Greenwood Hall Announces First Quarter Fiscal Year 2015 Operating Results

Achieves year-over-year revenue growth of 27%

SANTA ANA, Calif.--()--Greenwood Hall Inc. (OTCBB: ELRN), an emerging cloud-based education management solutions provider of end-to-end services that dynamically support the student lifecycle management for higher education, today announced financial results for the first quarter of its fiscal year 2015 ended August 31, 2015. The company’s first quarter of fiscal year 2015 ended November 30, 2014.

First Quarter 2015 Highlights

  • Reported year-over-year revenue growth of 27%
  • Continued to expand client roster to include Tennessee Temple University, Embry Riddle Aeronautical University, and Florence-Darlington Technical College; extended key client engagements with multiple clients including the University of Mississippi and Seminole State College
  • Partnered with Klass Apps to deploy My 24/7 Campus, an exclusive customized mobile app, that will enhance the communications and operational success of educational institutions
  • Announced the acquisition of a next-generation, cloud-based learning management platform that will allow Greenwood Hall to integrate student lifecycle management and learning in new and powerful ways
  • Strengthened Board of Directors and leadership team with the addition of Jonathan Newcomb, former Simon & Schuster Chairman and CEO, and Matt Toledo, Los Angeles Business Journal Publisher and CEO, as independent directors; and Tina J. Gentile as interim Chief Financial Officer

CEO Commentary

“Fiscal year 2015 is off to a strong start with annual revenue growth of 27% as a result of continued expansion of our client base and execution of our growth strategy,” said Greenwood Hall Chief Executive Officer and Co-founder John Hall, Ed.D. “It’s clear that more universities and colleges are seeing the value of our cloud-based, technology-enabled solutions that address some of their most pressing challenges. Our comprehensive solutions, which combine strategy, people, and technology, help our school partners address enrollment challenges, offer programs on-line, and improve student retention and outcomes. Over the past year, we have secured 8 new clients, including Florence-Darlington Technical College, Shorelight Education, St. Gregory’s University, and St. Mary’s University of Minnesota. We are well positioned with a strong pipeline of new business opportunities and expect to continue to add new clients in the coming year.”

“In an effort to enhance our service offerings, we recently announced two important developments. First, we signed an exclusive agreement with Klass Apps Inc., a unique mobile app developer, to deliver My 24/7 Campus, a customized app that maximizes student success. Second, we entered into an agreement with Gambassa, Inc. to acquire its next-generation, cloud-based learning management platform for use in the education marketplace. When fully integrated, their platform will enable us to provide more fully integrated and real-time student lifecycle management support and to accelerate our expansion into the K-12 education marketplace.”

“In the last quarter, we also strengthened our leadership team and Board of Directors. We appointed Tina J. Gentile as our interim Chief Financial Officer and added Johnathan Newcomb, former Simon & Schuster Chairman and Chief Executive Officer, and Matt Toledo, Los Angeles Business Journal publisher and Chief Executive Officer to our Board, increasing our independent directors from two to four. Jon and Matt have extensive leadership, education sector and corporate governance experience and we are delighted to partner with them to help guide Greenwood Hall to the next level.”

“Earlier this week, we announced the launch of the Safe Campus Community Support Center, which enables students to anonymously report and discuss concerns relating to campus violence, hazing, discrimination, sexual assault, bullying and other unethical behaviors. This new solution helps colleges and universities create a more positive learning environment by proactively addressing campus safety and furthering our overall mission of improving student outcomes,” Hall concluded.

First Quarter 2015 Financial Summary

Revenue for the first quarter of fiscal year 2015 increased 27% to $2.7 million from $2.1 million in the year-ago period. This increase was primarily due to increased business development efforts and growing marketplace interest in our solutions.

Direct cost of services for the first quarter of fiscal year 2015 totaled $1.6 million, compared to $0.9 million for the year ago period. This 77% increase reflects an increased number of client contracts but was primarily due to a change in allocation of costs.

Personnel costs for the first quarter of fiscal 2015 were $0.9 million, compared to $1.5 million for the year ago period. The decrease was primarily due to our restructuring initiative that occurred in calendar year 2013 and the first half of calendar year 2014.

Selling, general and administrative expenses decreased 38% for the first quarter of fiscal year 2015, to $0.8 million from $1.2 million in the prior year. The decrease was primarily due a more streamlined management and administrative structure following a restructuring that was completed during the first half of calendar year 2014.

Loss from operations was $0.6 million for the first quarter of fiscal year 2015, compared to a loss from operations of $1.6 million for the year ago quarter. This significant reduction in loss from operations was due to scale and operating efficiencies due to a combination of the revenue growth and the ongoing restructuring initiatives, as well as approximately $75,000 of one-time expenses in the first quarter of the fiscal year associated with bank debt restructuring and other transaction related expenditures.

Interest expense for the first quarter of fiscal year 2015 was $109,528, compared to $89,328 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.

Net loss attributable to common stockholders was $0.6 million in the first quarter of 2015, compared with a net loss of $1.6 million for the same period last year.

Liquidity and Capital Resources

At November 30, 2014, Greenwood Hall had cash and cash equivalents totaling $44.8 thousand and a $3.0 million revolving credit line, of which $1.5 million was utilized at November 30, 2014. Subsequent to quarter end, the Company amended its revolving line of credit and term loan with Opus Bank, resulting in improvements in the financial covenants. The Company is currently in compliance with all of the amended financial covenants of the credit facility.

In September 2014, the Company sold 1,000,000 units at a price of $1.00 per unit, which is comprised of one share of common stock and one warrant to purchase common stock at an exercise price of $1.30 per share, resulting in gross proceeds of $1,000,000. In December 2014, the Company issued $500,000 in three (3) year convertible promissory notes, bearing interest at 12% per year, resulting in gross proceeds of $500,000.

Outlook

Based on the increased number of served clients and our ongoing pipeline of new business opportunities, management expects FY2015 revenues to increase by 20% to 25% from 2014 levels, with the majority of revenue coming from the education sector rather than our legacy non-profit business. This assumes that we will increase our total number of clients to 40-45 up from 27 clients at December 31, 2014. We also expect to report positive income from operations in the fourth quarter of fiscal year 2015.

About Greenwood Hall

Greenwood Hall is an emerging cloud-based education management solutions provider that delivers end-to-end services for the entire student lifecycle, including offerings that increase student enrollment, improve student experiences, and help schools maximize operating efficiencies. 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. Headquartered in Santa Ana, California, Greenwood Hall has facilities in Phoenix, Arizona, College Station, Texas and Shanghai, China. The company 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
NOVEMBER 30, 2014 AND AUGUST 31, 2014
 
ASSETS            
(Unaudited) (Audited)
NOV 2014 AUG 2014
CURRENT ASSETS
Cash and cash equivalents $ 44,799 $ 367,286
Accounts receivable, net 599,261 1,039,065
Prepaid expenses and other current assets 100,878 305,691
Current assets to be disposed of   36,860     36,860  
 
TOTAL CURRENT ASSETS   781,798     1,748,902  
 
PROPERTY AND EQUIPMENT, net   181,744     211,525  
 
OTHER ASSETS
Deposits and other assets   65,812     57,659  
 
TOTAL OTHER ASSETS   65,812     57,659  
 
TOTAL ASSETS $ 1,029,354   $ 2,018,086  
 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 
CURRENT LIABILITIES
Accounts payable $ 628,646 $ 835,423
Accrued expenses 304,541 284,362
Accrued payroll and related expenses 427,933 411,280
Deferred revenue 108,603 1,102,500
Accrued interest 20,923 35,773
Due to shareholders / officer 112,586 155,476
Notes payable, net of discount of $65,235 and $71,758, respectively 1,395,609 2,053,134
Line of credit 1,500,000 1,500,000
Derivative liability 118,363 118,363
Current liabilities to be disposed of   335,857     335,857  
 
TOTAL CURRENT LIABILITIES 4,953,061 6,832,168
 
Notes payable, non-current   1,757,576     1,297,988  
 
TOTAL LIABILITIES   6,710,637     8,130,156  
 
 
COMMITMENTS AND CONTINGENCIES
 
STOCKHOLDERS' EQUITY (DEFICIT)

Common stock, $0.001 par value; 75,000,000 shares authorized, 39,536,450 and 38,536,450 shares issued and outstanding, respectively

39,536 38,536
 
Additional paid-in capital 4,148,711 3,149,711
Accumulated deficit   (9,869,530 )   (9,300,317 )
 
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (5,681,283 ) (6,112,070 )
 
Noncontrolling interest   -     -  
 
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)   (5,681,283 )   (6,112,070 )
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 1,029,354   $ 2,018,086  
 
 
GREENWOOD HALL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2014 AND 2013
(UNAUDITED)
 
      2014       2013
 
REVENUES $ 2,664,968 $ 2,103,272
 
OPERATING EXPENSES
Direct cost of services 1,578,471 891,803
Personnel 858,960 1,510,740
Selling, general and administrative   769,449     1,234,588  
 
TOTAL OPERATING EXPENSES   3,206,880     3,637,131  
 
INCOME (LOSS) FROM OPERATIONS   (541,912 )   (1,533,859 )
 
OTHER INCOME (EXPENSE)
Interest expense (109,528 ) (89,328 )
Change in value of derivatives - -
Miscellaneous income (expense), net   82,227     (2,677 )
 
TOTAL OTHER INCOME (EXPENSE)   (27,301 )   (92,005 )
 

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE PROVISION FOR (BENEFIT FROM) INCOME TAXES

(569,213 ) (1,625,864 )
 
Provision for (benefit from) income taxes   -     -  
 
INCOME (LOSS) FROM CONTINUING OPERATIONS   (569,213 )   (1,625,864 )
 
 
NET INCOME (LOSS) (569,213 ) (1,625,864 )
 
Net income (loss) attributable to noncontrolling interests   -     -  
 
Net income (loss) attributable to PCS Link, Inc. common stockholders $ (569,213 ) $ (1,625,864 )
 
Earnings per share - basic and diluted

Income (loss) from continuing operations attributable to Greenwood Hall, Inc. common stockholders

$ (0.01 ) $ (0.06 )
 
Net income (loss) attributable to Greenwood Hall, Inc. common stockholders $ (0.01 ) $ (0.06 )
 
Weighted average common shares - basic and diluted   39,536,450     25,051,591  
 
 
GREENWOOD HALL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2014 AND 2013
(UNAUDITED)
 
      2014       2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (569,213 ) $ (1,625,864 )
Net (income) loss from discontinued operations   -     -  
Net income (loss) from continuing operations (569,213 ) (1,625,864 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities of continuing operations:

 

Depreciation and amortization 15,840 -
Amortization of note discount 6,523
Changes in operating assets and liabilities:
Accounts receivable 439,804 389,555
Prepaid expenses and other current assets 196,660 75,806
Accounts payable (204,546 ) 486,546
Accrued expenses 20,177 49,144
Accrued payroll and related 16,653 -
Deferred revenue (993,897 ) 50,000
Accrued interest (14,848 ) 80,042
Advances from officers, net   (42,890 )   141,301  
Net cash provided by (used in) operating activities of continuing operations (1,129,737 ) (353,470 )
Net cash provided by (used in) operating activities of discontinued operations   -     -  
 
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES   (1,129,737 )   (353,470 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable - 1,216,275
Payments on notes payable (192,750 ) (1,299,934 )
Bank overdraft - 81,861
Repurchase of common stock - (13,000 )
Proceeds from the sale of units   1,000,000     -  
Net cash provided by (used in) financing activities of continuing operations 807,250 (14,798 )
Net cash provided by (used in) financing activities of discontinued operations   -     -  
 
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES   807,250     (14,798 )
 
NET INCREASE (DECREASE) IN CASH FROM CONTINUING OPERATIONS (322,487 ) (368,268 )
NET INCREASE (DECREASE) IN CASH FROM DISCONTINUED OPERATIONS   -     -  
NET INCREASE (DECREASE) IN CASH (322,487 ) (368,268 )
 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   367,286     368,268  
 
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 44,799   $ -  
 

Supplemental disclosures:

Interest paid in cash $ 117,853   $ 39,502  
Income taxes paid in cash $ -   $ -  
 

Contacts

Investor Contact
Financial Profiles, Inc.
David Bigelow - dbigelow@finprofiles.com
Beth Sackovich – bsackovich@finprofiles.com
Tel: 310-478-2700
or
Media Contact
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George Medici - gmedici@pondel.com
Evan Pondel - epondel@pondel.com
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Contacts

Investor Contact
Financial Profiles, Inc.
David Bigelow - dbigelow@finprofiles.com
Beth Sackovich – bsackovich@finprofiles.com
Tel: 310-478-2700
or
Media Contact
PondelWilkinson Inc.
George Medici - gmedici@pondel.com
Evan Pondel - epondel@pondel.com
Tel: 310-279-5980