澳门6合开彩开奖

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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 October 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/0001487198-20-000020/aspu-20201031_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 ¨
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 10, 2020
Common Stock, $0.001 par value per share
24,422,118 shares



Table of Contents
TABLE OF CONTENTS
Page Number
 



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

ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 31, 2020April 30, 2020
(Unaudited)
Assets
Current assets:
Cash and cash equivalents$12,237,710 $14,350,554 
Restricted cash4,644,618 3,556,211 
Accounts receivable, net of allowance of $2,523,293 and $1,758,920, respectively
17,995,485 14,326,791 
Prepaid expenses1,595,939 941,671 
Other receivables 23,097 
Other current assets446,857 173,090 
Total current assets36,920,609 33,371,414 
Property and equipment:
Computer equipment and hardware755,972 649,927 
Furniture and fixtures1,013,103 1,007,099 
Leasehold improvements920,736 867,024 
Instructional equipment315,993 301,842 
Software7,373,655 6,162,770 
Construction in progress878,263  
11,257,722 8,988,662 
Less accumulated depreciation and amortization(3,830,290)(2,841,019)
Total property and equipment, net7,427,432 6,147,643 
Goodwill5,011,432 5,011,432 
Intangible assets, net7,900,000 7,900,000 
Courseware, net100,369 111,457 
Accounts receivable, net of allowance of $625,963 and $625,963, respectively
45,329 45,329 
Long term contractual accounts receivable10,246,622 6,701,136 
Debt issue cost, net34,722 182,418 
Operating lease right of use assets, net7,809,489 6,412,851 
Deposits and other assets486,176 355,831 
Total assets$75,982,180 $66,239,511 
(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, 2020April 30, 2020
(Unaudited)
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$2,344,280 $1,505,859 
Accrued expenses1,820,396 537,413 
Deferred revenue8,628,498 3,712,994 
Due to students2,070,225 2,371,844 
Operating lease obligations, current portion1,670,277 1,683,252 
Other current liabilities259,339 545,711 
Total current liabilities16,793,015 10,357,073 
Convertible notes, net of discount of $0 and $1,550,854, respectively
 8,449,146 
Operating lease obligations, less current portion7,094,948 5,685,335 
Total liabilities23,887,963 24,491,554 
Commitments and contingencies – see Note 10
Stockholders’ equity:
Preferred stock, $0.001 par value; 1,000,000 shares authorized,
0 issued and 0 outstanding at October 31, 2020 and April 30, 2020
  
Common stock, $0.001 par value; 40,000,000 shares authorized
24,416,539 issued and outstanding at October 31, 2020
21,770,520 issued and 21,753,853 outstanding at April 30, 2020
24,417 21,771 
Additional paid-in capital105,092,551 89,505,216 
Treasury stock (0 and 16,667 shares at October 31, 2020 and April 30, 2020, respectively)
 (70,000)
Accumulated deficit(53,022,751)(47,709,030)
Total stockholders’ equity52,094,217 41,747,957 
Total liabilities and stockholders’ equity$75,982,180 $66,239,511 

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,
2020201920202019
Revenues$16,971,045 $12,085,965 $32,136,607 $22,443,947 
Operating expenses:
   Cost of revenues (exclusive of depreciation and amortization shown separately below)7,324,780 4,188,056 13,172,303 8,541,114 
   General and administrative11,285,155 7,193,700 20,078,911 13,989,951 
   Bad debt expense632,000 407,759 1,032,000 648,658 
   Depreciation and amortization526,357 628,225 1,016,981 1,234,799 
    Total operating expenses19,768,292 12,417,740 35,300,195 24,414,522 
Operating loss(2,797,247)(331,775)(3,163,588)(1,970,575)
Other income (expense):
   Other (expense) income, net(7,080)132,567 (130,378)155,369 
   Interest expense(1,529,668)(428,960)(1,985,125)(852,649)
     Total other expense, net(1,536,748)(296,393)(2,115,503)(697,280)
Loss before income taxes(4,333,995)(628,168)(5,279,091)(2,667,855)
Income tax expense36,530 10,000 34,630 45,595 
Net loss$(4,370,525)$(638,168)$(5,313,721)$(2,713,450)
Net loss per share - basic and diluted$(0.19)$(0.03)$(0.23)$(0.14)
Weighted average number of common stock outstanding - basic and diluted22,791,503 18,985,371 22,763,235 18,859,344 


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, 2020 and 2019
(Unaudited)


Common StockAdditional
Paid-In
Capital
Treasury
Stock
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance at Balance at July 31, 202022,377,744 $22,378 $92,378,584 $(70,000)$(48,652,226)$43,678,736 
Stock-based compensation— — 1,831,548 — — 1,831,548 
Common stock issued for stock options exercised for cash502,412 502 944,830 — — 945,332 
Common stock issued for cashless stock options exercised22,339 22 (22)— —  
Common stock issued for conversion of Convertible Notes1,398,602 1,399 9,998,601 — — 10,000,000 
Common stock issued for vested restricted stock units132,109 132 (132)— —  
Amortization of warrant based cost— — 9,125 — — 9,125 
Cancellation of Treasury Stock(16,667)(17)(69,983)70,000 —  
Net loss— — — — (4,370,525)(4,370,525)
Balance at October 31, 202024,416,539 $24,417 $105,092,551 $ $(53,022,751)$52,094,217 
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 stock options exercised for cash90,950 90 192,432 — — 192,522 
Common stock issued for cashless stock options exercised80,313 80 (80)— —  
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 

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)
Six Months Ended October 31, 2020 and 2019
(Unaudited)


Common StockAdditional
Paid-In
Capital
Treasury
Stock
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance at April 30, 202021,770,520 $21,771 $89,505,216 $(70,000)$(47,709,030)$41,747,957 
Stock-based compensation— — 2,318,658 — — 2,318,658 
Common stock issued for stock options exercised for cash917,587 918 2,214,397 — — 2,215,315 
Common stock issued for cashless stock options exercised22,339 22 (22)— —  
Common stock issued for conversion of Convertible Notes1,398,602 1,399 9,998,601 — — 10,000,000 
Common stock issued for vested restricted stock units132,109 132 (132)— —  
Common stock issued for warrants exercised for cash192,049 192 1,081,600 — — 1,081,792 
Modification charge for warrants exercised— — 25,966 — — 25,966 
Amortization of warrant based cost— — 18,250 — — 18,250 
Cancellation of Treasury Stock(16,667)(17)(69,983)70,000 —  
Net loss— — — — (5,313,721)(5,313,721)
Balance at October 31, 202024,416,539 $24,417 $105,092,551 $ (53,022,751)$52,094,217 
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 stock options exercised for cash112,826 113 237,600 — — 237,713 
Common stock issued for cashless stock options exercised182,207 182 (182)— —  
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 

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)
Six Months Ended October 31,
 20202019
Cash flows from operating activities:
Net loss$(5,313,721)$(2,713,450)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense1,032,000 648,658 
Depreciation and amortization1,016,981 1,234,799 
Stock-based compensation2,318,658 889,484 
Amortization of warrant based cost18,250 18,565 
Loss on asset disposition 3,918 
Amortization of debt discounts1,550,854 135,298 
Amortization of debt issue costs147,695 50,255 
Modification charge for warrants exercised25,966  
Non-cash payments to investor relations firm 73,350 
Changes in operating assets and liabilities:
Accounts receivable(8,246,180)(5,211,195)
Prepaid expenses(654,268)(378,184)
Other receivables23,097 1,833 
Other current assets(273,767)(172,507)
Deposits and other assets(171,303)304,676 
Accounts payable838,421 (511,473)
Accrued expenses1,282,983 88,243 
Deferred Rent (25,902)
Due to students(301,619)727,710 
Deferred revenue4,915,504 3,052,996 
Other current liabilities(286,372)(242,181)
Net cash used in operating activities(2,076,821)(2,025,107)
Cash flows from investing activities:
Purchases of courseware and accreditation(11,375)(9,575)
Purchases of property and equipment(2,233,348)(1,244,078)
Net cash used in investing activities(2,244,723)(1,253,653)
Cash flows from financing activities:
Proceeds from warrants exercised1,081,792  
Proceeds from stock options exercised2,215,315 237,713 
Net cash provided by financing activities3,297,107 237,713 
(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)
Six Months Ended October 31,
20202019
Net decrease in cash, cash equivalents and restricted cash$(1,024,437)$(3,041,047)
Cash, cash equivalents and restricted cash at beginning of period17,906,765 9,967,752 
Cash, cash equivalents and restricted cash at end of period$16,882,328 $6,926,705 
Supplemental disclosure cash flow information
Cash paid for interest$285,749 $652,121 
Cash paid for income taxes$38,608 $49,595 
Supplemental disclosure of non-cash investing and financing activities
Common stock issued for conversion of Convertible Notes$10,000,000 $ 
Right-of-use lease asset offset against operating lease obligations$851,733 $7,469,167 
Common stock issued for services$ $178,447 

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:
October 31, 2020October 31, 2019
Cash and cash equivalents $12,237,710 $6,472,417 
Restricted cash4,644,618 454,288 
Total cash, cash equivalents and restricted cash$16,882,328 $6,926,705 


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
October 31, 2020
(Unaudited)


Note 1. Nature of Operations and Liquidity
Overview
澳门6合开彩开奖. ("AGI") is an educational technology holding company. AGI has five subsidiaries, Aspen University Inc. ("Aspen University") organized in 1987, Aspen Nursing of Arizona, Inc. ("ANAI"), Aspen Nursing of Florida, Inc. ("ANFI"), Aspen Nursing of Texas, Inc. ("ANTI"), and United States University Inc. ("United States University" or "USU"). ANAI, ANFI and ANTI are subsidiaries of Aspen University Inc.
All references to the “Company”, “AGI”, “Aspen Group”, “we”, “our” and “us” refer to 澳门6合开彩开奖., unless the context otherwise indicates.
AGI leverages its education technology 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. As of October 31, 2020, 11,442 of 13,238 or 86% of all active 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 United States Department of Education (the “DOE”) and Council for Higher Education Accreditation ("CHEA"). On February 25, 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, 2020 and 2019, our cash flows for the six months ended October 31, 2020 and 2019, and our financial position as of October 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, 2020 as filed with the SEC on July 7, 2020. The April 30, 2020 balance sheet is derived from those statements.
COVID-19 Update

The COVID-19 crisis did not have a material impact on the Company’s consolidated financial results for the second quarter of fiscal year 2021, as evidenced by our record revenues of $17.0 million. In fact, the Company’s two highest LTV programs, USU’s MSN-FNP and Aspen’s BSN Pre-Licensure program, saw enrollment tailwinds this quarter related to COVID-19. RN’s, looking to attain their nurse practitioner license to broaden their career options, drove MSN-FNP enrollment. Additionally,
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ASPEN GROUP, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 2020
(Unaudited)

millennials, aspiring to become RNs, enrolled in the BSN Pre-Licensure program in Phoenix in record numbers, given that many were furloughed or laid off since the pandemic first started.

In our current, third fiscal quarter ending January 31, 2021, which has been historically a seasonally slower quarter given it falls during the holiday months of November and December, Aspen University is seeing slightly lower course registrations than seasonally expected in our Aspen Nursing + Other unit. We believe COVID-19 ‘Wave Two’ is partly a factor given that all the states in the country are now affected – not just some of the major metros. Our predominant student demographic of RNs has been especially overwhelmed over the past few months, so this isn’t unexpected.
Liquidity
At October 31, 2020, the Company had a cash and cash equivalents balance of $12,237,710 and $4,644,618 of restricted cash.
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 term notes, with the Company having the right to extend the term of the loans for an additional 12 months by paying a 1% one-time extension fee. On January 22, 2020, the term notes were exchanged for convertible notes maturing January 22, 2023. On September 14, 2020, the Convertible Notes automatically converted into shares of the Company’s common stock. (See Note 6)
On January 22, 2020, the Company closed on an underwritten public offering of common stock for net proceeds of approximately $16 million. The public offering was a condition precedent to the closing of the above refinancing. (See Note 6)
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)
During the six months ended October 31, 2020 the Company's net cash and restricted cash decreased by $1,024,437, which included using $2,076,821 in operating activities.
The Company has analyzed its liquidity position and believes its current resources are adequate to meet anticipated liquidity needs for the next 12 months from the issuance date of this report.
Note 2. Significant Accounting Policies
Basis of Presentation and Consolidation

The Company prepares its consolidated financial statements in accordance with U.S. generally accepted accounting principles ("GAAP").
The consolidated financial statements include the accounts of AGI and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Accounting Estimates
Management of the Company is required to make certain estimates, judgments and assumptions during the preparation of its consolidated financial statements in accordance with GAAP. These estimates, judgments and assumptions impact the reported amounts of assets, liabilities, revenue and expenses and the related disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Significant estimates in the accompanying consolidated financial statements include the allowance for doubtful accounts and other receivables, the valuation of lease liabilities and the carrying value of the related right-of-use ("ROU") assets, depreciable lives of property and equipment, amortization periods and valuation of courseware, intangibles and software development costs, 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
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ASPEN GROUP, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 2020
(Unaudited)

For the purposes of the 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.
As of October 31, 2020, restricted cash of $4,644,618 consists of $934,125 which is collateral for letters of credit for the Aspen University and USU facility operating leases, $379,345 which is collateral for a letter of credit issued by the bank, a $250,000 compensating balance under a secured credit line and $49,021 for employee payroll taxes to be remitted. Also included are funds held for students for unbilled educational services that were received from Title IV and non-Title IV programs totaling $3,032,127. As an administrator of these Title IV program funds, the Company is required to maintain and restrict these funds pursuant to the terms of the program participation agreement with the U.S. Department of Education.
As of April 30, 2020, restricted cash of $3,556,211 consists of $692,293 which is collateral for letters of credit for the Aspen University and USU facility operating leases and $255,708 which is collateral for a letter of credit issued by the bank and $71,828 which is related to USU’s receipt of Title IV funds and is required by the Department of Education ("DOE") in connection with the change of control of USU. Also included are funds held for students for unbilled educational services that were received from Title IV and non-Title IV programs totaling $2,536,382. As an administrator of these Title IV program funds, the Company is required to maintain and restrict these funds pursuant to the terms of the program participation agreement with the U.S. Department of Education.
Concentration of Credit Risk
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, 2020. As of October 31, 2020 and April 30, 2020, the Company maintained deposits exceeding federally insured limits by approximately $17,377,904 and $16,242,603, respectively, held in two separate institutions.
Goodwill and Intangibles
Goodwill currently represents the excess of purchase price over the fair market value of assets acquired and liabilities assumed from the 2017 acquisition of USU. Goodwill has an indefinite life and is not amortized. Goodwill is tested annually for impairment or if indicators are present.
Intangible assets represent both indefinite lived and definite lived assets. Accreditation and 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.
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ASPEN GROUP, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 2020
(Unaudited)

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 AGI for tuition, fees and other expenses. As of October 31, 2020, the monthly payment plan represents approximately 62% of the payments that are made by active 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 AGI’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, AGI may have to return all or a portion of the Title IV funds to the DOE and the student will owe AGI all amounts incurred that are in excess of the amount of financial aid that the student earned, and that AGI is entitled to retain. In this case, AGI must collect the receivable using the student’s second payment option.
For accounts receivable from students, AGI 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. AGI 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, aging of the accounts receivable and each student’s status. AGI estimates the amounts to increase the allowance based upon the risk presented by the age of the receivables and student status. AGI writes off accounts receivable balances at the time the balances are deemed uncollectible. AGI 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, AGI estimates its allowance for doubtful accounts by evaluating specific accounts where information indicates the primary payors 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, AGI uses assumptions and judgment, based on the best available facts and circumstances, to record a specific allowance for those primary payors 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. AGI may also record a general allowance as necessary.
Direct write-offs are taken in the period when AGI has exhausted its efforts to collect overdue and unpaid receivables or otherwise evaluate other circumstances that indicate that AGI should abandon such efforts. (See Note 8)
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, 2020 and April 30, 2020, those balances were $10,246,622 and $6,701,136, respectively, which amounts are evaluated and included in the allowance analysis as discussed above. 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 less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the related assets per the following table.
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ASPEN GROUP, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 2020
(Unaudited)

CategoryUseful Life
Computer equipment and hardware3 years
Software5 years
Instructional equipment5 years
Furniture and fixtures7 years
Leasehold improvements
The lesser of 8 years or lease term
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. Amortization 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 lesser of eight years or lease term.
The Company has construction in progress which includes property and equipment amounts for new campuses. These assets are not yet being depreciated as of October 31, 2020.
Upon the retirement or disposition of property and equipment, the related cost and accumulated depreciation or amortization 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 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.
Due to 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.
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ASPEN GROUP, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 2020
(Unaudited)

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 financing 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.
In February 2016, the FASB issued Accounting Standards Update ("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 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.
The Company canceled the remaining 16,667 treasury shares on October 16, 2020. See Note 7.
Revenue Recognition and Deferred Revenue
The Company follows 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 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 consolidated results of operations or our consolidated balance sheet and there was no cumulative effect adjustment.
Revenues consist primarily of tuition and course fees derived from courses taught by the Company online as well as from related educational resources and services that the Company provides