Plato Learning, Inc. (Nasdaq: TUTR) provides computer-based instruction, assessment instruments, and job training for K through adult consumers. The company is struggling to change its revenue model from dependence on a one-time perpetual software license model to a fee-based subscription model. There is reason for optimism about the new subscription model. Subscription revenues from fourth quarter (4Q) 2007 are up 9% to $7.1 million from the previous quarter, and up 32% from 4Q 2006. Orders for subscription courseware products are up 90%. Deferred revenue balance, revenue the company will receive in the future, increased 17% to $49 million. Restructuring costs declined 90% in 4Q 2007 and will decline further going forward. Operating expenses also declined, but so did gross margins in both perpetual license fees and subscriptions.

Plato Learning is still bleeding money. The net loss for 4Q 2007, excluding restructuring charges, was $3.2 million or $0.13 per share. This is $0.04 per share worse than anticipated, but still less than net losses in 2006 when the company began switching its revenue model. Total revenues were down 23% year-over-year to $18.2 million, $1 million below anticipated.

E-learning, either in school or the workplace, will only expand in terms of both reach and content offerings. Plato Learning is already one of the dominant content providers for educational courseware and assessment tools. Patient bargain investors may want to take a look at this stock, currently trading under $4 per share.

A virtual public school? That's what K12 does. Over the years, the company has invested roughly $95 million to create an e-learning environment where grade school students get instruction from certified teachers. Now, the company has filed to go public.

K12 has arrangements with public school systems in 16 states. From 2004 to 2007, enrollments increased from 11,000 to 27,000 students. And during this time, revenues went from $71.4 million to $116.9 million.

Parents choose K12 for a variety of reasons, such as geographic constraints, disabilities, the need for faster or slower learning, and even safety concerns of local schools.

So far, the results have been fairly strong. The students test near or above state averages on standardized tests. What's more, based on an internal study of K12 parents, about 97% were "satisfied or very satisfied" and 95% said they would recommend the company to other families.

The lead underwriters on the IPO include Morgan Stanley (NYSE: MS) and Credit Suisse (NYSE: CS). The proposed ticker is LRN.

The IPO prospectus is at the SEC website. Also, check out more recent filings.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.