Aspen Group, Inc.
[Pages:51]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 July 31, 2014 OR
o 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: 000-55107
Aspen Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
27-1933597
(I.R.S. Employer Identification No.)
720 South Colorado Boulevard, Suite 1150N Denver, CO
(Address of principal executive offices)
80246
(Zip Code)
Registrants telephone number: (646) 450-1843
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 ? No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ? No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Non-accelerated filer
o
Accelerated filer
o
o (Do not check if a smaller reporting company) Smaller reporting company
?
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ?
Class Common Stock, $0.001 par value per share
Outstanding as of September 12, 2014 112,501,897 shares
INDEX PART I ? FINANCIAL INFORMATION
Item 1.
Financial Statements
1
Consolidated Balance Sheets
1
Consolidated Statements of Operations (Unaudited)
3
Consolidated Statements of Changes in Stockholders Deficiency (Unaudited)
4
Consolidated Statements of Cash Flows (Unaudited)
5
Notes to Consolidated Financial Statements (Unaudited)
7
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
21
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
28
Item 4.
Controls and Procedures.
28
PART II ? OTHER INFORMATION
Item 1.
Legal Proceedings.
29
Item 1A. Risk Factors.
29
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
29
Item 3.
Defaults Upon Senior Securities.
29
Item 4.
Mine Safety Disclosures.
29
Item 5.
Other Information.
29
Item 6.
Exhibits.
29
SIGNATURES
30
PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
ASPEN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
Assets Current assets:
Cash and cash equivalents Restricted cash Accounts receivable, net of allowance of $234,049 and $221,537, respectively Prepaid expenses Net assets from discontinued operations (Note 1)
Total current assets Property and equipment:
Call center equipment Computer and office equipment Furniture and fixtures Library (online) Software Less accumulated depreciation and amortization
Total property and equipment, net Courseware, net Accounts receivable, secured - related party, net of allowance of $625,963, and $625,963, respectively Debt issuance costs, net Other assets Total assets
July 31, 2014
(Unaudited)
April 30, 2014
$ 1,416,407 $ 247,380
898,225
868,298
671,723
649,890
93,250
45,884
5,250
5,250
3,084,855 1,816,702
122,653 67,561 36,447 100,000 1,975,640 2,302,301 (1,044,098 ) 1,258,203 127,493 146,831 149,075 25,181
122,653 66,118 36,446 100,000 1,894,215 2,219,432 (938,703 ) 1,280,729 108,882 146,831 205,515 25,181
$ 4,791,638 $ 3,583,840
1
ASPEN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONTINUED)
Liabilities and Stockholders' Deficiency Current liabilities:
Accounts payable Accrued expenses Deferred revenue Refunds Due Students Loan payable to stockholder Deferred rent, current portion Convertible notes payable, current portion Debenture payable, net of discounts of $328,428 and $452,771
Total current liabilities Line of credit Loan payable officer - related party Convertible notes payable - related party Deferred rent
Total liabilities Commitments and contingencies - See Note 8 Stockholders' deficiency:
Common stock, $0.001 par value; 120,000,000 shares authorized, 73,414,478 issued and 73,214,478 outstanding at April 30,2014 88,203,020 issued and 88,003,020 outstanding at July 31, 2014
Additional paid-in capital Treasury stock (200,000 shares) Accumulated deficit
Total stockholders' deficiency Total liabilities and stockholders' deficiency
July 31, 2014
(Unaudited)
April 30, 2014
$ 536,659 $ 454,783
170,205
143,975
624,152
653,518
356,720
288,121
491
491
14,519
13,699
175,000
175,000
1,911,572 1,787,229
3,789,318 3,516,816
244,028 1,000,000
600,000 3,752
5,637,098
244,175 1,000,000
600,000 7,751
5,368,742
88,203 18,091,032
(70,000 ) (18,954,695)
(845,460 )
73,414 16,302,118
(70,000 ) (18,090,434) (1,784,902 )
$ 4,791,638 $ 3,583,840
The accompanying unaudited notes are an integral part of these unaudited consolidated financial statements.
2
ASPEN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Revenues Operating expenses
Cost of revenues (exclusive of depreciation and amortization shown separately below) General and administrative Depreciation and amortization
Total operating expenses Operating loss from continuing operations Other income (expense):
Interest income Interest expense
Total other expense, net Loss from continuing operations before income taxes Income tax expense (benefit) Loss from continuing operations Discontinued operations (Note 1)
Income from discontinued operations, net of income taxes Net loss
For the
Three Months Ended
July 31,
2014
2013
(See Note 2)
$ 1,169,860 $ 901,199
449,098 1,200,216
125,607 1,774,921
455,759 1,476,767
109,435 2,041,961
(605,061) (1,140,762)
1,671 (260,871 ) (259,200 )
289 (16,160 ) (15,871 )
(864,261) (1,156,633)
--
--
(864,261) (1,156,633)
--
22,263
$ (864,261) $(1,134,370)
Loss per share from continuing operations - basic and diluted Income per share from discontinued operations - basic and diluted Net loss per share allocable to common stockholders - basic and diluted
Weighted average number of common shares outstanding: basic and diluted
$ (0.01) $ (0.02)
$
-- $
0.00
$ (0.01) $ (0.02)
73,818,014 58,527,790
The accompanying unaudited notes are an integral part of these unaudited consolidated financial statements.
3
ASPEN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FOR THE THREE MONTHS ENDED JULY 31, 2014 (Unaudited)
Balance at April 30, 2014 Issuance of common shares for cash Offering cost for professional services from
private placement Stock-based compensation Shares issued for price protection Net loss, three months ended July 31, 2014 Balance at July 31, 2014
Common Stock
Shares
Amount
73,414,478 $ 73,414
11,315,283
11,316
Additional Paid-In Capital
$ 16,302,118 1,770,184
Treasury
Accumulated Stockholders'
Stock
Deficit
(Deficiency)
$ (70,000) $(18,090,434) $ (1,784,902)
--
-- 1,781,500
-- -- 3,473,259 -- 88,203,020 $
-- -- 3,473 -- 88,203
(75,000 ) 97,203 (3,473 )
-- $ 18,091,032 $
--
--
--
--
--
--
--
(864,261 )
(70,000) $(18,954,695) $
(75,000 ) 97,203
-- (864,261 ) (845,460 )
The accompanying unaudited notes are an integral part of these unaudited consolidated financial statements.
4
ASPEN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Cash flows from operating activities: Net loss Less income from discontinued operations Loss from continuing operations
Adjustments to reconcile net loss to net cash used in operating activities: Bad debt expense Amortization of debt issuance costs Amortization of debt discount Depreciation and amortization Stock-based compensation Amortization of prepaid shares for services
Changes in operating assets and liabilities: Accounts receivable Prepaid expenses Accounts payable Accrued expenses Deferred rent Refunds due students Deferred revenue Net cash used in operating activities
Cash flows from investing activities: Purchases of property and equipment Purchases of courseware Increase in restricted cash Net cash used in investing activities
Cash flows from financing activities: Proceeds from (repayments on) line of credit, net Proceeds from issuance of common shares and warrants, net Offering costs associated with private placement Net cash provided by financing activities
Cash flows from discontinued operations: Cash flows from operating activities Net cash provided by discontinued operations
Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period
5
For the
Three Months Ended
July 31,
2014
2013
(See Note 2)
$ (864,261) $(1,134,370)
--
22,263
(864,261) (1,156,633)
105,511 56,440 124,343 125,607 97,203
--
13,837 -- --
109,435 149,356 25,060
(127,344 ) (47,367 ) 81,876 26,231 (3,179 ) 68,599 (29,366 )
(385,707 )
(142,635 ) 6,345
118,450 (2,107 ) (2,359 )
(32,086 ) (99,931 ) (1,013,268 )
(82,869 ) (38,823 ) (29,927 ) (151,619 )
(104,385 ) (500 ) (137 )
(105,022 )
(147 ) 1,781,500
(75,000 ) 1,706,353
(4,518 ) 1,000,000
(48,240 ) 947,242
--
87,075
--
87,075
1,169,027
(83,973 )
247,380
724,982
$ 1,416,407 $ 641,009
(Continued)
ASPEN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
Supplemental disclosure of cash flow information: Cash paid for interest Cash paid for income taxes
For the
Three Months Ended
July 31,
2014
2013
$ 70,307 $ 11,158
$
-- $
--
Supplemental disclosure of non-cash investing and financing activities Common stock issued for prepaid services
$
-- $ 216,000
The accompanying unaudited notes are an integral part of these unaudited consolidated financial statements.
6
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