Aspen Group Delivers Positive Operating Income in Third Quarter Fiscal 2025

Q3 Fiscal 2025 Highlights (compared to Q3 Fiscal 2024) Gross margin increased by 400 basis points to 68%Lowered operating expense by $3.3 million to deliver operating income of $0.4 millionNet loss of $(0.9) million reflects a $(0.9) million non-cash fair value adjustment of put warrantsDelivers positive Adjusted EBITDA of $1.7 million as compared to $0.2 million PHOENIX, March 13, 2025 (GLOBE NEWSWIRE) -- Aspen Group, Inc. (OTCQB: ASPU) (“AGI” or the "Company"), an education technology holding company, today announced financial results for its third quarter fiscal year 2025 ended January 31, 2025. Third Quarter Fiscal Year 2025 Summary Results Three Months Ended January 31, Nine Months Ended January 31,$ in millions, except per share data 2025 2024 2025 2024 Revenue$10.9 $12.1 $33.7 $40.5 Gross Profit1$7.5 $7.7 $23.1 $26.2 Gross Margin (%)1 68% 64% 69% 65%Operating Income (Loss)$0.4 $(1.8) $(5.1) $(1.9)Net Income (Loss)$(0.9) $(3.9) $(5.2) $(6.1)Earnings (Loss) per Share$(0.04) $(0.15) $(0.20) $(0.24)EBITDA2, 3$0.2 $(0.9) $(1.8) $0.8 Adjusted EBITDA2$1.7 $0.2 $3.7 $3.1 _______________________1 GAAP gross profit calculation includes marketing and promotional costs, instructional costs and services, and amortization expense of $0.5 million and $0.5 million, and $1.4 million and $1.5 million for the three and nine months ended January 31, 2025 and 2024, respectively.2 Net income (loss) in Fiscal Q3 2025 and Fiscal year 2025 includes a non-cash (loss) gain of $(935,363) and $970,769, respectively, related to the change in the fair value of put warrant liability.3 Non-GAAP financial measures. See reconciliations of GAAP to non-GAAP financial measures under “Non-GAAP–Financial Measures” starting on page 4. Michael Mathews, Chairman and CEO of AGI, stated: “The third quarter showcased strong internal performance. First, we have experienced stabilization in sequential revenue levels at both Aspen University and United States University over the past four quarters with only a maintenance marketing spend rate. Second, management’s commitment to effective cost management and operational efficiency resulted in the year-over-year improvement in gross margin and the reduction in operating expenses. These factors worked together to yield positive operating income and operating cash flow of $0.7 million. The third quarter net loss was entirely attributed to a non-cash expense of $935,000 due to the fair value adjustment of put warrants, attributed to gains in AGI’s share price during the quarter. Moreover, we are pleased to report Adjusted EBITDA of $1.7 million.” Mr. Mathews added, “We are particularly encouraged by the recent renewal of Aspen University’s accreditation by the Distance Education Accrediting Commission through January 2029. The demand for Aspen University’s online post-licensure nursing degree programs and the United States University’s family nurse practitioner program remains steady, despite our limited marketing spend rate.” Fiscal Q3 2025 Financial and Operational Results (compared to Fiscal Q3 2024) Revenue decreased by 9% to $10.9 million compared to $12.1 million. The following table presents the Company’s revenue, both per-subsidiary and total: Three Months Ended January 31, 2025 $ Change % Change 2024 AU$4,430,489 $(1,698,219) (28)% $6,128,708 USU 6,513,479 584,340 10% 5,929,139 Revenue$10,943,968 $(1,113,879) (9)% $12,057,847 Aspen University's (“AU”) revenue decline of $1.7 million, or 28%, reflects the completion of the teach-out of the pre-licensure program and lower post-licensure enrollments as a result of the decrease in marketing spend initiated in late Fiscal Q1 2023. United States University (“USU”) revenue was up 10% compared to the prior year period. MSN-FNP program enrollments decreased in the quarter due to regular seasonal fluctuations and lower marketing spend initiated in late Fiscal Q1 2023. Lower new enrollments were offset by strong demand from existing students returning from inactive status and higher revenue per student driven by more students entering their second year of the MSN-FNP program, which includes clinical rotations, and by tuition increases. GAAP gross profit decreased $0.2 million to $7.5 million primarily due to the overall student body decrease of 21%. Gross margin was 68% compared to 64%. AU's gross margin was 67% versus 61%, and USU's gross margin was 70% versus 68%. The increase in gross margin is the result of lower instructional costs from completing the AU BSN Pre-licensure program teach-out and increased efficiencies in the usage of faculty at both AU and USU. AU instructional costs and services represented 25% of AU revenue, and USU instructional costs and services represented 27% of USU revenue. AU marketing and promotional costs represented 2% of AU revenue, and USU marketing and promotional costs represented 1% of USU revenue. In Fiscal Q3 2025, net income and EBITDA were impacted by a $0.9 million non-cash expense related to the fair value adjustment of the put warrants, attributed to gains in Aspen Group’s share price in the quarter. At the end of each quarter if our stock price has increased, we will incur a charge; contrarily, if our stock price has decreased, we will incur a gain from the put warrants. The following tables present the Company’s net income (loss), both per subsidiary and total: Three Months Ended January 31, 2025 Consolidated AGI Corporate AU USUNet income (loss)$(908,747) $(2,479,960) $(106,590) $1,677,803 Net loss per share available to common stockholders$(0.04) Three Months Ended January 31, 2024 Consolidated AGI Corporate AU USUNet income (loss)$(3,880,437) $(4,787,637) $(380,174) $1,287,374 Net loss per share available to common stockholders$(0.15) The following tables present the Company’s Non-GAAP Financial Measures, both per subsidiary and total. See reconciliations of GAAP to non-GAAP financial measures under “Non-GAAP–Financial Measures” starting on page 4. Three Months Ended January 31, 2025 Consolidated AGI Corporate AU USUEBITDA$157,934 $(2,064,706) $393,777 $1,828,863EBITDA Margin1% NM 9% 28%Adjusted EBITDA$1,703,731 $(1,022,970) $656,540 $2,070,161Adjusted EBITDA Margin16% NM 15% 32% Three Months Ended January 31, 2024 Consolidated AGI Corporate AU USUEBITDA$(943,597) $(2,715,226) $333,751 $1,437,878EBITDA Margin(8)% NM 5% 24%Adjusted EBITDA$178,442 $(2,414,628) $928,304 $1,664,766Adjusted EBITDA Margin1% NM 15% 28% Adjusted EBITDA improved by $1.5 million due to the reduction in instructional costs and services related to the teach-out of the pre-licensure program, increased instructional efficiencies at AU and USU and a decrease in general and administrative costs attributed to our restructurings. Operating Metrics New Student Enrollments Total enrollments for AGI decreased 30% from Fiscal Q3 2024. The year-over-year company-wide decrease of new student enrollments is primarily the result of the on-going maintenance level of marketing spend. As a result of the restructurings and increased instructional efficiencies, we anticipate we will increase marketing spend in Fiscal 2026 to a level necessary to provide enrollments needed to grow the student body and increase positive operating cash flow. New student enrollments for the past five quarters are shown below: Q3'24 Q4'24 Q1'25 Q2'25 Q3'25 Aspen University473 427 413 508 359 USU325 370 410 442 196 Total798 797 823 950 555 Total Active Student Body AGI’s active degree-seeking student body, including AU and USU, declined 21% year-over-year to 6,039 at January 31, 2025 from 7,649 at January 31, 2024. AU's total active student body decreased by 31% year-over-year to 3,564 at January 31, 2025 from 5,146 at January 31, 2024. On a year-over-year basis, USU's total active student body decreased by 1% to 2,475 at January 31, 2025 from 2,503 at January 31, 2024. Total active student body for the past five quarters is shown below: Q3'24 Q4'24 Q1'25 Q2'25 Q3'25 Aspen University5,146 4,559 4,145 3,827 3,564 USU2,503 2,489 2,477 2,560 2,475 Total7,649 7,048 6,622 6,387 6,039 Nursing Students Nursing student body for the past five quarters is shown below. Q3'24 Q4'24 Q1'25 Q2'25 Q3'25 Aspen University4,032 3,526 3,198 2,948 2,745 USU2,270 2,262 2,254 2,300 2,297 Total6,302 5,788 5,452 5,248 5,042 Liquidity The Fiscal Q3 2025 ending unrestricted cash balance was $0.8 million. We implemented the following during Fiscal Q3 2025 to help us further stabilize on-going cash flow. First, we renegotiated the 15% Senior Secured Debentures in October 2024, reducing ongoing principal payments and changing the timing of principal payments from monthly to quarterly. Second, the Company initiated a fourth restructuring late in the fourth quarter of calendar 2024, which is projected to reduce annual operating expenses by over $1.5 million. Cost reductions associated with the four restructuring plans and other corporate cost reductions were implemented to ensure that the Company will have sufficient cash to meet its working capital needs for the next 12 months. 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. AGI defines Adjusted EBITDA as EBITDA excluding: (1) bad debt expense; (2) stock-based compensation; (3) severance; (4) impairments of right-of-use assets and tenant leasehold improvements and (5) non-recurring charges. The following table presents a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA and of net income (loss) margin to the Adjusted EBITDA margin: Three Months Ended January 31, 2025 2024 Net loss$(908,747) $(3,880,437)Interest expense, net 353,629 1,992,185 Taxes 3,751 28,531 Depreciation and amortization 709,301 916,124 EBITDA 157,934 (943,597)Bad debt expense 450,000 450,000 Stock-based compensation 107,012 222,076 Severance 35,421 — Impairment of right-of-use assets — 105,314 Non-recurring charges - Other 953,364 344,649 Adjusted EBITDA$1,703,731 $178,442 Net income / loss Margin (8)% (32)% Adjusted EBITDA Margin 16% 1% The following tables present a reconciliation of Net income (loss) to EBITDA and Adjusted EBITDA and of Net income (loss) margin to the Adjusted EBITDA margin by business unit: Three Months Ended January 31, 2025 Consolidated AGI Corporate AU USUNet income (loss)$(908,747) $(2,479,960) $(106,590) $1,677,803 Interest expense, net 353,629 353,629 — — Taxes 3,751 (10,250) 13,301 700 Depreciation and amortization 709,301 71,875 487,066 150,360 EBITDA 157,934 (2,064,706) 393,777 1,828,863 Bad debt expense 450,000 — 225,000 225,000 Stock-based compensation 107,012 104,283 1,607 1,122 Severance 35,421 2,090 18,155 15,176 Non-recurring charges - Other 953,364 935,363 18,001 — Adjusted EBITDA$1,703,731 $(1,022,970) $656,540 $2,070,161 Net income (loss) Margin(8)% NM (2)% 26%Adjusted EBITDA Margin16% NM 15% 32% _________________NM – Not meaningful Three Months Ended January 31, 2024 Consolidated AGI Corporate AU USUNet income (loss)$(3,880,437) $(4,787,637) $(380,174) $1,287,374 Interest expense, net 1,992,185 1,992,185 — — Taxes 28,531 1,008 18,522 9,001 Depreciation and amortization 916,124 79,218 695,403 141,503 EBITDA (943,597) (2,715,226) 333,751 1,437,878 Bad debt expense 450,000 — 225,000 225,000 Stock-based compensation 222,076 207,149 13,039 1,888 Impairment of right-of-use assets 105,314 — 105,314 — Non-recurring charges - Other 344,649 93,449 251,200 — Adjusted EBITDA$178,442 $(2,414,628) $928,304 $1,664,766 Net income (loss) Margin(32)% NM (6)% 22%Adjusted EBITDA Margin1% NM 15% 28% Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including the increase in marketing spend and the impact on our future cash flows, the impact of our operating and debt restructurings, and our liquidity. 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. The results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements include, without limitation, the impact from our fourth restructuring plan, the effectiveness of our future marketing, our ability to sublease our remaining leases other than our executive offices and necessary space used by AU and USU, the continued high demand for nurses for our new programs and in general, student attrition, national and local economic factors including the labor market shortages, competition from other online universities including the competitive impact from the trend of major non-profit universities using online education and state regulation if the U.S. Department of Education is eliminated or implements an enhanced deregulatory effort toward for-profit universities. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise. 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 RogersManaging DirectorHayden IR385-831-7337 Kim@HaydenIR.com GAAP Financial Statements ASPEN GROUP, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS January 31, 2025 April 30, 2024 (Unaudited) Assets Current assets: Cash and cash equivalents$818,770 $1,531,425 Restricted cash 338,002 1,088,002 Accounts receivable, net of allowance of $5,866,401 and $4,560,378, respectively 18,643,872 19,686,527 Prepaid expenses 575,763 502,751 Other current assets 657,914 1,785,621 Total current assets 21,034,321 24,594,326 Property and equipment: Computer equipment and hardware 894,251 886,152 Furniture and fixtures 1,974,271 1,974,271 Leasehold improvements 4,594,240 6,553,314 Instructional equipment 529,299 529,299 Software 9,578,277 8,784,996 17,570,338 18,728,032 Less: accumulated depreciation and amortization (11,025,412) (9,542,520)Total property and equipment, net 6,544,926 9,185,512 Goodwill 5,011,432 5,011,432 Intangible assets, net 7,900,000 7,900,000 Courseware and accreditation, net 309,946 363,975 Long-term contractual accounts receivable 18,673,614 17,533,030 Operating lease right-of-use assets, net 5,203,586 10,639,838 Deposits and other assets 667,527 718,888 Total assets$65,345,352 $75,947,001 (Continued) ASPEN GROUP, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (CONTINUED) January 31, 2025 April 30, 2024 (Unaudited) Liabilities and Stockholders’ Equity Liabilities: Current liabilities: Accounts payable$1,530,941 $2,311,360 Accrued expenses 3,183,395 2,880,478 Advances on tuition 2,385,822 2,030,501 Deferred tuition 3,436,711 4,881,546 Due to students 2,279,274 2,558,492 Current portion of long-term debt 2,000,000 2,284,264 Operating lease obligations, current portion 2,694,665 2,608,534 Other current liabilities 368,705 86,495 Total current liabilities 17,879,513 19,641,670 Long-term debt, net 5,708,861 6,776,506 Operating lease obligations, less current portion 13,156,161 14,999,687 Put warrants liabilities 993,823 1,964,593 Other long-term liabilities 327,402 287,930 Total liabilities 38,065,760 43,670,386 Commitments and contingencies Stockholders’ equity: Preferred stock, $0.001 par value; 1,000,000 shares authorized, 10,000 issued and 10,000 outstanding at both January 31, 2025 and April 30, 2024 10 10 Common stock, $0.001 par value; 85,000 shares authorized, 27,665,439 issued and 27,665,439 outstanding at January 31, 2025 25,701,603 issued and 25,701,603 outstanding at April 30, 2024 27,665 25,702 Additional paid-in capital 122,105,038 121,921,048 Accumulated deficit (94,853,121) (89,670,145)Total stockholders’ equity 27,279,592 32,276,615 Total liabilities and stockholders’ equity$65,345,352 $75,947,001 ASPEN GROUP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) Three Months Ended January 31, Nine Months Ended January 31, 2025 2024 2025 2024 (Unaudited) (Unaudited) (Unaudited) (Unaudited)Revenue$10,943,968 $12,057,847 $33,732,584 $40,526,566 Operating expenses: Cost of revenue (exclusive of depreciation and amortization shown separately below) 3,032,138 3,861,895 9,265,258 12,838,943 General and administrative 6,368,891 8,493,275 20,933,780 25,335,699 Impairments of right-of-use assets and tenant leasehold improvements — 105,314 4,937,154 105,314 Bad debt expense 450,000 450,000 1,350,000 1,350,000 Depreciation and amortization 709,301 916,124 2,324,200 2,829,426 Total operating expenses 10,560,330 13,826,608 38,810,392 42,459,382 Operating income (loss) 383,638 (1,768,761) (5,077,808) (1,932,816) Other income (expense): Interest expense (353,629) (1,992,185) (1,043,289) (3,969,386)Change in fair value of put warrant liability (935,363) (93,449) 970,769 (93,449)Other income, net 358 2,489 17,120 16,741 Total other expense, net (1,288,634) (2,083,145) (55,400) (4,046,094) Loss before income taxes (904,996) (3,851,906) (5,133,208) (5,978,910) Income tax expense 3,751 28,531 49,768 152,778 Net loss (908,747) (3,880,437) (5,182,976) (6,131,688) Dividends attributable to preferred stock (119,979) — (268,188) — Net loss available to common stockholders$(1,028,726) $(3,880,437) $(5,451,164) $(6,131,688) Net loss per share - basic and diluted available to common stockholders$(0.04) $(0.15) $(0.20) $(0.24) Weighted average number of common stock outstanding - basic and diluted 27,642,172 25,835,042 26,752,369 25,650,447 ASPEN GROUP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) Nine Months Ended January 31, 2025 2024 (Unaudited) (Unaudited)Cash flows from operating activities: Net loss$(5,182,976) $(6,131,688)Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Bad debt expense 1,350,000 1,350,000 Depreciation and amortization 2,324,200 2,829,426 Stock-based compensation 239,098 527,657 Change in fair value of put warrant liability (970,769) 93,449 Amortization of warrant-based cost 7,000 21,000 Amortization of debt issuance costs 24,533 1,209,504 Amortization of debt discounts — 308,832 Non-cash lease benefit (159,214) (618,917)Impairments of right-of-use assets and tenant leasehold improvements 4,937,154 105,314 Changes in operating assets and liabilities: Accounts receivable (1,447,929) (5,504,660)Prepaid expenses (73,012) 32,139 Other current assets 1,127,707 (2,251,844)Deposits and other assets 51,361 (363,082)Accounts payable (780,419) 1,552,755 Accrued expenses 302,917 840,445 Due to students (279,218) (55,515)Advances on tuition and deferred tuition (1,089,514) 161,461 Other current liabilities 282,210 325,778 Other long-term liabilities 39,472 37,930 Net cash provided by (used in) operating activities 702,601 (5,530,016) Cash flows from investing activities: Purchases of courseware and accreditation (42,810) (152,550)Purchases of property and equipment (801,380) (865,464)Net cash used in investing activities (844,190) (1,018,014) Cash flows from financing activities: Repayment of portion of 15% Senior Secured Debentures (1,221,066) (968,440)Payments of debt issuance costs (100,000) (195,661)Proceeds from 15% Senior Secured Debentures, net of original issuance discount and fees — 10,451,080 Repayment of 2018 Credit Facility — (5,000,000)Advance from related party — 200,000 Net cash (used in) provided by financing activities (1,321,066) 4,486,979 (Continued) ASPEN GROUP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)(Unaudited) Nine Months Ended January 31, 2025 2024 (Unaudited) (Unaudited)Net decrease in cash, cash equivalents and restricted cash$(1,462,655) $(2,061,051)Cash, cash equivalents and restricted cash at beginning of period 2,619,427 5,724,467 Cash, cash equivalents and restricted cash at end of period$1,156,772 $3,663,416 Supplemental disclosure of cash flow information: Cash paid for interest$1,043,289 $2,423,307 Cash paid for income taxes$49,768 $89,441 Supplemental disclosure of non-cash investing and financing activities: Accrued dividends$119,979 $— Relative fair value of warrants issued as part of the 15% Senior Secured Debentures$— $154,000 Reclassification of put warrants as part of the 15% Senior Secured Debentures from equity to liabilities$— $500,825 Issuance of put warrants as part of the 15% Senior Secured Debentures$— $1,964,593 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: January 31, 2025 2024 (Unaudited) (Unaudited)Cash and cash equivalents$818,770 $563,416 Restricted cash 338,002 3,100,000 Total cash, cash equivalents and restricted cash$1,156,772 $3,663,416

Aspen Group Delivers Positive Operating Income in Third Quarter Fiscal 2025

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