Aspen Group Reports Year over Year Revenue Increase of 40% to a Record $17.0 Million in the Second Quarter Fiscal Year 2021, Raises Fiscal 2021 Revenue Growth Forecast by 300 Basis Points to 38%
NEW YORK, Dec. 15, 2020 (GLOBE NEWSWIRE) -- Aspen Group, Inc. ("Aspen Group" or "AGI") (Nasdaq: ASPU), an education technology holding company, today announced financial results for its 2021 fiscal second quarter ended October 31, 2020.
Second Quarter and Year to Date Fiscal Year 2021 Summary Results
Three Months Ended | Six Months Ended | |||||||||||
$ in millions, except per share data | October 31, | October 31, | October 31, | October 31, | ||||||||
Revenue | $17.0 | $12.1 | $32.1 | $22.4 | ||||||||
GAAP Gross Profit1 | $9.3 | $7.6 | $18.3 | $13.4 | ||||||||
GAAP Gross Margin (%)1 | 55% | 63% | 57% | 60% | ||||||||
Operating Income (Loss) | ($2.8 | ) | ($0.3 | ) | ($3.2 | ) | ($2.0 | ) | ||||
Net Income (Loss) | ($4.4 | ) | ($0.6 | ) | ($5.3 | ) | ($2.7 | ) | ||||
Earnings (Loss) per Share | ($0.19 | ) | ($0.03 | ) | ($0.23 | ) | ($0.14 | ) | ||||
Adjusted Net Income (Loss)2 | ($1.2 | ) | ($0.1 | ) | ($1.1 | ) | ($1.6 | ) | ||||
Adjusted Earnings (Loss) per Share2 | ($0.05 | ) | ($0.01 | ) | ($0.05 | ) | ($ 0.08 | ) | ||||
EBITDA2 | ($2.3 | ) | $0.5 | ($2.3 | ) | ($0.5 | ) | |||||
Adjusted EBITDA2 | $0.2 | $1.4 | $1.5 | $1.3 | ||||||||
1 GAAP gross profit calculation includes marketing and promotional costs, instructional costs & services, and amortization expense.
2 See reconciliations of GAAP to Non-GAAP financial measures under "Non-GAAP–Financial Measures" below.
"Aspen Group's consistent top-line performance is attributable to the focused execution of our growth strategy. Our high growth to date reflects our marketing spend prioritization to ramp enrollment in our high LTV degree programs. We have now begun executing our longer-term strategy of expanding our campus footprint into new metros with the successful launches of the Austin, Texas and Tampa, Florida pre-licensure campuses," stated Michael Mathews, Chairman and CEO of AGI.
Mr. Mathews continued, "During the second quarter, we strategically increased our investments in marketing and completed the expansion of our enrollment center to support the anticipated enrollment growth of our highest LTV programs and the launch of new campuses in Austin, Texas, and Tampa, Florida. These investments, which precede revenue, reduced second quarter gross margin versus the prior quarter and year. Note that for the first time, revenue in the second quarter from USU (primarily MSN-FNP) and Aspen’s BSN Pre-Licensure, our two fastest-growing, highest LTV units, equaled 50% of total Company revenue. These two units are forecast to increase as a percentage of total company revenue in the coming quarters. As a result, we expect to meet or exceed historical gross margin levels as these new campuses mature and revenue from these units continues to grow.
On September 14, 2020, we announced that $10 million of secured convertible notes, issued by the Company on January 22, 2020, had achieved the conversion stock price threshold and converted into 1.4 million shares of common stock. As a result, Aspen Group removed $700,000 of annual interest expense from the P&L and is now debt-free. This quarter's interest expense reflects the acceleration of the Original Issuance Discount on the convertible notes for a non-cash expense of $1.4 million. Also, as previously announced, the Company incurred stock compensation expense from the vesting of two tranches of performance-based equity grants, one in August and one in September 2020. This accelerated vesting resulted in a non-cash expense of $1.2 million reported in the quarter's G&A expense line. Solid execution combined with the stock market rally since the March low lifted our share price to near all-time highs during the quarter and triggered the vesting.
Advertising spend quarter over quarter was an increase of $700,000. In the quarter, G&A was $11.3 million, and included, among other things, the non-cash charge related to the RSU vesting of $1.2 million, new campus costs, and growth opex. Growth opex G&A are expenses attributable to the new Enrollment Advisors, Academic and Financial Aid Advisors, and clinical operations personnel necessary to support future enrollment growth. Total costs related to the G&A growth spending for new campus costs and growth opex totaled $0.5 million. Should these charges and expenses be excluded, G&A grew at our stated goal of 50% of the revenue increase year-over-year. 3
In addition to increasing enrollment from two new campuses, we will be introducing double cohorts at our main Phoenix campus to reduce wait times for students entering the core BSN program. These added cohorts will increase the capacity by approximately 50% to 45 students each semester in the core program, for each of the six semester starts per year beginning in February 2021. Rising enrollment from larger cohorts is anticipated to increase our annual revenue run rate at our main campus by approximately $1.8 million starting in our fiscal fourth quarter.
Aspen Group is committed to supporting working adults and millennials in achieving their educational goals. Technology and innovation are at the core of our Company's DNA and integral to our mission to make college affordable. With a vertically integrated EdTech platform featuring a proprietary CRM system, we experience the highest conversion rates and the lowest enrollment costs in the for-profit education sector. This allows Aspen Group to offer our students affordable tuition rates, monthly payment plans, and flexible on-campus class schedules. These competitive advantages, along with our operational expertise, are the underpinnings of our long-term growth strategy to open ten new campuses throughout the southern United States in the next five years, with the objective of increasing our high LTV revenue streams and improving shareholder value."
Second Quarter Fiscal Year 2021 Financial and Operational Results vs. Second Quarter Fiscal Year 2020:
The table below shows, on a year-over-year basis, second quarter fiscal year 2021 Bookings increased 34% to $42.1 million, delivering a Company-wide average revenue per enrollment (ARPU) increase of 12% to $15,825.
Second Quarter Bookings1 and Average Revenue Per Enrollment (ARPU)2
Three Months Ended | Three Months Ended | |||||||
$ in millions, | October 31, | October 31, | October 31, | October 31, | Year-over-Year % | |||
Aspen University | 2,010 | $30.5 | 1,823 | $24.3 | ||||
USU | 649 | $11.6 | 394 | $7.0 | ||||
Total | 2,659 | $42.1 | 2,217 | $31.3 | 34 | % | ||
ARPU | $15,825 | $14,125 | 12 | % | ||||
1Bookings are defined by multiplying LTV by new student enrollments for each operating unit.
2Average Revenue Per Enrollment (ARPU) is defined by dividing total Bookings by total new student enrollments for each operating unit.
Revenues increased 40% to $17.0 million for the Q2 fiscal 2021 as compared to $12.1 million in Q2 fiscal 2020. USU accounted for approximately 29% and Aspen University's Pre-Licensure BSN program accounted for approximately 21% of overall Company revenues for Q2 fiscal 2021.
Gross profit increased to $9.3 million or 55% gross margin for Q2 fiscal 2021 versus $7.6 million or 63% gross margin. Aspen University gross profit represented 57% of Aspen University revenues for Q2 fiscal 2021, while USU gross profit equaled 56% of USU revenues for Q2 fiscal 2021. Aspen University instructional costs and services represented 20% of Aspen University revenues for Q2 fiscal 2021, while USU instructional costs and services equaled 26% of USU revenues for Q2 fiscal 2021. Aspen University marketing and promotional costs represented 20% of Aspen University revenues for Q2 fiscal 2021, while USU marketing and promotional costs equaled 18% of USU revenues for Q2 fiscal 2021.
For the second quarter of fiscal year 2021, net loss applicable to shareholders was ($4.4 million) or basic net loss per share of ($0.19) versus net loss applicable to shareholders of ($0.6 million) or basic net loss per share of ($0.03). Aspen University generated $2.2 million of net income for Q2 fiscal 2021, and USU generated $0.6 million of net income in Q2 fiscal 2021. AGI corporate incurred $5.6 million of operating expenses for Q2 fiscal 2021.
Adjusted Net Income (Loss), a non-GAAP financial measure, was ($1.2 million) for the second quarter of fiscal year 2021 as compared to Adjusted Net Loss of ($0.1 million) in the prior year period. Adjusted Earnings (Loss) Per Share, a non-GAAP financial measure, was ($0.05) for the second quarter of fiscal year 2021 as compared to Adjusted Loss per Share of ($0.01) in the prior year period.
EBITDA, a non-GAAP financial measure, was ($2.3 million) or (13%) margin in Q2 fiscal 2021 as compared to an EBITDA of $0.5 million or 4% margin in Q2 fiscal 2020. Adjusted EBITDA, a non-GAAP financial measure, was $0.2 million or 1% margin in Q2 fiscal 2021 as compared to an Adjusted EBITDA was $1.4 million or 11% margin in Q2 fiscal 2020.
Aspen University generated net income of $2.2 million, EBITDA of $2.7 million or 23% margin and Adjusted EBITDA of $3.4 million or 28% margin for Q2 fiscal 2021. Note that Aspen's pre-licensure BSN program accounted for $1.1 million of the $2.7 million EBITDA generated at Aspen University, operating at an EBITDA margin of 31% -- the highest margin unit of the Company. USU generated net income of $0.6 million, EBITDA of $0.6 million or 12% margin and $0.7 million of Adjusted EBITDA or 14% margin for Q2 fiscal 2021. AGI corporate generated net loss of $7.1 million, EBITDA of ($5.6 million) and Adjusted EBITDA of ($3.9 million) in Q2 fiscal 2021.
At October 31, 2020, the Company reported basic shares outstanding of approximately 24,416,000, an increase of approximately 2,056,000 shares from approximately 22,360,000 basic shares outstanding at the beginning of the quarter. This is a result of the conversion of $10 million of Convertible Notes into 1.4 million shares as well as other employee exercises.
Liquidity
For the quarter ended October 31, 2020, the Company reported cash and cash equivalents of $12.2 million and restricted cash of $4.6 million. The Company used cash of ($1.4 million) in operations in the second quarter of fiscal year 2021, as compared to using ($0.3 million) in same period last year.
Conference Call:
Aspen Group will host a conference call to discuss its second quarter fiscal year 2021 financial results and business outlook on Tuesday, December 15, 2020, at 4:30 p.m. (ET). Aspen Group 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 9059076. 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 seven day dial-in replay which can be accessed by dialing toll-free (855) 859-2056 or (404) 537-3406 (international), passcode 9059076.
Non-GAAP2 – 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 Adjusted Net Income (Loss), Adjusted Earnings (Loss) Per Share, EBITDA and Adjusted EBITDA, 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.
AGI defines Adjusted Net Income (Loss) as net earnings (loss) from operations adding back non-recurring charges and stock-based compensation expense as reflected in the table below. Q2 Fiscal 2021 includes –non-cash stock-based compensation expense of $1.2 million related to the accelerated amortization expense for the price vesting of the Executive RSUs and non-recurring charges of $1.4 million related to the accelerated amortization expense of the original issue discount for the automatic conversion of $10 million of Convertible Notes on September 14, 2020.
The following table presents a reconciliation of net loss and earnings (loss) per share to Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Share:
Three Months Ended October 31, | Six Months Ended October 31, | ||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||
Earnings (loss) per share | $ | (0.19 | ) | $ | (0.03 | ) | $ | (0.23 | ) | $ | (0.14 | ) | |||||||
Weighted average number of common stock outstanding* | 22,791,503 | 18,985,371 | 22,763,235 | 18,859,344 | |||||||||||||||
Net loss | $ | (4,370,525 | ) | $ | (638,168 | ) | $ | (5,313,721 | ) | $ | (2,713,450 | ) | |||||||
Add back: | |||||||||||||||||||
Stock-based compensation | 1,831,548 | 492,130 | 2,318,658 | 990,547 | |||||||||||||||
Non-recurring charges | 1,362,819 | — | 1,906,203 | 132,949 | |||||||||||||||
Adjusted Net (Loss) | $ | (1,176,158 | ) | $ | (146,038 | ) | $ | (1,088,860 | ) | $ | (1,589,954 | ) | |||||||
Adjusted (Loss) per Share | $ | (0.05 | ) | $ | (0.01 | ) | $ | (0.05 | ) | $ | (0.08 | ) | |||||||
________________
*Same share count used for GAAP and non-GAAP financial measures.
AGI defines Adjusted EBITDA as EBITDA excluding: (1) bad debt expense; (2) stock-based compensation; and (3) non-recurring charges such as stock based compensation and other items. Included in Q2 Fiscal 2021 is –non-cash stock-based compensation expense of $1.2 million related to the accelerated amortization expense for the price vesting of the Executive RSUs. The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature. Adjusted EBITDA is an important measure of our operating performance because it allows management, analysts and investors to evaluate and assess our core operating results from period-to-period after removing the impact of items that affect comparability.
The following table presents a reconciliation of net loss to EBITDA and Adjusted EBITDA:
Three Months Ended October 31, | Six Months Ended October 31, | ||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||
Net loss | $ | (4,370,525 | ) | $ | (638,168 | ) | $ | (5,313,721 | ) | $ | (2,713,450 | ) | |||||||
Interest expense, net | 1,529,517 | 426,694 | 1,984,740 | 846,761 | |||||||||||||||
Taxes | 36,530 | 44,168 | 34,630 | 134,445 | |||||||||||||||
Depreciation and amortization | 526,357 | 628,225 | 1,016,981 | 1,234,799 | |||||||||||||||
EBITDA | (2,278,121 | ) | 460,919 | (2,277,370 | ) | (497,445 | ) | ||||||||||||
Bad debt expense | 632,000 | 407,759 | 1,032,000 | 648,658 | |||||||||||||||
Stock-based compensation | 1,831,548 | 492,130 | 2,318,658 | 990,547 | |||||||||||||||
Non-recurring charges | — | — | 419,437 | 132,949 | |||||||||||||||
Adjusted EBITDA | $ | 185,427 | $ | 1,360,808 | $ | 1,492,725 | $ | 1,274,709 | |||||||||||
3The following table presents a reconciliation of net loss to net loss, excluding growth spend and non-cash items:
Q2 Fiscal 2021 | |||||||||
Amounts | Earnings (Loss) | ||||||||
Net Loss, as reported | $ | (4,370,525 | ) | $ | (0.19 | ) | |||
Add back: | |||||||||
Growth spend (includes advertising, growth opex and new campus costs) | 1,347,330 | ||||||||
Non-cash items | 2,561,761 | ||||||||
Subtotal | 3,909,091 | ||||||||
Net Loss, excluding growth spend and non-cash items | $ | (461,434 | ) | $ | (0.02 | ) | |||
3See reconciliations of GAAP to Non-GAAP financial measures under "Non-GAAP–Financial Measures" above.
Definitions
Bookings – is defined by multiplying LTV by new student enrollments for each operating unit.
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.
Average Revenue per Enrollment ("ARPU") – is defined by dividing total bookings by total new student enrollments for each operating unit.
Marketing Efficiency Ratio ("MER") – is defined as revenue per enrollment divided by cost per enrollment.
EBITDA Margin – is defined as EBITDA divided by revenues. We believe EBITDA margin is useful for management, analysts and investors as this measure allows a more meaningful comparison between our performance and that of our competitors. EBITDA margin has certain limitations in that it does not take into account the impact to our consolidated statement of operations of certain expenses.
Adjusted EBITDA Margin – is defined as Adjusted EBITDA divided by revenues. We believe Adjusted EBITDA margin is useful for management, analysts and investors as this measure allows 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.
NM – Not meaningful.
Subsequent to the call, a transcript of the audiocast will be available from the Company's website at ir.aspen.edu.
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 2021 and Q2 2021 Financial Results Presentation published on our website.
Forward-Looking Statements:
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our expected fiscal 2021 revenue growth, the anticipated enrollment growth, the expected revenue from our pre-licensure BSN and the MSN-FNP programs as a percentage of revenue, the planned introduction of double cohorts in the core BSN program and the expected effect of this increase on our revenue run rate at our main campus, our estimates as to Lifetime Value, the expected future impact of bookings, and ARPU. 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, student attrition, national and local economic factors including the effectiveness of the COVID-19 vaccine rollout on our class starts in the fiscal fourth quarter, and the competitive impact from the trend of major non-profit universities using online education and consolidation among our competitors. Other risks are included in our filings with the SEC including our Form 10-K for the year ended April 30, 2020, and prospectus supplement dated October 31, 2020. 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.
Investor Relations Contact:
Kim Rogers
Managing Director
Hayden IR
385-831-7337
Kim@HaydenIR.com
ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 31, 2020 | April 30, 2020 | ||||||||
(Unaudited) | |||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 12,237,710 | $ | 14,350,554 | |||||
Restricted cash | 4,644,618 | 3,556,211 | |||||||
Accounts receivable, net of allowance of $2,523,293 and $1,758,920, respectively | 17,995,485 | 14,326,791 | |||||||
Prepaid expenses | 1,595,939 | 941,671 | |||||||
Other receivables | — | 23,097 | |||||||
Other current assets | 446,857 | 173,090 | |||||||
Total current assets | 36,920,609 | 33,371,414 | |||||||
Property and equipment: | |||||||||
Computer equipment and hardware | 755,972 | 649,927 | |||||||
Furniture and fixtures | 1,013,103 | 1,007,099 | |||||||
Leasehold improvements | 920,736 | 867,024 | |||||||
Instructional equipment | 315,993 | 301,842 | |||||||
Software | 7,373,655 | 6,162,770 | |||||||
Construction in progress | 878,263 | — | |||||||
11,257,722 | 8,988,662 | ||||||||
Less accumulated depreciation and amortization | (3,830,290 | ) | (2,841,019 | ) | |||||
Total property and equipment, net | 7,427,432 | 6,147,643 | |||||||
Goodwill | 5,011,432 | 5,011,432 | |||||||
Intangible assets, net | 7,900,000 | 7,900,000 | |||||||
Courseware, net | 100,369 | 111,457 | |||||||
Accounts receivable, net of allowance of $625,963 and $625,963, respectively | 45,329 | 45,329 | |||||||
Long term contractual accounts receivable | 10,246,622 | 6,701,136 | |||||||
Debt issue cost, net | 34,722 | 182,418 | |||||||
Operating lease right of use assets, net | 7,809,489 | 6,412,851 | |||||||
Deposits and other assets | 486,176 | 355,831 | |||||||
Total assets | $ | 75,982,180 | $ | 66,239,511 | |||||
(Continued)
ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
October 31, 2020 | April 30, 2020 | ||||||||
(Unaudited) | |||||||||
Liabilities and Stockholders’ Equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 2,344,280 | $ | 1,505,859 | |||||
Accrued expenses | 1,820,396 | 537,413 | |||||||
Deferred revenue | 8,628,498 | 3,712,994 | |||||||
Due to students | 2,070,225 | 2,371,844 | |||||||
Operating lease obligations, current portion | 1,670,277 | 1,683,252 | |||||||
Other current liabilities | 259,339 | 545,711 | |||||||
Total current liabilities | 16,793,015 | 10,357,073 | |||||||
Convertible notes, net of discount of $0 and $1,550,854, respectively | — | 8,449,146 | |||||||
Operating lease obligations, less current portion | 7,094,948 | 5,685,335 | |||||||
Total liabilities | 23,887,963 | 24,491,554 | |||||||
Commitments and contingencies | |||||||||
Stockholders’ equity: | |||||||||
Preferred stock, $0.001 par value; 1,000,000 shares authorized, | |||||||||
0 issued and 0 outstanding at October 31, 2020 and April 30, 2020 | — | — | |||||||
Common stock, $0.001 par value; 40,000,000 shares authorized | |||||||||
24,416,539 issued and outstanding at October 31, 2020 | |||||||||
21,770,520 issued and 21,753,853 outstanding at April 30, 2020 | 24,417 | 21,771 | |||||||
Additional paid-in capital | 105,092,551 | 89,505,216 | |||||||
Treasury stock (0 and 16,667 shares at October 31, 2020 and April 30, 2020, respectively) | — | (70,000 | ) | ||||||
Accumulated deficit | (53,022,751 | ) | (47,709,030 | ) | |||||
Total stockholders’ equity | 52,094,217 | 41,747,957 | |||||||
Total liabilities and stockholders’ equity | $ | 75,982,180 | $ | 66,239,511 | |||||
ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended October 31, | Six Months Ended October 31, | ||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||
Revenues | $ | 16,971,045 | $ | 12,085,965 | $ | 32,136,607 | $ | 22,443,947 | |||||||||||
Operating expenses: | |||||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 7,324,780 | 4,188,056 | 13,172,303 | 8,541,114 | |||||||||||||||
General and administrative | 11,285,155 | 7,193,700 | 20,078,911 | 13,989,951 | |||||||||||||||
Bad debt expense | 632,000 | 407,759 | 1,032,000 | 648,658 | |||||||||||||||
Depreciation and amortization | 526,357 | 628,225 | 1,016,981 | 1,234,799 | |||||||||||||||
Total operating expenses | 19,768,292 | 12,417,740 | 35,300,195 | 24,414,522 | |||||||||||||||
Operating loss | (2,797,247 | ) | (331,775 | ) | (3,163,588 | ) | (1,970,575 | ) | |||||||||||
Other income (expense): | |||||||||||||||||||
Other (expense) income, net | (7,080 | ) | 132,567 | (130,378 | ) | 155,369 | |||||||||||||
Interest expense | (1,529,668 | ) | (428,960 | ) | (1,985,125 | ) | (852,649 | ) | |||||||||||
Total other expense, net | (1,536,748 | ) | (296,393 | ) | (2,115,503 | ) | (697,280 | ) | |||||||||||
Loss before income taxes | (4,333,995 | ) | (628,168 | ) | (5,279,091 | ) | (2,667,855 | ) | |||||||||||
Income tax expense | 36,530 | 10,000 | 34,630 | 45,595 | |||||||||||||||
Net loss | $ | (4,370,525 | ) | $ | (638,168 | ) | $ | (5,313,721 | ) | $ | (2,713,450 | ) | |||||||
Net loss per share - basic and diluted | $ | (0.19 | ) | $ | (0.03 | ) | $ | (0.23 | ) | $ | (0.14 | ) | |||||||
Weighted average number of common stock outstanding - basic and diluted | 22,791,503 | 18,985,371 | 22,763,235 | 18,859,344 | |||||||||||||||
ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Three Months Ended October 31, 2020 and 2019
(Unaudited)
Common Stock | Additional | Treasury | Accumulated | Total | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||
Balance at 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 | $ | 24,417 | $ | 105,092,551 | $ | — | $ | (53,022,751 | ) | $ | 52,094,217 | ||||||||||||||||
Common Stock | Additional | Treasury | Accumulated | Total | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||
Balance at July 31, 2019 | 18,913,527 | $ | 18,914 | $ | 69,146,123 | $ | (70,000 | ) | $ | (44,125,247 | ) | $ | 24,969,790 | |||||||||||||||
Stock-based compensation | — | — | 391,067 | — | — | 391,067 | ||||||||||||||||||||||
Common stock issued for stock options exercised for cash | 90,950 | 90 | 192,432 | — | — | 192,522 | ||||||||||||||||||||||
Common stock issued for cashless stock options exercised | 80,313 | 80 | (80 | ) | — | — | — | |||||||||||||||||||||
Common stock issued for cashless warrant exercise | 57,526 | 58 | (58 | ) | — | — | — | |||||||||||||||||||||
Amortization of warrant based cost | — | — | 9,125 | — | — | 9,125 | ||||||||||||||||||||||
Amortization of restricted stock issued for services | — | — | 42,754 | — | — | 42,754 | ||||||||||||||||||||||
Net loss | — | — | — | — | (638,168 | ) | (638,168 | ) | ||||||||||||||||||||
Balance at October 31, 2019 | 19,142,316 | $ | 19,142 | $ | 69,781,363 | $ | (70,000 | ) | $ | (44,763,415 | ) | $ | 24,967,090 | |||||||||||||||
ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)
Six Months Ended October 31, 2020 and 2019
(Unaudited)
Common Stock | Additional | Treasury | Accumulated | Total | ||||||||||||||||||||||||
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 | 192 | 1,081,600 | — | — | 1,081,792 | ||||||||||||||||||||||
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 | $ | 24,417 | $ | 105,092,551 | $ | — | (53,022,751 | ) | $ | 52,094,217 | |||||||||||||||||
Common Stock | Additional | Treasury | Accumulated | Total | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||
Balance at April 30, 2019 | 18,665,551 | $ | 18,666 | $ | 68,562,727 | $ | (70,000 | ) | $ | (42,049,965 | ) | $ | 26,461,428 | |||||||||||||||
Stock-based compensation | — | — | 889,484 | — | — | 889,484 | ||||||||||||||||||||||
Common stock issued for stock options exercised for cash | 112,826 | 113 | 237,600 | — | — | 237,713 | ||||||||||||||||||||||
Common stock issued for cashless stock options exercised | 182,207 | 182 | (182 | ) | — | — | — | |||||||||||||||||||||
Common stock issued for cashless warrant exercise | 76,929 | 77 | (77 | ) | — | — | — | |||||||||||||||||||||
Amortization of warrant based cost | — | — | 18,565 | — | — | 18,565 | ||||||||||||||||||||||
Amortization of restricted stock issued for services | — | — | 73,350 | — | — | 73,350 | ||||||||||||||||||||||
Restricted Stock Issued for Services, subject to vesting | 104,803 | 104 | (104 | ) | — | — | — | |||||||||||||||||||||
Net loss | — | — | — | — | (2,713,450 | ) | (2,713,450 | ) | ||||||||||||||||||||
Balance at October 31, 2019 | 19,142,316 | $ | 19,142 | $ | 69,781,363 | $ | (70,000 | ) | $ | (44,763,415 | ) | $ | 24,967,090 | |||||||||||||||
ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended October 31, | |||||||||
2020 | 2019 | ||||||||
Cash flows from operating activities: | |||||||||
Net loss | $ | (5,313,721 | ) | $ | (2,713,450 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||
Bad debt expense | 1,032,000 | 648,658 | |||||||
Depreciation and amortization | 1,016,981 | 1,234,799 | |||||||
Stock-based compensation | 2,318,658 | 889,484 | |||||||
Amortization of warrant based cost | 18,250 | 18,565 | |||||||
Loss on asset disposition | — | 3,918 | |||||||
Amortization of debt discounts | 1,550,854 | 135,298 | |||||||
Amortization of debt issue costs | 147,695 | 50,255 | |||||||
Modification charge for warrants exercised | 25,966 | — | |||||||
Non-cash payments to investor relations firm | — | 73,350 | |||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | (8,246,180 | ) | (5,211,195 | ) | |||||
Prepaid expenses | (654,268 | ) | (378,184 | ) | |||||
Other receivables | 23,097 | 1,833 | |||||||
Other current assets | (273,767 | ) | (172,507 | ) | |||||
Deposits and other assets | (171,303 | ) | 304,676 | ||||||
Accounts payable | 838,421 | (511,473 | ) | ||||||
Accrued expenses | 1,282,983 | 88,243 | |||||||
Deferred Rent | — | (25,902 | ) | ||||||
Due to students | (301,619 | ) | 727,710 | ||||||
Deferred revenue | 4,915,504 | 3,052,996 | |||||||
Other current liabilities | (286,372 | ) | (242,181 | ) | |||||
Net cash used in operating activities | (2,076,821 | ) | (2,025,107 | ) | |||||
Cash flows from investing activities: | |||||||||
Purchases of courseware and accreditation | (11,375 | ) | (9,575 | ) | |||||
Purchases of property and equipment | (2,233,348 | ) | (1,244,078 | ) | |||||
Net cash used in investing activities | (2,244,723 | ) | (1,253,653 | ) | |||||
Cash flows from financing activities: | |||||||||
Proceeds from warrants exercised | 1,081,792 | — | |||||||
Proceeds from stock options exercised | 2,215,315 | 237,713 | |||||||
Net cash provided by financing activities | 3,297,107 | 237,713 | |||||||
(Continued)
ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
Six Months Ended October 31, | |||||||||
2020 | 2019 | ||||||||
Net decrease in cash, cash equivalents and restricted cash | $ | (1,024,437 | ) | $ | (3,041,047 | ) | |||
Cash, cash equivalents and restricted cash at beginning of period | 17,906,765 | 9,967,752 | |||||||
Cash, cash equivalents and restricted cash at end of period | $ | 16,882,328 | $ | 6,926,705 | |||||
Supplemental disclosure cash flow information | |||||||||
Cash paid for interest | $ | 285,749 | $ | 652,121 | |||||
Cash paid for income taxes | $ | 38,608 | $ | 49,595 | |||||
Supplemental disclosure of non-cash investing and financing activities | |||||||||
Common stock issued for conversion of Convertible Notes | $ | 10,000,000 | $ | — | |||||
Right-of-use lease asset offset against operating lease obligations | $ | 851,733 | $ | 7,469,167 | |||||
Common stock issued for services | $ | — | $ | 178,447 | |||||
The following table provides a reconciliation of cash and restricted cash reported within the unaudited consolidated balance sheets that sum to the same such amounts shown in the unaudited consolidated statements of cash flows:
October 31, 2020 | October 31, 2019 | ||||||||
Cash and cash equivalents | $ | 12,237,710 | $ | 6,472,417 | |||||
Restricted cash | 4,644,618 | 454,288 | |||||||
Total cash, cash equivalents and restricted cash | $ | 16,882,328 | $ | 6,926,705 | |||||
