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PRESS RELEASE from provider: Globe Newswire
This content is a press release from our partner Globe Newswire. The AP newsroom and editorial departments were not involved in its creation.

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

March 11, 2019

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, CEO914-906-9159

ASPEN GROUP, INC. AND SUBSIDIARIESCONSOLIDATED 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, 45,329 45,329 respectively 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 SUBSIDIARIESCONSOLIDATED 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 18,506 18,334 18,489,202 outstanding at January 31, 2019, 18,333,521 issued and 18,316,854 outstanding at April 30,2018 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 SUBSIDIARIESCONSOLIDATED 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 4,076,980 2,665,664 11,664,887 6,282,814 and amortization shown separately below) 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 $ (0.13 ) $ (0.15 ) $ (0.42 ) $ (0.25 ) stockholders – basic and diluted - ---------- - ---------- - ---------- - ---------- Weighted average number of common shares 18,398,095 14,491,634 18,350,360 13,862,992 outstanding: basic and diluted - ---------- - ---------- - ---------- - ----------

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

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

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

ASPEN GROUP, INC. AND SUBSIDIARIESCONSOLIDATED 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 — — (14,033 ) — — (14,033 ) equity raise Restricted stock issued 10,000 10 88,690 — — 88,700 for services Stock-based compensation — — 466,468 — — 466,468 Common stock issued for 1,203,209 1,203 10,214,041 — — 10,215,244 acquisition Common stock issued for 162,072 162 (162 ) — — — cashless warrant exercise Common stock issued for warrants exercised for 79,442 79 196,301 — — 196,380 cash Common stock issued for 113,597 114 402,382 — — 402,496 stock options exercised Warrants issued with — — 478,428 — — 478,428 senior secured term loan Net loss, for the Nine months ended January 31, — — — — (3,396,575 ) (3,396,575 ) 2018 ---------- - ------ - ---------- - ------- - ----------- - ---------- Balance at January 31, 15,072,332 $ 15,072 $ 45,439,538 $ (70,000 ) $ (29,107,262 ) $ 16,277,348 2018 (Unaudited) ---------- - ------ - ---------- - ------- - ----------- - ----------

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

ASPEN GROUP, INC. AND SUBSIDIARIESCONSOLIDATED 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 SUBSIDIARIESCONSOLIDATED 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 - --------- - ---------