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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 001-38175
/all-sec-filings/content/0001487198-20-000004/aspu-20200131_g1.jpg
ASPEN GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware27-1933597
State or Other Jurisdiction of Incorporation or OrganizationI.R.S. Employer Identification No.
276 Fifth Avenue, Suite 505, New York, New York
10001
Address of Principal Executive OfficesZip Code
(480) 407-7365
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001ASPU
The Nasdaq Stock Market
(The Nasdaq Global Market)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes þ    No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨
Accelerated filer þ
Non-accelerated filer ¨
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes     No þ 
ClassOutstanding as of March 6, 2020
Common Stock, $0.001 par value per share
21,740,741 shares



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Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
January 31, 2020April 30, 2019
(Unaudited)
Assets
Current assets:
Cash$20,512,808  $9,519,352  
Restricted cash456,211  448,400  
Accounts receivable, net of allowance of $1,759,824 and $1,247,031, respectively
14,128,185  10,656,470  
Prepaid expenses977,937  410,745  
Other receivables1,750  2,145  
Other current assets173,090    
Total current assets36,249,981  21,037,112  
Property and equipment:
Call center equipment305,766  193,774  
Computer and office equipment396,898  327,621  
Furniture and fixtures1,550,520  1,381,271  
Software5,725,500  4,314,198  
7,978,684  6,216,864  
Less accumulated depreciation and amortization(2,662,273) (1,825,524) 
Total property and equipment, net5,316,411  4,391,340  
Goodwill5,011,432  5,011,432  
Intangible assets, net7,900,000  8,541,667  
Courseware, net121,235  161,930  
Accounts receivable, secured - net of allowance of $625,963 and $625,963, respectively
45,329  45,329  
Long term contractual accounts receivable6,067,234  3,085,243  
Debt issue cost, net211,999  300,824  
Right of use lease asset7,693,268  —  
Deposits and other assets349,535  629,626  
Total assets$68,966,424  $43,204,503  
(Continued)
The accompanying condensed notes are an integral part of these unaudited consolidated financial statements
1

Table of Contents
ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
January 31, 2020April 30, 2019
(Unaudited)
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$791,138  $1,699,221  
Accrued expenses1,077,985  651,418  
Deferred revenue5,694,743  2,456,865  
Refunds due students2,311,745  1,174,501  
Deferred rent, current portion  47,436  
Convertible note payable50,000  50,000  
Operating lease obligations, current portion1,649,934  —  
Other current liabilities584,659  270,786  
Total current liabilities12,160,204  6,350,227  
Convertible notes, net of discount of $1,692,309 at January 31, 2020
8,307,691    
Senior secured loan payable, net of discount of $353,328 at April 30, 2019
  9,646,672  
Operating lease obligations6,043,334  —  
Deferred rent775,807  746,176  
Total liabilities27,287,036  16,743,075  
Commitments and contingencies – see Note 10
Stockholders’ equity:
Preferred stock, $0.001 par value; 1,000,000 shares authorized,
0 issued and outstanding at January 31, 2020 and April 30, 2019
    
Common stock, $0.001 par value; 40,000,000 shares authorized
21,727,075 issued and 21,710,408 outstanding at January 31, 2020
18,665,551 issued and 18,648,884 outstanding at April 30, 2019
21,727  18,666  
Additional paid-in capital88,772,128  68,562,727  
Treasury stock (16,667 shares)
(70,000) (70,000) 
Accumulated deficit(47,044,467) (42,049,965) 
Total stockholders’ equity41,679,388  26,461,428  
Total liabilities and stockholders’ equity$68,966,424  $43,204,503  

The accompanying notes are an integral part of these unaudited consolidated financial statements.
2

Table of Contents
ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended
January 31,
Nine Months Ended
January 31,
2020201920202019
Revenues$12,537,940  $8,494,627  $34,981,887  $23,811,275  
Operating expenses
Cost of revenues (exclusive of depreciation and amortization shown separately below)5,163,007  4,076,980  13,704,121  11,664,887  
General and administrative8,627,588  6,284,041  23,264,447  18,318,061  
Depreciation and amortization475,393  555,292  1,710,192  1,577,464  
Total operating expenses14,265,988  10,916,313  38,678,760  31,560,412  
Operating loss(1,728,048) (2,421,686) (3,696,873) (7,749,137) 
Other income (expense)
Other income34,117  142,180  189,486  240,074  
Interest expense(571,958) (76,434) (1,424,607) (159,232) 
Total other income/(expense), net(537,841) 65,746  (1,235,121) 80,842  
Loss before income taxes(2,265,889) (2,355,940) (4,931,994) (7,668,295) 
Income tax expense15,163    62,508    
Net loss$(2,281,052) $(2,355,940) $(4,994,502) $(7,668,295) 
Net loss per share allocable to common stockholders - basic $(0.12) $(0.13) $(0.26) $(0.42) 
Weighted average number of common stock outstanding - basic 19,420,987  18,398,095  19,046,558  18,350,360  


The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.
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ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Three Months Ended January 31, 2020 and 2019
(Unaudited)


Common StockAdditional
Paid-In
Capital
Treasury
Stock
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance at October 31, 201919,142,316  $19,142  $69,781,363  $(70,000) $(44,763,415) $24,967,090  
Stock-based compensation—  —  737,820  —  —  737,820  
Common stock issued for cashless stock options exercised8,352  9  (9) —  —    
Common stock issued for stock options exercised for cash121,407  121  530,547  —  —  530,668  
Amortization of warrant based cost—  —  9,125  —  —  9,125  
Amortization of restricted stock issued for services—  —  24,398  —  —  24,398  
Restricted Stock Issued for Services, subject to vesting40,000  40  (40) —  —    
Common stock issued for equity raise, net of underwriter costs of $1,222,371
2,415,000  2,415  16,042,464  —  —  16,044,879  
Other offering costs—  —  (51,282) —  —  (51,282) 
Beneficial conversion feature on convertible debt—  —  1,692,309  —  —  1,692,309  
Common stock short swing reclamation—  —  5,433  —  —  5,433  
Net loss—  —  —  —  (2,281,052) (2,281,052) 
Balance at January 31, 202021,727,075  $21,727  $88,772,128  $(70,000) $(47,044,467) $41,679,388  
Common StockAdditional
Paid-In
Capital
Treasury
Stock
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance at October 31, 201818,391,092  $18,391  $67,102,509  $(70,000) $(38,084,103) $28,966,797  
Stock-based compensation—  —  350,838  —  —  350,838  
Common stock issued for cashless stock options exercised55,871  56  (56) —  —    
Common stock issued for stock options exercised for cash22,985  23  50,018  —  —  50,041  
Common stock issued for cashless warrant exercise35,921  36  (36) —  —    
Relative fair value of warrants issued with debt—  —  255,071  —  —  255,071  
Net loss—  —  —  —  (2,355,940) (2,355,940) 
Balance at January 31, 201918,505,869  $18,506  $67,758,344  $(70,000) $(40,440,043) $27,266,807  


The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.



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ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)
Nine Months Ended January 31, 2020 and 2019
(Unaudited)

Common StockAdditional
Paid-In
Capital
Treasury
Stock
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance at April 30, 201918,665,551  $18,666  $68,562,727  $(70,000) $(42,049,965) $26,461,428  
Stock-based compensation—  —  1,627,304  —  —  1,627,304  
Common stock issued for cashless stock options exercised190,559  191  (191) —  —    
Common stock issued for stock options exercised for cash234,233  234  768,147  —  —  768,381  
Common stock issued for cashless warrant exercise76,929  77  (77) —  —    
Amortization of warrant based cost—  —  27,690  —  —  27,690  
Amortization of restricted stock issued for services—  —  97,748  —  —  97,748  
Restricted Stock Issued for Services, subject to vesting144,803  144  (144) —  —    
Common stock issued for equity raise, net of underwriter costs of $1,222,371
2,415,000  2,415  16,042,464  —  —  16,044,879  
Other offerings costs—  —  (51,282) —  —  (51,282) 
Beneficial conversion feature on convertible debt—  —  1,692,309  —  —  1,692,309  
Common stock short swing reclamation—  —  5,433  —  —  5,433  
Net loss—  —  —  —  (4,994,502) (4,994,502) 
Balance at January 31, 202021,727,075  $21,727  $88,772,128  $(70,000) $(47,044,467) $41,679,388  
Common StockAdditional
Paid-In
Capital
Treasury
Stock
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance at April 30, 201818,333,521  $18,334  $66,557,005  $(70,000) $(32,771,748) $33,733,591  
Stock-based compensation—  —  866,129  —  —  866,129  
Common stock issued for cashless stock options exercised86,635  87  (87) —  —    
Common stock issued for stock options exercised for cash49,792  49  110,094  —  —  110,143  
Common stock issued for cashless warrant exercise35,921  36  (36) —  —    
Relative fair value of warrants issued with debt—  —  255,071  —  —  255,071  
Purchase of treasury stock, net of broker fees—  —  —  (7,370,000) —  (7,370,000) 
Re-sale of treasury stock, net of broker fees—  —  —  7,370,000  —  7,370,000  
Fees associated with equity raise—  —  (29,832) —  —  (29,832) 
Net loss—  —  —  —  (7,668,295) (7,668,295) 
Balance at January 31, 201918,505,869  $18,506  $67,758,344  $(70,000) $(40,440,043) $27,266,807  

The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.
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ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
January 31,
 20202019
Cash flows from operating activities:
Net loss$(4,994,502) $(7,668,295) 
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense651,205  480,066  
Depreciation and amortization1,710,192  1,577,464  
Stock-based compensation1,782,472  866,129  
Warrants issued for services27,690    
Loss on asset disposition3,918    
Amortization of debt discounts182,218    
Amortization of debt issue costs88,825  24,657  
Amortization of prepaid shares for services  8,285  
Non-cash payments to investor relations firm97,748    
Changes in operating assets and liabilities:
Accounts receivable(7,104,911) (4,209,576) 
Prepaid expenses(567,192) (152,094) 
Other receivables395  105,334  
Other current assets(173,090)   
Other assets280,091  (22,846) 
Accounts payable(908,083) (517,981) 
Accrued expenses426,567  (88,048) 
Deferred rent(17,805) 638,713  
Refunds due students1,137,244  554,219  
Deferred revenue3,237,878  885,091  
Other liabilities313,875  88,332  
Net cash used in operating activities(3,825,265) (7,430,550) 
Cash flows from investing activities:
Purchases of courseware and accreditation(11,001) (89,573) 
Purchases of property and equipment(1,929,878) (1,873,326) 
Net cash used in investing activities(1,940,879) (1,962,899) 
Cash flows from financing activities:
    Proceeds from sale of common stock net of underwriter costs16,044,879    
Disbursements for equity offering costs(51,282) (29,832) 
    Common stock short swing reclamation5,433    
Proceeds of stock options exercised and warrants exercised768,381  110,143  
Repayment of convertible note payable  (1,000,000) 
Offering costs paid on debt financing  (100,000) 
Purchase of treasury stock, net of broker fees  (7,370,000) 
Re-sale of treasury stock, net of broker fees  7,370,000  
Net cash provided by (used in) financing activities16,767,411  (1,019,689) 
(Continued)
The accompanying condensed notes are an integral part of these unaudited consolidated financial statements

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ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED
(Unaudited)
Nine Months Ended
January 31,
20202019
Net increase (decrease) in cash and cash equivalents$11,001,267  $(10,413,138) 
Cash, restricted cash, and cash equivalents at beginning of period9,967,752  14,803,065  
Cash and cash equivalents at end of period$20,969,019  $4,389,927  
Supplemental disclosure cash flow information
Cash paid for interest$979,792  $163,139  
Cash paid for income taxes$110,307  $  
Supplemental disclosure of non-cash investing and financing activities
Common stock issued for services$178,447  $  
Right-of-use lease asset offset against operating lease obligations$7,693,268  $—  
Beneficial conversion feature on convertible debt$1,692,309  $  
Warrants issued as part of revolving credit facility$  $255,071  

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:
Nine Months Ended
January 31,
20202019
Cash$20,512,808  $4,197,235  
Restricted cash456,211  192,692  
Total cash and restricted cash$20,969,019  $4,389,927  


The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.

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ASPEN GROUP, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2020
(Unaudited)

Note 1. Nature of Operations and Liquidity
Overview
˿Ƶ. (together with its subsidiaries, the “Company,” “Aspen,” or “AGI”) is a holding company, which has three subsidiaries. They are Aspen University Inc. (“Aspen University”) organized in 1987, Aspen Nursing, Inc. (“ANI”) (a subsidiary of Aspen University) formed in October 2018 and United States University, Inc. (“USU”) formed in May 2017. USU was the vehicle we used to acquire United States University on December 1, 2017. (See Note 4). When we refer to USU in this Report, we refer to either the online university which has operated under the name United States University or our subsidiary which operates this university, as the context implies.
AGI 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. Because we believe higher education should be a catalyst to our students’ long-term economic success, we exert financial prudence by offering affordable tuition that is one of the greatest values in higher education.  AGI’s primary focus relative to future growth is to target the high growth nursing profession, currently 84% of all students across both universities are degree-seeking nursing students.
Since 1993, Aspen University has been nationally accredited by the Distance Education and Accrediting Council (“DEAC”), a national accrediting agency recognized by the U.S. Department of Education (the “DOE”). In February 2019, the DEAC informed Aspen University that it had renewed its accreditation for five years through January 2024.
Since 2009, USU has been regionally accredited by WASC Senior College and University Commission. (“WSCUC”).
Both universities are qualified to participate under the Higher Education Act of 1965, as amended (HEA) and the Federal student financial assistance programs (Title IV, HEA programs). USU has a provisional certification resulting from the ownership change of control in connection with the acquisition by AGI on December 1, 2017.
Basis of Presentation
Interim Financial Statements
The interim consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) necessary to present fairly our results of operations for the three and nine months ended January 31, 2020 and 2019, our cash flows for the nine months ended January 31, 2020 and 2019, and our financial position as of January 31, 2020 have been made. The results of operations for such interim periods are not necessarily indicative of the operating results to be expected for the full year.
Certain information and disclosures normally included in the notes to the annual consolidated financial statements have been condensed or omitted from these interim consolidated financial statements. Accordingly, these interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended April 30, 2019 as filed with the SEC on July 9, 2019. The April 30, 2019 balance sheet is derived from those statements.
Liquidity
At January 31, 2020, the Company had a cash balance of $20,512,808 with an additional $456,211 in restricted cash.
On November 5, 2018 the Company entered into a three year, $5,000,000 senior revolving credit facility. There is currently no outstanding balance under that facility. (See Note 6)
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ASPEN GROUP, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2020
(Unaudited)

In March 2019, the Company entered into two loan agreements for a principal amount of $5 million each and received total proceeds of $10 million.  In connection with the loan agreements, the Company issued 18 month senior secured promissory notes, with the right to extend the term of the loans for an additional 12 months subject to paying a 1% one-time extension fee. On January 23, 2020, the Term Loans were exchanged for convertible notes maturing January 22, 2023. (See Note 6)
On January 22, 2020, the Company closed on an underwritten offering under which the net proceeds were approximately $16 million and the condition precedent to the closing of the refinancing was satisfied. (See Note 6)
During the nine months ended January 31, 2020 the Company provided net cash of $11,001,267, which included using $3,825,265 in operating activities.
Note 2. Significant Accounting Policies
Principles of Consolidation
The unaudited consolidated financial statements include the accounts of AGI and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the unaudited consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Actual results could differ from those estimates. Significant estimates in the accompanying unaudited consolidated financial statements include the allowance for doubtful accounts and other receivables, the valuation of collateral on certain receivables, estimates of the fair value of assets acquired and liabilities assumed in a business combination, amortization periods and valuation of courseware, intangibles and software development costs, estimates of the valuation of initial right of use ("ROU") assets and corresponding lease liabilities, valuation of beneficial conversion features in convertible debt, valuation of goodwill, valuation of loss contingencies, valuation of stock-based compensation and the valuation allowance on deferred tax assets.
Cash, Cash Equivalents, and Restricted Cash
For the purposes of the unaudited consolidated statements of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents at January 31, 2020 and April 30, 2019.  The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits of $250,000 per financial institution. The Company has not experienced any losses in such accounts from inception through January 31, 2020.
As of January 31, 2020 and April 30, 2019, the Company maintained deposits totaling $22,318,390 and $9,359,208, respectively, held in two separate institutions.
Restricted cash was $456,211 as of January 31, 2020 and consisted of $123,132 which is collateral for a letter of credit issued by the bank and required under the USU facility operating lease. Also, included was $72,022 and an additional $261,057, which was collateral for a letter of credit issued by the bank and related to USU’s receipt of Title IV funds as required by DOE in connection with the change of control of USU. Restricted cash as of April 30, 2019 was $448,400. See Note 11. Subsequent Events for information on the release of a portion of USU's restricted cash.
Goodwill and Intangibles
Goodwill currently represents the excess of the purchase price of USU over the fair market value of assets acquired and liabilities assumed from Educacion Significativa, LLC. Goodwill has an indefinite life and is not amortized. Goodwill is tested annually for impairment.
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ASPEN GROUP, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2020
(Unaudited)

Intangible assets represent both indefinite lived and definite lived assets. Accreditation, regulatory approvals, trade name and trademarks are deemed to have indefinite useful lives and accordingly are not amortized but are tested annually for impairment. Student relationships and curriculums are deemed to have definite lives and are amortized accordingly.
Fair Value Measurements
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy:
Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets;
Level 2—Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and
Level 3—Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities.
The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.
Accounts Receivable and Allowance for Doubtful Accounts Receivable
All students are required to select both a primary and secondary payment option with respect to amounts due to Aspen for tuition, fees and other expenses. The monthly payment plan represents approximately 65% of the payments that are made by students, making it the most common payment type. In instances where a student selects financial aid as the primary payment option, he or she often selects personal cash as the secondary option. If a student who has selected financial aid as his or her primary payment option withdraws prior to the end of a course but after the date that Aspen’s institutional refund period has expired, the student will have incurred the obligation to pay the full cost of the course. If the withdrawal occurs before the date at which the student has earned 100% of his or her financial aid, Aspen may have to return all or a portion of the Title IV funds to the DOE and the student will owe Aspen all amounts incurred that are in excess of the amount of financial aid that the student earned, and that Aspen is entitled to retain. In this case, Aspen must collect the receivable using the student’s second payment option.
For accounts receivable from students, Aspen records an allowance for doubtful accounts for estimated losses resulting from the inability, failure or refusal of its students to make required payments, which includes the recovery of financial aid funds advanced to a student for amounts in excess of the student’s cost of tuition and related fees. Aspen determines the adequacy of its allowance for doubtful accounts using an allowance method based on an analysis of its historical bad debt experience, current economic trends, and the aging of the accounts receivable and each student’s status. Aspen estimates the amounts to increase the allowance based upon the risk presented by the age of the receivables and student status. Aspen writes off accounts receivable balances at the time the balances are deemed uncollectible. Aspen continues to reflect accounts receivable with an offsetting allowance as long as management believes there is a reasonable possibility of collection.
For accounts receivable from primary payors other than students, Aspen estimates its allowance for doubtful accounts by evaluating specific accounts where information indicates the customers may have an inability to meet financial obligations, such as bankruptcy proceedings and receivable amounts outstanding for an extended period beyond contractual terms. In these cases, Aspen uses assumptions and judgment, based on the best available facts and circumstances, to record a specific allowance for those customers against amounts due to reduce the receivable to the amount expected to be collected. These
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