Loading, Please Wait...

CST: 19/11/2019 09:17:57   

Aspen Group Reports Record Revenues of $8.5 Million and 49% Revenue Growth in Third Quarter of Fiscal 2019

252 Days ago

AGI’s New Business Units, USU and Aspen University’s Pre-Licensure BSN Program, Grow to 25% of Company Revenues

NEW YORK, March 11, 2019 (GLOBE NEWSWIRE) -- Aspen Group, Inc. (Nasdaq: ASPU)( “AGI”), an education technology holding company, today announced financial results for its 2019 fiscal third quarter ended January 31, 2019, highlighted by record revenue of $8,494,627, an increase of 49% compared to the third quarter of fiscal year 2018. 

Michael Mathews, Chairman & CEO of Aspen Group, commented, “Our two new business units, United States University, Inc. (“USU”) and Aspen University’s Pre-Licensure BSN program, continue to grow rapidly as they accounted for 25% of the overall revenues of the Company this quarter. This trend is expected to continue, and we now estimate these business units to grow to approximately 40% of our overall revenues by the end of fiscal year 2020.”

Fiscal Q3 2019 Highlights:

  • Revenue totaled $8,494,627 an increase of 49% as compared to the prior fiscal year third quarter;
  • Gross Profit totaled $4,221,939 or a 50% margin, a 46% increase as compared to the prior fiscal year third quarter;
  • Net Loss applicable to shareholders of ($2,355,940), as compared to Net Loss of ($2,147,945) in the prior fiscal year third quarter; Diluted net loss per share was $(0.13), as compared to a loss of $(0.15) in the prior fiscal year third quarter;
  • EBITDA, a non-GAAP financial measure, totaled a loss of $(1,726,399);
  • Adjusted EBITDA, a non-GAAP financial measure, totaled a loss of $(1,105,209);
  • Cash used in operations totaled $1,943,127, as compared to $2,099,213 last quarter, a sequential improvement of $156,086 or 7%.

In reviewing these comparisons, investors should note AGI acquired USU and all its operating expenses on December 1, 2017. For the third quarter, revenues were $8,494,627, an increase of 49% as compared to the prior fiscal year third quarter. USU revenues contributed approximately 21% of the quarterly revenues for the Company as compared to 19% in the previous quarter.

Fiscal 2019 Third Quarter Financial and Other Results:

AGI delivered 1,363 new student enrollments in the third quarter, as compared to 972 new student enrollments in the prior year, an increase of 40% year-over-year.  Aspen University accounted for 1,112 new student enrollments (includes 120 Doctoral enrollments and 97 Pre-licensure BSN AZ campus enrollments), while USU accounted for 251 new student enrollments (primarily Family Nurse Practitioner (“FNP”) enrollments).

AGI’s overall active student body (includes both Aspen University and USU) grew 28% year-over-year from 6,512 to 8,354. Aspen University’s total active degree-seeking student body grew 22% year-over-year from 6,066 to 7,393. Aspen’s School of Nursing grew 30% year-over-year, from 4,401 to 5,718 active students, which includes 210 active students in the BSN Pre-Licensure program in Phoenix, AZ.

Aspen University students paying tuition and fees through a monthly payment method grew by 25% year-over-year, from 4,194 to 5,259. Those 5,259 students paying through a monthly payment method represent 71% of Aspen University’s total active student body. USU’s total active degree-seeking student body grew sequentially from 843 to 961 students or a sequential increase of 14%. USU students paying tuition and fees through a monthly payment method grew from 514 to 602 students sequentially. Those 602 students paying through a monthly payment method represent 63% of USU’s total active student body.

Revenues increased to $8,494,627, an increase of 49% as compared to the prior fiscal year third quarter. USU accounted for approximately 21% and Aspen University’s Pre-Licensure BSN program accounted for approximately 5% of overall Company revenues.

Gross profit increased to $4,221,939 or 50% gross margin. Aspen University gross profit represented 54% of Aspen University revenues for the third quarter, while USU gross profit equaled 45% of USU revenues during the third quarter. Aspen University instructional costs and services represented 18% of Aspen University revenues for the 2019 third quarter, while USU instructional costs and services equaled 30% of USU revenues during the 2019 third quarter. Aspen University marketing and promotional costs represented 25% of Aspen University revenues for the 2019 third quarter, while USU marketing and promotional costs equaled 25% of USU revenues during the 2019 third quarter.

Net loss applicable to shareholders was ($2,355,940) or diluted net loss per share of ($0.13). Aspen University generated $0.4 million of net income for the third quarter, while USU experienced a net loss of ($0.9) million during the third quarter. Aspen Group corporate incurred $1.8 million of expenses for the third quarter.

EBITDA, a non-GAAP financial measure, was a loss of ($1,726,399) or (20%) as a percentage of revenue. Adjusted EBITDA, a non-GAAP financial measure, was a loss of ($1,105,209) or (13%) as a percentage of revenue. Aspen University generated $0.9 million of Adjusted EBITDA for the third quarter, while USU experienced an Adjusted EBITDA loss of ($0.5) million during the third quarter. Aspen Group corporate contributed $1.5 million toward the ($1,105,209) Adjusted EBITDA loss for the third quarter.

The company used cash of $1.9 million for operations in the third quarter, as compared to using $2.1 million last quarter, a sequential improvement of $156,086 or 7%.

Conference Call:

Aspen Group, Inc. will host a conference call to discuss its fiscal year 2019 3rd quarter financial results and business outlook on Monday, March 11th, 2019, at 4:30 p.m. (ET).   Aspen will issue a press release reporting results after the market closes on that day. The conference call can be accessed by dialing toll-free (844) 452-6823 (U.S.) or (731) 256-5216 (international), passcode 7082258. Subsequent to the call, a transcript of the audiocast will be available from the Company’s website at ir.aspen.edu. There will also be a 7 day dial-in replay which can be accessed by dialing toll-free (855) 859-2056 or (404) 537-3406 (international), passcode 7082258.

Non-GAAP – Financial Measures:

This press release includes both financial measures in accordance with Generally Accepted Accounting Principles, or GAAP, as well as non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to net income (loss), operating income (loss), and cash flow from operating activities, liquidity or any other financial measures. They may not be indicative of the historical operating results of Aspen Group nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.

Our management uses and relies on Adjusted EBITDA and EBITDA, each of which are non-GAAP financial measures. We believe that both management and shareholders benefit from referring to the following non-GAAP financial measures in planning, forecasting and analyzing future periods. Our management uses these non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparisons.  Our management recognizes that the non-GAAP financial measures have inherent limitations because of the excluded items described below.

Aspen Group defines Adjusted EBITDA as earnings (or loss) from continuing operations before the items in the table below. Aspen Group excludes these expenses because they are non-cash or non-recurring in nature.

We have included a reconciliation of our non-GAAP financial measures to the most comparable financial measures calculated in accordance with GAAP. We believe that providing the non-GAAP financial measures, together with the reconciliation to GAAP, helps investors make comparisons between Aspen Group and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measure and the corresponding GAAP measure provided by each company under applicable SEC rules.

The following table presents a reconciliation of Adjusted EBITDA to net loss allocable to common shareholders, a GAAP financial measure:

    For the Three Months Ended
    January 31,
    2019   2018
Net loss   $ (2,355,940 )   $ (2,147,945 )
Interest expense, net     74,249       211,486  
Taxes            
Depreciation & amortization     555,292       347,894  
EBITDA (loss)     (1,726,399 )     (1,588,565 )
Bad debt expense     187,178       132,644  
Acquisition expense           610,219  
Non-recurring charges     83,174       85,853  
Stock-based compensation     350,838       162,544  
Adjusted EBITDA (Loss)   $ (1,105,209 )   $ (597,305 )

About Aspen Group, Inc.:

Aspen Group, Inc. is an education technology holding company that leverages its infrastructure and expertise to allow its two universities, Aspen University and United States University, to deliver on the vision of making college affordable again.

Forward-Looking Statements:

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including future growth of our new business units. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Important factors that could cause actual results to differ from those in the forward-looking statements include the continued demand of nursing students for the new programs, potential student attrition and national and local economic factors. Other risks are included in our filings with the SEC including our Form S-3, our Prospectus Supplement filed April 19, 2018 and our Form 10-K for the year ended April 30, 2018. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Company Contact:

Aspen Group, Inc.
Michael Mathews, CEO
914-906-9159

ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

    January 31,     April 30,  
    2019     2018  
    (unaudited)
         
Assets                
                 
Current assets:                
Cash   $ 4,197,235     $ 14,612,559  
Restricted cash     192,692       190,506  
Accounts receivable, net of allowance of $903,450 and $468,174, respectively     9,278,751       6,802,723  
Prepaid expenses     343,215       199,406  
Other receivables     79,235       184,569  
Total current assets     14,091,128       21,989,763  
                 
Property and equipment:                
Call center equipment     173,077       140,509  
Computer and office equipment     301,548       230,810  
Furniture and fixtures     1,310,139       932,454  
Software     3,869,750       2,878,753  
      5,654,514       4,182,526  
Less accumulated depreciation and amortization     (1,622,908 )     (1,320,360 )
Total property and equipment, net     4,031,606       2,862,166  
Goodwill     5,011,432       5,011,432  
Intangible assets, net     8,816,667       9,641,667  
Courseware and accreditation, net     179,154       138,159  
Accounts receivable, secured - net of allowance of $625,963, and $625,963, respectively     45,329       45,329  
Long term contractual accounts receivable     2,568,532       1,315,050  
Debt issue cost, net     330,414        
Other assets     607,812       584,966  
                 
Total assets   $ 35,682,074     $ 41,588,532  
                 
                 

ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)

    January 31,     April 30,  
    2019     2018  
    (unaudited)          
Liabilities and Stockholders’ Equity                
                 
Current liabilities:                
Accounts payable   $ 1,709,233     $ 2,227,214  
Accrued expenses     570,806       658,854  
Deferred revenue     2,699,227       1,814,136  
Refunds due students     1,370,060       815,841  
Deferred rent, current portion     18,818       8,160  
Convertible notes payable, current portion     1,050,000       1,050,000  
Other current liabilities     291,703       203,371  
Total current liabilities     7,709,847       6,777,576  
                 
Convertible note           1,000,000  
Deferred rent     705,420       77,365  
Total liabilities     8,415,267       7,854,941  
                 
Commitments and contingencies - See Note 6                
                 
Stockholders’ equity:                
Preferred stock, $0.001 par value; 10,000,000 shares authorized, 0 issued and outstanding
at January 31, 2019 and April 30, 2018
           
Common stock, $0.001 par value; 250,000,000 shares authorized,18,505,869 issued and
18,489,202 outstanding at January 31, 2019, 18,333,521 issued and 18,316,854 outstanding at April 30,2018
    18,506       18,334  
Additional paid-in capital     67,758,344       66,557,005  
Treasury stock (16,667 shares)     (70,000 )     (70,000 )
Accumulated deficit     (40,440,043 )     (32,771,748 )
Total stockholders’ equity     27,266,807       33,733,591  
                 
Total liabilities and stockholders’ equity   $ 35,682,074     $ 41,588,532  
                 
                 

ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

    For the     For the  
    Three Months Ended     Nine Months Ended  
    January 31,     January 31,  
    2019     2018     2019     2018  
                         
Revenues   $ 8,494,627     $ 5,701,958     $ 23,811,275     $ 14,796,483  
                                 
Operating expenses                                
Cost of revenues (exclusive of depreciation and amortization shown separately below)     4,076,980       2,665,664       11,664,887       6,282,814  
General and administrative     6,284,041       4,677,359       18,318,061       10,975,085  
Depreciation and amortization     555,292       347,894       1,577,464       631,969  
Total operating expenses     10,916,313       7,690,917       31,560,412       17,889,868  
                                 
Operating loss     (2,421,686 )     (1,988,959 )     (7,749,137 )     (3,093,385 )
                                 
Other income (expense):                                
Other income     142,180       46,179       240,074       88,067  
Gain on extinguishment of warrant liability           52,500             52,500  
Interest expense     (76,434 )     (257,665 )     (159,232 )     (443,757 )
Total other income (expense), net     65,746       (158,986 )     80,842       (303,190 )
                                 
Loss before income taxes     (2,355,940 )     (2,147,945 )     (7,668,295 )     (3,396,575 )
                                 
Income tax expense (benefit)                        
                                 
Net loss   $ (2,355,940 )   $ (2,147,945 )   $ (7,668,295 )   $ (3,396,575 )
                                 
Net loss per share allocable to common stockholders – basic and diluted   $ (0.13 )   $ (0.15 )   $ (0.42 )   $ (0.25 )
                                 
Weighted average number of common shares outstanding: basic and diluted     18,398,095       14,491,634       18,350,360       13,862,992  
                                 
                                 

ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED JANUARY 31, 2019 AND 2018
(Unaudited)

                              Total  
            Additional                 Stockholders'  
For the nine months ended   Common Stock   Paid-In     Treasury     Accumulated     Equity  
January 31, 2019   Shares   Amount   Capital     Stock     Deficit        
Balance at April 30, 2018   18,333,521   $ 18,334   $ 66,557,005     $ (70,000 )   $ (32,771,748 )   $ 33,733,591  
                                           
Stock-based compensation           866,129                   866,129  
Common stock issued for cashless stock options exercised   86,635     87     (87 )                  
Common stock issued for stock options exercised for cash   49,792     49     110,094                   110,143  
Relative fair value of warrants issued with debt           255,071                   255,071  
Common stock issued for cashless warrant exercise   35,921     36     (36 )                  
Purchase of treasury stock, net of broker fees                 (7,370,000 )           (7,370,000 )
Re-sale of treasury stock, net of broker fees                 7,370,000             7,370,000  
Fees associated with equity raise           (29,832 )                 (29,832 )
Net loss, for the nine months ended January 31, 2019                       (7,668,295 )     (7,668,295 )
Balance at January 31, 2019 (Unaudited)   18,505,869   $ 18,506   $ 67,758,344     $ (70,000 )   $ (40,440,043 )   $ 27,266,807  


                              Total  
            Additional                 Stockholders'  
For the three months ended   Common Stock   Paid-In     Treasury     Accumulated     Equity  
January 31, 2019   Shares   Amount   Capital     Stock     Deficit        
Balance at October 31, 2018 (Unaudited)   18,391,092   $ 18,391   $ 67,102,509     $ (70,000 )   $ (38,084,103 )   $ 28,966,797  
                                           
Stock-based compensation           350,838                   350,838  
Common stock issued for cashless stock options exercised   55,871     56     (56 )                  
Common stock issued for stock options exercised for cash   22,985     23     50,018                   50,041  
Relative fair value of warrants issued with debt           255,071                   255,071  
Common stock issued for cashless warrant exercise   35,921     36     (36 )                  
Net loss, for the three months ended January 31, 2019                       (2,355,940 )     (2,355,940 )
Balance at January 31, 2019 (Unaudited)   18,505,869   $ 18,506   $ 67,758,344     $ (70,000 )   $ (40,440,043 )   $ 27,266,807  
                                           
                                           

ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)
FOR THE THREE AND NINE MONTHS ENDED JANUARY 31, 2019 AND 2018
(Unaudited)

                              Total  
            Additional                 Stockholders'  
For the nine months ended   Common Stock   Paid-In     Treasury     Accumulated     Equity  
January 31, 2018   Shares   Amount   Capital     Stock     Deficit        
Balance at April 30, 2017     13,504,012   $ 13,504   $ 33,607,423     $ (70,000 )   $ (25,710,687 )   $ 7,840,240  
                                             
Fees associated with equity raise             (14,033 )                 (14,033 )
Restricted stock issued for services     10,000     10     88,690                   88,700  
Stock-based compensation             466,468                   466,468  
Common stock issued for acquisition     1,203,209     1,203     10,214,041                   10,215,244  
Common stock issued for cashless warrant exercise     162,072     162     (162 )                  
Common stock issued for warrants exercised for cash     79,442     79     196,301                   196,380  
Common stock issued for stock options exercised     113,597     114     402,382                   402,496  
Warrants issued with senior secured term loan             478,428                   478,428  
Net loss, for the Nine months ended January 31, 2018                         (3,396,575 )     (3,396,575 )
Balance at January 31, 2018 (Unaudited)     15,072,332   $ 15,072   $ 45,439,538     $ (70,000 )   $ (29,107,262 )   $ 16,277,348  


                              Total  
            Additional                 Stockholders'  
For the three months ended   Common Stock   Paid-In     Treasury     Accumulated     Equity  
January 31, 2018   Shares   Amount   Capital     Stock     Deficit        
Balance at October 31, 2017 (Unaudited)     13,613,996   $ 13,613   $ 34,471,602     $ (70,000 )   $ (26,959,317 )   $ 7,455,898  
                                             
Fees associated with equity raise             (9,326 )                 (9,326 )
Restricted stock issued for services     10,000     10     88,690                   88,700  
Stock-based compensation             162,544                   162,544  
Common stock issued for acquisition     1,203,209     1,203     10,214,041                   10,215,244  
Common stock issued for cashless warrant exercise     83,544     83     (83 )                  
Common stock issued for warrants exercised for cash     64,584     65     162,717                   162,782  
Common stock issued for stock options exercised     96,999     98     349,353                   349,451  
Net loss, for the three months ended January 31, 2018                         (2,147,945 )     (2,147,945 )
Balance at January 31, 2018 (Unaudited)     15,072,332   $ 15,072   $ 45,439,538     $ (70,000 )   $ (29,107,262 )   $ 16,277,348  
                                             
                                             

ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

    For the  
    Nine months ended  
    January 31,  
    2019     2018  
Cash flows from operating activities:            
Net loss   $ (7,668,295 )   $ (3,396,575 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Bad debt expense     480,066       298,144  
Gain on extinguishment of warrant liability           (52,500 )
Depreciation and amortization     1,577,464       631,969  
Stock-based compensation     866,129       466,468  
Loss on asset disposition           27,590  
Amortization of debt discounts           99,726  
Amortization of debt issue costs     24,657        
Amortization of prepaid shares for services     8,285       37,039  
Changes in operating assets and liabilities:                
Accounts receivable     (4,209,576 )     (4,534,118 )
Prepaid expenses     (152,094 )     (59,451 )
Accrued interest receivable           (45,400 )
Other receivables     105,334       (152,398 )
Other assets     (22,846 )     (528,789 )
Accounts payable     (517,981 )     366,044  
Accrued expenses     (88,048 )     218,476  
Deferred rent     638,713       22,087  
Refunds due students     554,219       420,146  
Deferred revenue     885,091       2,340,461  
Other liabilities     88,332       186,134  
Net cash used in  operating activities     (7,430,550 )     (3,654,947 )
                 
Cash flows from investing activities:                
Purchases of courseware and accreditation     (89,573 )     (33,369 )
Purchases of property and equipment     (1,873,326 )     (1,171,473 )
Proceeds from promissory note receivable           900,000  
Cash paid in asset acquisition           (2,589,719 )
Proceeds from promissory note interest receivable           53,400  
Net cash used in investing activities     (1,962,899 )     (2,841,161 )
                 
Cash flows from financing activities:                
Disbursements for equity offering costs     (29,832 )     (14,033 )
Repayment of convertible note payable     (1,000,000 )      
Proceeds from senior secured term loan           7,500,000  
Proceeds of warrant and stock options exercised     110,143       598,876  
Purchase of treasury stock     (7,370,000 )      
Re-sale of treasury stock     7,370,000        
Offering costs paid on debt financing     (100,000 )     (351,366 )
Net cash provided by (used in) financing activities     (1,019,689 )     7,733,477  
                 
Net increase (decrease) in cash and cash equivalents     (10,413,138 )     1,237,369  
Cash, restricted cash, and cash equivalents at beginning of period     14,803,065       2,756,217  
Cash and cash equivalents at end of period   $ 4,389,927     $ 3,993,586  
                 
                 

ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)

    For the
    Nine months ended
    January 31,
    2019     2018
Supplemental disclosure of cash flow information:              
Cash paid for interest   $ 163,139     $ 316,781
Cash paid for income taxes   $     $
               
Supplemental disclosure of non-cash investing and financing activities              
Warrants issued as part of revolving credit facility   $ 255,071     $
Warrants issued as part of senior secured loan   $     $ 478,428
Assets acquired net of liabilities assumed for non-cash consideration   $     $ 12,215,244
               

The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheet that sum to the total of the same such amounts shown in the consolidated statement of cash flows:

    For the
    Nine months ended
    January 31,
    2018     2017
Cash   $ 4,197,235     $ 3,803,080
Restricted cash     192,692       190,506
Total cash and restricted cash   $ 4,389,927     $ 3,993,586

Is your business listed correctly on America’s largest city directory network of 1,000 portals?