˿Ƶ

false--04-30Q2202000014871980.08333P6M.333300014871982019-05-012019-10-31xbrli:shares00014871982019-12-06iso4217:USD00014871982019-10-3100014871982019-04-300001487198aspu:IntangibleAssetsOtherThanCoursewareAndAccreditationMember2019-10-310001487198aspu:IntangibleAssetsOtherThanCoursewareAndAccreditationMember2019-04-300001487198aspu:CoursewareAndAccreditationMember2019-10-310001487198aspu:CoursewareAndAccreditationMember2019-04-30iso4217:USDxbrli:shares00014871982019-08-012019-10-3100014871982018-08-012018-10-3100014871982018-05-012018-10-310001487198us-gaap:CommonStockMember2019-07-310001487198us-gaap:AdditionalPaidInCapitalMember2019-07-310001487198us-gaap:TreasuryStockMember2019-07-310001487198us-gaap:RetainedEarningsMember2019-07-3100014871982019-07-310001487198us-gaap:AdditionalPaidInCapitalMember2019-08-012019-10-310001487198us-gaap:CommonStockMember2019-08-012019-10-310001487198us-gaap:RetainedEarningsMember2019-08-012019-10-310001487198us-gaap:CommonStockMember2019-10-310001487198us-gaap:AdditionalPaidInCapitalMember2019-10-310001487198us-gaap:TreasuryStockMember2019-10-310001487198us-gaap:RetainedEarningsMember2019-10-310001487198us-gaap:CommonStockMember2018-07-310001487198us-gaap:AdditionalPaidInCapitalMember2018-07-310001487198us-gaap:TreasuryStockMember2018-07-310001487198us-gaap:RetainedEarningsMember2018-07-3100014871982018-07-310001487198us-gaap:AdditionalPaidInCapitalMember2018-08-012018-10-310001487198us-gaap:CommonStockMember2018-08-012018-10-310001487198us-gaap:RetainedEarningsMember2018-08-012018-10-310001487198us-gaap:CommonStockMember2018-10-310001487198us-gaap:AdditionalPaidInCapitalMember2018-10-310001487198us-gaap:TreasuryStockMember2018-10-310001487198us-gaap:RetainedEarningsMember2018-10-3100014871982018-10-310001487198us-gaap:CommonStockMember2019-04-300001487198us-gaap:AdditionalPaidInCapitalMember2019-04-300001487198us-gaap:TreasuryStockMember2019-04-300001487198us-gaap:RetainedEarningsMember2019-04-300001487198us-gaap:AdditionalPaidInCapitalMember2019-05-012019-10-310001487198us-gaap:CommonStockMember2019-05-012019-10-310001487198us-gaap:RetainedEarningsMember2019-05-012019-10-310001487198us-gaap:CommonStockMember2018-04-300001487198us-gaap:AdditionalPaidInCapitalMember2018-04-300001487198us-gaap:TreasuryStockMember2018-04-300001487198us-gaap:RetainedEarningsMember2018-04-3000014871982018-04-300001487198us-gaap:AdditionalPaidInCapitalMember2018-05-012018-10-310001487198us-gaap:CommonStockMember2018-05-012018-10-310001487198us-gaap:TreasuryStockMember2018-05-012018-10-310001487198us-gaap:RetainedEarningsMember2018-05-012018-10-31aspu:subsidiaryxbrli:pure0001487198us-gaap:RevolvingCreditFacilityMember2018-11-05aspu:agreement00014871982019-03-012019-03-310001487198aspu:LoanAgreementTwoMember2019-03-060001487198aspu:LoanAgreementOneMember2019-03-060001487198aspu:LeonAndTobyCoopermanFamilyFoundationMemberaspu:LoanAgreementsMember2019-03-012019-03-310001487198us-gaap:LetterOfCreditMember2019-10-310001487198aspu:CallCenterMember2019-05-012019-10-310001487198aspu:ComputerAndOfficeEquipmentMember2019-05-012019-10-310001487198us-gaap:FurnitureAndFixturesMember2019-05-012019-10-310001487198aspu:LibraryMember2019-05-012019-10-310001487198us-gaap:ComputerSoftwareIntangibleAssetMember2019-05-012019-10-3100014871982019-05-010001487198us-gaap:WarrantMember2019-05-012019-10-310001487198us-gaap:WarrantMember2018-05-012018-10-310001487198aspu:UnvestedRestrictedStockMember2019-05-012019-10-310001487198aspu:UnvestedRestrictedStockMember2018-05-012018-10-310001487198us-gaap:ConvertibleDebtMember2019-10-310001487198us-gaap:ConvertibleDebtMember2018-10-310001487198us-gaap:ConvertibleDebtMember2019-05-012019-10-310001487198us-gaap:ConvertibleDebtMember2018-05-012018-10-31aspu:segment0001487198aspu:CallCenterMember2019-10-310001487198aspu:CallCenterMember2019-04-300001487198aspu:ComputerAndOfficeEquipmentMember2019-10-310001487198aspu:ComputerAndOfficeEquipmentMember2019-04-300001487198us-gaap:FurnitureAndFixturesMember2019-10-310001487198us-gaap:FurnitureAndFixturesMember2019-04-300001487198us-gaap:ComputerSoftwareIntangibleAssetMember2019-10-310001487198us-gaap:ComputerSoftwareIntangibleAssetMember2019-04-300001487198aspu:EducacionSignificativaLLCMember2019-05-012019-10-310001487198aspu:EducacionSignificativaLLCMember2018-05-012019-04-300001487198aspu:EducacionSignificativaLLCMember2019-10-310001487198aspu:EducacionSignificativaLLCMember2019-04-300001487198aspu:CoursewareMember2019-05-012019-10-310001487198aspu:CoursewareMember2018-05-012019-04-300001487198aspu:CoursewareMember2019-10-310001487198aspu:CoursewareMember2019-04-300001487198aspu:AccreditationMember2019-10-310001487198aspu:AccreditationMember2019-04-300001487198aspu:AccreditationMember2019-05-012019-10-310001487198aspu:AccreditationMember2018-05-012019-04-300001487198aspu:CoursewareMember2019-08-012019-10-310001487198aspu:CoursewareMember2018-08-012018-10-310001487198aspu:CoursewareMember2018-05-012018-10-310001487198aspu:ConvertiblePromissoryNoteDatedFebruaryTwentyNineTwoThousandTwelveMember2012-02-290001487198aspu:TwoYearPromissoryNotesMember2012-02-290001487198aspu:HemgMember2019-02-280001487198us-gaap:RevolvingCreditFacilityMemberaspu:CreditFacilityAgreementMember2018-11-050001487198us-gaap:RevolvingCreditFacilityMemberaspu:CreditFacilityAgreementMember2018-11-012018-11-050001487198aspu:LeonAndTobyCoopermanFamilyFoundationMemberaspu:LoanAgreementsMember2019-03-012019-03-060001487198aspu:LeonAndTobyCoopermanFamilyFoundationMemberaspu:LoanAgreementsMember2019-03-060001487198aspu:LoanAgreementsMember2019-03-012019-03-060001487198aspu:WarrantsMemberaspu:LoanAgreementsMember2019-03-012019-03-0600014871982012-02-292012-02-290001487198srt:MaximumMemberus-gaap:CommonStockMember2019-06-280001487198us-gaap:CommonStockMembersrt:MinimumMember2019-06-280001487198srt:MaximumMemberus-gaap:PreferredStockMember2019-06-280001487198us-gaap:PreferredStockMembersrt:MinimumMember2019-06-280001487198us-gaap:CommonStockMember2019-05-012019-07-3100014871982019-05-012019-07-310001487198aspu:WarrantsMember2019-10-310001487198srt:DirectorMember2019-05-012019-07-310001487198us-gaap:RestrictedStockMemberaspu:AndrewKaplanMember2019-06-182019-06-180001487198us-gaap:RestrictedStockMemberaspu:TwoFormerDirectorsMember2019-06-182019-06-180001487198us-gaap:InvestorMember2019-05-012019-10-310001487198us-gaap:RestrictedStockMemberus-gaap:InvestorMember2019-10-310001487198us-gaap:RestrictedStockMembersrt:ChiefFinancialOfficerMember2018-09-012018-09-300001487198us-gaap:RestrictedStockMembersrt:ChiefFinancialOfficerMember2018-09-300001487198us-gaap:RestrictedStockMember2018-12-240001487198us-gaap:RestrictedStockMembersrt:DirectorMember2018-12-012018-12-240001487198us-gaap:RestrictedStockMember2018-12-242018-12-240001487198us-gaap:WarrantMember2019-04-300001487198us-gaap:WarrantMember2019-04-302019-04-300001487198us-gaap:WarrantMember2019-05-012019-10-310001487198us-gaap:WarrantMember2019-10-310001487198us-gaap:WarrantMember2019-10-312019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNineMemberus-gaap:WarrantMember2019-05-012019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNineMemberus-gaap:WarrantMember2019-10-310001487198us-gaap:WarrantMemberaspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeFiveEightFiveMember2019-05-012019-10-310001487198us-gaap:WarrantMemberaspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeFiveEightFiveMember2019-10-310001487198us-gaap:WarrantMemberaspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeSixZeroMember2019-05-012019-10-310001487198us-gaap:WarrantMemberaspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeSixZeroMember2019-10-310001487198us-gaap:WarrantMemberaspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeElevenMember2019-05-012019-10-310001487198us-gaap:WarrantMemberaspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeElevenMember2019-10-310001487198us-gaap:InvestorMemberaspu:WarrantsMember2019-08-172019-08-170001487198us-gaap:InvestorMember2019-08-172019-08-17aspu:investor00014871982019-08-200001487198aspu:Investor1Memberaspu:WarrantsMember2019-08-202019-08-200001487198aspu:Investor2Memberaspu:WarrantsMember2019-08-202019-08-200001487198aspu:Investor1Member2019-08-202019-08-200001487198aspu:Investor2Member2019-08-202019-08-200001487198aspu:WarrantsMemberaspu:FormerDirectorMember2019-06-030001487198aspu:FormerDirectorMember2019-06-030001487198srt:ChiefExecutiveOfficerMember2019-06-070001487198aspu:EquityIncentivePlanMember2012-03-130001487198aspu:EquityIncentivePlanMember2019-10-310001487198aspu:EquityIncentivePlanMember2018-12-130001487198us-gaap:SubsequentEventMemberaspu:EquityIncentivePlanMember2019-12-300001487198us-gaap:ScenarioPlanMemberus-gaap:SubsequentEventMemberaspu:EquityIncentivePlanMember2019-12-300001487198aspu:StockOptionGrantsToEmployeesAndDirectorsMember2019-05-012019-10-3100014871982018-05-012019-04-300001487198aspu:StockOptionGrantsToEmployeesAndDirectorsMember2018-05-012019-04-300001487198aspu:StockOptionGrantsToEmployeesAndDirectorsMember2019-04-300001487198aspu:StockOptionGrantsToEmployeesAndDirectorsMember2019-04-302019-04-300001487198aspu:StockOptionGrantsToEmployeesAndDirectorsMember2019-10-310001487198aspu:StockOptionGrantsToEmployeesAndDirectorsMember2019-10-312019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOneMember2019-08-012019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOneMember2019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOneMember2019-05-012019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeTwoMember2019-08-012019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeTwoMember2019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeTwoMember2019-05-012019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeThreeMember2019-08-012019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeThreeMember2019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeThreeMember2019-05-012019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeFourMember2019-08-012019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeFourMember2019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeFourMember2019-05-012019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeFiveMember2019-08-012019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeFiveMember2019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeFiveMember2019-05-012019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeSixMember2019-08-012019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeSixMember2019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeSixMember2019-05-012019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeSevenMember2019-08-012019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeSevenMember2019-10-310001487198aspu:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeSevenMember2019-05-012019-10-310001487198us-gaap:EmployeeStockOptionMember2019-08-012019-08-010001487198us-gaap:EmployeeStockOptionMember2019-08-010001487198aspu:NonQualifiedStockOptionsToCertainFormerDirectorsMember2019-05-132019-05-130001487198aspu:NonQualifiedStockOptionsToCertainFormerDirectorsMember2019-05-130001487198srt:ExecutiveOfficerMember2019-08-012019-10-310001487198aspu:TuitionRevenueMember2019-08-012019-10-310001487198aspu:TuitionRevenueMember2018-08-012018-10-310001487198aspu:TuitionRevenueMember2019-05-012019-10-310001487198aspu:TuitionRevenueMember2018-05-012018-10-310001487198aspu:CourseFeeRevenueMember2019-08-012019-10-310001487198aspu:CourseFeeRevenueMember2018-08-012018-10-310001487198aspu:CourseFeeRevenueMember2019-05-012019-10-310001487198aspu:CourseFeeRevenueMember2018-05-012018-10-310001487198aspu:BookFeeRevenueMember2019-08-012019-10-310001487198aspu:BookFeeRevenueMember2018-08-012018-10-310001487198aspu:BookFeeRevenueMember2019-05-012019-10-310001487198aspu:BookFeeRevenueMember2018-05-012018-10-310001487198aspu:ExamFeeRevenueMember2019-08-012019-10-310001487198aspu:ExamFeeRevenueMember2018-08-012018-10-310001487198aspu:ExamFeeRevenueMember2019-05-012019-10-310001487198aspu:ExamFeeRevenueMember2018-05-012018-10-310001487198aspu:ServiceFeeRevenueMember2019-08-012019-10-310001487198aspu:ServiceFeeRevenueMember2018-08-012018-10-310001487198aspu:ServiceFeeRevenueMember2019-05-012019-10-310001487198aspu:ServiceFeeRevenueMember2018-05-012018-10-310001487198us-gaap:NonUsMemberus-gaap:SalesRevenueNetMember2019-05-012019-10-310001487198us-gaap:NonUsMemberus-gaap:SalesRevenueNetMember2018-05-012018-10-310001487198us-gaap:SubsequentEventMemberus-gaap:RestrictedStockUnitsRSUMemberaspu:FrankJCotroneoMember2019-12-022019-12-020001487198aspu:RobertAlessiMemberus-gaap:SubsequentEventMemberus-gaap:RestrictedStockUnitsRSUMember2019-12-012019-12-010001487198us-gaap:SubsequentEventMemberus-gaap:RestrictedStockUnitsRSUMemberaspu:FrankJCotroneoMember2019-12-012019-12-010001487198us-gaap:SubsequentEventMemberaspu:JosephSeverlyMember2019-12-152019-12-150001487198us-gaap:SubsequentEventMemberaspu:JosephSeverlyMember2019-12-150001487198us-gaap:RestrictedStockMemberus-gaap:SubsequentEventMemberaspu:JosephSeverlyMember2019-12-150001487198us-gaap:CommonStockMemberus-gaap:SubsequentEventMemberaspu:JosephSeverlyMember2019-12-150001487198us-gaap:SubsequentEventMember2019-11-012019-11-300001487198us-gaap:SubsequentEventMemberus-gaap:RestrictedStockUnitsRSUMember2019-11-012019-11-30
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 October 31, 2019
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
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
(646) 448-5144
(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 December 6, 2019
Common Stock, $0.001 par value per share
19,131,899 shares



Table of Contents
INDEX
 
 



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

ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 31, 2019April 30, 2019
(Unaudited)
Assets
Current assets:
Cash$6,472,417  $9,519,352  
Restricted cash454,288  448,400  
Accounts receivable, net of allowance of $1,892,318 and $1,247,031, respectively
12,813,517  10,656,470  
Prepaid expenses788,929  410,745  
Other receivables312  2,145  
Other current assets172,507    
Total current assets20,701,970  21,037,112  
Property and equipment:
Call center equipment270,010  193,774  
Computer and office equipment345,241  327,621  
Furniture and fixtures1,484,930  1,381,271  
Software5,178,944  4,314,198  
7,279,125  6,216,864  
Less accumulated depreciation and amortization(2,296,365) (1,825,524) 
Total property and equipment, net4,982,760  4,391,340  
Goodwill5,011,432  5,011,432  
Intangible assets, net7,991,667  8,541,667  
Courseware, net135,446  161,930  
Accounts receivable, secured - net of allowance of $625,963 and $625,963, respectively
45,329  45,329  
Long term contractual accounts receivable5,490,733  3,085,243  
Debt issue cost, net250,569  300,824  
Right of use lease asset7,953,283  —  
Deposits and other assets324,950  629,626  
Total assets$52,888,139  $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)
October 31, 2019April 30, 2019
(Unaudited)
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$1,187,748  $1,699,221  
Accrued expenses739,661  651,418  
Deferred revenue5,509,861  2,456,865  
Refunds due students1,902,211  1,174,501  
Deferred rent, current portion  47,436  
Convertible note payable50,000  50,000  
    Senior secured loan payable, net of discount of $218,030 at October 31, 2019
9,781,970    
Operating lease obligations, current portion1,509,429  —  
Other current liabilities28,605  270,786  
Total current liabilities20,709,485  6,350,227  
Senior secured loan payable, net of discount of $353,328 at April 30, 2019
  9,646,672  
Operating lease obligations6,443,854  —  
Deferred rent767,710  746,176  
Total liabilities27,921,049  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 October 31, 2019 and April 30, 2019
    
Common stock, $0.001 par value; 40,000,000 shares authorized
19,142,316 issued and 19,125,649 outstanding at October 31, 2019
18,665,551 issued and 18,648,884 outstanding at April 30, 2019
19,142  18,666  
Additional paid-in capital69,781,363  68,562,727  
Treasury stock (16,667 shares)
(70,000) (70,000) 
Accumulated deficit(44,763,415) (42,049,965) 
Total stockholders’ equity24,967,090  26,461,428  
Total liabilities and stockholders’ equity$52,888,139  $43,204,503  

The accompanying condensed 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
October 31,
Six Months Ended
October 31,
20192018
2019
2018
Revenues$12,085,965  $8,095,344  $22,443,947  $15,316,649  
Operating expenses
Cost of revenues (exclusive of depreciation and amortization shown separately below)4,188,056  3,835,515  8,541,114  7,587,907  
General and administrative7,601,459  6,210,411  14,638,609  12,034,543  
Depreciation and amortization628,225  524,067  1,234,799  1,022,172  
Total operating expenses12,417,740  10,569,993  24,414,522  20,644,622  
Operating loss(331,775) (2,474,649) (1,970,575) (5,327,973) 
Other income (expense)
Other income132,567  41,493  155,369  97,894  
Interest expense(428,960) (41,922) (852,649) (82,275) 
Total other income/(expense), net(296,393) (429) (697,280) 15,619  
Loss before income taxes(628,168) (2,475,078) (2,667,855) (5,312,354) 
Income tax expense10,000    45,595    
Net loss$(638,168) $(2,475,078) $(2,713,450) $(5,312,354) 
Net loss per share allocable to common stockholders - basic and diluted$(0.03) $(0.13) $(0.14) $(0.29) 
Weighted average number of common stock outstanding - basic and diluted18,985,371  18,335,413  18,859,344  18,326,621  

The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.
3

Table of Contents
ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Three Months Ended October 31, 2019 and 2018
(Unaudited)


Common StockAdditional
Paid-In
Capital
Treasury
Stock
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance at July 31, 201918,913,527  $18,914  $69,146,123  $(70,000) $(44,125,247) $24,969,790  
Stock-based compensation—  —  391,067  —  —  391,067  
Common stock issued for cashless stock options exercised80,313  80  (80) —  —    
Common stock issued for stock options exercised for cash90,950  90  192,432  —  —  192,522  
Common stock issued for cashless warrant exercise57,526  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, 201919,142,316  $19,142  $69,781,363  $(70,000) $(44,763,415) $24,967,090  
Common StockAdditional
Paid-In
Capital
Treasury
Stock
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance at July 31, 201818,341,440  $18,341  $66,744,959  $(70,000) $(35,609,024) $31,084,276  
Stock-based compensation—  —  305,315  —  —  305,315  
Common stock issued for cashless stock options exercised25,534  26  (26) —  —    
Common stock issued for stock options exercised for cash24,118  24  52,261  —  —  52,285  
Net loss—  —  —  —  (2,475,078) (2,475,078) 
Balance at October 31, 201818,391,092  $18,391  $67,102,509  $(70,000) $(38,084,102) $28,966,798  




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






4

Table of Contents
ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)
Six Months Ended October 31, 2019 and 2018
(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—  —  889,484  —  —  889,484  
Common stock issued for cashless stock options exercised182,207  182  (182) —  —    
Common stock issued for stock options exercised for cash112,826  113  237,600  —  —  237,713  
Common stock issued for cashless warrant exercise76,929  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 vesting104,803  104  (104) —  —    
Net loss—  —  —  —  (2,713,450) (2,713,450) 
Balance at October 31, 201919,142,316  $19,142  $69,781,363  $(70,000) $(44,763,415) $24,967,090  
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—  —  515,291  —  —  515,291  
Common stock issued for cashless stock options exercised30,764  31  (31) —  —    
Common stock issued for stock options exercised for cash26,807  26  60,076  —  —  60,102  
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—  —  —  —  (5,312,354) (5,312,354) 
Balance at October 31, 201818,391,092  $18,391  $67,102,509  $(70,000) $(38,084,102) $28,966,798  

The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.
5

Table of Contents
ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
October 31,
 20192018
Cash flows from operating activities:
Net loss$(2,713,450) $(5,312,354) 
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense648,658  292,889  
Depreciation and amortization1,234,799  1,022,172  
Stock-based compensation889,484  515,291  
Warrants issued for services18,565    
Loss on asset disposition3,918    
Amortization of debt discounts135,298    
Amortization of debt issue costs50,255    
Amortization of prepaid shares for services  8,285  
Non-cash payments to investor relations firm73,350    
Changes in operating assets and liabilities:
Accounts receivable(5,211,195) (4,028,143) 
Prepaid expenses(378,184) (238,951) 
Other receivables1,833  179,196  
Other current assets(172,507)   
Other assets304,676  (20,846) 
Accounts payable(511,473) (601,225) 
Accrued expenses88,243  72,737  
Deferred rent(25,902) 453,880  
Refunds due students727,710  366,098  
Deferred revenue3,052,996  1,631,170  
Other liabilities(242,181) 172,378  
Net cash used in operating activities(2,025,107) (5,487,423) 
Cash flows from investing activities:
Purchases of courseware and accreditation(9,575) (85,821) 
Purchases of property and equipment(1,244,078) (1,345,777) 
Net cash used in investing activities(1,253,653) (1,431,598) 
Cash flows from financing activities:
Disbursements for equity offering costs  (29,832) 
Proceeds of stock options exercised and warrants exercised237,713  60,102  
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 financing activities237,713  30,270  
Net (decrease) in cash and cash equivalents(3,041,047) (6,888,751) 
Cash, restricted cash, and cash equivalents at beginning of period9,967,752  14,803,065  
Cash and cash equivalents at end of period$6,926,705  $7,914,314  
Supplemental disclosure cash flow information
Cash paid for interest$652,121  $  
Cash paid for income taxes$49,595  $  
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$7,469,167  $—  
The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.
6

Table of Contents
ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
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:
Six Months Ended
October 31,
20192018
Cash$6,472,417  $7,723,808  
Restricted cash454,288  190,506  
Total cash and restricted cash$6,926,705  $7,914,314  
The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.

7

Table of Contents
ASPEN GROUP, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 2019
(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 83% 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 six months ended October 31, 2019 and 2018, our cash flows for the six months ended October 31, 2019 and 2018, and our financial position as of October 31, 2019 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 October 31, 2019, the Company had a cash balance of $6,472,417 with an additional $454,288 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)
8

Table of Contents
ASPEN GROUP, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 2019
(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. (See Note 6)
During the six months ended October 31, 2019 the Company used net cash of $3,041,047, which included using $2,025,107 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 October 31, 2019 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 October 31, 2019.
As of October 31, 2019 and April 30, 2019, the Company maintained deposits totaling $6,352,050 and $9,359,208, respectively, held in two separate institutions.
Restricted cash was $454,288 as of October 31, 2019 and consisted of $122,262 which is collateral for a letter of credit issued by the bank and required under the USU facility operating lease. Also, included was $71,932 and an additional $260,094, 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.
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.
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
9

Table of Contents
ASPEN GROUP, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 2019
(Unaudited)

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 66% 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 specific allowances are re-evaluated and adjusted as additional information is received. The amounts calculated are analyzed to determine the total amount of the allowance. Aspen may also record a general allowance as necessary.
Direct write-offs are taken in the period when Aspen has exhausted its efforts to collect overdue and unpaid receivables or otherwise evaluate other circumstances that indicate that Aspen should abandon such efforts. (See Note 8)
10

Table of Contents
ASPEN GROUP, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 2019
(Unaudited)

When a student signs up for the monthly payment plan, there is a contractual amount that the Company can expect to earn over the life of the student’s program. This contractual amount cannot be recorded as an accounts receivable because, the student does have the option to stop attending. As a student takes a class, revenue is earned over the class term. Some students accelerate their program, taking two or more classes every eight week period, which increases the student’s accounts receivable balance. If any portion of that balance will be paid in a period greater than 12 months, that portion is reflected as long-term accounts receivable. At October 31, 2019 and April 30, 2019, those balances were $5,490,733 and $3,085,243, respectively. The Company has determined that the long term accounts receivable do not constitute a significant financing component as the list price, cash selling price and promised consideration are equal.  Further, the interest free financing portion of the monthly payment plans are not considered significant to the contract.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets per the following table.
CategoryUseful Life
Call center equipment5 years
Computer and office equipment5 years
Furniture and fixtures7 years
Library (online)3 years
Software5 years
Costs incurred to develop internal-use software during the preliminary project stage are expensed as incurred. Internal-use software development costs are capitalized during the application development stage, which is after: (i) the preliminary project stage is completed; and (ii) management authorizes and commits to funding the project and it is probable the project will be completed and used to perform the function intended. Capitalization ceases at the point the software project is substantially complete and ready for its intended use, and after all substantial testing is completed. Upgrades and enhancements are capitalized if it is probable that those expenditures will result in additional functionality. Depreciation is provided for on a straight-line basis over the expected useful life of five years of the internal-use software development costs and related upgrades and enhancements. When existing software is replaced with new software, the unamortized costs of the old software are expensed when the new software is ready for its intended use.
Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful lives of the leasehold improvements.
Upon the retirement or disposition of property and equipment, the related cost and accumulated depreciation are removed and a gain or loss is recorded in the consolidated statements of operations. Repairs and maintenance costs are expensed in the period incurred.
Courseware and Accreditation
The Company records the costs of courseware and accreditation in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350 “Intangibles - Goodwill and Other”.
Generally, costs of courseware creation and enhancement are capitalized. Accreditation renewal or extension costs related to intangible assets are capitalized as incurred. Courseware is stated at cost less accumulated amortization. Amortization is provided for on a straight-line basis over the expected useful life of five years.
Long-Lived Assets
The Company assesses potential impairment to its long-lived assets when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include, but are not limited to: significant changes in performance relative to expected operating results, significant
11

Table of Contents
ASPEN GROUP, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 2019
(Unaudited)

changes in the use of the assets, significant negative industry or economic trends, a significant decline in the Company’s stock price for a sustained period of time, and changes in the Company’s business strategy. An impairment loss is recorded when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Any required impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds fair value and is recorded as a reduction in the carrying value of the related asset and an expense to operating results.
Refunds Due Students
The Company receives Title IV funds from the Department of Education to cover tuition and living expenses. After deducting tuition and fees, the Company sends checks for the remaining balances to the students.
Leases
The Company enters into various lease agreements in conducting its business. At the inception of each lease, the Company evaluates the lease agreement to determine whether the lease is an operating or capital lease. Leases may contain initial periods of free rent and/or periodic escalations. When such items are included in a lease agreement, the Company records rent expense on a straight-line basis over the initial term of a lease. The difference between the rent payment and the straight-line rent expense is recorded as additional amortization. The Company expenses any additional payments under its operating leases for taxes, insurance or other operating expenses as incurred.
The Company implemented ASU 2016-2 as of May 1, 2019.  There were no material changes to our unaudited consolidated financial statements other than additional assets and off-setting liabilities.
In February 2016, the Financial Accounting Standards Board, of FASB, issued Accounting Standards Update, or ASU, No. 2016-2, Leases (Topic 842).  This standard requires entities to recognize most operating leases on their balance sheets as right-of-use assets with a corresponding lease liability, along with disclosing certain key information about leasing arrangements. The Company adopted the standard effective May 1, 2019 using the cumulative effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented.  The Company adopted the following practical expedients and elected the following accounting policies related to this standard:
Carry forward of historical lease classification;
Short-term lease accounting policy election allowing lessees to not recognize right-of-use assets and lease liabilities for leases with a term of 12 months or less; and
Not separate lease and non-lease components for office space and campus leases.
The adoption of this standard resulted in the recognition of an initial operating lease right-of-use assets (“ROU’s”) and corresponding lease liabilities of approximately $8.8 million, on the unaudited Consolidated Balance Sheet as of May 1, 2019. There was no impact to the Company’s net income or liquidity as a result of the adoption of this ASU. Additionally, the standard did not materially impact the Company's unaudited consolidated statements of cash flows.
Disclosures related to the amount, timing, and uncertainty of cash flows arising from leases are included in Note 9.
Treasury Stock
Purchases and sales of treasury stock are accounted for using the cost method. Under this method, shares acquired are recorded at the acquisition price directly to the treasury stock account. Upon sale, the treasury stock account is reduced by the original acquisition price of the shares and any difference is recorded in equity. This method does not allow the company to recognize a gain or loss to income from the purchase and sale of treasury stock.
Revenue Recognition and Deferred Revenue
On May 1, 2018, the Company adopted Accounting Standards Codification 606 (ASC 606). ASC 606 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to
12

Table of Contents
ASPEN GROUP, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 2019
(Unaudited)

which the entity expects to be entitled in exchange for those goods or services. This ASC also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer purchase orders, including significant judgments. Our adoption of this ASC, resulted in no change to our results of operations or our balance sheet.