequent~~Company to Novations of the ~~date~~Businesses. As a result of ~~our~~the ~~most~~sale ~~recent~~of ~~evaluation~~the Businesses, ~~including~~some ~~any~~information ~~corrective~~required ~~actions~~to ~~with~~be ~~regard~~disclosed by the Company in this report was accumulated and communicated to ~~significant~~the ~~deficiencies~~Company’s management by persons who are no longer employees of the Company. Nonetheless, we believe that such information was accumulated and ~~material~~communicated ~~weaknesses~~to our CEO and CFO, as necessary, to allow appropriate decisions regarding required disclosure.

~~Date:~~(b) ~~November~~Changes 14in Internal Controls. Other than organizational and personnel changes arising in connection with the sale of the Businesses, ~~2002~~there were no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the Evaluation Date.

/As disclosed above, on February 10, 2003, Joseph Swerderski was appointed the Chief Operating Officer and on March 4, 2003 he was appointed Chief Executive Officer of the Government group. One of his responsibilities will be to address questions regarding the Government group’s~~/ John~~ Htimely payment of subcontractors, government cost accounting and other government contract compliance issues. ~~Zenger~~However, we do not believe that these issues are the result of significant deficiencies or material weaknesses in the Company’s internal controls.

~~John~~(c) HLimitations of Controls and Procedures. ~~Zenger~~The Company’s management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal controls and procedures for financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

~~President~~28 ~~and Chief Executive Officer~~

23PART II. OTHER INFORMATION

~~Table~~ Item 2. Changes in Securities and Use of ~~Contents~~Proceeds.

IOn November 21, ~~Janet~~2002, ~~Hoey~~in connection with the execution of the Seventeenth Amendment to the Company’s credit facility agreement, ~~certify~~the Company issued to its credit facility banks warrants to purchase an aggregate of 5,132,250 shares of the Company’s common stock, subject to adjustment under certain circumstances (the “Warrant Shares”). The warrants have an exercise price of $.01 per share and expire on November 21, 2012. Warrants with respect to one-fifth of the Warrant Shares became exercisable on November 21, 2002. Warrants with respect to one-fifth of the Warrant Shares expired on December 31, 2002. Warrants will become exercisable with respect to one-fifth of the Warrant Shares on March 31, 2003 if the outstanding principal balance under the Company’s credit facility is in excess of $22.95 million on that: date and with respect to two-fifths of the Warrant Shares on April 15, 2003 if the outstanding principal balance under the Company’s credit facility is not paid in full by that date. The Company has the right to pay the credit facility banks a fee in lieu of any warrant vesting or becoming exercised in an amount equal to $100,000 per one-fifth of the Warrant Shares, subject to adjustment under certain circumstances. The issuance of the warrants was exempt from registration by virtue of Rule 506 of Regulation D, as promulgated under the Securities Act of 1933, as amended.

1 Item 3. IDefaults ~~have~~Upon ~~reviewed~~Senior ~~this quarterly report on Form 10-Q of Provant, Inc~~Securities.;

2.Provant ~~Based~~is oncurrently myin ~~knowledge,~~default ~~this~~of ~~quarterly~~certain ~~report~~of ~~does~~its ~~not~~obligations ~~contain~~to ~~any~~its ~~untrue~~lenders ~~statement~~under ofits asenior ~~material~~credit ~~fact~~facility orand ~~omit~~ to ~~state~~pay acertain ~~material~~acquisition ~~fact~~related ~~necessary~~indebtedness to ~~make~~ the ~~statements~~former ~~made,~~owners ~~in light~~ of ~~the~~a ~~circumstances~~business ~~under~~acquired ~~which~~by ~~such~~Provant. ~~statements~~See “Management’s ~~were~~Discussion ~~made,~~and ~~not~~Analysis ~~misleading~~of ~~with~~Financial ~~respect~~Condition toand ~~the~~Results ~~period~~of ~~covered~~Operations.” ~~by this quarterly report;~~

3 Item 6. ~~Based~~Exhibits ~~on my knowledge, the financial statements,~~ and ~~other~~Reports ~~financial~~on ~~information~~Form ~~included~~8-K. in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a)		Exhibits:

10.1		Amendment No. 10 to Revolving Credit Agreement

10.2		Amendment No. 11 to Revolving Credit Agreement

10.3		Amendment No. 12 to Revolving Credit Agreement

10.4		Amendment No. 13 to Revolving Credit Agreement*

10.5		Amendment No. 14 to Revolving Credit Agreement*

10.6		Amendment No. 15 to Revolving Credit Agreement

10.7		Amendment No. 16 to Revolving Credit Agreement

10.8		Amendment No. 17 to Revolving Credit Agreement*

10.9		Form of Tranche 1 Common Stock Warrants Issued to Credit Facility Banks

10.10		Form of Tranche 2 Common Stock Warrants Issued to Credit Facility Banks

10.11		Form of Tranche 3 Common Stock Warrants Issued to Credit Facility Banks

10.12		Form of Tranche 4 Common Stock Warrants Issued to Credit Facility Banks

10.13		Separation Agreement between Provant and Norman G. Fornella

21		Subsidiaries of Registrant

99.1		Certificate of Chief Executive Officer and Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002

* The Company has requested confidential treatment of the redacted portion of this exhibit pursuant to Rule 24b-2 promulgated under the Securities and Exchange Act of 1934, as amended, and has separately filed a complete copy of this exhibit with the Securities and Exchange Commission.

(b)		Reports on Form 8-K:

Provant filed a) ~~designed~~Current ~~such~~Report ~~disclosure~~on ~~controls~~Form ~~and~~8-K ~~procedures~~dated December 17, 2002 to ~~ensure~~announce that ~~material~~it ~~information~~had ~~relating~~entered tointo ~~the~~an ~~registrant,~~agreement ~~including~~for ~~its~~the ~~consolidated~~sale ~~subsidiaries,~~to isDrake ~~made~~Beam ~~known~~Morin-Japan toof usProvant’s byPerformance ~~others~~Solutions, ~~within~~Technology ~~those~~and ~~entities~~Development, ~~particularly~~Vertical ~~during~~Markets ~~the~~and ~~period~~Project Management ingroups ~~which~~and ~~this~~Learning ~~quarterly~~and ~~report~~Strategic isAlliances ~~being~~businesses. ~~prepared;~~

b)29 ~~evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and~~

c) SIGNATURES ~~presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;~~

5.Pursuant ~~The~~to the ~~registrant’s~~requirements ~~other~~of ~~certifying~~the ~~officers~~Securities ~~and~~Exchange IAct ~~have~~of ~~disclosed~~1934, ~~based on our most recent evaluation, to~~ the registrant’s ~~auditors~~has ~~and~~duly ~~the~~caused ~~audit~~this ~~committee~~report ofto ~~registrant’s~~be ~~board~~signed ofon ~~directors~~its ~~(or~~behalf ~~persons~~by ~~performing~~ the ~~equivalent~~undersigned ~~function):~~thereunto duly authorized.

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	PROVANT, INC.

Date: March 14, 2003	By:	/s/ JANET H. SULLIVAN
		Janet H. Sullivan Vice President and Chief Financial Officer

b)CERTIFICATIONS ~~any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and~~

~~6. The registrant’s other certifying officers and~~ I, ~~have~~John ~~indicated~~H. inZenger, ~~this quarterly report whether or not there were significant changes in internal controls or in other factors~~ certify that: ~~could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.~~

~~Date:~~1. ~~November~~I 14have reviewed this quarterly report on Form 10-Q of Provant, ~~2002~~Inc.;

~~/s/ Janet~~2. ~~Hoey~~Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

~~Janet~~3. ~~Hoey~~Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

~~Vice~~4. ~~President,~~The ~~Chief~~registrant’s ~~Financial~~other ~~Officer~~certifying officer and ~~Chief~~I ~~Accounting~~are ~~Officer~~responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

24a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 14, 2003

/s/ JOHN H. ZENGER

John H. Zenger

President and Chief Executive Officer

I, Janet Sullivan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Provant, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

Date: March 14, 2003

/s/ JANET H. SULLIVAN

Janet H. Sullivan

Vice President, Chief Financial Officer

and Chief Accounting Officer

Table of Contents

Filing Compare · PROVANT INC