Scientific Learning –

BERKELEY, Calif. – Scientific Learning Corp., a neuroscience-based software developer, went public July 21, offering 2.3 million shares at $16 per share. The company’s stock priced at the high end of its $14 to $16 filing range.

Merrill Lynch & Co., Thomas Weisel Partners L.L.C. and Pacific Growth Equities Inc. underwrote the offering, which left 10.3 million shares outstanding.

There were no selling shareholders. Warburg, Pincus Ventures and LF SL Holding provided the company’s venture backing.

Scientific Learning develops intensive, computer-based training programs that focus on improving critical language and reading skills. The company’s current products primarily target the learning needs of children ages four to 13, and were developed based on research and field testing under scientific conditions.

The company has a history of operating losses in its limited history, losing $10.7 million in 1998 and $5.1 million in 1997.

The $36.8 million in proceeds from the offering will be used for sales and marketing, research and product development and other general corporate purposes.

James Thomas, a managing director at Warburg Pincus, joined Scientific Learning’s board of directors in November 1996, followed by Rodman Moorhead, a Warburg Pincus senior managing director, in June 1998, and David Tanner, a managing director of Lazard Freres & Co., in January.

Scientific Learning – Selected Financial

(in thousands, except per share data)

Year Ended December 31, Three Months Ended March 31,

1996 1997 1998 1998 1999

Total revenue – 2,962 5,166 647 1,340

Net income (loss) 2,497 -5,058 -10,748 -1,748 -3,537