SANTA MONICA, Calif., July 15, 2015 (GLOBE NEWSWIRE) -- Greenwood Hall Inc. (OTCQB:ELRN), a provider of technology-enabled student lifecycle management solutions that help colleges and universities increase revenue and improve student engagement and outcomes, today announced financial results for the fiscal third quarter ended May 31, 2015.
Third Quarter 2015 Highlights
- Added three (3) new strategic accounts on top of the five (5) new accounts added in Q1 and Q2
- Continued to expand Southeast presence, including new partnerships with Spartanburg Community College, Greenville Technical College, and Technical College of Lowcountry in South Carolina as well as a reengagement program with Jacksonville State University in Alabama
- Received strategic investment from institutional investor, Lincoln Park Capital
- Expanded business development resources including the appointment of Bill Bradfield, a 40 year industry veteran, as SVP of Higher Education Partnerships
- Partnered with Comic Relief Inc. to coordinate and manage donations in excess of $21 million for the inaugural Red Nose Day USA
CEO Commentary
"The third quarter continued to be strategically important for us as we began to see the revenue impact from new account activity since the beginning of the fiscal year," said Dr. John Hall, CEO of Greenwood Hall. "Our results reflect the efforts we took in the third quarter to focus on revenue opportunities that are both profitable and related to our core business and that position Greenwood Hall for sustained long term growth.
"To that end, we continued to add education partners to our roster in the Southeast. To date we have five schools in South Carolina, four schools in Alabama, and key clients in Florida, North Carolina and Texas.
"We also added Bill Bradfield to our team as SVP of Higher Education Partnerships to further build out the Company's business development initiatives. Bill brings with him extensive industry experience that includes his tenure as Founder and CEO of Perceptis, Inc., a leading independent provider of student support services to higher education, prior to its sale to Blackboard in 2014. Bill is already making a significant impact in developing new relationships and playing a key role in strategic planning and execution.
"In April, we secured our second institutional investor, Lincoln Park Capital Fund, a Chicago-based investment group and asset management firm. We are excited about this investment and our partnership with Lincoln Park Capital Fund, which speaks to the opportunity of our business model and strategic plan going forward.
"Last quarter we significantly downsized our California operations and at the same time strategically expanded our Phoenix, Arizona operations. As mentioned last quarter, these changes impacted our general and administrative expenses into the third quarter of fiscal 2015; however, we continue to believe they will reduce our cost structure over the long term.
"We continue to build off of solid growth margins. We expect to see additional revenue for the fiscal year through organic growth and we are excited about the steps we've taken to position Greenwood Hall for sustained growth. From an acquisitive growth perspective, we continue looking at synergistic targets as well as education technology companies that are younger but have strong technology platforms where we can integrate and sell additional services that are highly relevant to our clients. Only 10% of the education marketplace is served and Greenwood Hall has relevant solutions to address these challenges," Hall concluded.
Third Quarter 2015 Financial Summary
Revenue for the third quarter of fiscal year 2015 increased 32% to $2.2 million from $1.6 million in the year ago period, primarily due to signing new business and new engagements from existing clients during the third quarter of fiscal year 2015 compared to the three month period a year ago.
Direct cost of services for the third quarter of fiscal year 2015 totaled $1.2 million, compared to $0.9 million for the year ago period. This 33% increase was primarily due to the increased revenues for the same time period as well as duplicative costs associated with the Company's consolidation of its California operations and expansion in Phoenix, Arizona.
General and administrative expenses decreased $347,062, or 49%, during the third quarter of fiscal year 2015, primarily due to a reduction in the number of employees, specifically management personnel, and implementing operational efficiencies.
Other expense increased 152% for the third quarter of fiscal year 2015, to $2.4 million from $0.9 million from the year ago period, primarily due to non-cash changes in the value of derivative liabilities and related to a warrant exchange transaction.
Loss from operations was $1.7 million for the third quarter of fiscal year 2015, compared to a loss from operations of $0.9 million for the year ago period, primarily due to non-cash equity related transactions.
Interest expense for the third quarter of fiscal year 2015 was $198,477, compared to $562,667 in the same period last year, as a result of the Company's debt service as part of its recapitalization that took place during calendar year 2014.
Nine Months 2015 Financial Summary
Revenue for the first nine months of fiscal year 2015 increased 11% to $6.3 million from $5.7 million in the year ago period, primarily due to new business and new engagements from existing clients obtained in fiscal year 2015.
Direct cost of services for the nine months of fiscal year 2015 totaled $3.7 million compared to $2.8 million for the year ago period. This 34% increase was primarily due to the increases in revenue and payment of severance of job duties of personnel related to direct cost of services versus overhead in 2014 as well as greater overall operating efficiencies.
General and administrative expenses decreased $137,602, or 5%, during the first nine months of fiscal year 2015, primarily due to a reduction in the number of employees.
Other expense increased 17% for the first nine months of fiscal year 2015, to $3.9 million from $3.3 million from the year ago period, primarily due to non-cash changes in the value of derivative liabilities and related to a warrant exchange transaction.
Loss from operations for the first nine months of fiscal year 2015 was $4.0 million, an increase of $0.8 million or 11% from the year ago period, primarily due to our efforts to improve operational efficiencies.
Interest expense for the first nine months of fiscal year 2015 was $510,275, compared to $935,649 in the same period last year, as a result of the Company's debt service as part of its recapitalization that took place during calendar year 2014.
Liquidity and Capital Resources
At May 31, 2015, Greenwood Hall had cash and cash equivalents totaling $0 and a $3.0 million revolving credit line, of which $2.0 million was utilized at May 31, 2015.
Outlook
Based on the increased number of clients and our ongoing pipeline of new business opportunities, management expects FY2015 revenues to increase from 2014 levels, with the majority of revenue coming from the education sector rather than our legacy business providing donor lifecycle management services to major non-profit organizations. We also expect continued progress towards positive income from operations in the fourth quarter of fiscal year 2015.
About Greenwood Hall
Greenwood Hall is a provider of technology-enabled student lifecycle management solutions that help colleges and universities increase revenue and improve student engagement and outcomes. Since 2006, Greenwood Hall has developed customized turnkey solutions that combine strategy, people, proven processes and robust technology, to help schools effectively and efficiently improve student outcomes, as well as increase revenues and expand into new marketing channels, such as online learning. Greenwood Hall has served more than 40 education clients and over 70 degree programs.
For more information, visit http://www.greenwoodhall.com, follow us on Twitter @GreenwoodHall and Facebook at http://www.facebook.com/GreenwoodandHall.
Forward Looking Statements
Certain statements contained in this document, including, but not limited to, predictions and projections that may be considered forward-looking statements under securities law, involve a number of risks and uncertainties that could cause actual results to differ materially, including, but not limited to, lack of consumer acceptance and demand for the Company's products, insufficient working capital to expand the Company's technology and engage in product marketing, intense competition from larger and more well-established companies, and other economic, competitive and technological factors involving the Company's operations, markets, services, products and prices, and other factors, including those set forth in the Risk Factors section of the Company's annual report on Form 10-K for the period ended August 31, 2014 filed with the Securities and Exchange Commission ("SEC").
| GREENWOOD HALL, INC. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| MAY 31, 2015 AND AUGUST 31, 2014 | ||
| ASSETS | ||
| (Unaudited) | (Audited) | |
| MAY 2015 | AUG 2014 | |
| CURRENT ASSETS | ||
| Cash and cash equivalents | $ -- | $ 367,286 |
| Accounts receivable, net | 727,140 | 1,039,065 |
| Prepaid expenses and other current assets | 91,636 | 305,691 |
| Current assets to be disposed of | 36,860 | 36,860 |
| TOTAL CURRENT ASSETS | 855,636 | 1,748,902 |
| PROPERTY AND EQUIPMENT, net | 149,717 | 211,525 |
| OTHER ASSETS | ||
| Deposits and other assets | 40,812 | 57,659 |
| TOTAL OTHER ASSETS | 40,812 | 57,659 |
| TOTAL ASSETS | $ 1,046,165 | $ 2,018,086 |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||
| CURRENT LIABILITIES | ||
| Accounts payable | $ 957,736 | $ 835,423 |
| Accrued expenses | 401,955 | 284,362 |
| Accrued payroll and related expenses | 440,129 | 411,280 |
| Book Overdraft | 173,948 | -- |
| Deferred revenue | -- | 1,102,500 |
| Accrued interest | 101,630 | 35,773 |
| Due to shareholders / officer | 169,238 | 155,476 |
| Notes payable, net of discount of $689,002 and $71,758, respectively | 3,088,753 | 2,053,134 |
| Line of credit | 2,000,000 | 1,500,000 |
| Derivative liability | 709,060 | 118,363 |
| Current liabilities to be disposed of | 335,857 | 335,857 |
| TOTAL CURRENT LIABILITIES | 8,378,306 | 6,832,168 |
| Notes payable, non-current | 515,000 | 1,297,988 |
| TOTAL LIABILITIES | 8,893,306 | 8,130,156 |
| COMMITMENTS AND CONTINGENCIES | ||
| STOCKHOLDERS' EQUITY (DEFICIT) | ||
| Common stock, $0.001 par value; 937,500,000 shares authorized, | ||
| 41,503,980 and 38,536,450 shares issued and outstanding, respectively | 41,974 | 38,536 |
| Additional paid-in capital | 6,182,259 | 3,149,711 |
| Accumulated deficit | (14,071,374) | (9,300,317) |
| TOTAL GREENWOOD HALL, INC. STOCKHOLDERS' EQUITY (DEFICIT) | (7,847,141) | (6,112,070) |
| Noncontrolling interest | -- | -- |
| TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | (7,847,141) | (6,112,070) |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 1,046,165 | $ 2,018,086 |
|
See the unaudited notes to consolidated financial statements. |
||
| GREENWOOD HALL, INC. AND SUBSIDIARIES | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| FOR THE THREE MONTHS AND NINE MONTHS ENDED MAY 31, 2015 AND 2014 | ||||
| (UNAUDITED) | ||||
| Three Months Ended | Nine Months Ended | |||
| May 31, 2015 | May 31, 2014 | May 31, 2015 | May 31, 2014 | |
| REVENUES | $ 2,170,894 | $ 1,644,090 | $ 6,316,282 | $ 5,692,214 |
| OPERATING EXPENSES | ||||
| Direct cost of services | 1,166,113 | 877,990 | 3,724,551 | 2,771,977 |
| Personnel | 1,339,866 | 942,940 | 2,364,335 | 3,346,772 |
| Selling, general and administrative | 364,863 | 711,925 | 2,706,176 | 2,843,778 |
| Stock Based Compensation | 1,031,226 | -- | 1,565,723 | -- |
| TOTAL OPERATING EXPENSES | 3,902,068 | 2,532,855 | 10,360,785 | 8,962,527 |
| INCOME (LOSS) FROM OPERATIONS | (1,731,174) | (888,765) | (4,044,503) | (3,270,313) |
| OTHER INCOME (EXPENSE) | ||||
| Interest expense | (198,477) | (562,667) | (510,275) | (935,649) |
| Change in value of derivatives | (57,956) | -- | (194,826) | -- |
| Miscellaneous income (expense), net | 10,518 | (50,495) | (21,343) | (104,309) |
| TOTAL OTHER INCOME (EXPENSE) | (245,915) | (613,162) | (726,444) | (1,039,958) |
| INCOME (LOSS) FROM BEFORE | (1,977,089) | (1,501,927) | (4,770,947) | (4,310,271) |
| PROVISION FOR INCOME TAXES | (111) | (523) | (111) | (523) |
| NET LOSS | (1,977,200) | (1,502,450) | (4,771,058) | (4,310,794) |
| Net income (loss) attributable to noncontrolling interests | -- | -- | -- | -- |
| Net income (loss) attributable to Greenwood Hall, Inc. | $ (1,977,200) | $ (1,502,450) | $ (4,771,058) | $ (4,310,794) |
| Earnings per share - basic and diluted | ||||
| Basic earnings per share attributable to Greenwood Hall, Inc. | $ (0.05) | $ (0.06) | $ (0.12) | $ (0.17) |
| Weighted average common shares - basic and diluted | 41,221,068 | 25,051,591 | 40,048,299 | 25,051,591 |
|
See the unaudited notes to consolidated financial statements. |
||||
| GREENWOOD HALL, INC. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| FOR THE NINE MONTHS ENDED MAY 31, 2015 AND 2014 (UNAUDITED) | ||
| Nine Months Ended | ||
| May 31, 2015 | May 31, 2014 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net income (loss) from continuing operations | $ (4,771,058) | $ (4,310,790) |
| Adjustments to reconcile net income (loss) to net cash provided by | ||
| (used in) operating activities of continuing operations: | ||
| Stock-based compensation | 1,565,723 | -- |
| Depreciation and amortization | 47,866 | 94,624 |
| Amortization of note discount | 98,945 | 410,125 |
| Change in value of derivative liabilities | 194,826 | -- |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | 311,925 | 348,796 |
| Prepaid expenses and other current assets | 230,903 | 154,680 |
| Accounts payable | 124,544 | 308,778 |
| Accrued expenses | 117,592 | 429,555 |
| Accrued payroll and related | 28,849 | 11,555 |
| Deferred revenue | (1,102,500) | 82,780 |
| Accrued interest and related | 65,859 | 133,433 |
| Advances from officers, net | 60,882 | 86,782 |
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | (3,025,644) | (2,249,682) |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchase of property and equipment | -- | (21,772) |
| NET CASH USED IN INVESTING ACTIVITIES | -- | (21,772) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Book overdraft | 173,948 | (208,436) |
| Proceeds from issuance of notes payable | 1,701,500 | 5,661,354 |
| Payments on notes payable | (455,535) | (3,510,732) |
| Repurchase of common stock | -- | (39,000) |
| Proceeds from the sale of stock | 1,238,445 | -- |
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 2,658,358 | 1,903,186 |
| NET INCREASE (DECREASE) IN CASH | (367,286) | (368,268) |
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 367,286 | 368,268 |
| CASH AND CASH EQUIVALENTS, END OF YEAR | $ -- | $ -- |
| Supplemental disclosures: | ||
| Interest paid in cash | $ 297,009 | $ 935,649 |
| Income taxes paid in cash | $ -- | $ -- |
| See the unaudited notes to consolidated financial statements. | ||