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

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