EXHIBIT 99.1

 

 

 

FOR IMMEDIATE RELEASE: December 14, 2021

 

 

Aspen Group Reports Revenue of $18.9 million, or 12% Growth, for Second Quarter Fiscal 2022

 

·Revenue increased to $18.9 million compared to $17.0 million last year
·Business units with highest LTV degrees accounted for 54% of revenue
·Net loss of ($2.9) million, an improvement of $1.5 million year-over-year

 

NEW YORK – December 14, 2021 - Aspen Group, Inc. (Nasdaq: ASPU) (“AGI”), an education technology holding company, today announced financial results for its second quarter fiscal year 2022 ended October 31, 2021.

 

Second Quarter Fiscal Year 2022 Summary Results

 

  Three Months Ended October 31,   Six Months Ended October 31,
  2021   2020   2021   2020
$ in millions, except per share data            
Revenue $ 18.9      $ 17.0      $ 38.4      $ 32.1   
Gross Profit1 $ 9.7      $ 9.3      $ 20.1      $ 18.3   
Gross Margin (%)1   51  %     55  %     52  %     57  %
Net Income (Loss) $ (2.9)     $ (4.4)     $ (3.7)     $ (5.3)  
Earnings (Loss) per Share $ (0.11)     $ (0.19)     $ (0.15)     $ (0.23)  
EBITDA2 $ (1.9)     $ (2.3)     $ (1.8)     $ (2.3)  
Adjusted EBITDA2 $ (0.7)     $ 0.2      $ (0.2)     $ 1.5   

_______________________

1 GAAP gross profit calculation includes marketing and promotional costs, instructional costs and services, and amortization expense of $0.5 million and $0.9 million, and $0.4 million and $0.7 million, for the three and six months ended October 31, 2021 and 2020, respectively.

2 Non-GAAP financial measure. See reconciliations of GAAP to non-GAAP financial measures under "Non-GAAPFinancial Measures" starting on page 5.

 

“In the second quarter, our high-LTV degree programs increased to 54% of total revenue fueled by continued strong growth in our BSN Pre-Licensure and MSN Family Nurse Practitioner (FNP) programs, which combined with careful management of our costs, reduced our net loss by 35% year-over-year,” said Michael Mathews, Chairman and CEO of AGI. “Beginning in the second half of June, the rapid rise in COVID hospitalizations increased the workload of licensed registered nurses (RNs) on the front lines of patient care. RNs represented 69% of our total active student body at the end of the second quarter of fiscal year 2022 and are the total population of our students primarily impacted by the COVID pandemic trends. As a result, our pace of enrollments and class starts slowed in the second quarter, similar to the effect seen across the entire nursing higher education sector during the same period.”

“Two primary dynamics in the nursing sector favor the Aspen Group business model,” continued Mr. Mathews. “First, the ongoing nursing shortage provides a strong backdrop for the continued expansion of our high-LTV BSN Pre-Licensure nursing program. Second, RNs interested in moving to private clinics and the growing awareness within health care organizations of the economic benefits of hiring FNPs will be drivers for continued growth in our FNP degree program. When the COVID headwinds diminish, we anticipate that Aspen Group’s revenue growth will accelerate, supported by our BSN Pre-Licensure expansion which has been relatively unaffected by COVID to date.”

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COVID-19 Update

Nursing students represented 87% or 12,442 of the Company’s total student body of 14,318 students at the end of the second quarter of fiscal 2022. Of the 12,442 nursing students, 2,500 are BSN Pre-Licensure students located across our four metro locations (Phoenix, Austin, Tampa, and Nashville). The remaining 9,942 nursing students are RNs studying to earn an advanced degree (RN to BSN, MSN, MSN-FNP, or DNP degree programs). Therefore, these 9,942 post-licensure nursing students represent 69% of the Company’s total student body and are the population of AGI students primarily affected by the COVID-19 pandemic.

 

Starting in the second half of June 2021 and continuing through October 2021, the Company saw lower course starts than seasonally expected among our RN student body. For example, at Aspen University, course starts among RNs from June through October increased by approximately 3% year-over-year. By comparison, over the previous two full fiscal years (Fiscal year 2021 and Fiscal 2020), course starts among RNs at Aspen University increased by an average of approximately 10% year-over-year.

 

In terms of new student enrollments, the Company saw enrollment growth on a quarterly sequential basis in all BSN Pre-Licensure metros as these prospective students continue to communicate a strong desire to enter the nursing profession. However, aggregate enrollments among RNs at both Aspen University and United States University were relatively flat on a quarterly sequential basis.

 

We cannot be certain what impact the Delta variant and other variants will have on the Company’s results as we progress through the second half of fiscal 2022.

 

Outlook for Fiscal Year 2022

 

The Company anticipates continued growth in USU's MSN-FNP program and AU’s BSN Pre-Licensure program as we execute our strategy to expand our two highest LTV programs for the remainder of fiscal year 2022. While the COVID-19 pandemic may continue to impact post-licensure revenue growth, the Company intends to prudently manage discretionary G&A spending in the coming months to minimize the impact of any revenue shortfalls. However, we will not eliminate spending critical to the execution of the Company’s long-term strategy. 

 

Though we cannot be certain how the pandemic will continue to unfold, we have seen our class starts and enrollments in post-licensure programs impacted by COVID during the first two quarters of fiscal year 2022. Given the difficulty in foreseeing when this external headwind will diminish, we are revising our guidance for the remainder of fiscal year 2022, as indicated in the table below.

 

Dollar amounts in millions, except per share data Prior Guidance Range   Revised Guidance Range
Revenue $ 85.0      $ 88.0      $ 77.0      $ 80.0   
Net Income (Loss) 1 $ (4.5)     $ (3.0)     $ (9.0)     $ (7.0)  
GAAP Earnings (Loss) per Share1 $ (0.18)     $ (0.12)     $ (0.38)     $ (0.29)  
EBITDA1 $ (1.6)     $ 0.4      $ (5.0)     $ (3.0)  
Adjusted EBITDA1 $ 2.0      $ 4.0      $ (2.0)     $ 0.0   

 

1 Non-GAAP financial measure. See reconciliations of GAAP to Non-GAAP financial measures under "Non-GAAP–Financial Measures" starting on page 5.

 

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Fiscal Q2 2022 Financial and Operational Results (compared to Fiscal Q2 2021)

 

Revenue increased to $18.9 million for Fiscal Q2 2022 compared to $17.0 million for Fiscal Q2 2021. United States University (USU) revenue for the quarter, which includes the high LTV MSN-FNP program, accounted for 33%, or $6.2 million versus 29%, or $4.9 million of consolidated revenue in the prior year period. Aspen University’s (AU) revenue in the second quarter of fiscal year 2022, which includes the high LTV BSN Pre-Licensure program, accounted for 67%, or $12.8 million, versus 71% or $12.1 million of consolidated revenue in the prior year period.

 

GAAP gross profit increased 4% to $9.7 million for Fiscal Q2 2022 compared to $9.3 million for Fiscal Q2 2021. Gross margin was 51% for Fiscal Q2 2022 compared to 55% for Fiscal Q2 2021. Gross margin in Fiscal Q2 2022 was impacted by higher instructional costs related to the BSN Pre-Licensure program. AU gross margin was 50% of AU revenue for Fiscal Q2 2022 versus 56% in Fiscal Q2 2021, and USU gross margin was 58% of USU revenue for Fiscal Q2 2022 versus 56% in Fiscal Q2 2021.

 

Net loss and net loss per share were ($2.9) million and ($0.11), respectively, for Fiscal Q2 2022 compared to ($4.4) million and ($0.19), respectively, for Fiscal Q2 2021. AU generated net income of $1.3 million for Fiscal Q2 2022 versus $2.2 million in Fiscal Q2 2021, and USU generated net income of $0.9 million for Fiscal Q2 2022 versus $0.6 million in Fiscal Q2 2021. AGI corporate incurred a net loss of ($5.1) million for Fiscal Q2 2022 as compared to ($7.1) million in the prior year period.

 

EBITDA was ($1.9) million and (10%) margin for Fiscal Q2 2022 compared to EBITDA of ($2.3) million and (13%) margin for Fiscal Q2 2021.

 

For Fiscal Q2 2022, AU generated EBITDA of $2.0 million and 16% margin as compared to $2.7 million or 23% margin in Fiscal Q2 2021. USU generated EBITDA of $1.0 million and 16% margin, as compared to $0.6 million or 12% margin in Fiscal Q2 2021. AGI corporate incurred EBITDA of ($4.9) million as compared to ($5.6) million in Fiscal Q2 2021.

 

Adjusted EBITDA was ($0.7) million and (4%) margin for Fiscal Q2 2022 compared to Adjusted EBITDA of $0.2 million and 1% margin for Fiscal Q2 2021.

 

For Fiscal Q2 2022, AU generated Adjusted EBITDA of $2.3 million and 18% margin, as compared to $3.4 million or 28% margin in Fiscal Q2 2021. USU generated Adjusted EBITDA of $1.1 million and 18% margin, as compared to $0.7 million or 14% margin in Fiscal Q2 2021. AGI corporate incurred Adjusted EBITDA of ($4.1) million as compared to ($3.9) million in Fiscal Q2 2021.

 

Operating Metrics

 

New student enrollments at AU grew sequentially by 9% primarily as a result of rising enrollments in the three new pre-licensure metros (Austin, Nashville and Tampa). AU year-over-year new enrollments were down 13% as a result of the planned reduction of BSN Pre-Licensure enrollments in the Phoenix metro year-over-year and the impact of COVID-19 (specifically the effect the Delta variant surge has had among prospective RN students starting in June 2021). New student enrollments at USU decreased by 7% sequentially and 3% year-over-year, from 649 a year ago to 630. New RN student enrollments at USU were similarly impacted by COVID-19.

 

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On a Company-wide basis, new student enrollments increased sequentially from 2,276 to 2,380 or 5%, primarily as a result of sequential enrollment growth in the three new pre-licensure metros. On a year-over-year basis, new student enrollments for the Company were down 10% due to the planned enrollment reduction in the Phoenix pre-licensure metro and the COVID-19 impact.

 

New student enrollments for the past five quarters are shown below:

 

    New Student Quarterly Enrollments
    Q2'21   Q3'21   Q4'21   Q1'22   Q2'22
Aspen University   2,010      1,593      1,593      1,601      1,750  
USU   649      536      589      675      630  
Total   2,659      2,129      2,182      2,276      2,380  

 

 

AGI’s overall active degree-seeking student body (includes both Aspen University and USU) grew 8% year-over-year to 14,318 as of October 31, 2021 from 13,238 as of October 31, 2020 and students seeking nursing degrees were 12,442 or 87% of total active students at both universities. Of the 12,442 students seeking nursing degrees, 9,942 are RNs studying to earn an advanced degree, including 7,031 at Aspen University and 2,911 at USU, while the remaining 2,500 nursing students are enrolled in Aspen University’s BSN Pre-Licensure program in the Phoenix, Austin, Tampa and Nashville metros.

 

The chart below shows five quarters of active student body results. Active student body is comprised of active degree-seeking students, enrolled in a course at the end of the second quarter of fiscal year 2022 or are registered for an upcoming course.

 

Liquidity

 

At October 31, 2021, the Company had cash and cash equivalents of $11.0 million, and restricted cash of $1.4 million. Cash used in operations for the six months ended October 31, 2021 was $3.5 million, which is attributed to changes in working capital to support increased revenue.

 

On August 31, 2021, the Company drew down $5 million on the credit facility and extended the maturity by one year to November 4, 2022. These funds are expected to be used for general business purposes, including the roll out of the new campuses. The Company anticipates that the Aspen 2.0 business plan, to invest only in our highest LTV programs while continuing to control expenses, will reduce the need to borrow funds in the future.

 

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Conference Call

 

Aspen Group, Inc. will host a conference call to discuss its second quarter fiscal 2022 results and business outlook on Tuesday, December 14, 2021, at 4:30 p.m. ET. Aspen Group, Inc. 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 4291098.

 

Subsequent to the call, a transcript of the audio cast will be available from the Company’s website at www.aspu.com. There will also be a seven-day dial-in replay which can be accessed by dialing toll-free (855) 859-2056 (U.S.) or (404) 537-3406 (International), passcode 4291098.

For additional information on the financial statements and performance, please refer to the Aspen Group, Inc. Form 10-Q for the second quarter of fiscal year 2022 and Q2 2022 Financial Results Presentation published on the Company’s website at www.aspu.com, on the Presentations page under Company Info.

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 AGI 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 EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, which are non-GAAP financial measures. We believe that management, analysts and shareholders benefit from referring to the following non-GAAP financial measures to evaluate and assess our core operating results from period-to-period after removing the impact of items that affect comparability. Our management recognizes that the non-GAAP financial measures have inherent limitations because of the excluded items described below.

 

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 AGI 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.

 

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AGI defines Adjusted EBITDA as EBITDA excluding: (1) bad debt expense; (2) stock-based compensation; and (3) non-recurring charges or gains. The following table presents a reconciliation of net loss to EBITDA and Adjusted EBITDA and of net loss margin to the Adjusted EBITDA margin:

 

  Three Months Ended October 31,   Six Months Ended October 31,
  2021   2020   2021   2020
Net loss $ (2,852,258)     $ (4,370,525)     $ (3,723,146)     $ (5,313,721)  
Interest expense, net 138,064      1,529,517      170,196      1,984,740   
Taxes 5,900      36,530      156,910      34,630   
Depreciation and amortization 817,234      526,357      1,596,643      1,016,981   
EBITDA (1,891,060)     (2,278,121)     (1,799,397)     (2,277,370)  
Bad debt expense 350,000      632,000      700,000      1,032,000   
Stock-based compensation 722,158      1,831,548      1,264,870      2,318,658   
Non-recurring charges - Severance —      —      19,665      44,000   
Non-recurring (income) charges - Other 103,754      —      (394,366)     375,437   
Adjusted EBITDA $ (715,148)     $ 185,427      $ (209,228)     $ 1,492,725   
Net loss Margin (15) %   (26) %   (10) %   (17) %
Adjusted EBITDA Margin (4) %   %   (1) %   %

 

The following tables present a reconciliation of net loss to EBITDA and Adjusted EBITDA and of net income (loss) margin to the Adjusted EBITDA margin by subsidiary:

 

  Three Months Ended October 31, 2021
  Consolidated   AGI Corporate   AU   USU
Net income (loss) $ (2,852,258)     $ (5,059,164)     $ 1,329,813      $ 877,093   
Interest expense, net 138,064      139,239      (739)     (436)  
Taxes 5,900      1,249      3,400      1,251   
Depreciation and amortization 817,234      38,141      681,107      97,986   
EBITDA (1,891,060)     (4,880,535)     2,013,581      975,894   
Bad debt expense 350,000      —      250,000      100,000   
Stock-based compensation 722,158      672,967      23,298      25,893   
Non-recurring charges - Severance —      —      —      —   
Non-recurring income - Other 103,754      58,325      45,429      —   
Adjusted EBITDA $ (715,148)     $ (4,149,243)     $ 2,332,308      $ 1,101,787   
Net income (loss) Margin (15) %   NM   10  %   14  %
Adjusted EBITDA Margin (4) %   NM   18  %   18  %

________________________________

NM - Not meaningful

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  Three Months Ended October 31, 2020
  Consolidated   AGI Corporate   AU   USU
Net income (loss) $ (4,370,525)     $ (7,136,251)     $ 2,207,770      $ 557,956   
Interest expense, net 1,529,517      1,529,519      —      (2)  
Taxes 36,530      12,550      23,780      200   
Depreciation and amortization 526,357      13,391      481,673      31,293   
EBITDA (2,278,121)     (5,580,791)     2,713,223      589,447   
Bad debt expense 632,000      —      572,000      60,000   
Stock-based compensation 1,831,548      1,684,400      86,317      60,831   
Non-recurring charges - Severance —      —      —      —   
Non-recurring charges - Other —      —      —      —   
Adjusted EBITDA $ 185,427      $ (3,896,391)     $ 3,371,540      $ 710,278   
Net income (loss) Margin (26) %   NM   18  %   11  %
Adjusted EBITDA Margin %   NM   28  %   14  %

 

  Six Months Ended October 31, 2021
  Consolidated   AGI Corporate   AU   USU
Net income (loss) $ (3,723,146)     $ (9,517,700)     $ 3,664,270      $ 2,130,284   
Interest expense, net 170,196      172,511      (1,739)     (576)  
Taxes 156,910      2,412      153,207      1,291   
Depreciation and amortization 1,596,643      69,184      1,344,800      182,659   
EBITDA (1,799,397)     (9,273,593)     5,160,538      2,313,658   
Bad debt expense 700,000      —      500,000      200,000   
Stock-based compensation 1,264,870      1,116,246      92,893      55,731   
Non-recurring charges - Severance 19,665      —      —      19,665   
Non-recurring income - Other (394,366)     58,325      (452,691)     —   
Adjusted EBITDA $ (209,228)     $ (8,099,022)     $ 5,300,740      $ 2,589,054   
Net income (loss) Margin (10) %   NM   14  %   17  %
Adjusted EBITDA Margin (1) %   NM   20  %   21  %

 

  Six Months Ended October 31, 2020
  Consolidated   AGI Corporate   AU   USU
Net income (loss) $ (5,313,721)     $ (11,391,986)     $ 4,517,533      $ 1,560,732   
Interest expense, net 1,984,740      1,984,742      —      (2)  
Taxes 34,630      10,650      23,780      200   
Depreciation and amortization 1,016,981      26,483      931,727      58,771   
EBITDA (2,277,370)     (9,370,111)     5,473,040      1,619,701   
Bad debt expense 1,032,000      —      912,000      120,000   
Stock-based compensation 2,318,658      2,076,443      147,634      94,581   
Non-recurring charges - Severance 44,000      44,000      —      —   
Non-recurring charges - Other 375,437      375,437      —      —   
Adjusted EBITDA $ 1,492,725      $ (6,874,231)     $ 6,532,674      $ 1,834,282   
Net income (loss) Margin (17) %   NM   20  %   17  %
Adjusted EBITDA Margin %   NM   29  %   20  %

 

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In Full Fiscal Q2 2022, the non-recurring income of $498,120 is from a litigation settlement, which is included in “other income (expense), net.” In Full Fiscal Q2 2021, an additional non-recurring charge of $25,966 was included in “interest expense, net”, which arose from the acceleration of amortization resulting from the exercise of warrants issued to a lender.

 

Definitions

 

Lifetime Value ("LTV") – is calculated as the weighted average total amount of tuition and fees paid by every new student that enrolls in the Company’s universities, after giving effect to attrition.

 

Bookings – is defined by multiplying LTV by new student enrollments for each operating unit.

 

Adjusted EBITDA Margin – is defined as Adjusted EBITDA divided by revenue. We believe Adjusted EBITDA margin is useful for management, analysts and investors as this measure allows for a more meaningful comparison between our performance and that of our competitors. Adjusted EBITDA margin has certain limitations in that it does not take into account the impact to our consolidated statement of operations of certain expenses.

 

Forward-Looking Statements

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including revenue growth, the growth of the pre-licensure and FNP programs, post COVID-19 pre-licensure campus expansions, the effect of COVID-19 on the second half of fiscal 2022, G&A spending, the Aspen 2.0 business plan and anticipated reduction in the need to borrow funds, our liquidity, and our estimates as to Lifetime Value and bookings. 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 our ability to successfully implement the Aspen 2.0 business plan, the continued demand of nursing students, the effectiveness of our collection efforts and process improvements, student attrition, national and local economic factors including the substantial impact of the COVID-19 pandemic on working nurses and the economy, competition from nursing schools in local markets, the competitive impact from the trend of major non-profit universities using online education and consolidation among our competitors, unfavorable regulatory changes, the continued effectiveness of our marketing efforts, and potential loss of employees as a result of the COVID-19 vaccine mandate. Other risks are included in our filings with the SEC including our Form 10-K for the year ended April 30, 2021, and the Form 10-Q for the fiscal quarter ended October 31, 2021. 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.

 

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.

 

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Investor Relations Contact

 

Kim Rogers
Managing Director
Hayden IR
385-831-7337 
Kim@HaydenIR.com

 

 

 

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GAAP Financial Statements

 

ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

  October 31, 2021   April 30, 2021
  (Unaudited)    
Assets      
Current assets:      
Cash and cash equivalents $ 10,985,131      $ 12,472,082   
Restricted cash 1,433,397      1,193,997   
Accounts receivable, net of allowance of $3,345,182 and $3,289,816, respectively 21,309,982      16,724,744   
Prepaid expenses 1,577,516      1,077,831   
Other current assets 20,631      68,529   
Total current assets 35,326,657      31,537,183   
       
Property and equipment:      
Computer equipment and hardware 1,402,006      956,463   
Furniture and fixtures 1,976,342      1,705,101   
Leasehold improvements 7,057,859      5,729,324   
Instructional equipment 608,894      421,039   
Software 9,386,352      8,488,635   
Construction in progress 900      247,767   
  20,432,353      17,548,329   
Less: accumulated depreciation and amortization (6,672,208)     (4,892,987)  
Total property and equipment, net 13,760,145      12,655,342   
Goodwill 5,011,432      5,011,432   
Intangible assets, net 7,907,503      7,908,360   
Courseware, net 299,914      187,296   
Accounts receivable, net of allowance of $— and $625,963, respectively —      45,329   
Long-term contractual accounts receivable 12,663,815      10,249,833   
Deferred financing costs 117,857      18,056   
Operating lease right of use assets, net 13,510,656      12,714,863   
Deposits and other assets 515,569      479,212   
Total assets $ 89,113,548      $ 80,806,906   

(Continued)

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ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED)

 

  October 31, 2021   April 30, 2021
  (Unaudited)    
Liabilities and Stockholders’ Equity      
Liabilities:      
Current liabilities:      
Accounts payable $ 2,102,624      $ 1,466,488   
Accrued expenses 1,772,808      2,040,896   
Deferred revenue 10,191,241      6,825,014   
Due to students 3,219,643      2,747,484   
Operating lease obligations, current portion 2,145,431      2,029,821   
Other current liabilities 96,003      307,921   
Total current liabilities 19,527,750      15,417,624   
       
Long-term debt 5,000,000      —   
Operating lease obligations, less current portion 17,732,483      16,298,808   
Total liabilities 42,260,233      31,716,432   
       
Commitments and contingencies      
       
Stockholders’ equity:      
Preferred stock, $0.001 par value; 1,000,000 shares authorized,      
0 issued and 0 outstanding at October 31, 2021 and April 30, 2021 —      —   
Common stock, $0.001 par value; 40,000,000 shares authorized,      
25,148,194 issued and 24,992,708 outstanding at October 31, 2021      
25,066,297 issued and 24,910,811 outstanding at April 30, 2021 25,149      25,067   
Additional paid-in capital 110,526,729      109,040,824   
Treasury stock (155,486 at both October 31, 2021 and April 30, 2021) (1,817,414)     (1,817,414)  
Accumulated deficit (61,881,149)     (58,158,003)  
Total stockholders’ equity 46,853,315      49,090,474   
Total liabilities and stockholders’ equity $ 89,113,548      $ 80,806,906   

 

11 
 

ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

  Three Months Ended October 31,   Six Months Ended October 31,
  2021   2020   2021   2020
Revenue $ 18,940,211      $ 16,971,045      $ 38,371,206      $ 32,136,607   
               
Operating expenses:              
   Cost of revenue (exclusive of depreciation and amortization shown separately below) 8,789,201      7,324,780      17,382,769      13,172,303   
   General and administrative 11,641,312      11,285,155      22,587,789      20,078,911   
   Bad debt expense 350,000      632,000      700,000      1,032,000   
   Depreciation and amortization 817,234      526,357      1,596,643      1,016,981   
Total operating expenses 21,597,747      19,768,292      42,267,201      35,300,195   
               
   Operating loss (2,657,536)     (2,797,247)     (3,895,995)     (3,163,588)  
               
Other income (expense):              
   Interest expense (139,502)     (1,529,668)     (173,041)     (1,985,125)  
   Other (expense) income, net (49,320)     (7,080)     502,800      (130,378)  
Total other (expense) income, net (188,822)     (1,536,748)     329,759      (2,115,503)  
               
Loss before income taxes (2,846,358)     (4,333,995)     (3,566,236)     (5,279,091)  
               
Income tax expense 5,900      36,530      156,910      34,630   
               
Net loss $ (2,852,258)     $ (4,370,525)     $ (3,723,146)     $ (5,313,721)  
               
Net loss per share - basic and diluted $ (0.11)     $ (0.19)     $ (0.15)     $ (0.23)  
               
Weighted average number of common stock outstanding - basic and diluted 24,957,046      22,791,503      24,935,793      22,763,235   

 

 

12 
 

ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Three Months Ended October 31, 2021 and 2020

(Unaudited)

 

  Common Stock  

Additional

Paid-In

Capital

 

Treasury

Stock

 

Accumulated

Deficit

 

Total

Stockholders’

Equity

  Shares   Amount        
Balance at July 31, 2021 25,087,051      $ 25,088      $ 109,617,521      $ (1,817,414)     $ (59,028,891)     $ 48,796,304   
Stock-based compensation —      —      722,158      —      —      722,158   
Common stock issued for stock options exercised for cash 11,655      12      33,474      —      —      33,486   
Common stock issued for cashless stock options exercised 30,156      30      (30)     —      —      —   
Common stock issued for vested restricted stock units 19,332      19      (19)     —      —      —   
Amortization of warrant based cost —      —      16,125      —      —      16,125   
Warrants issued for deferred financing costs related to Credit Facility —      —      137,500      —      —      137,500   
Net loss —      —      —      —      (2,852,258)     (2,852,258)  
Balance at October 31, 2021 25,148,194      $ 25,149      $ 110,526,729      $ (1,817,414)     $ (61,881,149)     $ 46,853,315   
                       
  Common Stock  

Additional

Paid-In

Capital

 

Treasury

Stock

 

Accumulated

Deficit

 

Total

Stockholders’

Equity

  Shares   Amount        
Balance at July 31, 2020 22,377,744      $ 22,378      $ 92,378,584      $ (70,000)     $ (48,652,226)     $ 43,678,736   
Stock-based compensation —      —      1,831,548      —      —      1,831,548   
Common stock issued for stock options exercised for cash 502,412      502      944,830      —      —      945,332   
Common stock issued for cashless stock options exercised 22,339      22      (22)     —      —      —   
Common stock issued for conversion of Convertible Notes 1,398,602      1,399      9,998,601      —      —      10,000,000   
Common stock issued for vested restricted stock units 132,109      132      (132)     —      —      —   
Amortization of warrant based cost —      —      9,125      —      —      9,125   
Cancellation of Treasury Stock (16,667)     (17)     (69,983)     70,000      —      —   
Net loss —      —      —      —      (4,370,525)     (4,370,525)  
Balance at October 31, 2020 24,416,539      $ 24,416      $ 105,092,551      $ —      $ (53,022,751)     $ 52,094,216   

 

13 
 

ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)

Six Months Ended October 31, 2021 and 2020

(Unaudited)

 

  Common Stock  

Additional

Paid-In

Capital

 

Treasury

Stock

 

Accumulated

Deficit

 

Total

Stockholders’

Equity

  Shares   Amount        
Balance at April 30, 2021 25,066,297      $ 25,067      $ 109,040,824      $ (1,817,414)     $ (58,158,003)     $ 49,090,474   
Stock-based compensation —      —      1,264,870      —      —      1,264,870   
Common stock issued for stock options exercised for cash 16,752      17      56,017      —      —      56,034   
Common stock issued for cashless stock options exercised 30,156      30      (30)     —      —      —   
Common stock issued for vested restricted stock units 34,989      35      (35)     —      —      —   
Amortization of warrant based cost —      —      27,583      —      —      27,583   
Warrants issued for deferred financing costs related to Credit Facility —      —      137,500      —      —      137,500   
Net loss —      —      —      —      (3,723,146)     (3,723,146)  
Balance at October 31, 2021 25,148,194      $ 25,149      $ 110,526,729      $ (1,817,414)     $ (61,881,149)     $ 46,853,315   
                       
  Common Stock  

Additional

Paid-In

Capital

 

Treasury

Stock

 

Accumulated

Deficit

 

Total

Stockholders’

Equity

  Shares   Amount        
Balance at April 30, 2020 21,770,520      $ 21,771      $ 89,505,216      $ (70,000)     $ (47,709,030)     $ 41,747,957   
Stock-based compensation —      —      2,318,658      —      —      2,318,658   
Common stock issued for stock options exercised for cash 917,587      918      2,214,397      —      —      2,215,315   
Common stock issued for cashless stock options exercised 22,339      22      (22)     —      —      —   
Common stock issued for conversion of Convertible Notes 1,398,602      1,399      9,998,601      —      —      10,000,000   
Common stock issued for vested restricted stock units 132,109      132      (132)     —      —      —   
Common stock issued for warrants exercised for cash 192,049      191      1,081,600      —      —      1,081,791   
Modification charge for warrants exercised —      —      25,966      —      —      25,966   
Amortization of warrant based cost —      —      18,250      —      —      18,250   
Cancellation of Treasury Stock (16,667)     (17)     (69,983)     70,000      —      —   
Net loss —      —      —      —      (5,313,721)     (5,313,721)  
Balance at October 31, 2020 24,416,539      $ 24,416      $ 105,092,551      $ —      $ (53,022,751)     $ 52,094,216   

 

 

14 
 

 

ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

  Six Months Ended October 31,
  2021   2020
Cash flows from operating activities:      
Net loss $ (3,723,146)     $ (5,313,721)  
Adjustments to reconcile net loss to net cash used in operating activities:      
Bad debt expense 700,000      1,032,000   
Depreciation and amortization 1,596,643      1,016,981   
Stock-based compensation 1,264,870      2,318,658   
Amortization of warrant based cost 27,583      18,250   
Amortization of debt discounts —      1,550,854   
Amortization of debt issue costs 18,056      147,695   
Amortization of deferred financing costs 19,643      —   
Modification charge for warrants exercised —      25,966   
Loss on asset disposition 36,442      —   
Lease benefit (63,099)     —   
Tenant improvement allowances received from landlords 816,591      —   
Changes in operating assets and liabilities:      
Accounts receivable (7,699,220)     (8,246,180)  
Prepaid expenses (520,685)     (654,268)  
Other receivables —      23,097   
Other current assets 47,901      (273,767)  
Accounts receivable, other 45,329      —   
Deposits and other assets (15,357)     (171,303)  
Accounts payable 636,136      838,421   
Accrued expenses (268,088)     1,282,983   
Due to students 472,159      (301,619)  
Deferred revenue 3,366,227      4,915,504   
Other current liabilities (211,918)     (286,372)  
Net cash used in operating activities (3,453,933)     (2,076,821)  
Cash flows from investing activities:      
Purchases of courseware and accreditation (149,751)     (11,375)  
Purchases of property and equipment (2,699,901)     (2,233,348)  
Net cash used in investing activities (2,849,652)     (2,244,723)  
Cash flows from financing activities:      
Borrowings under the Credit Facility 5,000,000      —   
Proceeds from stock options exercised 56,034      2,215,315   
Proceeds from warrants exercised —      1,081,792   
Net cash provided by financing activities 5,056,034      3,297,107   

 

(Continued)

 

15 
 

 

ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(Unaudited)

 

  Six Months Ended October 31,
  2021   2020
Net decrease in cash, cash equivalents and restricted cash $ (1,247,551)     $ (1,024,437)  
Cash, cash equivalents and restricted cash at beginning of period 13,666,079      17,906,765   
Cash, cash equivalents and restricted cash at end of period $ 12,418,528      $ 16,882,328   
       
Supplemental disclosure cash flow information:      
Cash paid for interest $ 98,904      $ 285,749   
Cash paid for income taxes $ 157,552      $ 38,608   
       
Supplemental disclosure of non-cash investing and financing activities:      
Common stock issued for conversion of Convertible Notes $ —      $ 10,000,000   
Warrants issued as part of Credit Facility $ 137,500      $ —   

 

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the accompanying consolidated balance sheet to the total amounts shown in the accompanying unaudited consolidated statements of cash flows:

 

  October 31, 2021   April 30, 2021
Cash and cash equivalents $ 10,985,131      $ 12,472,082   
Restricted cash 1,433,397      1,193,997   
Total cash, cash equivalents and restricted cash $ 12,418,528      $ 13,666,079   

 

16