EXHIBIT 99.3


UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION


On December 1, 2017 certain assets were acquired and certain liabilities assumed from Educacion Significativa, LLC (dba United States University) by United States University, Inc. (“USU Inc.”). USU Inc. is the wholly owned subsidiary of Aspen Group Inc. (“AGI”) and was set up for purposes of finalizing the asset purchase transaction. For purposes of purchase accounting, AGI is referred to as the acquirer. AGI acquired the assets and assumed the liabilities of Educacion Significativa, LLC (dba United States University) for a purchase price of $14,604,913. The purchase consideration consisted of a cash payment of $2,500,000 less an adjustment for working capital of $110,331, a convertible note of $2,000,000 and 1,203,209 shares of AGI stock with a closing price of $8.49 per share as of November 30, 2017. The stock consideration represents $10,215,244 of the purchase consideration.


The acquisition was accounted for by AGI in accordance with the acquisition method of accounting and pushdown accounting was applied to record the fair value of the assets acquired and liabilities assumed on USU Inc. Under this method, the purchase price is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the amount paid over the estimated fair values of the identifiable net assets was $4,811,382 which has been reflected in the balance sheet as goodwill.


The following unaudited pro forma condensed combined financial statements are based on our historical consolidated financial statements and the historical financial statements of Educacion Significativa, LLC (dba United States University) as adjusted to give effect to the company’s acquisition of Educacion Significativa, LLC and the reported financing transactions. The unaudited pro forma condensed combined statements of operations for the six months ended October 31, 2017 and for the year ended April 30, 2017 give effect to these transactions as if they had occurred on May 1, 2016, the start of that fiscal year. The unaudited pro forma condensed combined balance sheet as of October 31, 2017 gives effect to these transactions as if they had occurred on October 31, 2017.


The assumptions and estimates underlying the unaudited adjustments to the pro forma condensed combined financial statements are described in the accompanying notes, which should be read together with the pro forma condensed combined financial statements.


The unaudited pro forma condensed combined financial statement should also be read together with AGI’s historical financial statements, which are included in AGI’s latest annual report on Form 10-K and quarterly report on Form 10-Q, and the historical information of Educacion Significativa LLC (dba United States University) (“USU”) included herein.




  


Aspen Group, Inc.

Unaudited Pro Forma Condensed Combined Balance Sheet

October 31, 2017

 

 

 

 

 

 

 

 

 

 

Educacion Significativa, LLC

 

 

Pro Forma Adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro Forma

 

 

 

(dba United States

 

 

Assets and

 

 

 

 

 

 

 

 

 

 

 

Aspen Group Inc.

 

 

Adjustments

 

 

 

University)

 

 

Liabilities

 

 

 

Other Pro Forma

 

 

 

Pro Forma

 

 

 

Historical

 

 

Aspen Group, Inc.

 

 

 

Historical

 

 

Not Acquired

 

 

 

Adjustments

 

 

 

Combined

 

Assets

 

 

 

 

 

 

     

 

 

 

 

 

 

     

 

 

 

     

 

 

 

                                         

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

5,379,694

 

 

$

-

 

 

 

$

261,353

 

 

$

-

 

 

 

$

-

 

 

 

$

5,641,047

 

Accounts receivable, net

 

 

6,390,633

 

 

 

-

 

 

 

 

147,373

 

 

 

-

 

 

 

 

170,727

 

(c)

 

 

6,708,733

 

Other current assets

 

 

1,587,772

 

 

 

(944,800

)

(a)

 

 

1,007,598

 

 

 

(387,598

)

(b)

 

 

-

 

 

 

 

1,262,972

 

Total current assets

 

 

13,358,099

 

 

 

(944,800

)

 

 

 

1,416,324

 

 

 

(387,598

)

 

 

 

170,727

 

 

 

 

13,612,752

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other fixed Assets

 

 

471,255

 

 

 

-

 

 

 

 

1,083,079

 

 

 

(906,412

)

(b)

 

 

-

 

 

 

 

647,922

 

Software

 

 

2,459,932

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

 

2,459,932

 

 

 

 

2,931,187

 

 

 

-

 

 

 

 

1,083,079

 

 

 

(906,412

)

 

 

 

-

 

 

 

 

3,107,854

 

Less accumulated depreciation and amortization

 

 

(1,192,350

)

 

 

-

 

 

 

 

(901,884

)

 

 

901,884

 

(b)

 

 

-

 

 

 

 

(1,192,350

)

Total property and equipment, net

 

 

1,738,837

 

 

 

-

 

 

 

 

181,195

 

 

 

(4,528

)

 

 

 

-

 

 

 

 

1,915,504

 

Intangible assets, net

 

 

-

 

 

 

-

 

 

 

 

3,580,000

 

 

 

(3,580,000

)

(b)

 

 

10,100,000

 

(c)

 

 

10,100,000

 

Goodwill

 

 

-

 

 

 

-

 

 

 

 

925,334

 

 

 

(925,334

)

(b)

 

 

4,781,344

 

(c)

 

 

4,781,344

 

Other assets

 

 

1,031,518

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

 

105,381

 

(c)

 

 

1,136,899

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

16,128,454

 

 

$

(944,800

)

 

 

$

6,102,853

 

 

$

(4,897,460

)

 

 

$

15,157,452

 

 

 

$

31,546,499

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity (Deficiency)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

934,367

 

 

$

-

 

 

 

$

292,894

 

 

$

(84,765

)

(b)

 

$

-

 

 

 

$

1,142,496

 

Accrued expenses

 

 

246,415

 

 

 

-

 

 

 

 

1,005,657

 

 

 

(389,075

)

(b)

 

 

(558,210

)

(c)

 

 

304,787

 

Deferred revenue

 

 

2,314,163

 

 

 

-

 

 

 

 

254,999

 

 

 

-

 

 

 

 

15,001

 

(c)

 

 

2,584,163

 

Current maturities of long term liabilities

 

 

-

 

 

 

-

 

 

 

 

1,615,000

 

 

 

(1,615,000

)

(b)

 

 

-

 

 

 

 

-

 

Other current liabilities

 

 

792,488

 

 

 

-

 

 

 

 

133,489

 

 

 

(7,806

)

(b)

 

 

65,417

 

(c)

 

 

983,588

 

Total current liabilities

 

 

4,287,433

 

 

 

-

 

 

 

 

3,302,039

 

 

 

(2,096,646

)

 

 

 

(477,792

)

 

 

 

5,015,034

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior secured loan payable, net of discount

 

 

4,302,144

 

 

 

-

 

 

 

 

 

 

 

 

-

 

 

 

 

-

 

 

 

 

4,302,144

 

Other long term liabilities

 

 

82,978

 

 

 

-

 

 

 

 

57,888

 

 

 

(57,888

)

(b)

 

 

-

 

 

 

 

82,978

 

Total liabilities

 

 

8,672,555

 

 

 

-

 

 

 

 

3,359,927

 

 

 

(2,154,534

)

 

 

 

(477,792

)

 

 

 

9,400,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity (deficiency):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

13,613

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

 

13,613

 

Additional paid-in capital

 

 

34,471,602

 

 

 

(944,800

)

 (a)

 

 

44,533,498

 

 

 

(44,533,498

)

(b)

 

 

15,635,244

 

(c)

 

 

49,162,046

 

Treasury stock

 

 

(70,000

)

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

 

(70,000

)

Accumulated deficit

 

 

(26,959,316

)

 

 

-

 

 

 

 

(41,790,572

)

 

 

41,790,572

 

(b)

 

 

-

 

 

 

 

(26,959,316

)

Total stockholders’ equity (deficiency)

 

 

7,455,899

 

 

 

(944,800

)

 

 

 

2,742,926

 

 

 

(2,742,926

)

 

 

 

15,635,244

 

 

 

 

22,146,343

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity (deficiency)

 

$

16,128,454

 

 

$

(944,800

)

 

 

$

6,102,853

 

 

$

(4,897,460

)

 

 

$

15,157,452

 

 

 

$

31,546,499

 


See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information.



  


Aspen Group, Inc.

Unaudited Pro Forma Condensed Combined Statements of Operations

Six Months Ended October 31, 2017

 

 

 

 

 

 

Educacion
Significativa, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

(dba United States

 

 

 

 

 

 

 

 

 

 

Aspen Group Inc.

 

 

University)

 

 

Pro Forma

 

 

 

Pro Forma

 

 

 

Historical

 

 

Historical

 

 

Adjustments

 

 

 

Combined

 

 

  

                            

  

 

                            

  

 

                            

 

 

 

                            

 

Revenues

 

$

9,094,525

 

 

$

1,625,021

 

 

$

-

 

     

 

$

10,719,546

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues (exclusive of depreciation and amortization shown separately below)

 

 

3,617,150

 

 

 

1,916,911

 

 

 

-

 

 

 

 

5,534,061

 

General and administrative

 

 

6,297,725

 

 

 

1,964,550

 

 

 

-

 

 

 

 

8,262,275

 

Depreciation and amortization

 

 

284,074

 

 

 

32,044

 

 

 

-

 

 

 

 

316,118

 

Total operating expenses

 

 

10,198,949

 

 

 

3,913,505

 

 

 

-

 

 

 

 

14,112,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(1,104,424

)

 

 

(2,288,484

)

 

 

-

 

 

 

 

(3,392,908

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

41,888

 

 

 

308,179

 

 

 

- 

 

 

 

 

350,067

 

Interest expense

 

 

(186,093

)

 

 

(42,152

)

 

 

(250,000

)

(d)

 

 

(478,245

)

Total other expense, net

 

 

(144,205

)

 

 

266,027

 

 

 

(250,000

)

 

 

 

(128,178

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(1,248,629

)

 

 

(2,022,457

)

 

 

(250,000

)

 

 

 

(3,521,086

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(1,248,629

)

 

$

(2,022,457

)

 

$

(250,000

)

 

 

$

(3,521,086

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share allocable to common stockholders - basic and diluted

 

$

(0.09

)

 

 

 

 

 

 

 

 

   

 

$

(0.26

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding: basic and diluted

 

 

13,548,672

 

 

 

 

 

 

 

 

 

 

 

 

13,548,672

 

 





See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information.

 

 



  


Aspen Group, Inc.

Unaudited Pro Forma Condensed Combined Statements of Operations

Year Ended April 30, 2017

 

 

 

 

 

 

Educacion
Significativa, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

(dba United States

 

 

 

 

 

 

 

 

 

 

Aspen Group Inc.

 

 

University)

 

 

Pro Forma

 

 

 

Pro Forma

 

 

 

Historical

 

 

Historical

 

 

Adjustments

 

 

 

Combined

 

 

  

                            

  

 

                            

  

 

                            

 

     

 

                            

 

Revenues

 

$

14,246,696

 

 

$

3,791,778

 

 

$

-

 

  

 

$

18,038,474

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues (exclusive of depreciation and amortization shown separately below)

 

 

5,061,222

 

 

 

3,058,016

 

 

 

-

 

 

 

 

8,119,238

 

General and administrative

 

 

9,087,740

 

 

 

4,535,367

 

 

 

-

 

 

 

 

13,623,107

 

Program review settlement expense

 

 

323,090

 

 

 

-

 

 

 

-

 

 

 

 

323,090

 

Depreciation and amortization

 

 

556,730

 

 

 

219,230

 

 

 

-

 

 

 

 

775,960

 

Total operating expenses

 

 

15,028,782

 

 

 

7,812,613

 

 

 

-

 

 

 

 

22,841,395

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(782,086

)

 

 

(4,020,835

)

 

 

-

 

 

 

 

(4,802,921

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

14,336

 

 

 

252,259

 

 

 

- 

 

 

 

 

266,595

 

Interest expense

 

 

(337,510

)

 

 

(7,369

)

 

 

(563,000

)

(d)

 

 

(907,879

)

Total other expense, net

 

 

(323,174

)

 

 

244,890

 

 

 

(563,000

)

 

 

 

(641,284

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(1,105,260

)

 

 

(3,775,945

)

 

 

(563,000

)

 

 

 

(5,444,205

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(1,105,260

)

 

$

(3,775,945

)

 

$

(563,000

)

 

 

$

(5,444,205

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share allocable to common stockholders - basic and diluted

 

$

(0.10

)

 

 

 

 

 

 

 

 

  

 

$

(0.47

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding: basic

 

 

11,558,112

 

 

 

 

 

 

 

 

 

 

 

 

11,558,112

 





See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information.






  


Notes to Unaudited Pro Forma Condensed Combined Financial Information


Note 1 — Basis of presentation


The historical consolidated financial statements have been adjusted in the pro forma condensed combined financial statements to give effect to pro forma events that are (1) directly attributable to the business combination, (2) factually supportable and (3) with respect to the pro forma condensed combined statements of operations, expected to have a continuing impact on the combined results following the business combination.


The business combination was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. As the acquirer for accounting purposes, the Company has estimated the fair value of USU’s assets acquired and liabilities assumed and conformed the accounting policies of USU to its own accounting policies.


The pro forma combined financial statements do not necessarily reflect what the combined company’s financial condition or results of operations would have been had the acquisition occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.


The combined pro forma financial information does not reflect the realization of any expected cost savings or other synergies from the acquisition of USU as a result of restructuring activities and other planned cost saving initiatives following the completion of the business combination.


Note 2 — Financing transactions


As part of a $10 million senior secured term loan, AGI had drawn $7.5 million of the facility as of November 30, 2017, and approximately $3.5 million of the loan was used to finance the asset purchase of USU. Terms of the 4 year senior loan include a 10% over 3-month LIBOR per annum interest rate. The pro forma interest adjustments are described in Note 4.


Note 3 — Purchase price allocation


The acquisition was accounted for by AGI in accordance with the acquisition method of accounting and pushdown accounting was applied to record the fair value of the assets acquired and liabilities assumed on USU. Under this method, the purchase price is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the amount paid over the estimated fair values of the identifiable net assets was $4,811,382 which has been reflected in the balance sheet as goodwill.


The following is a summary of the preliminary valuation analysis of the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition:


 

 

Purchase Price Allocation

 

Useful Life

Cash & cash equivalents

 

$

-

 

 

Current assets acquired

 

 

244,465

 

 

Other assets acquired

 

 

176,667

 

 

Intangible assets

 

 

 

 

  

Accreditation and regulatory approvals

 

 

6,200,000

 

 

Trade name and trademarks

 

 

1,700,000

 

 

Student relationships

 

 

2,000,000

 

2 years

Curriculum

 

 

200,000

 

1 year

Goodwill

 

 

4,811,382

 

 

Less: Current liabilities assumed

 

 

(727,601

)

 

Total Fair value of consideration

 

$

14,604,913

 

 




  


This preliminary purchase price allocation has been used to prepare pro forma adjustments in the pro forma balance sheet and income statement. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation used in the pro forma adjustments. The final allocation may include (1) changes in fair values of property, plant and equipment, (2) changes in allocations to intangible assets such as trade names, technology and customer relationships as well as goodwill and (3) other changes to assets and liabilities.


Note 4 – Pro Forma Adjustments


The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma condensed combined financial information:


(a) – Represents the loan and interest from AGI to USU prior to the acquisition date.

(b) – Represents asset not acquired and liabilities not assumed upon acquisition.

(c) – Represents the opening balance sheet adjustments bringing assets acquired and liabilities assumed to fair value less the activity of the month of November.

(d) – Represents the incremental interest expense for the senior secured term loan.