Aspen Group Reports Record Revenue of $4.85 million in Q2 Fiscal 2018
Nursing Student Body Grows to 4,068, Represents 74% of Revenues
NEW YORK, Dec. 13, 2017 (GLOBE NEWSWIRE) -- Aspen Group, Inc. (Nasdaq:ASPU), a post-secondary education company, today announced financial results for its 2018 second quarter ended October 31, 2017, highlighted by revenue of $4.85 million, Nursing student body growth to 4,068, and 1,255 new student enrollments for the quarter, respectively.
Michael Mathews, Chairman & CEO of Aspen Group, commented, “Following the headcount investments made in Q1 in preparation for the acquisition of United States University, bottom line results improved this quarter as projected based on G&A spending remaining flat on a sequential basis. We’re well prepared as an organization to accelerate growth in the coming quarters given we now have two universities to market our breakthrough monthly payment plan business model.”
Fiscal Q2 2018 Highlights:
- Revenue totaled $4,851,639, an increase of 40% as compared to the prior fiscal year;
- GAAP Gross Profit totaled $2,860,772, a 36% increase as compared to the prior fiscal year;
- Net Loss applicable to shareholders of ($481,551), as compared to Net Income of $116,541 in the prior fiscal year; Diluted Net Loss per share was $(0.04), as compared to $(0.00) in the prior fiscal year;
- EBITDA, a non-GAAP financial measure, of $(179,411) or (4%) margin;
- Adjusted EBITDA, a non-GAAP financial measure, totaled $224,495 or 5% margin;
- Aspen’s total active student body grew year-over-year from 3,726 to 5,641, an increase of 51%; with Aspen’s School of Nursing adding 1,530 students to account for 80% of the growth;
- Aspen’s School of Nursing grew year-over-year from 2,538 to 4,068 active students, an increase of 60%. Aspen’s RN to BSN program accounted for the majority of the growth, from 1,493 to 2,639 active students, an increase of 1,146 active students, or 77% year-over-year.
Fiscal 2018 Second Quarter Financial and Other Results:
Aspen set a quarterly enrollment record in the second quarter with 1,255 new student enrollments, as compared to 811 new student enrollments in the prior year, an increase of 55% year-over-year. Aspen’s rolling six-month average cost-per-enrollment (CPE) increased by 10% year-over-year, from $718 to $787. Aspen’s marketing efficiency ratio (revenue-per-enrollment/cost-per-enrollment) is now projecting to earn an 8.9X return on its marketing investments.
Students utilizing a monthly payment method increased to over 3,700 (includes students in the Monthly Installment Plan and Monthly Payment Plan), which represented 66% of all course payments received in the quarter. At October 31, 2017, 3,480 students were currently in the Monthly Payment Plan, equaling total contractual value over $30 million.
As previously reported last quarter, in preparation to support the acquisition of United States University and limit integration issues, during the months of March through July, Aspen Group increased its full-time staff, not including faculty, from 81 to 125 employees. The Company hired an additional 15 employees from August through October to increase its full-time staff to 140 employees, in preparation for the now completed acquisition of United States University.
For the second quarter, revenues increased 40% to $4,851,639 as compared to $3,465,026 for the same period the prior year.
GAAP Gross Profit increased to $2,860,772 or 59% Gross Margin. Net loss applicable to shareholders was ($481,551) or (10%) margin. Diluted Net Loss per share was $(0.04). EBITDA, a non-GAAP financial measure, was $(179,411) or (4%) margin. Adjusted EBITDA, a non-GAAP financial measure, was $224,495 or 5% margin.
The following table presents gross profit calculated in accordance with GAAP:
| For the Quarters Ended | |||||||
| October 31, | |||||||
| 2017 | 2016 | ||||||
| Revenues | $ | 4,851,639 | $ | 3,465,026 | |||
|
Costs of revenues (exclusive of amortization shown separately) |
1,864,659 | 1,234,856 |
|||||
| Amortization expenses excluded from cost of revenues | 126,208 | 127,987 | |||||
| GAAP gross profit | $ | 2,860,772 | $ | 2,102,183 | |||
The following table presents a reconciliation of EBITDA and Adjusted EBITDA to Net loss, a GAAP financial measure:
|
For the Quarters Ended October 31, |
||||||||||||
| 2017 | 2016 | |||||||||||
| Net loss | $ | (481,551 | ) | $ | 116,541 | |||||||
| Interest Expense, net of interest income | 156,785 | 54,971 | ||||||||||
| Depreciation & amortization | 145,355 | 139,005 | ||||||||||
| EBITDA (Loss) | (179,411 | ) | 310,517 | |||||||||
| Bad debt expense | 22,500 | — | ||||||||||
| Acquisition expenses | 99,065 | — | ||||||||||
| Non-recurring charges | 137,717 | 97,384 | ||||||||||
| Stock-based compensation | 144,624 | 61,728 | ||||||||||
| Adjusted EBITDA | $ | 224,495 | $ | 469,629 | ||||||||
* 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, operating income, 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 comparison. Our management recognizes that the non-GAAP financial measures have inherent limitations because of the excluded items described above.
Aspen Group defines Adjusted EBITDA as earnings (or loss) from continuing operations before the items in the table above. 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.
Conference Call:
Aspen Group, Inc. will host a conference call to discuss its fiscal year 2018 first quarter (ending October 31, 2017) financial results and business outlook on Wednesday, December 13, 2017, at 4:30 p.m. (ET). The conference call can be accessed by dialing toll-free (844) 452-6823 (U.S.) or (731) 256-5216 (international), passcode 5099116. 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 5099116.
About Aspen Group, Inc.:
Aspen Group, Inc. is a publicly held, for-profit post-secondary education company headquartered in New York, NY. It owns two accredited universities, Aspen University and United States University. Aspen Group’s vision is to make college affordable again in America.
Aspen University’s mission is to offer any motivated college-worthy student the opportunity to receive a high quality, responsibly priced distance-learning education for the purpose of achieving sustainable economic and social benefits for themselves and their families. Aspen University is dedicated to providing the highest quality education experiences taught by top-tier faculty - 54% of Aspen University’s faculty hold doctoral degrees. To learn more about Aspen University, visit www.aspen.edu.
United States University began its institutional history in 1997 as InterAmerican College in National City, CA. Its initial focus was the provision of affordable educational opportunities to working adults, Latinos, and educated immigrants to increase bilingual capacity in education and healthcare in Southern California. In 2010, the school was renamed to United States University and recently moved its campus into the heart of San Diego. United States University is regionally accredited by the Accrediting Commission for Senior Colleges and Universities of the Western Association of Schools and Colleges, offering bachelor and master level degree programs in nursing, education, health science, and business & management. To learn more about United States University, visit www.usuniversity.edu.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including the expectations of high growth for the coming quarters, the projected return on marketing investment and errors in our estimates of the contractual value of accounts receivable. 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 unexpected difficulties integrating United States University, a change in the effectiveness of our marketing and changes in the economy. Further information on our risk factors is contained in our filings with the SEC, including our Form 10-K for the year ended April 30, 2017. 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 |
||||||||
| October 31, | April 30, | |||||||
| 2017 | 2017 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 5,379,694 | $ | 2,756,217 | ||||
| Accounts receivable, net of allowance of $414,364 and $328,864, respectively | 6,390,633 | 4,434,862 | ||||||
| Prepaid expenses | 172,923 | 133,531 | ||||||
| Promissory note | 900,000 | 900,000 | ||||||
| Other receivables | 470,049 | 81,464 | ||||||
| Accrued interest receivable | 44,800 | 8,000 | ||||||
| Total current assets | 13,358,099 | 8,314,074 | ||||||
| Property and equipment: | ||||||||
| Call center equipment | 82,606 | 53,748 | ||||||
| Computer and office equipment | 105,717 | 103,649 | ||||||
| Furniture and fixtures | 282,932 | 255,984 | ||||||
| Software | 2,459,932 | 2,131,344 | ||||||
| 2,931,187 | 2,544,725 | |||||||
| Less accumulated depreciation and amortization | (1,192,350 | ) | (1,090,010 | ) | ||||
| Total property and equipment, net | 1,738,837 | 1,454,715 | ||||||
| Courseware, net | 143,254 | 145,477 | ||||||
| Accounts receivable, secured - related party, net of allowance of $625,963, and $625,963, respectively | 45,329 | 45,329 | ||||||
| Long term contractual receivable | 753,326 | 657,542 | ||||||
| Other assets | 89,609 | 56,417 | ||||||
| Total assets | $ | 16,128,454 | $ | 10,673,554 | ||||
(Continued)
|
ASPEN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONTINUED) |
||||||||
| October 31, | April 30, | |||||||
| 2017 | 2017 | |||||||
| (Unaudited) | ||||||||
| Liabilities and Stockholders’ Equity (Deficiency) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 934,367 | $ | 756,701 | ||||
| Accrued expenses | 246,415 | 262,911 | ||||||
| Deferred revenue | 2,314,163 | 1,354,989 | ||||||
| Refunds due Students | 734,938 | 310,576 | ||||||
| Deferred rent, current portion | 7,550 | 11,200 | ||||||
| Convertible notes payable, current portion | 50,000 | 50,000 | ||||||
| Total current liabilities | 4,287,433 | 2,746,377 | ||||||
| Senior secured loan payable, net of discount | 4,302,144 | — | ||||||
| Warrant liability | 52,500 | 52,500 | ||||||
| Deferred rent | 30,478 | 34,437 | ||||||
| Total liabilities | 8,672,555 | 2,833,314 | ||||||
| Commitments and contingencies - See Note 8 | — | — | ||||||
| Stockholders’ equity (deficiency): | ||||||||
| Common stock, $0.001 par value; 250,000,000 shares authorized, 13,626,589 issued and 13,609,922 outstanding at October 31, 2017, 13,504,012 issued and 13,487,345 outstanding at April 30, 2017 | 13,613 | 13,504 | ||||||
| Additional paid-in capital | 34,471,602 | 33,607,423 | ||||||
| Treasury stock (16,667 shares) | (70,000 | ) | (70,000 | ) | ||||
| Accumulated deficit | (26,959,316 | ) | (25,710,687 | ) | ||||
| Total stockholders’ equity | 7,455,899 | 7,840,240 | ||||||
| Total liabilities and stockholders’ equity | $ | 16,128,454 | $ | 10,673,554 | ||||
| ASPEN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
||||||||||||||||
| For the | For the | |||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| October 31, | October 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues | $ | 4,851,639 | $ | 3,465,026 | $ | 9,094,525 | $ | 6,221,841 | ||||||||
| Operating expenses | ||||||||||||||||
| Cost of revenues (exclusive of depreciation and amortization shown separately below) | 1,864,659 | 1,234,856 | 3,617,150 | 2,130,915 | ||||||||||||
| General and administrative | 3,166,391 | 1,913,403 | 6,297,725 | 4,095,481 | ||||||||||||
| Depreciation and amortization | 145,355 | 139,005 | 284,074 | 290,054 | ||||||||||||
| Total operating expenses | 5,176,405 | 3,287,264 | 10,198,949 | 6,516,450 | ||||||||||||
| Operating (loss) income from operations | (324,766 | ) | 177,762 | (1,104,424 | ) | (294,609 | ) | |||||||||
| Other expense: | ||||||||||||||||
| Other income | 23,111 | 1,307 | 41,888 | 1,364 | ||||||||||||
| Interest expense | (179,896 | ) | (62,528 | ) | (186,093 | ) | (95,661 | ) | ||||||||
| Total other expense, net | (156,785 | ) | (61,221 | ) | (144,205 | ) | (94,297 | ) | ||||||||
| (Loss) income from operations before income taxes | (481,551 | ) | 116,541 | (1,248,629 | ) | (388,906 | ) | |||||||||
| Income tax expense (benefit) | — | — | — | — | ||||||||||||
| Net (loss) income | $ | (481,551 | ) | $ | 116,541 | $ | (1,248,629 | ) | $ | (388,906 | ) | |||||
| Net loss per share allocable to common stockholders - basic | $ | (0.04 | ) | $ | 0.00 | $ | (0.09 | ) | $ | (0.00 | ) | |||||
| Net loss per share allocable to common stockholders - diluted | $ | (0.04 | ) | $ | 0.00 | $ | (0.09 | ) | $ | (0.00 | ) | |||||
| Weighted average number of common shares outstanding: basic | 13,292,384 | 11,479,845 | 13,548,672 | 11,402,751 | ||||||||||||
| Weighted average number of common shares outstanding: diluted | 13,292,384 | 12,140,264 | 13,548,672 | 11,402,751 | ||||||||||||
| ASPEN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE SIX MONTHS ENDED OCTOBER 31, 2017 (Unaudited) |
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| Total | ||||||||||||||||||||||||
| Additional | Stockholders' | |||||||||||||||||||||||
| Common Stock | Paid-In | Treasury | Accumulated | Equity | ||||||||||||||||||||
| Shares | Amount | Capital | Stock | Deficit | ||||||||||||||||||||
| Balance at April 30, 2016 | 13,504,012 | $ | 13,504 | $ | 33,607,423 | $ | (70,000 | ) | $ | (25,710,687 | ) | $ | 7,840,240 | |||||||||||
| Fees associated with equity raise | — | — | (4,707 | ) | — | — | (4,707 | ) | ||||||||||||||||
| Stock-based compensation | — | — | 303,924 | — | — | 303,924 | ||||||||||||||||||
| Common stock issued for cashless warrant exercise | 78,528 | 79 | (79 | ) | — | — | — | |||||||||||||||||
| Common stock issued for warrants exercised for cash | 14,858 | 14 | 33,584 | — | — | 33,598 | ||||||||||||||||||
| Common stock issued for stock options exercised | 16,598 | 16 | 53,029 | — | — | 53,045 | ||||||||||||||||||
| Warrants issued with senior secured term loan | — | — | 478,428 | — | — | 478,428 | ||||||||||||||||||
| Net loss, for the six months ended October 31, 2017 | — | — | — | — | (1,248,629 | ) | (1,248,629 | ) | ||||||||||||||||
| Balance at October 31, 2017 | 13,613,996 | $ | 13,613 | $ | 34,471,602 | $ | (70,000 | ) | $ | (26,959,316 | ) | $ | 7,455,899 | |||||||||||
| ASPEN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
||||||||
| For the | ||||||||
| Six Months Ended | ||||||||
| October 31, | ||||||||
| 2017 | 2016 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (1,248,630 | ) | $ | (388,907 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Bad debt expense | 85,500 | — | ||||||
| Depreciation and amortization | 284,074 | 290,055 | ||||||
| Stock-based compensation | 303,924 | 157,335 | ||||||
| Amortization of debt discounts | — | 6,250 | ||||||
| Amortization of prepaid shares for services | — | 35,000 | ||||||
| Warrant buyback expense | — | 206,000 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (2,137,055 | ) | (1,304,754 | ) | ||||
| Other receivables | (388,585 | ) | — | |||||
| Prepaid expenses | (39,392 | ) | 20,118 | |||||
| Accrued interest receivable | (36,800 | ) | — | |||||
| Other assets | (33,192 | ) | (23,240 | ) | ||||
| Accounts payable | 177,666 | 609,562 | ||||||
| Accrued expenses | (16,496 | ) | 55,974 | |||||
| Deferred rent | (7,609 | ) | 20,513 | |||||
| Refunds due students | 424,362 | 167,344 | ||||||
| Deferred revenue | 959,174 | 175,073 | ||||||
| Net cash (used in) provided by operating activities | (1,673,058 | ) | 26,323 | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (540,873 | ) | (382,490 | ) | ||||
| Purchases of courseware | (25,100 | ) | (6,550 | ) | ||||
| Net cash used in investing activities | (565,973 | ) | (389,040 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Warrant Buyback | — | (400,000 | ) | |||||
| Borrowing from bank line of credit | — | 247,000 | ||||||
| Repayment of bank line of credit | — | (248,783 | ) | |||||
| Third party line of credit | — | 750,000 | ||||||
| Third party line of credit financing costs | — | (60,000 | ) | |||||
| Senior secured loan | 4,780,572 | — | ||||||
| Proceeds of warrant exercise | 33,598 | — | ||||||
| Proceeds of stock options exercised | 53,045 | — | ||||||
| Disbursements for equity offering costs | (4,707 | ) | (1,917 | ) | ||||
| Net cash provided by financing activities | 4,862,508 | 286,300 | ||||||
| Net increase (decrease) in cash and cash equivalents | 2,623,477 | (76,417 | ) | |||||
| Cash and cash equivalents at beginning of period | 2,756,217 | 783,796 | ||||||
| Cash and cash equivalents at end of period | $ | 5,379,694 | $ | 707,379 | ||||
(Continued)
| ASPEN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (Unaudited) |
||||||||
| For the | ||||||||
| Six Months Ended | ||||||||
| October 31, | ||||||||
| 2017 | 2016 | |||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 3,346 | $ | 67,656 | ||||
| Cash paid for income taxes | $ | — | $ | — | ||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Common stock issued for services | $ | — | $ | 75,002 | ||||
| Warrants issued as part of senior secured loan | $ | 478,428 | $ | 52,500 | ||||
Released December 13, 2017