10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2016

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	27-1933597
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1660 S Albion Street, Suite 525 Denver, CO	80222
(Address of principal executive offices)	(Zip Code)

Registrants telephone number: (303) 333-4224

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 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 þ  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	o	Accelerated filer	o
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No þ

Class	Outstanding as of December 12, 2016
Common Stock, $0.001 par value per share	137,958,145 shares

INDEX

	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements.	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations (Unaudited)	3
	Consolidated Statement of Changes in Stockholders Equity (Unaudited)	4
	Consolidated Statements of Cash Flows (Unaudited)	5
	Condensed Notes to Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	26
Item 4.	Controls and Procedures.	26
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.	27
Item 1A.	Risk Factors.	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	27
Item 3.	Defaults Upon Senior Securities.	27
Item 4.	Mine Safety Disclosures.	27
Item 5.	Other Information.	27
Item 6.	Exhibits.	27

SIGNATURES 28

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	October 31,			April 30,
	2016			2016
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	707,379		$	783,796
Accounts receivable, net of allowance of $449,946 and $449,946, respectively		3,484,606			2,179,852
Prepaid expenses		142,939			123,055
Total current assets		4,334,924			3,086,703
Property and equipment:
Call center equipment		39,567			79,199
Computer and office equipment		80,171			67,773
Furniture and fixtures		216,652			114,964
Software		2,451,208			2,567,383
		2,787,598			2,829,319
Less accumulated depreciation and amortization		(1,515,529	)		(1,680,687	)
Total property and equipment, net		1,272,069			1,148,632
Courseware, net		170,481			194,932
Accounts receivable, secured - related party, net of allowance of $625,963, and $625,963, respectively		45,329			45,329
Other assets		54,415			31,175
Total assets	$	5,877,218		$	4,506,771

(Continued)

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

1

ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED)

	October 31,			April 30,
	2016			2016
	(Unaudited)
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	618,763		$	9,201
Accrued expenses		232,949			176,974
Deferred revenue		1,188,507			1,013,434
Refunds Due Students		278,227			110,883
Deferred rent, current portion		13,998			2,345
Convertible notes payable, current portion		50,000			50,000
Total current liabilities		2,382,444			1,362,837
Bank Line of credit		—			1,783
Loan payable officer - related party		1,000,000			1,000,000
Convertible notes payable - related party		300,000			300,000
Third party Line of Credit, net of discounts of $106,250 and $0		643,750			—
Warrant derivative liability		52,500			—
Deferred rent		38,029			29,169
Total liabilities		4,416,723			2,693,789
Commitments and contingencies - See Note 8
Stockholders’ equity:
Common stock, $0.001 par value; 250,000,000 shares authorized,
135,158,145 issued and 134,958,145 outstanding at April 30, 2016
138,158,145 issued and 137,958,145 outstanding at October 31, 2016		137,959			134,958
Additional paid-in capital		26,386,870			26,353,451
Treasury stock (200,000 shares)		(70,000	)		(70,000	)
Accumulated deficit		(24,994,334	)		(24,605,427	)
Total stockholders’ equity		1,460,495			1,812,982
Total liabilities and stockholders’ equity	$	5,877,218		$	4,506,771

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

2

ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the						For the
	Three Months Ended						Six Months Ended
	October 31,						October 31,
	2016			2015			2016			2015
Revenues	$	3,465,026		$	1,913,161		$	6,221,841		$	3,619,022
Operating expenses
Cost of revenues (exclusive of depreciation and amortization shown separately below)		1,234,856			867,801			2,130,915			1,641,910
General and administrative		1,919,653			1,610,202			4,101,731			3,087,819
Depreciation and amortization		139,005			148,258			290,055			291,717
Total operating expenses		3,293,514			2,626,261			6,522,701			5,021,446
Operating income (loss)		171,512			(713,100	)		(300,860	)		(1,402,424	)
Other income (expense):
Other income		1,307			2,930			1,364			6,663
Interest expense		(56,278	)		(34,250	)		(89,411	)		(67,365	)
Total other expense, net		(54,971	)		(31,320	)		(88,047	)		(60,702	)
Income (loss) before income taxes		116,541			(744,420	)		(388,907	)		(1,463,126	)
Income tax expense (benefit)		—			—			—			—
Net income (loss)	$	116,541		$	(744,420	)	$	(388,907	)	$	(1,463,126	)
Net income (loss) per share allocable to common stockholders - basic	$	0.00		$	(0.01	)	$	(0.00	)	$	(0.01	)
Net income (loss) per share allocable to common stockholders - diluted	$	0.00		$	(0.01	)	$	(0.00	)	$	(0.01	)
Weighted average number of common shares outstanding - basic		137,758,145			128,303,606			136,833,008			128,239,022
Weighted average number of common shares outstanding - diluted		145,683,166			128,303,606			136,833,008			128,239,022

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

3

ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED OCTOBER 31, 2016

(Unaudited)

					Additional									Total
	Common Stock				Paid-In			Treasury			Accumulated			Stockholders'
	Shares		Amount		Capital			Stock			Deficit			Equity
Balance at April 30, 2016		134,958,145	$	134,958	$	26,353,451		$	(70,000	)	$	(24,605,427	)	$	1,812,982
Attorney fees associated with Registration Statement		—		—		(1,917	)		—			—			(1,917	)
Stock-based compensation		—		—		157,335			—			—			157,335
Warrant buyback		2,500,000		2,500		(196,500	)		—			—			(194,000	)
Shares issued for services		500,000		501		74,501			—			—			75,002
Net loss, Six Months ended October 31, 2016		—		—		—			—			(388,907	)		(388,907	)
Balance at October 31, 2016		137,958,145	$	137,959	$	26,386,870		$	(70,000	)	$	(24,994,334	)	$	1,460,495

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

4

ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the
	Six Months Ended
	October 31,
	2016			2015
Cash flows from operating activities:
Net income (loss)	$	(388,907	)	$	(1,463,126	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Bad debt expense		—			99,188
Depreciation and amortization		290,055			291,717
Stock-based compensation		157,335			128,987
Warrant modification expense		—			6,000
Amortization of debt discounts		6,250			—
Amortization of prepaid shares for services		35,000			47,600
Warrant buyback expense		206,000			—
Changes in operating assets and liabilities:
Accounts receivable		(1,304,754	)		(594,794	)
Prepaid expenses		20,118			1,809
Other assets		(23,240	)		(7,267	)
Accounts payable		609,562			312,004
Accrued expenses		55,974			58,931
Deferred rent		20,513			(6,300	)
Refunds due students		167,344			179,638
Deferred revenue		175,073			67,105
Net cash provided by (used in) operating activities		26,323			(878,508	)
Cash flows from investing activities:
Purchases of property and equipment		(382,490	)		(214,019	)
Purchases of courseware		(6,550	)		(63,634	)
Net cash used in investing activities		(389,040	)		(277,653	)
Cash flows from financing activities:
Warrant buyback		(400,000	)		—
Borrowing of bank line of credit		247,000			5,794
Repayment of bank line of credit		(248,783	)		—
Third party line of credit		750,000			—
Third party line of credit financing costs		(60,000	)		—
Disbursements for equity offering costs		(1,917	)		(679	)
Net cash provided by financing activities		286,300			5,115
Net decrease in cash and cash equivalents		(76,417	)		(1,151,046	)
Cash and cash equivalents at beginning of period		783,796			2,159,463
Cash and cash equivalents at end of period	$	707,379		$	1,008,417
Supplemental disclosure of cash flow information:
Cash paid for interest	$	67,656		$	58,017
Cash paid for income taxes	$	—		$	—
Supplemental disclosure of non-cash investing and financing activities
Common stock issued for services	$	75,002		$	47,600
Warrant derivative liability	$	52,500		$	—

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

5

ASPEN GROUP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2016

(Unaudited)

Note 1. Nature of Operations and Liquidity

Overview

Aspen Group, Inc. (together with its subsidiary, the “Company” or “Aspen”) is a holding company. Its subsidiary Aspen University Inc. was founded in Colorado in 1987 as the International School of Information Management. On September 30, 2004, it changed its name to Aspen University Inc. (“Aspen University”). On March 13, 2012, the Company was recapitalized in a reverse merger. All references to the Company or Aspen before March 13, 2012 are to Aspen University.

Aspen’s mission is to offer any motivated college-worthy student the opportunity to receive a high quality, responsibly priced distance-learning education for the purpose of achieving sustainable economic and social benefits for themselves and their families. Aspen is dedicated to providing the highest quality education experiences taught by top-tier professors - 57% of our adjunct professors hold doctorate degrees.

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 online higher education. In 2014, Aspen University unveiled a monthly payment plan aimed at reversing the college-debt sentence plaguing working-class Americans. The monthly payment plan offers bachelor students (except RN to BSN) the opportunity to pay their tuition at $250/month for 72 months ($18,000), nursing bachelor students (RN to BSN) $250/month for 39 months ($9,750), master students $325/month for 36 months ($11,700) and doctoral students $375/month for 72 months ($27,000), interest free, thereby giving students a monthly payment tuition payment option versus taking out a federal financial aid loan.

On November 10, 2014, Aspen University announced the Commission on Collegiate Nursing Education (“CCNE”) has granted accreditation to its Bachelor of Science in Nursing program (RN to BSN) until December 31, 2019.

Since 1993, we have 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”). On February 25, 2015, the DEAC informed Aspen University that it had renewed its accreditation for five years to January, 2019.

Basis of Presentation

A. 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, 2016 and 2015, our cash flows for the six months ended October 31, 2016 and 2015, and our financial position as of October 31, 2016 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 Report on Form 10-K for the period ended April 30, 2016 as filed with the SEC on July 27, 2016. The April 30, 2016 balance sheet is derived from those statements.

6

ASPEN GROUP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2016

(Unaudited)

B. Liquidity

In August 2016, the Company closed on a $3 million credit line with its largest shareholder. The credit line, whose terms include a 12% per annum interest rate on drawn funds and a 2% per annum interest rate on undrawn funds, will extend through August 2019.  The Company initially drew down $750,000 under the line, of which approximately $248,000 was used to repay a secured line of credit with a bank. (See Note 8)

At October 31, 2016, the Company had a cash balance of approximately $700,000. The Company had cash provided from operating activities of $26,323.

On April 22, 2016, the Company issued 4,855,487 shares of common stock to two of its warrant holders in exchange for their early exercise of warrants at a reduced exercise price of $0.155 per share. The Company received gross proceeds of $752,500 from these exercises. As a condition of the warrant holders exercising their warrants, Mr. Michael Mathews, the Company’s Chairman of the Board and Chief Executive Officer, converted a $300,000 note and in connection with this conversion, Mr. Mathews was issued 1,591,053 shares of common stock. See Note 7. With the additional cash raised in the financings, the growth in revenues and improving operating margins, the Company believes that it has sufficient cash to allow the Company to implement its long-term business plan.

Note 2. Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Aspen Group, Inc. 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 unaudited 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, amortization periods and valuation of courseware and software development costs, valuation of beneficial conversion features in convertible debt, valuation of derivative instruments, valuation of loss contingencies, valuation of stock-based compensation and the valuation allowance on deferred tax assets.

Cash and Cash Equivalents

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, 2016 and April 30, 2016. 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, 2016. As of October 31, 2016 and April 30, 2016, there were deposits totaling $426,487 and $1,224,863 respectively, held in two separate institutions greaterthan the federally insured limits.

7

ASPEN GROUP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2016

(Unaudited)

Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy:

Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets;

Level 2—Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and

Level 3—Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities.

The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

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.

Revenue Recognition and Deferred Revenue

Revenues consist primarily of tuition and fees derived from courses taught by the Company online as well as from related educational resources that the Company provides to its students, such as access to our online materials and learning management system. Tuition revenue is recognized pro-rata over the applicable period of instruction. The Company allows a student to make three monthly tuition payments during each class. The Company maintains an institutional tuition refund policy, which provides for all or a portion of tuition to be refunded if a student withdraws during stated refund periods. Certain states in which students reside impose separate, mandatory refund policies, which override the Company’s policy to the extent in conflict. If a student withdraws at a time when a portion or none of the tuition is refundable, then in accordance with its revenue recognition policy, the Company recognizes as revenue the tuition that was not refunded. Since the Company recognizes revenue pro-rata over the term of the course and because, under its institutional refund policy, the amount subject to refund is never greater than the amount of the revenue that has been deferred, under the Company’s accounting policies revenue is not recognized with respect to amounts that could potentially be refunded. The Company’s educational programs have starting and ending dates that differ from its fiscal quarters. Therefore, at the end of each fiscal quarter, a portion of revenue from these programs is not yet earned and is therefore deferred. The Company also charges students annual fees for library, technology and other services, which are recognized over the related service period. Deferred revenue represents the amount of tuition, fees, and other student payments received in excess of the portion recognized as revenue and it is included in current liabilities in the accompanying consolidated balance sheets. Other revenues may be recognized as sales occur or services are performed.

The Company has revenues from students outside the United States representing 3.5% of the revenues for the quarter ended October 31, 2016.

Accounting for Derivatives

The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging”. The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liability at the fair value of the instrument on the reclassification date.

8

ASPEN GROUP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2016

(Unaudited)

Net Income (Loss) Per Share

Net income (loss) per common share is based on the weighted average number of common shares outstanding during each period. Options to purchase 22,197,979 and 16,857,313 common shares, warrants to purchase 11,214,659 and 28,871,757 common shares, and $350,000 and $650,000 of convertible debt (convertible into 907,143 and 1,207,143 common shares, respectively) were outstanding during three months ending October 31, 2016 and 2015, respectively, but during certain periods were not included in the computation of diluted loss per share because the effects would have been anti-dilutive. The options, warrants and convertible debt are considered to be common stock equivalents and are only included in the calculation of diluted earnings per common share when their effect is dilutive, as noted in the chart below.

Basic and diluted income per share for the three months ended October 31, 2016, were calculated as follows:

	Basic		Diluted
Numerator
Net income applicable to common stock	$	116,541	$	116,541
Convertible debt interest		—		8,021
	$	116,541	$	124,562
Denominator
Weighted average common shares outstanding		137,758,145		137,758,145
Convertible debt		—		907,143
Warrants and options		—		7,017,878
		137,758,145		145,683,166
Net income per share	$	0.00	$	0.00

Recent Accounting Pronouncements

There have been no new relevant pronouncements since those disclosed in the April 30, 2016 Consolidated Financial Statements.

Note 3. Secured Note and Accounts Receivable – Related Parties

On March 30, 2008 and December 1, 2008, Aspen University sold courseware pursuant to marketing agreements to Higher Education Management Group, Inc. (“HEMG”,) which was then a related party and principal stockholder of the Company. HEMG’s president is Mr. Patrick Spada, the former Chairman of the Company, the sold courseware amounts were $455,000 and $600,000, respectively; UCC filings were filed accordingly.  Under the marketing agreements, the receivables were due net 60 months. On September 16, 2011, HEMG pledged 772,793 Series C preferred shares (automatically converted to 654,850 common shares on March 13, 2012) of the Company as collateral for this account receivable which at that time had a remaining balance of $772,793. Based on the reduction in value of the collateral to $0.19 based on the then current price of the Company’s common stock, the Company recognized an expense of $123,647 during the year ended April 30, 2014 as an additional allowance. As of October 31, 2016 and April 30, 2016, the balance of the account receivable, net of allowance, was $45,329.

HEMG has failed to pay to Aspen University any portion of the $772,793 amount due as of September 30, 2014, despite due demand for same. Consequently, on November 18, 2014 Aspen University filed a complaint vs. HEMG in the United States District Court for the District of New Jersey, to collect the full amount due to the Company. HEMG defaulted and Aspen University obtained a default judgment. In addition, Aspen University gave notice to HEMG that it intended to privately sell the 654,850 shares after March 10, 2015. On April 29, 2015, the Company sold those shares to a private investor for $0.155 per share or $101,502, which proceeds reduced the receivable balance to $671,291 with a remaining allowance of $625,963, resulting in a net receivable of $45,329. (See Notes 8 and 10)

9

ASPEN GROUP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2016

(Unaudited)

Note 4. Property and Equipment

As property and equipment become fully expired, the fully expired asset is written off against the associated accumulated depreciation. There is no expense impact for such write offs. Property and equipment consisted of the following at October 31, 2016 and April 30, 2016:

	October 31,			April 30,
	2016			2016
Call center hardware	$	39,567		$	79,199
Computer and office equipment		80,171			67,773
Furniture and fixtures		216,652			114,964
Software		2,451,208			2,567,383
		2,787,598			2,829,319
Accumulated depreciation and amortization		(1,515,529	)		(1,680,687	)
Property and equipment, net	$	1,272,069		$	1,148,632

Software consisted of the following at October 31, 2016 and April 30, 2016:

	October 31,			April 30,
	2016			2016
Software	$	2,451,208		$	2,567,383
Accumulated amortization		(1,429,668	)		(1,560,932	)
Software, net	$	1,021,540		$	1,006,451

Depreciation and Amortization expense for all Property and Equipment as well as the portion for just software is presented below for three and six months ended October 31, 2016 and 2015:

	For the				For the
	Three Months Ended October 31,				Six Months Ended October 31,
	2016		2015		2016		2015
Depreciation and Amortization Expense	$	123,906	$	130,154	$	259,054	$	254,925
Software Amortization Expense	$	112,888	$	118,237	$	237,067	$	232,069

The following is a schedule of estimated future amortization expense of software at October 31, 2016:

Year Ending April 30,
2017	$	198,363
2018		317,445
2019		234,272
2020		164,430
2021		107,030
Total	$	1,021,540

10

ASPEN GROUP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2016

(Unaudited)

Note 5. Courseware

Courseware costs capitalized were $6,550 and $63,634 for the six months ended October 31, 2016 and 2015 respectively. During September 2015, $1,970,670 of fully amortized courseware was written off against the accumulated amortization. In subsequent periods, certain other fully expired courseware has been written off in the same way. There is no expense impact for such write-offs.

Courseware consisted of the following at October 31, 2016 and April 30, 2016:

	October 31,			April 30,
	2016			2016
Courseware	$	318,297		$	319,267
Accumulated amortization		(147,816	)		(124,335	)
Courseware, net	$	170,481		$	194,932

Amortization expense of courseware for the three and six months ended October 31, 2016 and 2015:

	For the				For the
	Three Months Ended October 31,				Six Months Ended October 31,
	2016		2015		2016		2015
Amortization Expense	$	15,099	$	18,104	$	31,001	$	36,792

The following is a schedule of estimated future amortization expense of courseware at October 31, 2016:

Year Ending April 30,
2017	$	27,246
2018		50,492
2019		49,019
2020		35,177
2021		8,547
Total	$	170,481

Note 6. Loan Payable Officer – Related Party

On June 28, 2013, the Company received $1,000,000 as a loan from the Company’s Chief Executive Officer. This loan was for a term of 6 months with an annual interest rate of 10%, payable monthly. Through various note extensions, the debt was extended to May 5, 2018. There was no accounting effect for these extensions.

Note 7. Convertible Notes, Convertible Notes – Related Party

On February 29, 2012, a loan payable of $50,000 was converted into a two-year convertible promissory note, bearing interest of 0.19% per annum. Beginning March 31, 2012, the note was convertible into common shares of the Company at the rate of $1.00 per share. The Company evaluated the convertible note and determined that, for the embedded conversion option, there was no beneficial conversion value to record as the conversion price is considered to be the fair market value of the common shares on the note issue date. This loan (now a convertible promissory note) was originally due in February 2014.  The amount due under this note has been reserved for payment upon the note being tendered to the Company by the note holder.

11

ASPEN GROUP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2016

(Unaudited)

On March 13, 2012, the Company’s CEO loaned the Company $300,000 and received a convertible promissory note due March 31, 2013, bearing interest at 0.19% per annum. The note is convertible into common shares of the Company at the rate of $1.00 per share upon five days written notice to the Company. The Company evaluated the convertible note and determined that, for the embedded conversion option, there was no beneficial conversion value to record as the conversion price is considered to be the fair market value of the common shares on the note issue date. Through various note extensions, the debt was extended to May 5, 2018. There was no accounting effect for these modifications. On April 22, 2016, the CEO converted the loan and accrued interest into common stock. The loan was converted at $0.19 per share and the Company issued 1,591,053 shares of common stock.  The note modification was treated as a debt extinguishment under ASC 470-50. There was no gain or loss on this debt extinguishment. The Company evaluated the convertible notes and determined that, for the embedded conversion option there was no beneficial conversion value to record as the conversion price exceeded the fair market value of the common shares on the note issue dates.

On August 14, 2012, the Company’s CEO loaned the Company $300,000 and received a convertible promissory note, payable on demand, bearing interest at 5% per annum. The note is convertible into shares of common stock of the Company at a rate of $0.35 per share (based on proceeds received on September 28, 2012 under a private placement at $0.35 per unit). The Company evaluated the convertible notes and determined that, for the embedded conversion option, there was no beneficial conversion value to record as the conversion price is considered to be the fair market value of the shares of common stock on the note issue date. Through various note extensions, the debt was extended to May 5, 2018. There was no accounting effect for these modifications.

Note 8. Commitments and Contingencies

Line of Credit

In August 2016, the Company closed on a $3 million credit line with its largest shareholder. The credit line, whose terms include a 12% per annum interest rate on drawn funds and a 2% per annum interest rate on undrawn funds, will extend through August 2019.  The Company initially drew down $750,000 under the line, of which approximately $248,000 was used to repay a secured line of credit with a bank as noted below. Additionally, the Company paid a 2% origination fee of $60,000 and issued 750,000 common-stock warrants at an exercise price of $0.20 per share, which are redeemable by the Company if the closing price of its common stock averages at least $0.25 per share for 10 consecutive trading days.  The origination fee and $52,500 value of the 750,000 warrants (see note 11) were recorded as debt discounts to be amortized over the term of the line.  Amortization expense was $6,250 as of October 31, 2016.

The Company maintained a line of credit with a bank, up to a maximum credit line of $250,000.  In September 2016, the line of credit with the bank was paid and terminated.

Employment Agreements

From time to time, the Company enters into employment agreements with certain of its employees. These agreements typically include bonuses, some of which are performance-based in nature. As of October 31, 2016, no performance bonuses have been earned.

Legal Matters

On August 13, 2015, a former employee filed a complaint against the Company in the United States District Court, District of Arizona, for breach of contract claiming that Plaintiff was terminated for “Cause” when no cause existed. Plaintiff sought the remaining amounts under her employment agreement, severance pay, bonuses, value of lost benefits, and the loss of the value of her stock options. The Company filed an answer to the complaint by the September 8, 2015 deadline. That matter has been fully and finally settled for $69,000 as of June 2016 and has been dismissed. The Company accrued $87,500 in accordance with ASC 450-20-55-11 and is included in accrued expenses at April 30, 2016.  The amount owed was paid in the six months ended October 31, 2016.

12

ASPEN GROUP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2016

(Unaudited)

Regulatory Matters

The Company’s subsidiary, Aspen University, is subject to extensive regulation by Federal and State governmental agencies and accrediting bodies. In particular, the Higher Education Act (the “HEA”) and the regulations promulgated thereunder by the DOE subject Aspen University to significant regulatory scrutiny on the basis of numerous standards that schools must satisfy to participate in the various types of federal student financial assistance programs authorized under Title IV of the HEA. Aspen University has had provisional certification to participate in the Title IV Programs. That provisional certification imposes certain regulatory restrictions including, but not limited to, a limit of 1,200 student recipients for Title IV funding for the duration of the provisional certification. The provisional certification restrictions continue with regard to Aspen University’s participation in Title IV Programs.

To participate in the Title IV Programs, an institution must be authorized to offer its programs of instruction by the relevant agencies of the State in which it is located. In addition, an institution must be accredited by an accrediting agency recognized by the DOE and certified as eligible by the DOE. The DOE will certify an institution to participate in the Title IV Programs only after the institution has demonstrated compliance with the HEA and the DOE’s extensive academic, administrative, and financial regulations regarding institutional eligibility and certification. An institution must also demonstrate its compliance with these requirements to the DOE on an ongoing basis. Aspen University performs periodic reviews of its compliance with the various applicable regulatory requirements. As Title IV funds received in fiscal 2016 represented approximately 28% of the Company's cash basis revenues (including revenues from discontinued operations), as calculated in accordance with Department of Education guidelines, the loss of Title IV funding would have a material effect on the Company's future financial performance.

On March 27, 2012 and on August 31, 2012, Aspen University provided the DOE with letters of credit for which the due date was extended to December 31, 2013. On January 30, 2014, the DOE provided Aspen University with an option to become permanently certified by increasing the letter of credit to 50% of all Title IV funds received in the last program year, equaling $1,696,445, or to remain provisionally certified by increasing the 25% letter of credit to $848,225. Aspen informed the DOE of its desire to remain provisionally certified and posted the $848,225 letter of credit for the DOE on April 14, 2014. On February 26, 2015, Aspen University was informed by the DOE that it again had the option to become permanently certified by increasing the letter of credit to 50% of all Title IV funds received in the last program year, equaling $2,244,971, or to remain provisionally certified by increasing the existing 25% letter of credit to $1,122,485. Aspen informed the DOE on March 3, 2015 of its desire to remain provisionally certified and post the $1,122,485 letter of credit for the DOE by April 30, 2015. In November of 2015, the DOE informed Aspen that they no longer need to post a letter of credit. It was subsequently released. The DOE may impose additional or different terms and conditions in any final provisional program participation agreement that it may issue.

The HEA requires accrediting agencies to review many aspects of an institution's operations in order to ensure that the education offered is of sufficiently high quality to achieve satisfactory outcomes and that the institution is complying with accrediting standards. Failure to demonstrate compliance with accrediting standards may result in the imposition of probation, the requirements to provide periodic reports, the loss of accreditation or other penalties if deficiencies are not remediated.

Because Aspen University operates in a highly regulated industry, it may be subject from time to time to audits, investigations, claims of noncompliance or lawsuits by governmental agencies or third parties, which allege statutory violations, regulatory infractions or common law causes of action.

On February 25, 2015, the DEAC informed Aspen University that it had renewed its accreditation for five years to January, 2019.

Return of Title IV Funds

An institution participating in Title IV Programs must correctly calculate the amount of unearned Title IV Program funds that have been disbursed to students who withdraw from their educational programs before completion and must return those unearned funds in a timely manner, no later than 45 days of the date the school determines that the student has withdrawn. Under Department regulations, failure to make timely returns of Title IV Program funds for 5% or more of students sampled on the institution's annual compliance audit in either of its two most recently completed fiscal years can result in the institution having to post a letter of credit in an amount equal to 25% of its required Title IV returns during its most recently completed fiscal year. If unearned funds are not properly calculated and returned in a timely manner, an institution is also subject to monetary liabilities or an action to impose a fine or to limit, suspend or terminate its participation in Title IV Programs.

13

ASPEN GROUP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2016

(Unaudited)

Subsequent to a program review by the Department of Education, the Company recognized that it had not fully complied with all requirements for calculating and making timely returns of Title IV funds (R2T4). In November 2013, the Company returned a total of $102,810 of Title IV funds to the Department of Education.

Delaware Approval to Confer Degrees

Aspen University is a Delaware corporation. Delaware law requires an institution to obtain approval from the Delaware Department of Education (“Delaware DOE”) before it may incorporate with the power to confer degrees. In July 2012, Aspen received notice from the Delaware DOE that it was granted provisional approval status effective until June 30, 2015. On April 25, 2016 the Delaware DOE informed Aspen University it was granted full approval to operate with degree-granting authority in the State of Delaware until July 1, 2020. Aspen University is authorized by the Colorado Commission on Education to operate in Colorado as a degree granting institution.

Note 9. Stockholders’ Equity

Common Stock

On June 21, 2016, the Company issued 2,500,000 shares valued at $400,000 and made a cash payment of $400,000 to a warrant holder in exchange for the buyback of 13,451,611 warrants.  The Company re-valued the fair value of the warrants on the buyback date which equaled $594,000 and accordingly, the Company recorded an expense associated with the buyback of $206,000.

On July 31, 2016, the Company issued 500,000 shares to two IR firms for services.  200,000 shares were issued for services under a six month contract with a value of $30,000. 300,000 shares were issued for services under a one year contract with a value of $45,000.  The Company recorded a prepaid for the value of the services and is amortizing over the respective service periods.

Warrants

A summary of the Company’s warrant activity during the six months ended October 31, 2016 is presented below:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Warrants	Shares			Price		Term		Value
Balance Outstanding, April 30, 2016		23,916,270		$	0.19		—		616,335
Granted		750,000			0.20		—		37,500
Exercised		—			—		—		—
Forfeited		(13,451,611	)		0.16		—		—
Expired		—			—		—		—
Balance Outstanding, October 31, 2016		11,214,659		$	0.24		2.0	$	653,835
Exercisable, October 31, 2016		11,214,659		$	0.24		2.0	$	653,835

On June 24, 2016, the Company issued 2,500,000 shares and a cash payment of $400,000 to a warrant holder in exchange for 13,451,611 warrants as discussed above.

On August 31, 2016, the Company announced that it had closed on a $3 million credit line with its largest shareholder. The Company paid a 2% origination fee of $60,000 and issued 750,000 common-stock warrants at an exercise price of $0.20 per share, which are redeemable by the Company if the closing price of its common stock averages at least $0.25 per share for 10 consecutive trading days.

14

ASPEN GROUP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2016

(Unaudited)

Stock Incentive Plan and Stock Option Grants to Employees and Directors

Immediately following the closing of the Reverse Merger, on March 13, 2012, the Company adopted the 2012 Equity Incentive Plan (the “Plan”) that provides for the grant of 9,300,000 shares, 14,300,000 effective July 2014, 16,300,000 effective September 2014, 20,300,000 effective November 2015 and 25,300,000 effective June 2016, in the form of incentive stock options, non-qualified stock options, restricted shares, stock appreciation rights and restricted stock units to employees, consultants, officers and directors. As of October 31, 2016, there were 3,102,021 shares remaining under the Plan for future issuance. The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of the Company’s stock price over the expected term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates. The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors which are subject to ASC Topic 718 requirements. These amounts are estimates and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes compensation on a straight-line basis over the requisite service period for each award. The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted to employees during the six months ended October 31, 2016 and 2015.

	October 31,
	2016
Expected life (years)		4-6.5
Expected volatility		40-43	%
Weighted-average volatility		0.38	%
Risk-free interest rate		0.00	%
Dividend yield		n/a
Expected forfeiture rate

The Company utilized the simplified method to estimate the expected life for stock options granted to employees. The simplified method was used as the Company does not have sufficient historical data regarding stock option exercises. The expected volatility is based on the average of the expected volatilities from the most recent audited financial statements available for comparative public companies that are deemed to be similar in nature to the Company. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected life of the related option at the time of the grant. Dividend yield is based on historical trends. While the Company believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased.

A summary of the Company’s stock option activity for employees and directors during the six months ended October 31, 2016, is presented below:

				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Options	Shares			Price		Term		Value
Balance Outstanding, April 30, 2016		17,931,102		$	0.21		3.3		—
Granted		4,300,000		$	0.16		4.9		—
Exercised					—		—		—
Forfeited		(228,123	)	$	0.01		1.4		—
Expired		—			—		—		—
Balance Outstanding, October 31, 2016		22,002,979		$	0.18		3.16	$	1,557,341
Exercisable, October 31, 2016		9,839,872		$	0.21		1.57	$	557,660

On May 19, 2016, the Company granted to each of its eight non-employee directors 150,000 five-year stock options. The Company granted an additional 50,000 five-year stock options to the chairman of the Compensation Committee and to the chairman of the Audit Committee.  These options are exercisable at $0.16 and vest in three years.  For the directors receiving 150,000, the fair value was approximately $7,500 per grant and for the two directors receiving 200,000 options, the fair value on the date of grant was approximately $10,000.

15

ASPEN GROUP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2016

(Unaudited)

On June 23, 2016, the Company granted 2,000,000 stock options to the Chief Operating Officer, 700,000 stock options to the Chief Academic Officer and 300,000 to the Chief Financial Officer. The five-year options are exercisable at a price of $0.166 and vest over three years. On the date of grant, the grant to the Chief Operating Officer had a fair value of approximately $100,000, the grant to the Chief Academic Officer had a fair value of approximately $35,000 and the grant to the Chief Financial Officer had a fair value of approximately $15,000.

As of October 31, 2016, there was approximately $583,000 of unrecognized compensation costs related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 2.7 years.

The Company recorded compensation expense of $157,335 for the six months ended October 31, 2016 in connection with employee stock options. The Company recorded compensation expense of $128,987 for the six months ended October 31, 2015 in connection with employee stock options.

On September 12, 2016, the Company extended approximately 5 million options that were expiring in 2017.  The new expiration dates were extended three years.  The cost associated with these extensions is approximately $150,000, which represents the difference between the fair value of the options before the modification and the fair value immediately after the modification.  These extended options will vest over the next three years.  

Stock Option Grants to Non-Employees

There were no stock options granted to non-employees during six months ended October 31, 2016 and 2015. The Company recorded no compensation expense for the six months ended October 31, 2016 in connection with non-employee stock options. There was no unrecognized compensation cost at October 31, 2016.

A summary of the Company's stock option activity for non-employees during the six months ended October 31, 2016, is presented below:

			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
Options	Shares		Price		Term		Value
Balance Outstanding, April 30, 2016		195,000	$	0.28		0.9	$	—
Granted		—		—		—		—
Exercised		—		—		—		—
Forfeited		—		—		—		—
Expired		—		—		—		—
Balance Outstanding, October 31, 2016		195,000	$	0.29		0.43	$	4,500
Exercisable, October 31, 2016		195,000	$	0.29		0.43	$	4,500

Note 10. Related Party Transactions

See Note 3 for discussion of secured note and account receivable to related parties and see Notes 6 and 7 for discussion of loans payable and convertible notes payable to related parties.

Note 11. Fair Value Measurements – Warrant Derivative liability

 The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The accounting standard established a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 input are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. An asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

16

ASPEN GROUP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2016

(Unaudited)

Assets and liabilities measured at fair value on a recurring and non-recurring basis consisted of the following at October 31, 2016 which related to 750,000 warrants which contained price protection:

	Carrying
	Value at
	October 31,		Fair value Measurements at October 31, 2016
	2016		(Level 1)		(Level 2)		(Level 3)
Warrant Derivative Liability	$	52,500	$	—	$	—	$	52,500

The following is a summary of activity of Level 3 liabilities for the six-month period ended October 31, 2016:

Balance April 30, 2016	$	—
Initial valuation of warrant derivative liability		52,500
Change in valuation of warrant derivative liability		—
Balance October 31, 2016	$	52,500

Changes in fair value of the warrant derivative liability are included in other income (expense) in the accompanying unaudited condensed consolidated statements of operations.

The Company intends to provide notice to the warrant holder that they would redeem any unexercised warrants within 30 days in accordance with the warrant terms as the Company’s common stock trading average was at least twenty-five cents over ten consecutive trading days. Accordingly, the fixed monetary redemption value of $0.07 indicates the fair value as of October 31, 2016.

There were no changes in the valuation techniques during the three and six month periods ended October 31, 2016.

Note 12. Subsequent Event

On November 18, 2016, under the 2012 Equity incentive Plan the Company granted 500,000 five-year options to each of the two new directors elected at the annual meeting held that month. These options are exercisable at $0.27 per share. The options were valued at $40,000 each and vest over a three year term, subject to continued service.

17

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion in conjunction with our consolidated financial statements, which are included elsewhere in this Form 10-Q. Management’s Discussion and Analysis of Financial Condition and Results of Operations contain forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed in the Risk Factors contained in the Annual Report on Form 10-K filed on July 27, 2016 with the Securities and Exchange Commission, or the SEC.

All references to “we,” “our” and “us” refer to Aspen Group, Inc. and its subsidiaries (including Aspen), unless the context otherwise indicates. In referring to academic matters, these words refer solely to Aspen University.

Company Overview

Founded in 1987, Aspen’s mission is to offer any motivated college-worthy student the opportunity to receive a high quality, responsibly priced distance-learning education for the purpose of achieving sustainable economic and social benefits for themselves and their families. Aspen is dedicated to providing the highest quality education experiences taught by top-tier professors - 57% of our adjunct professors hold doctorate degrees.

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 online higher education. In 2014, Aspen University unveiled a monthly payment plan aimed at reversing the college-debt sentence plaguing working-class Americans. The monthly payment plan offers bachelor students (except RN to BSN) the opportunity to pay their tuition at $250/month for 72 months ($18,000), nursing bachelor students (RN to BSN) $250/month for 39 months ($9,750), master students $325/month for 36 months ($11,700) and doctoral students $375/month for 72 months ($27,000), interest free, thereby giving students a monthly payment tuition payment option versus taking out a federal financial aid loan.

One of the key differences between Aspen and other publicly-traded, exclusively online, for-profit universities is the fact that the majority of our active degree-seeking students (68% as of October 31, 2016) were enrolled in Aspen’s School of Nursing.

Student Population Overview*

Aspen’s active degree-seeking student body increased year-over-year by 54% during the fiscal quarter ended October 31, 2016, from 2,422 to 3,726 students.

Our most popular school is our School of Nursing. Aspen’s School of Nursing has grown from 57% of our active degree-seeking student body at October 31, 2015, to 68% at October 31, 2016. Aspen’s School of Nursing grew from 1,379 to 2,538 student’s year-over-year, which represented 89% of Aspen’s active degree-seeking student body growth. At October 31, 2016, Aspen’s School of Nursing included 1,493 active students in the RN to BSN program and 1,045 active students in the MSN program or the RN to MSN Bridge program.

* Note: Aspen has revised its degree seeking student body definition to only report “Active Degree-Seeking Students.” “Active Degree-Seeking Students” are defined as students who were enrolled in a course during the quarter reported, or are registered for an upcoming course. Aspen is using this definition going forward because it’s more closely aligned with the definitions used by other publicly traded, for-profit institutions.

New Student Enrollment and Active Degree Seeking Student Body Growth

Since the launch of the BSN marketing campaign in November, 2014, Aspen’s growth rate of new student enrollments has accelerated significantly. Below is a quarterly analysis of the growth of Aspen’s new student enrollments, as well as the growth of the active degree seeking student body over the past seven quarters, including the recent quarter ending October 31, 2016.

	New Student Enrollments	Active Degree Seeking Student Body*
Fiscal Quarter End April 30, 2015	444	1,989
Fiscal Quarter End July 31, 2015	410	2,153
Fiscal Quarter End October 31, 2015	557	2,422
Fiscal Quarter End January 31, 2016	550	2,704
Fiscal Quarter End April 30, 2016	572	2,932
Fiscal Quarter End July 31, 2016	621	3,252
Fiscal Quarter End October 31, 2016	811	3,726

18

Aspen’s School of Nursing is responsible for the vast majority of the new student enrollment and overall active student body growth. Specifically, Aspen’s School of Nursing is now on pace to grow on an annualized basis by approximately 1,320 Active Nursing students – net of student graduations and withdrawals (or ~110/month). Aspen’s BSN program accounts for 68% of that growth, as that program is on pace to increase on an annualized basis by approximately 900 students – net (or ~75/month).

Aspen University expects its total active degree-seeking student body to continue its rapid growth and reach approximately 4,500 students by the end of the fiscal year, April 30, 2017. Therefore, the university is on pace to increase its active student body by ~1,600 students on an annualized basis in fiscal year 2017 versus the previous pace of ~950 active students a year ago, an improvement of 68% year-over-year.

Nursing Revenue Summary

Below is a summary of the Nursing active degree-seeking student body as a percentage of the total active degree-seeking student body over the past six fiscal quarters, as well as the Nursing degree-seeking revenue as a percentage of total revenues. Because Nursing average more course completions per year and the average tuition price per course is higher (all Nursing courses are $975/course) as compared to non-Nursing students, Nursing students today represent 71% of total revenues.

	Total Degree-Seeking Active Student Body		Nursing Degree- Seeking Active Student Body		Nursing Degree-Seeking Active Student Body (%)			Nursing Degree-Seeking Active Student Body – Revenue %*
Quarter ended July 31, 2015		2,153		1,098		51	%		53	%
Quarter ended October 31, 2015		2,422		1,379		57	%		59	%
Quarter ended January 31, 2016		2,704		1,663		62	%		62	%
Quarter ended April 30, 2016		2,932		1,882		64	%		67	%
Quarter ended July 31, 2016		3,252		2,144		66	%		69	%
Quarter ended October 31, 2016		3,726		2,538		68	%		71	%

Monthly Payment Programs Overview

Since the March 2014 monthly payment plan announcement, 59% of courses are now paid through monthly payment methods (based on courses started over the last 90 days). Aspen offers two monthly payment programs, a monthly payment plan in which students make payments every month over a fixed period (36, 39 or 72 months depending on the degree program), and a monthly installment plan in which students pay three monthly installments (day 1, day 31 and day 61 after the start of each course).

As of October 31, 2016, Aspen had 1,970 active students paying through a monthly payment plan, and 238 students paying through a monthly installment plan, for a total of 2,208 active students paying tuition through a monthly payment method. Additionally, Aspen is currently on pace to add approximately 75 active students/month net to its monthly payment programs through fiscal year 2017. Monthly recurring tuition cash payments for monthly payment programs is approximately $550,000 per month, as compared to approximately $150,000 per month a year ago.

Finally, as a consequence of monthly payment programs becoming the payment method of choice among the majority of Aspen’s degree-seeking student body, our HEA, Title IV Program revenue dropped from 33% of total cash receipts in fiscal year 2015 to approximately 28% for fiscal year 2016.

Marketing Efficiency Analysis

Aspen has developed a marketing efficiency ratio to continually monitor the performance of its business model.

Revenue per Enrollment (RPE)

Marketing Efficiency Ratio =

—————————————

Cost per Enrollment (CPE)

Cost per Enrollment (CPE)

The Cost per Enrollment measures the marketing investment spent in a given quarter, divided by the number of new student enrollments achieved in that given quarter, in order to obtain an average CPE for the quarter measured.

19

Revenue per Enrollment (RPE)

The Revenue per Enrollment takes each quarterly cohort of new degree-seeking student enrollments, and measures the amount of earned revenue including tuition and fees to determine the average RPE for the cohort measured. For the later periods of a cohort, in particular students four years or older, we have used reasonable projections based off of historical results to determine the amount of revenue we will earn in later periods of the cohort.

We created the reporting to track the CPE and RPE starting in 2012 and can accurately predict the CPE and RPE for each new student cohort. Our current CPE/RPE Marketing Efficiency Ratio is reflected in the below table.

Quarterly New Student Cohort Actuals Data:

CPE/RPE Analysis *	6 Months Out	12 Months Out	2 Years Out	3 Years Out	4+ Years Out
Courses Completed	2.24	3.52	5.28	6.48	8
Average RPE	$1,974	$3,078	$4,630	$5,684	$7,000
RPE % Earned	28%	44%	66%	81%	100%
Marketing Efficiency Ratio**	2.7x	4.3x	6.4x	7.9x	9.7x
* Projection ** Based on current $718 CPE (six month rolling CPE average)

The Average RPE is approximately $7,000. Of the $7,000, $6,400 of the RPE is earned through tuition, with the remaining $600 on average earned through miscellaneous fees (includes annual technology fee, withdrawal fees, graduation fees, proctored exams, course specific fees, etc.)

Aspen is projecting to average a Marketing Efficiency Ratio of 9.7x, in other words a 9.7x return on our marketing investment. Third-party companies in the higher education industry that manage the Enrollment and Marketing functions on behalf of Universities (also referred to as Managed Services companies) reportedly average 3-4x return on their marketing investments, meaning that Aspen’s business model is currently performing at more than double the efficiency level of that sector.

Results of Operations

For the Quarter Ended October 31, 2016 Compared with the Quarter Ended October 31, 2015

Revenue

Revenue from operations for the quarter ended October 31, 2016 (“2016 Quarter”) increased to $3,465,026 from $1,913,161 for the quarter ended October 31, 2015 (“2015 Quarter”), an increase of $1,551,865 or 81%.

New class starts begun in the 2016 quarter rose to 3,730 from 2,238 for the 2015 quarter, an increase of 67%.  The average tuition price of the new class starts rose to $819 for the 2016 quarter from $786 for the 2015 quarter, an increase of 4%.

20

Cost of Revenues (exclusive of amortization)

The Company’s cost of revenues consists of instructional costs and services and marketing and promotional costs.

Instructional Costs and Services

Instructional costs and services for the 2016 Quarter rose to $547,863 from $384,854 for the 2015 Quarter, an increase of $163,009 or 42%.  

Note that instructional costs and services for the 2016 Quarter dropped to 16% of revenues, as compared to 20% of revenues for the 2015 Quarter.  As student enrollment levels continue to rise, Aspen anticipates the growth rate in instructional costs and services will continue to lag that of overall revenue growth as a result of the Company commencing in early-2016 with a full-time faculty conversion model which saves approximately $50,000 per year for each adjunct faculty member that is converted to full-time status. Depending upon how successful Aspen is in converting faculty to full-time status, we estimate annualized savings of over $500,000.

Marketing and Promotional

Marketing and promotional costs for the 2016 Quarter were $686,993 compared to $482,947 for the 2015 Quarter, an increase of $204,046 or 42%. The Company expects marketing and promotional costs to rise in future periods, given we expect to increase monthly marketing spend to approximately $360,000 by the end of the 2017 fiscal year.

Gross Profit rose to 61% of revenues or $2,102,183 for the 2016 Quarter from 48% of revenues or $909,019 for the 2015 Quarter.

Costs and Expenses

General and Administrative

General and Administrative costs for the 2016 Quarter were $1,919,653 compared to $1,610,202 during the 2015 Quarter, an increase of $309,451 or 19%. A significant portion of this increase is the approximate $360,000 increase in payroll, primarily due to the headcount of our enrollment center increasing by 82% year-over-year. General and Administrative costs as a percentage of revenue for the 2016 Quarter declined to 55% compared to 84% during the 2015 Quarter.

From a sequential perspective, excluding the extraordinary one-time, non-recurring and other expenses incurred in the July 30, 2016 quarter of $269,000 ($206,000 expense associated with the surrender of warrants and a $69,000 expense resulting from a former employee litigation settlement), General and Administrative costs only rose by $12,575.

Depreciation and Amortization

Depreciation and amortization costs for the 2016 Quarter declined to $139,005 from $148,258 for the 2015 Quarter, a decrease of $9,253 or 6%.

Other Expense, net

Other expense, net for the 2016 Quarter increased to $54,971 from $31,320 in the 2015 Quarter, an increase of $23,651 or 76%.

Income Taxes

Income taxes expense (benefit) for the comparable years was $0 as Aspen Group experienced operating losses in both periods. As management made a full valuation allowance against the deferred tax assets stemming from these losses, there was no tax benefit recorded in the statement of operations in both periods.

Net Income

Net Income for 2016 Quarter was $116,541 as compared to a loss of ($744,420) for the 2015 Quarter, an improvement of $860,961 or approximately 116%. Contributing to this improvement was the year-over-year increase in revenues of $1,551,865 or 81% in the 2016 Quarter growing at a significantly higher rate than the increase of General and Administrative costs of only 19%.

21

For the Six Months Ended October 31, 2016 Compared with the Six Months Ended October 31, 2015

Revenue

Revenue from operations for the six months ended October 31, 2016 (“2016 Period”) increased to $6,221,841 from $3,619,022 for the six months ended October 31, 2015 (“2015 Period”), an increase of $2,602,819 or 72%.

Cost of Revenues (exclusive of amortization)

The Company’s cost of revenues consist of instructional costs and services and marketing and promotional costs.

Instructional Costs and Services

Instructional costs and services for the 2016 Period rose to $1,007,062 from $770,921 for the 2015 Period, an increase of $236,141 or 31%.

As student enrollment levels continue to rise, Aspen anticipates the growth rate in instructional costs and services will continue to lag that of overall revenue growth as a result of the Company commencing in early-2016 with a full-time faculty conversion model which saves approximately $50,000 per year for each adjunct faculty member that is converted to full-time status. Depending upon how successful Aspen is in converting faculty to full-time status, we estimate annualized savings of over $500,000.

Marketing and Promotional

Marketing and promotional costs for the 2016 Period were $1,123,853 compared to $870,989 for the 2015 Period, an increase of $252,864 or 29%. The Company expects marketing and promotional costs to rise in future periods, given we expect to increase monthly marketing spend to approximately $360,000 by the end of the 2017 fiscal year.

Gross Profit rose to 61% of revenues or $3,822,857 for the 2016 Quarter from 47% of revenues or $1,708,251 for the 2015 Quarter.

Costs and Expenses

General and Administrative

General and administrative costs for the 2016 Period were $4,101,731 compared to $3,087,819 during the 2015 Period, an increase of $1,013,912 or 33%. A significant portion of this increase is the increase in payroll, as well as $206,000 for the warrant surrender incurred in the quarter ending July 31, 2016.

Depreciation and Amortization

Depreciation and amortization costs for the 2016 Period decreased to $290,055 from $291,717 for the 2015 Period, a decrease of $1,662 or 1%.

Other Income (Expense)

Other income for the 2016 Period decreased to $1,364 from $6,663 in the 2015 Period, a decrease of $5,299 or 80%. Interest expense increased to $89,411 from $67,365, an increase of $22,046 or 33%, the increase primarily to higher interest paid for the third party line of credit.

Income Taxes

Income taxes expense (benefit) for the 2016 Period and 2015 Period was $0 as Aspen Group experienced operating losses in both periods. As management made a full valuation allowance against the deferred tax assets stemming from these losses, there was no tax benefit recorded in the statement of operations in both periods.

22

Net Loss

Net loss for the 2016 Period was ($388,907) as compared to ($1,463,126) for the 2015 Period, a decrease in the loss of $1,074,219, or approximately 73%. Contributing to this lower loss was the increase in revenues and gross profits in the 2016 Period, as well as lower proportional increase in G&A expenses relative to the increase in revenues.

Non-GAAP – Financial Measures

The following discussion and analysis includes both financial measures in accordance with Generally Accepted Accounting Principles, or GAAP, as well as non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to net income, operating income, and cash flow from operating activities, liquidity or any other financial measures. They may not be indicative of the historical operating results of Aspen Group nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.

Our management uses and relies on Adjusted EBITDA and EBITDA, which are non-GAAP financial measures. We believe that both management and shareholders benefit from referring to the following non-GAAP financial measures in planning, forecasting and analyzing future periods. Our management uses these non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparison. Our management recognizes that the non-GAAP financial measures have inherent limitations because of the described excluded items.

Aspen Group defines Adjusted EBITDA as earnings (or loss) from continuing operations before the items in the table below including non-recurring and other charges of $97,384. Adjusted EBITDA is an important measure of our operating performance because it allows management, investors and analysts to evaluate and assess our core operating results from period-to-period after removing the impact of items of a non-operational nature that affect comparability.

We have included a reconciliation of our non-GAAP financial measures to the most comparable financial measure calculated in accordance with GAAP. We believe that providing the non-GAAP financial measures, together with the reconciliation to GAAP, helps investors make comparisons between Aspen Group and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measure and the corresponding GAAP measure provided by each company under applicable SEC rules.

The following table presents a reconciliation of Adjusted EBITDA to Net loss allocable to common shareholders, a GAAP financial measure:

	For the Quarters Ended
	October 31,
	2016		2015
Net income (loss)	$	116,541	$	(744,420	)
Interest Expense, net of interest income		54,971		31,320
Depreciation & Amortization		139,005		148,258
EBITDA (loss)		310,517		(564,842	)
Bad Debt Expense		—		67,299
Non-recurring and Other Charges		97,384		162,145
Stock-based compensation		61,728		56,046
Adjusted EBITDA (Loss)	$	469,629	$	(279,352	)

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Liquidity and Capital Resources

A summary of our cash flows is as follows:

	For the
	Six Months Ended
	October 31,
	2016			2015
Net cash provided by (used in) operating activities	$	26,323		$	(878,508	)
Net cash used in investing activities		(389,040	)		(277,653	)
Net cash provided by financing activities		286,300			5,115
Net increase (decrease) in cash and cash equivalents	$	(76,417	)	$	(1,151,046	)

Net Cash Provided by (Used in) Operating Activities

Net cash provided in operating activities during the 2016 Period totaled $26,323 and resulted primarily by non-cash items of $692,905 and a net change in operating assets and liabilities of $277,674, reduced by the net loss of $388,907. The most significant item change operating assets and liabilities was an increase in accounts receivable of $1,304,754 which is primarily attributed to the growth in revenues from students paying through the monthly payment plan.  The most significant non-cash items were depreciation and amortization expense of $290,055 and the warrant buyback expense of $206,000.

Net cash used in operating activities during the 2015 Period totaled ($878,508) and resulted primarily from a net loss from continuing operations of ($1,463,126) offset by non-cash items of $573,491 and a net change in operating assets and liabilities of $11,127 Depreciation and amortization of $291,716 was the most significant non-cash change and an increase of $594,794 in accounts receivable was the most significant change in operating assets and liabilities.

Net Cash Used in Investing Activities

Net cash used in investing activities during the 2016 Period totaled ($389,040) mostly attributed to the increase in software.

Net cash used in investing activities during the 2015 Period totaled ($277,653) and resulted primarily from capitalized technology expenditures included in property and equipment.

Net Cash Provided By Financing Activities

Net cash used by financing activities during the 2016 Period totaled $286,300 which reflects the increase due to the new $3,000,000 line of credit, of which $750,000 has been drawn, offset by the buyback of warrants for $400,000.

Net cash provided by financing activities during the 2015 Period totaled $5,115 which resulted primarily from a net increase in the line of credit at our bank.

Liquidity and Capital Resource Considerations

Historically, our primary source of liquidity is cash receipts from tuition and the issuances of debt and equity securities. The primary uses of cash are payroll related expenses, professional expenses and instructional and marketing expenses.

As of December 12, 2016, the Company had a cash balance of approximately $1.0 million. With the additional cash from the Company’s $3 million line of credit, the growth in the Company revenues and improving operating margins, the Company believes that it has sufficient cash to allow the Company to implement its long-term business plan and meet its operations for at least the next 12 months. During the next 12 months, we expect to double our monthly marketing spend rate from $180,000 to $360,000, and spend $500,000 to enhance our computer systems to support our planned growth.

Our cash balances are kept liquid to support our growing infrastructure needs. The majority of our cash is concentrated in large financial institutions.

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Critical Accounting Policies and Estimates

In response to financial reporting release FR-60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies, from the SEC, we have selected our more subjective accounting estimation processes for purposes of explaining the methodology used in calculating the estimate, in addition to the inherent uncertainties pertaining to the estimate and the possible effects on our financial condition. The accounting estimates are discussed below and involve certain assumptions that, if incorrect, could have a material adverse impact on our results of operations and financial condition.

Revenue Recognition and Deferred Revenue

Revenue consisting primarily of tuition and fees derived from courses taught by Aspen online as well as from related educational resources that Aspen provides to its students, such as access to our online materials and learning management system. Tuition revenue is recognized pro-rata over the applicable period of instruction. Aspen maintains an institutional tuition refund policy, which provides for all or a portion of tuition to be refunded if a student withdraws during stated refund periods. Certain states in which students reside impose separate, mandatory refund policies, which override Aspen’s policy to the extent in conflict. If a student withdraws at a time when a portion or none of the tuition is refundable, then in accordance with its revenue recognition policy, Aspen recognizes as revenue the tuition that was not refunded. Since Aspen recognizes revenue pro-rata over the term of the course and because, under its institutional refund policy, the amount subject to refund is never greater than the amount of the revenue that has been deferred, under Aspen’s accounting policies revenue is not recognized with respect to amounts that could potentially be refunded. Aspen’s educational programs have starting and ending dates that differ from its fiscal quarters. Therefore, at the end of each fiscal quarter, a portion of revenue from these programs is not yet earned and is therefore deferred. Aspen also charges students annual fees for library, technology and other services, which are recognized over the related service period. Deferred revenue represents the amount of tuition, fees, and other student payments received in excess of the portion recognized as revenue and it is included in current liabilities in the accompanying consolidated balance sheets. Other revenue may be recognized as sales occur or services are performed.

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 most common payment option for Aspen’s students is personal funds or payment made on their behalf by an employer. 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 will 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 a general reserve method based on an analysis of its historical bad debt experience, current economic trends, and the aging of the accounts receivable and student status. Aspen applies reserves to its receivables based upon an estimate of 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 payers 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.

Related Party Transactions

See Note 10 to the unaudited consolidated financial statements included herein for additional description of related party transactions that had a material effect on our unaudited consolidated financial statements.

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Off Balance Sheet Arrangements

We do not engage in any activities involving variable interest entities or off-balance sheet arrangements.

New Accounting Pronouncements

See Note 2 to our unaudited consolidated financial statements included herein for discussion of recent accounting pronouncements.

Cautionary Note Regarding Forward Looking Statements

This report contains forward-looking statements including statements regarding student growth, projected Marketing Efficiency Ratio, overall growth and liquidity. All statements other than statements of historical facts contained in this report, including statements regarding our future financial position, liquidity, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.

The results anticipated by any or all of these forward-looking statements might not occur. Important factors that could cause actual results to differ from those in the forward-looking statements include the failure to maintain regulatory approvals, regulatory issues, competition, ineffective media and/or marketing, failure to maintain growth in degree seeking students and the failure to generate sufficient revenue. Further information on our risk factors is contained in our filings with the SEC, including the Form 10-K filed on July 27, 2016. Any forward-looking statement made by us in this report speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. Our management carried out an evaluation, with the participation of our Principal Executive Officer and Principal Financial Officer, required by Rule 13a-15 or 15d-15 of the Securities Exchange Act of 1934 (the “Exchange Act”) of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act. Based on their evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

26

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. There were no material changes to our legal proceedings as described in the Company’s Form 10-K during the period covered by this report.   

ITEM 1A. RISK FACTORS

Not applicable to smaller reporting companies.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Effective September 14, 2016, Mr. Paul Schneier resigned from the Company’s Board of Directors. Additionally, effective August 29, 2016, Mr. David Pasi resigned from the Company’s Board of Directors. By agreement with the Company, all of Mr. Schneier’s and Mr. Pasi’s outstanding equity awards became fully vested upon their resignations.

ITEM 6. EXHIBITS

See the Exhibit Index at the end of this report.

27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Aspen Group, Inc.
December 12, 2016	By:	/s/ Michael Mathews
		Michael Mathews
		Chief Executive Officer
		(Principal Executive Officer)

December 12, 2016	By:	/s/ Janet Gill
		Janet Gill
		Chief Financial Officer
		(Principal Financial Officer)

28

EXHIBIT INDEX

		Incorporated by Reference			Filed or Furnished
Exhibit #	Exhibit Description	Form	Date	Number	Herewith
3.1	Certificate of Amendment to Certificate of Incorporation, as amended	S-1	10/18/14	3.1
3.2	Bylaws	8-K	3/19/12	2.7
3.3	Amendment No. 1 to Bylaws	8-K	3/12/14	3.1
10.1	2012 Equity Incentive Plan, as amended	10-K	7/27/16	10.5
10.2	Form of Letter Agreement	8-K	9/7/16	2.1
10.3	Form of Revolving Promissory Note	8-K	9/7/16	2.2
10.4	Form of Warrant	8-K	9/7/16	3.1
31.1	Certification of Principal Executive Officer (302)				Filed
31.2	Certification of Principal Financial Officer (302)				Filed
32.1	Certification of Principal Executive and Principal Financial Officer (906)				Furnished**
101.INS	XBRL Instance Document				Filed
101.SCH	XBRL Taxonomy Extension Schema Document				Filed
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document				Filed
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document				Filed
101.LAB	XBRL Taxonomy Extension Label Linkbase Document				Filed
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document				Filed

———————

**

This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

Copies of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our shareholders who make a written request to Aspen Group, Inc., at the address on the cover page of this report, Attention: Corporate Secretary.

29

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Michael Mathews, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Aspen Group, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 12, 2016

/s/ Michael Mathews

Michael Mathews

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Janet Gill, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Aspen Group, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 12, 2016

/s/ Janet Gill

Janet Gill

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Aspen Group, Inc. (the “Company”) on Form 10-Q for the quarter ended October 31, 2016, as filed with the Securities and Exchange Commission on the date hereof, I, Michael Mathews, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.

The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and

2.

The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael Mathews

Michael Mathews

Chief Executive Officer

(Principal Executive Officer)

Dated: December 12, 2016

In connection with the quarterly report of Aspen Group, Inc. (the “Company”) on Form 10-Q for the quarter ended October 31, 2016, as filed with the Securities and Exchange Commission on the date hereof, I, Janet Gill, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.

The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and

2.

The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Janet Gill

Janet Gill

Chief Financial Officer

(Principal Financial Officer)

Dated: December 12, 2016

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	Oct. 31, 2016	Dec. 12, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 31, 2016
Entity Registrant Name	ASPEN GROUP, INC.
Entity Central Index Key	0001487198
Current Fiscal Year End Date	--04-30
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2017
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		137,958,145
Trading Symbol	ASPU

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CONSOLIDATED BALANCE SHEETS - USD ($)	Oct. 31, 2016	Apr. 30, 2016
Current assets:
Cash and cash equivalents	$ 707,379	$ 783,796
Accounts receivable, net of allowance of $449,946 and $449,946, respectively	3,484,606	2,179,852
Prepaid expenses	142,939	123,055
Total current assets	4,334,924	3,086,703
Property and equipment:
Call center equipment	39,567	79,199
Computer and office equipment	80,171	67,773
Furniture and fixtures	216,652	114,964
Software	2,451,208	2,567,383
Total	2,787,598	2,829,319
Less accumulated depreciation and amortization	(1,515,529)	(1,680,687)
Total property and equipment, net	1,272,069	1,148,632
Courseware, net	170,481	194,932
Accounts receivable, secured - related party, net of allowance of $625,963, and $625,963, respectively	45,329	45,329
Other assets	54,415	31,175
Total assets	5,877,218	4,506,771
Current liabilities:
Accounts payable	618,763	9,201
Accrued expenses	232,949	176,974
Deferred revenue	1,188,507	1,013,434
Refunds Due Students	278,227	110,883
Deferred rent, current portion	13,998	2,345
Convertible notes payable, current portion	50,000	50,000
Total current liabilities	2,382,444	1,362,837
Bank Line of credit		1,783
Loan payable officer - related party	1,000,000	1,000,000
Convertible notes payable - related party	300,000	300,000
Third party Line of Credit, net of discounts of $106,250 and $0	643,750
Warrant derivative liability	52,500
Deferred rent	38,029	29,169
Total liabilities	4,416,723	2,693,789
Commitments and contingencies - See Note 8
Stockholders' equity:
Common stock, $0.001 par value; 250,000,000 shares authorized, 135,158,145 issued and 134,958,145 outstanding at April 30, 2016 138,158,145 issued and 137,958,145 outstanding at October 31, 2016	137,959	134,958
Additional paid-in capital	26,386,870	26,353,451
Treasury stock (200,000 shares)	(70,000)	(70,000)
Accumulated deficit	(24,994,334)	(24,605,427)
Total stockholders' equity	1,460,495	1,812,982
Total liabilities and stockholders' equity	$ 5,877,218	$ 4,506,771

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Oct. 31, 2016	Apr. 30, 2016
Assets
Allowance for doubtful accounts, current accounts receivables	$ 449,946	$ 449,946
Allowance for doubtful accounts, noncurrent accounts receivables	625,963	625,963
Debt discount	$ 106,250	$ 0
Stockholders' Equity:
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	138,158,145	135,158,145
Common stock, shares outstanding	137,958,145	134,958,145
Treasury stock, shares	200,000	200,000

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		6 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Oct. 31, 2015
Income Statement [Abstract]
Revenues	$ 3,465,026	$ 1,913,161	$ 6,221,841	$ 3,619,022
Operating expenses
Cost of revenues (exclusive of depreciation and amortization shown separately below)	1,234,856	867,801	2,130,915	1,641,910
General and administrative	1,919,653	1,610,202	4,101,731	3,087,819
Depreciation and amortization	139,005	148,258	290,055	291,717
Total operating expenses	3,293,514	2,626,261	6,522,701	5,021,446
Operating income (loss)	171,512	(713,100)	(300,860)	(1,402,424)
Other income (expense):
Other income	1,307	2,930	1,364	6,663
Interest expense	(56,278)	(34,250)	(89,411)	(67,365)
Total other expense, net	(54,971)	(31,320)	(88,047)	(60,702)
Income (loss) before income taxes	116,541	(744,420)	(388,907)	(1,463,126)
Income tax expense (benefit)
Net income (loss)	$ 116,541	$ (744,420)	$ (388,907)	$ (1,463,126)
Net income (loss) per share allocable to common stockholders - basic	$ 0.00	$ (0.01)	$ (0.00)	$ (0.01)
Net income (loss) per share allocable to common stockholders - diluted	$ 0.00	$ (0.01)	$ 0.00	$ (0.01)
Weighted average number of common shares outstanding - basic	137,758,145	128,303,606	136,833,008	128,239,022
Weighted average number of common shares outstanding - diluted	145,683,166	128,303,606	136,833,008	128,239,022

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CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - 6 months ended Oct. 31, 2016 - USD ($)	Common Stock [Member]	Additional Paid-In Capital [Member]	Treasury Stock [Member]	Accumulated Deficit [Member]	Total
Balance at Apr. 30, 2016	$ 134,958	$ 26,353,451	$ (70,000)	$ (24,605,427)	$ 1,812,982
Balance, shares at Apr. 30, 2016	134,958,145				134,958,145
Attorney fees associated with Registration Statement		(1,917)			$ (1,917)
Stock-based compensation		157,335			157,335
Warrant buyback	$ 2,500	(196,500)			(194,000)
Warrant buyback, shares	2,500,000
Shares issued for services	$ 501	74,501			75,002
Shares issued for services, shares	500,000
Net loss				(388,907)	(388,907)
Balance at Oct. 31, 2016	$ 137,959	$ 26,386,870	$ (70,000)	$ (24,994,334)	$ 1,460,495
Balance, shares at Oct. 31, 2016	137,958,145

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
Cash flows from operating activities:
Net income (loss)	$ (388,907)	$ (1,463,126)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Bad debt expense		99,188
Depreciation and amortization	290,055	291,717
Stock-based compensation	157,335	128,987
Warrant modification expense		6,000
Amortization of debt discounts	6,250
Amortization of prepaid shares for services	35,000	47,600
Warrant buyback expense	206,000
Changes in operating assets and liabilities:
Accounts receivable	(1,304,754)	(594,794)
Prepaid expenses	20,118	1,809
Other assets	(23,240)	(7,267)
Accounts payable	609,562	312,004
Accrued expenses	55,974	58,931
Deferred rent	20,513	(6,300)
Refunds due students	167,344	179,638
Deferred revenue	175,073	67,105
Net cash provided by (used in) operating activities	26,323	(878,508)
Cash flows from investing activities:
Purchases of property and equipment	(382,490)	(214,019)
Purchases of courseware	(6,550)	(63,634)
Net cash used in investing activities	(389,040)	(277,653)
Cash flows from financing activities:
Warrant buyback	(400,000)
Borrowing of bank line of credit	247,000	5,794
Repayment of bank line of credit	(248,783)
Third party line of credit	750,000
Third party line of credit financing costs	(60,000)
Disbursements for equity offering costs	(1,917)	(679)
Net cash provided by financing activities	286,300	5,115
Net decrease in cash and cash equivalents	(76,417)	(1,151,046)
Cash and cash equivalents at beginning of period	783,796	2,159,463
Cash and cash equivalents at end of period	707,379	1,008,417
Supplemental disclosure of cash flow information:
Cash paid for interest	67,656	58,017
Cash paid for income taxes
Supplemental disclosure of non-cash investing and financing activities
Common stock issued for services	75,002	47,600
Warrant derivative liability	$ 52,500

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Nature of Operations and Liquidity

6 Months Ended

Oct. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations and Liquidity

Note 1. Nature of Operations and Liquidity

Overview

Aspen Group, Inc. (together with its subsidiary, the “Company” or “Aspen”) is a holding company. Its subsidiary Aspen University Inc. was founded in Colorado in 1987 as the International School of Information Management. On September 30, 2004, it changed its name to Aspen University Inc. (“Aspen University”). On March 13, 2012, the Company was recapitalized in a reverse merger. All references to the Company or Aspen before March 13, 2012 are to Aspen University.

Aspen’s mission is to offer any motivated college-worthy student the opportunity to receive a high quality, responsibly priced distance-learning education for the purpose of achieving sustainable economic and social benefits for themselves and their families. Aspen is dedicated to providing the highest quality education experiences taught by top-tier professors - 57% of our adjunct professors hold doctorate degrees.

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 online higher education. In 2014, Aspen University unveiled a monthly payment plan aimed at reversing the college-debt sentence plaguing working-class Americans. The monthly payment plan offers bachelor students (except RN to BSN) the opportunity to pay their tuition at $250/month for 72 months ($18,000), nursing bachelor students (RN to BSN) $250/month for 39 months ($9,750), master students $325/month for 36 months ($11,700) and doctoral students $375/month for 72 months ($27,000), interest free, thereby giving students a monthly payment tuition payment option versus taking out a federal financial aid loan.

On November 10, 2014, Aspen University announced the Commission on Collegiate Nursing Education (“CCNE”) has granted accreditation to its Bachelor of Science in Nursing program (RN to BSN) until December 31, 2019.

Since 1993, we have 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”). On February 25, 2015, the DEAC informed Aspen University that it had renewed its accreditation for five years to January, 2019.

Basis of Presentation

A. 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, 2016 and 2015, our cash flows for the six months ended October 31, 2016 and 2015, and our financial position as of October 31, 2016 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 Report on Form 10-K for the period ended April 30, 2016 as filed with the SEC on July 27, 2016. The April 30, 2016 balance sheet is derived from those statements.

B. Liquidity

In August 2016, the Company closed on a $3 million credit line with its largest shareholder. The credit line, whose terms include a 12% per annum interest rate on drawn funds and a 2% per annum interest rate on undrawn funds, will extend through August 2019.  The Company initially drew down $750,000 under the line, of which approximately $248,000 was used to repay a secured line of credit with a bank. (See Note 8)

At October 31, 2016, the Company had a cash balance of approximately $700,000. The Company had cash provided from operating activities of $26,323.

On April 22, 2016, the Company issued 4,855,487 shares of common stock to two of its warrant holders in exchange for their early exercise of warrants at a reduced exercise price of $0.155 per share. The Company received gross proceeds of $752,500 from these exercises. As a condition of the warrant holders exercising their warrants, Mr. Michael Mathews, the Company’s Chairman of the Board and Chief Executive Officer, converted a $300,000 note and in connection with this conversion, Mr. Mathews was issued 1,591,053 shares of common stock. See Note 7. With the additional cash raised in the financings, the growth in revenues and improving operating margins, the Company believes that it has sufficient cash to allow the Company to implement its long-term business plan.

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Significant Accounting Policies

6 Months Ended

Oct. 31, 2016

Accounting Policies [Abstract]

Significant Accounting Policies

Note 2. Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Aspen Group, Inc. 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 unaudited 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, amortization periods and valuation of courseware and software development costs, valuation of beneficial conversion features in convertible debt, valuation of derivative instruments, valuation of loss contingencies, valuation of stock-based compensation and the valuation allowance on deferred tax assets.

Cash and Cash Equivalents

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, 2016 and April 30, 2016. 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, 2016. As of October 31, 2016 and April 30, 2016, there were deposits totaling $426,487 and $1,224,863 respectively, held in two separate institutions greater than the federally insured limits.

Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy:

Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets;

Level 2—Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and

Level 3—Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities.

The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

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.

Revenue Recognition and Deferred Revenue

Revenues consist primarily of tuition and fees derived from courses taught by the Company online as well as from related educational resources that the Company provides to its students, such as access to our online materials and learning management system. Tuition revenue is recognized pro-rata over the applicable period of instruction. The Company allows a student to make three monthly tuition payments during each class. The Company maintains an institutional tuition refund policy, which provides for all or a portion of tuition to be refunded if a student withdraws during stated refund periods. Certain states in which students reside impose separate, mandatory refund policies, which override the Company’s policy to the extent in conflict. If a student withdraws at a time when a portion or none of the tuition is refundable, then in accordance with its revenue recognition policy, the Company recognizes as revenue the tuition that was not refunded. Since the Company recognizes revenue pro-rata over the term of the course and because, under its institutional refund policy, the amount subject to refund is never greater than the amount of the revenue that has been deferred, under the Company’s accounting policies revenue is not recognized with respect to amounts that could potentially be refunded. The Company’s educational programs have starting and ending dates that differ from its fiscal quarters. Therefore, at the end of each fiscal quarter, a portion of revenue from these programs is not yet earned and is therefore deferred. The Company also charges students annual fees for library, technology and other services, which are recognized over the related service period. Deferred revenue represents the amount of tuition, fees, and other student payments received in excess of the portion recognized as revenue and it is included in current liabilities in the accompanying consolidated balance sheets. Other revenues may be recognized as sales occur or services are performed.

The Company has revenues from students outside the United States representing 3.5% of the revenues for the quarter ended October 31, 2016.

Accounting for Derivatives

The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging”. The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liability at the fair value of the instrument on the reclassification date.

Net Income (Loss) Per Share

Net income (loss) per common share is based on the weighted average number of common shares outstanding during each period. Options to purchase 22,197,979 and 16,857,313 common shares, warrants to purchase 11,214,659 and 28,871,757 common shares, and $350,000 and $650,000 of convertible debt (convertible into 907,143 and 1,207,143 common shares, respectively) were outstanding during three months ending October 31, 2016 and 2015, respectively, but during certain periods were not included in the computation of diluted loss per share because the effects would have been anti-dilutive. The options, warrants and convertible debt are considered to be common stock equivalents and are only included in the calculation of diluted earnings per common share when their effect is dilutive, as noted in the chart below.

Basic and diluted income per share for the three months ended October 31, 2016, were calculated as follows:

	Basic		Diluted
Numerator
Net income applicable to common stock	$	116,541	$	116,541
Convertible debt interest		—		8,021
	$	116,541	$	124,562
Denominator
Weighted average common shares outstanding		137,758,145		137,758,145
Convertible debt		—		907,143
Warrants and options		—		7,017,878
		137,758,145		145,683,166
Net income per share	$	0.00	$	0.00

Recent Accounting Pronouncements

There have been no new relevant pronouncements since those disclosed in the April 30, 2016 Consolidated Financial Statements.

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Secured Note and Accounts Receivable - Related Parties

6 Months Ended

Oct. 31, 2016

Due from Related Parties, Unclassified [Abstract]

Secured Note and Accounts Receivable - Related Parties

Note 3. Secured Note and Accounts Receivable – Related Parties

On March 30, 2008 and December 1, 2008, Aspen University sold courseware pursuant to marketing agreements to Higher Education Management Group, Inc. (“HEMG”,) which was then a related party and principal stockholder of the Company. HEMG’s president is Mr. Patrick Spada, the former Chairman of the Company, the sold courseware amounts were $455,000 and $600,000, respectively; UCC filings were filed accordingly.  Under the marketing agreements, the receivables were due net 60 months. On September 16, 2011, HEMG pledged 772,793 Series C preferred shares (automatically converted to 654,850 common shares on March 13, 2012) of the Company as collateral for this account receivable which at that time had a remaining balance of $772,793. Based on the reduction in value of the collateral to $0.19 based on the then current price of the Company’s common stock, the Company recognized an expense of $123,647 during the year ended April 30, 2014 as an additional allowance. As of October 31, 2016 and April 30, 2016, the balance of the account receivable, net of allowance, was $45,329.

HEMG has failed to pay to Aspen University any portion of the $772,793 amount due as of September 30, 2014, despite due demand for same. Consequently, on November 18, 2014 Aspen University filed a complaint vs. HEMG in the United States District Court for the District of New Jersey, to collect the full amount due to the Company. HEMG defaulted and Aspen University obtained a default judgment. In addition, Aspen University gave notice to HEMG that it intended to privately sell the 654,850 shares after March 10, 2015. On April 29, 2015, the Company sold those shares to a private investor for $0.155 per share or $101,502, which proceeds reduced the receivable balance to $671,291 with a remaining allowance of $625,963, resulting in a net receivable of $45,329. (See Notes 8 and 10)

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Property and Equipment

6 Months Ended

Oct. 31, 2016

Property and equipment:

Property and Equipment

Note 4. Property and Equipment

As property and equipment become fully expired, the fully expired asset is written off against the associated accumulated depreciation. There is no expense impact for such write offs. Property and equipment consisted of the following at October 31, 2016 and April 30, 2016:

	October 31,			April 30,
	2016			2016
Call center hardware	$	39,567		$	79,199
Computer and office equipment		80,171			67,773
Furniture and fixtures		216,652			114,964
Software		2,451,208			2,567,383
		2,787,598			2,829,319
Accumulated depreciation and amortization		(1,515,529	)		(1,680,687	)
Property and equipment, net	$	1,272,069		$	1,148,632

Software consisted of the following at October 31, 2016 and April 30, 2016:

	October 31,			April 30,
	2016			2016
Software	$	2,451,208		$	2,567,383
Accumulated amortization		(1,429,668	)		(1,560,932	)
Software, net	$	1,021,540		$	1,006,451

Depreciation and Amortization expense for all Property and Equipment as well as the portion for just software is presented below for three and six months ended October 31, 2016 and 2015:

	For the				For the
	Three Months Ended October 31,				Six Months Ended October 31,
	2016		2015		2016		2015
Depreciation and Amortization Expense	$	123,906	$	130,154	$	259,054	$	254,925
Software Amortization Expense	$	112,888	$	118,237	$	237,067	$	232,069

The following is a schedule of estimated future amortization expense of software at October 31, 2016:

Year Ending April 30,
2017	$	198,363
2018		317,445
2019		234,272
2020		164,430
2021		107,030
Total	$	1,021,540

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Courseware

6 Months Ended

Oct. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Courseware

Note 5. Courseware

Courseware costs capitalized were $6,550 and $63,634 for the six months ended October 31, 2016 and 2015 respectively. During September 2015, $1,970,670 of fully amortized courseware was written off against the accumulated amortization. In subsequent periods, certain other fully expired courseware has been written off in the same way. There is no expense impact for such write-offs.

Courseware consisted of the following at October 31, 2016 and April 30, 2016:

	October 31,			April 30,
	2016			2016
Courseware	$	318,297		$	319,267
Accumulated amortization		(147,816	)		(124,335	)
Courseware, net	$	170,481		$	194,932

Amortization expense of courseware for the three and six months ended October 31, 2016 and 2015:

	For the				For the
	Three Months Ended October 31,				Six Months Ended October 31,
	2016		2015		2016		2015
Amortization Expense	$	15,099	$	18,104	$	31,001	$	36,792

The following is a schedule of estimated future amortization expense of courseware at October 31, 2016:

Year Ending April 30,
2017	$	27,246
2018		50,492
2019		49,019
2020		35,177
2021		8,547
Total	$	170,481

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Loan Payable Officer - Related Party

6 Months Ended

Oct. 31, 2016

Loans Payable, by Type, Current and Noncurrent [Abstract]

Loan Payable Officer, Related Party

Note 6. Loan Payable Officer – Related Party

On June 28, 2013, the Company received $1,000,000 as a loan from the Company’s Chief Executive Officer. This loan was for a term of 6 months with an annual interest rate of 10%, payable monthly. Through various note extensions, the debt was extended to May 5, 2018. There was no accounting effect for these extensions.

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Convertible Notes, Convertible Notes - Related Party

6 Months Ended

Oct. 31, 2016

Debt Disclosure [Abstract]

Convertible Notes, Convertible Notes - Related Party and Debenture Payable

Note 7. Convertible Notes, Convertible Notes – Related Party

On February 29, 2012, a loan payable of $50,000 was converted into a two-year convertible promissory note, bearing interest of 0.19% per annum. Beginning March 31, 2012, the note was convertible into common shares of the Company at the rate of $1.00 per share. The Company evaluated the convertible note and determined that, for the embedded conversion option, there was no beneficial conversion value to record as the conversion price is considered to be the fair market value of the common shares on the note issue date. This loan (now a convertible promissory note) was originally due in February 2014.  The amount due under this note has been reserved for payment upon the note being tendered to the Company by the note holder.

On March 13, 2012, the Company’s CEO loaned the Company $300,000 and received a convertible promissory note due March 31, 2013, bearing interest at 0.19% per annum. The note is convertible into common shares of the Company at the rate of $1.00 per share upon five days written notice to the Company. The Company evaluated the convertible note and determined that, for the embedded conversion option, there was no beneficial conversion value to record as the conversion price is considered to be the fair market value of the common shares on the note issue date. Through various note extensions, the debt was extended to May 5, 2018. There was no accounting effect for these modifications. On April 22, 2016, the CEO converted the loan and accrued interest into common stock. The loan was converted at $0.19 per share and the Company issued 1,591,053 shares of common stock.  The note modification was treated as a debt extinguishment under ASC 470-50. There was no gain or loss on this debt extinguishment. The Company evaluated the convertible notes and determined that, for the embedded conversion option there was no beneficial conversion value to record as the conversion price exceeded the fair market value of the common shares on the note issue dates.

On August 14, 2012, the Company’s CEO loaned the Company $300,000 and received a convertible promissory note, payable on demand, bearing interest at 5% per annum. The note is convertible into shares of common stock of the Company at a rate of $0.35 per share (based on proceeds received on September 28, 2012 under a private placement at $0.35 per unit). The Company evaluated the convertible notes and determined that, for the embedded conversion option, there was no beneficial conversion value to record as the conversion price is considered to be the fair market value of the shares of common stock on the note issue date. Through various note extensions, the debt was extended to May 5, 2018. There was no accounting effect for these modifications.

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Commitments and Contingencies

6 Months Ended

Oct. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 8. Commitments and Contingencies

Line of Credit

In August 2016, the Company closed on a $3 million credit line with its largest shareholder. The credit line, whose terms include a 12% per annum interest rate on drawn funds and a 2% per annum interest rate on undrawn funds, will extend through August 2019.  The Company initially drew down $750,000 under the line, of which approximately $248,000 was used to repay a secured line of credit with a bank as noted below. Additionally, the Company paid a 2% origination fee of $60,000 and issued 750,000 common-stock warrants at an exercise price of $0.20 per share, which are redeemable by the Company if the closing price of its common stock averages at least $0.25 per share for 10 consecutive trading days.  The origination fee and $52,500 value of the 750,000 warrants (see note 11) were recorded as debt discounts to be amortized over the term of the line.  Amortization expense was $6,250 as of October 31, 2016.

The Company maintained a line of credit with a bank, up to a maximum credit line of $250,000.  In September 2016, the line of credit with the bank was paid and terminated.

Employment Agreements

From time to time, the Company enters into employment agreements with certain of its employees. These agreements typically include bonuses, some of which are performance-based in nature. As of October 31, 2016, no performance bonuses have been earned.

Legal Matters

On August 13, 2015, a former employee filed a complaint against the Company in the United States District Court, District of Arizona, for breach of contract claiming that Plaintiff was terminated for “Cause” when no cause existed. Plaintiff sought the remaining amounts under her employment agreement, severance pay, bonuses, value of lost benefits, and the loss of the value of her stock options. The Company filed an answer to the complaint by the September 8, 2015 deadline. That matter has been fully and finally settled for $69,000 as of June 2016 and has been dismissed. The Company accrued $87,500 in accordance with ASC 450-20-55-11 and is included in accrued expenses at April 30, 2016.  The amount owed was paid in the six months ended October 31, 2016.

Regulatory Matters

The Company’s subsidiary, Aspen University, is subject to extensive regulation by Federal and State governmental agencies and accrediting bodies. In particular, the Higher Education Act (the “HEA”) and the regulations promulgated thereunder by the DOE subject Aspen University to significant regulatory scrutiny on the basis of numerous standards that schools must satisfy to participate in the various types of federal student financial assistance programs authorized under Title IV of the HEA. Aspen University has had provisional certification to participate in the Title IV Programs. That provisional certification imposes certain regulatory restrictions including, but not limited to, a limit of 1,200 student recipients for Title IV funding for the duration of the provisional certification. The provisional certification restrictions continue with regard to Aspen University’s participation in Title IV Programs.

To participate in the Title IV Programs, an institution must be authorized to offer its programs of instruction by the relevant agencies of the State in which it is located. In addition, an institution must be accredited by an accrediting agency recognized by the DOE and certified as eligible by the DOE. The DOE will certify an institution to participate in the Title IV Programs only after the institution has demonstrated compliance with the HEA and the DOE’s extensive academic, administrative, and financial regulations regarding institutional eligibility and certification. An institution must also demonstrate its compliance with these requirements to the DOE on an ongoing basis. Aspen University performs periodic reviews of its compliance with the various applicable regulatory requirements. As Title IV funds received in fiscal 2016 represented approximately 28% of the Company's cash basis revenues (including revenues from discontinued operations), as calculated in accordance with Department of Education guidelines, the loss of Title IV funding would have a material effect on the Company's future financial performance.

On March 27, 2012 and on August 31, 2012, Aspen University provided the DOE with letters of credit for which the due date was extended to December 31, 2013. On January 30, 2014, the DOE provided Aspen University with an option to become permanently certified by increasing the letter of credit to 50% of all Title IV funds received in the last program year, equaling $1,696,445, or to remain provisionally certified by increasing the 25% letter of credit to $848,225. Aspen informed the DOE of its desire to remain provisionally certified and posted the $848,225 letter of credit for the DOE on April 14, 2014. On February 26, 2015, Aspen University was informed by the DOE that it again had the option to become permanently certified by increasing the letter of credit to 50% of all Title IV funds received in the last program year, equaling $2,244,971, or to remain provisionally certified by increasing the existing 25% letter of credit to $1,122,485. Aspen informed the DOE on March 3, 2015 of its desire to remain provisionally certified and post the $1,122,485 letter of credit for the DOE by April 30, 2015. In November of 2015, the DOE informed Aspen that they no longer need to post a letter of credit. It was subsequently released. The DOE may impose additional or different terms and conditions in any final provisional program participation agreement that it may issue.

The HEA requires accrediting agencies to review many aspects of an institution's operations in order to ensure that the education offered is of sufficiently high quality to achieve satisfactory outcomes and that the institution is complying with accrediting standards. Failure to demonstrate compliance with accrediting standards may result in the imposition of probation, the requirements to provide periodic reports, the loss of accreditation or other penalties if deficiencies are not remediated.

Because Aspen University operates in a highly regulated industry, it may be subject from time to time to audits, investigations, claims of noncompliance or lawsuits by governmental agencies or third parties, which allege statutory violations, regulatory infractions or common law causes of action.

On February 25, 2015, the DEAC informed Aspen University that it had renewed its accreditation for five years to January, 2019.

Return of Title IV Funds

An institution participating in Title IV Programs must correctly calculate the amount of unearned Title IV Program funds that have been disbursed to students who withdraw from their educational programs before completion and must return those unearned funds in a timely manner, no later than 45 days of the date the school determines that the student has withdrawn. Under Department regulations, failure to make timely returns of Title IV Program funds for 5% or more of students sampled on the institution's annual compliance audit in either of its two most recently completed fiscal years can result in the institution having to post a letter of credit in an amount equal to 25% of its required Title IV returns during its most recently completed fiscal year. If unearned funds are not properly calculated and returned in a timely manner, an institution is also subject to monetary liabilities or an action to impose a fine or to limit, suspend or terminate its participation in Title IV Programs.

Subsequent to a program review by the Department of Education, the Company recognized that it had not fully complied with all requirements for calculating and making timely returns of Title IV funds (R2T4). In November 2013, the Company returned a total of $102,810 of Title IV funds to the Department of Education.

Delaware Approval to Confer Degrees

Aspen University is a Delaware corporation. Delaware law requires an institution to obtain approval from the Delaware Department of Education (“Delaware DOE”) before it may incorporate with the power to confer degrees. In July 2012, Aspen received notice from the Delaware DOE that it was granted provisional approval status effective until June 30, 2015. On April 25, 2016 the Delaware DOE informed Aspen University it was granted full approval to operate with degree-granting authority in the State of Delaware until July 1, 2020. Aspen University is authorized by the Colorado Commission on Education to operate in Colorado as a degree granting institution.

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Stockholders' Equity

6 Months Ended

Oct. 31, 2016

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Note 9. Stockholders’ Equity

Common Stock

On June 21, 2016, the Company issued 2,500,000 shares valued at $400,000 and made a cash payment of $400,000 to a warrant holder in exchange for the buyback of 13,451,611 warrants.  The Company re-valued the fair value of the warrants on the buyback date which equaled $594,000 and accordingly, the Company recorded an expense associated with the buyback of $206,000.

On July 31, 2016, the Company issued 500,000 shares to two IR firms for services.  200,000 shares were issued for services under a six month contract with a value of $30,000. 300,000 shares were issued for services under a one year contract with a value of $45,000.  The Company recorded a prepaid for the value of the services and is amortizing over the respective service periods.

Warrants

A summary of the Company’s warrant activity during the six months ended October 31, 2016 is presented below:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Warrants	Shares			Price		Term		Value
Balance Outstanding, April 30, 2016		23,916,270		$	0.19		—		616,335
Granted		750,000			0.20		—		37,500
Exercised		—			—		—		—
Forfeited		(13,451,611	)		0.16		—		—
Expired		—			—		—		—
Balance Outstanding, October 31, 2016		11,214,659		$	0.24		2.0	$	653,835
Exercisable, October 31, 2016		11,214,659		$	0.24		2.0	$	653,835

On June 24, 2016, the Company issued 2,500,000 shares and a cash payment of $400,000 to a warrant holder in exchange for 13,451,611 warrants as discussed above.

On August 31, 2016, the Company announced that it had closed on a $3 million credit line with its largest shareholder. The Company paid a 2% origination fee of $60,000 and issued 750,000 common-stock warrants at an exercise price of $0.20 per share, which are redeemable by the Company if the closing price of its common stock averages at least $0.25 per share for 10 consecutive trading days.

Stock Incentive Plan and Stock Option Grants to Employees and Directors

Immediately following the closing of the Reverse Merger, on March 13, 2012, the Company adopted the 2012 Equity Incentive Plan (the “Plan”) that provides for the grant of 9,300,000 shares, 14,300,000 effective July 2014, 16,300,000 effective September 2014, 20,300,000 effective November 2015 and 25,300,000 effective June 2016, in the form of incentive stock options, non-qualified stock options, restricted shares, stock appreciation rights and restricted stock units to employees, consultants, officers and directors. As of October 31, 2016, there were 3,102,021 shares remaining under the Plan for future issuance. The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of the Company’s stock price over the expected term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates. The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors which are subject to ASC Topic 718 requirements. These amounts are estimates and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes compensation on a straight-line basis over the requisite service period for each award. The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted to employees during the six months ended October 31, 2016 and 2015.

	October 31,
	2016
Expected life (years)		4-6.5
Expected volatility		40-43	%
Weighted-average volatility		0.38	%
Risk-free interest rate		0.00	%
Dividend yield		n/a
Expected forfeiture rate

The Company utilized the simplified method to estimate the expected life for stock options granted to employees. The simplified method was used as the Company does not have sufficient historical data regarding stock option exercises. The expected volatility is based on the average of the expected volatilities from the most recent audited financial statements available for comparative public companies that are deemed to be similar in nature to the Company. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected life of the related option at the time of the grant. Dividend yield is based on historical trends. While the Company believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased.

A summary of the Company’s stock option activity for employees and directors during the six months ended October 31, 2016, is presented below:

				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Options	Shares			Price		Term		Value
Balance Outstanding, April 30, 2016		17,931,102		$	0.21		3.3		—
Granted		4,300,000		$	0.16		4.9		—
Exercised					—		—		—
Forfeited		(228,123	)	$	0.01		1.4		—
Expired		—			—		—		—
Balance Outstanding, October 31, 2016		22,002,979		$	0.18		3.16	$	1,557,341
Exercisable, October 31, 2016		9,839,872		$	0.21		1.57	$	557,660

On May 19, 2016, the Company granted to each of its eight non-employee directors 150,000 five-year stock options. The Company granted an additional 50,000 five-year stock options to the chairman of the Compensation Committee and to the chairman of the Audit Committee.  These options are exercisable at $0.16 and vest in three years.  For the directors receiving 150,000, the fair value was approximately $7,500 per grant and for the two directors receiving 200,000 options, the fair value on the date of grant was approximately $10,000.

On June 23, 2016, the Company granted 2,000,000 stock options to the Chief Operating Officer, 700,000 stock options to the Chief Academic Officer and 300,000 to the Chief Financial Officer. The five-year options are exercisable at a price of $0.166 and vest over three years. On the date of grant, the grant to the Chief Operating Officer had a fair value of approximately $100,000, the grant to the Chief Academic Officer had a fair value of approximately $35,000 and the grant to the Chief Financial Officer had a fair value of approximately $15,000.

As of October 31, 2016, there was approximately $583,000 of unrecognized compensation costs related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 2.7 years.

The Company recorded compensation expense of $157,335 for the six months ended October 31, 2016 in connection with employee stock options. The Company recorded compensation expense of $128,987 for the six months ended October 31, 2015 in connection with employee stock options.

On September 12, 2016, the Company extended approximately 5 million options that were expiring in 2017.  The new expiration dates were extended three years.  The cost associated with these extensions is approximately $150,000, which represents the difference between the fair value of the options before the modification and the fair value immediately after the modification.  These extended options will vest over the next three years.  

Stock Option Grants to Non-Employees

There were no stock options granted to non-employees during six months ended October 31, 2016 and 2015. The Company recorded no compensation expense for the six months ended October 31, 2016 in connection with non-employee stock options. There was no unrecognized compensation cost at October 31, 2016.

A summary of the Company's stock option activity for non-employees during the six months ended October 31, 2016, is presented below:

			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
Options	Shares		Price		Term		Value
Balance Outstanding, April 30, 2016		195,000	$	0.28		0.9	$	—
Granted		—		—		—		—
Exercised		—		—		—		—
Forfeited		—		—		—		—
Expired		—		—		—		—
Balance Outstanding, October 31, 2016		195,000	$	0.29		0.43	$	4,500
Exercisable, October 31, 2016		195,000	$	0.29		0.43	$	4,500

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Related Party Transactions

6 Months Ended

Oct. 31, 2016

Related Party Transactions [Abstract]

Related Party Transactions

Note 10. Related Party Transactions

See Note 3 for discussion of secured note and account receivable to related parties and see Notes 6 and 7 for discussion of loans payable and convertible notes payable to related parties.

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Fair Value Measurements - Warrant Derivative liability

6 Months Ended

Oct. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements - Warrant Derivative liability

Note 11. Fair Value Measurements – Warrant Derivative liability

 The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The accounting standard established a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 input are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. An asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Assets and liabilities measured at fair value on a recurring and non-recurring basis consisted of the following at October 31, 2016 which related to 750,000 warrants which contained price protection:

	Carrying
	Value at
	October 31,		Fair value Measurements at October 31, 2016
	2016		(Level 1)		(Level 2)		(Level 3)
Warrant Derivative Liability	$	52,500	$	—	$	—	$	52,500

The following is a summary of activity of Level 3 liabilities for the six-month period ended October 31, 2016:

Balance April 30, 2016	$	—
Initial valuation of warrant derivative liability		52,500
Change in valuation of warrant derivative liability		—
Balance October 31, 2016	$	52,500

Changes in fair value of the warrant derivative liability are included in other income (expense) in the accompanying unaudited condensed consolidated statements of operations.

The Company intends to provide notice to the warrant holder that they would redeem any unexercised warrants within 30 days in accordance with the warrant terms as the Company’s common stock trading average was at least twenty-five cents over ten consecutive trading days. Accordingly, the fixed monetary redemption value of $0.07 indicates the fair value as of October 31, 2016.

There were no changes in the valuation techniques during the three and six month periods ended October 31, 2016.

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Subsequent Event

6 Months Ended

Oct. 31, 2016

Subsequent Event

Subsequent Event

Note 12. Subsequent Event

On November 18, 2016, under the 2012 Equity incentive Plan the Company granted 500,000 five-year options to each of the two new directors elected at the annual meeting held that month. These options are exercisable at $0.27 per share. The options were valued at $40,000 each and vest over a three year term, subject to continued service.

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Significant Accounting Policies (Policies)

6 Months Ended

Oct. 31, 2016

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of Aspen Group, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

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 unaudited 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, amortization periods and valuation of courseware and software development costs, valuation of beneficial conversion features in convertible debt, valuation of derivative instruments, valuation of loss contingencies, valuation of stock-based compensation and the valuation allowance on deferred tax assets.

Cash and Cash Equivalents

Cash and Cash Equivalents

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, 2016 and April 30, 2016. 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, 2016. As of October 31, 2016 and April 30, 2016, there were deposits totaling $426,487 and $1,224,863 respectively, held in two separate institutions greaterthan the federally insured limits.

Fair Value Measurements

Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy:

Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets;

Level 2—Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and

Level 3—Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities.

The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

Refunds Due Students

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.

Revenue Recognition and Deferred Revenue

Revenue Recognition and Deferred Revenue

Revenues consist primarily of tuition and fees derived from courses taught by the Company online as well as from related educational resources that the Company provides to its students, such as access to our online materials and learning management system. Tuition revenue is recognized pro-rata over the applicable period of instruction. The Company allows a student to make three monthly tuition payments during each class. The Company maintains an institutional tuition refund policy, which provides for all or a portion of tuition to be refunded if a student withdraws during stated refund periods. Certain states in which students reside impose separate, mandatory refund policies, which override the Company’s policy to the extent in conflict. If a student withdraws at a time when a portion or none of the tuition is refundable, then in accordance with its revenue recognition policy, the Company recognizes as revenue the tuition that was not refunded. Since the Company recognizes revenue pro-rata over the term of the course and because, under its institutional refund policy, the amount subject to refund is never greater than the amount of the revenue that has been deferred, under the Company’s accounting policies revenue is not recognized with respect to amounts that could potentially be refunded. The Company’s educational programs have starting and ending dates that differ from its fiscal quarters. Therefore, at the end of each fiscal quarter, a portion of revenue from these programs is not yet earned and is therefore deferred. The Company also charges students annual fees for library, technology and other services, which are recognized over the related service period. Deferred revenue represents the amount of tuition, fees, and other student payments received in excess of the portion recognized as revenue and it is included in current liabilities in the accompanying consolidated balance sheets. Other revenues may be recognized as sales occur or services are performed.

The Company has revenues from students outside the United States representing 3.5% of the revenues for the quarter ended October 31, 2016.

Accounting for Derivatives

Accounting for Derivatives

The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging”. The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liability at the fair value of the instrument on the reclassification date.

Net Income (Loss) Per Share

Net Income (Loss) Per Share

Net income (loss) per common share is based on the weighted average number of common shares outstanding during each period. Options to purchase 22,197,979 and 16,857,313 common shares, warrants to purchase 11,214,659 and 28,871,757 common shares, and $350,000 and $650,000 of convertible debt (convertible into 907,143 and 1,207,143 common shares, respectively) were outstanding during three months ending October 31, 2016 and 2015, respectively, but during certain periods were not included in the computation of diluted loss per share because the effects would have been anti-dilutive. The options, warrants and convertible debt are considered to be common stock equivalents and are only included in the calculation of diluted earnings per common share when their effect is dilutive, as noted in the chart below.

Basic and diluted income per share for the three months ended October 31, 2016, were calculated as follows:

	Basic		Diluted
Numerator
Net income applicable to common stock	$	116,541	$	116,541
Convertible debt interest		—		8,021
	$	116,541	$	124,562
Denominator
Weighted average common shares outstanding		137,758,145		137,758,145
Convertible debt		—		907,143
Warrants and options		—		7,017,878
		137,758,145		145,683,166
Net income per share	$	0.00	$	0.00

Recent Accounting Pronouncements

Recent Accounting Pronouncements

There have been no new relevant pronouncements since those disclosed in the April 30, 2016 Consolidated Financial Statements.

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Significant Accounting Policies (Tables)

6 Months Ended

Oct. 31, 2016

Accounting Policies [Abstract]

Schedule of Basic and diluted income per share

Basic and diluted income per share for the three months ended October 31, 2016, were calculated as follows:

	Basic		Diluted
Numerator
Net income applicable to common stock	$	116,541	$	116,541
Convertible debt interest		—		8,021
	$	116,541	$	124,562
Denominator
Weighted average common shares outstanding		137,758,145		137,758,145
Convertible debt		—		907,143
Warrants and options		—		7,017,878
		137,758,145		145,683,166
Net income per share	$	0.00	$	0.00

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Property and Equipment (Tables)

6 Months Ended

Oct. 31, 2016

Property, Plant and Equipment [Line Items]

Schedule of Property and Equipment

Property and equipment consisted of the following at October 31, 2016 and April 30, 2016:

	October 31,			April 30,
	2016			2016
Call center hardware	$	39,567		$	79,199
Computer and office equipment		80,171			67,773
Furniture and fixtures		216,652			114,964
Software		2,451,208			2,567,383
		2,787,598			2,829,319
Accumulated depreciation and amortization		(1,515,529	)		(1,680,687	)
Property and equipment, net	$	1,272,069		$	1,148,632

Schedule of Depreciation and Amortization Expense

Depreciation and Amortization expense for all Property and Equipment as well as the portion for just software is presented below for three and six months ended October 31, 2016 and 2015:

	For the				For the
	Three Months Ended October 31,				Six Months Ended October 31,
	2016		2015		2016		2015
Depreciation and Amortization Expense	$	123,906	$	130,154	$	259,054	$	254,925
Software Amortization Expense	$	112,888	$	118,237	$	237,067	$	232,069

Software [Member]

Property, Plant and Equipment [Line Items]

Schedule of Intangible Asset

Software consisted of the following at October 31, 2016 and April 30, 2016:

	October 31,			April 30,
	2016			2016
Software	$	2,451,208		$	2,567,383
Accumulated amortization		(1,429,668	)		(1,560,932	)
Software, net	$	1,021,540		$	1,006,451

Schedule of Estimated Future Amortization Expense

The following is a schedule of estimated future amortization expense of software at October 31, 2016:

Year Ending April 30,
2017	$	198,363
2018		317,445
2019		234,272
2020		164,430
2021		107,030
Total	$	1,021,540

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Courseware (Tables) - Courseware [Member]

6 Months Ended

Oct. 31, 2016

Finite-Lived Intangible Assets [Line Items]

Schedule of Intangible Asset

Courseware consisted of the following at October 31, 2016 and April 30, 2016:

	October 31,			April 30,
	2016			2016
Courseware	$	318,297		$	319,267
Accumulated amortization		(147,816	)		(124,335	)
Courseware, net	$	170,481		$	194,932

Schedule of amortization expense of intangible assets

Amortization expense of courseware for the three and six months ended October 31, 2016 and 2015:

	For the				For the
	Three Months Ended October 31,				Six Months Ended October 31,
	2016		2015		2016		2015
Amortization Expense	$	15,099	$	18,104	$	31,001	$	36,792

Schedule of Estimated Future Amortization Expense

The following is a schedule of estimated future amortization expense of courseware at October 31, 2016:

Year Ending April 30,
2017	$	27,246
2018		50,492
2019		49,019
2020		35,177
2021		8,547
Total	$	170,481

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Stockholders' Equity (Tables)

6 Months Ended

Oct. 31, 2016

Schedule of Warrants Activity

A summary of the Company’s warrant activity during the six months ended October 31, 2016 is presented below:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Warrants	Shares			Price		Term		Value
Balance Outstanding, April 30, 2016		23,916,270		$	0.19		—		616,335
Granted		750,000			0.20		—		37,500
Exercised		—			—		—		—
Forfeited		(13,451,611	)		0.16		—		—
Expired		—			—		—		—
Balance Outstanding, October 31, 2016		11,214,659		$	0.24		2.0	$	653,835
Exercisable, October 31, 2016		11,214,659		$	0.24		2.0	$	653,835

Stock Incentive Plan and Stock Option Grants to Employees and Directors [Member]

Schedule of Assumptions Used In Valuing Stock Options

The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted to employees during the six months ended October 31, 2016 and 2015.

	October 31,
	2016
Expected life (years)		4-6.5
Expected volatility		40-43	%
Weighted-average volatility		0.38	%
Risk-free interest rate		0.00	%
Dividend yield		n/a
Expected forfeiture rate

Schedule of Stock Option Activity

A summary of the Company’s stock option activity for employees and directors during the six months ended October 31, 2016, is presented below:

				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Options	Shares			Price		Term		Value
Balance Outstanding, April 30, 2016		17,931,102		$	0.21		3.3		—
Granted		4,300,000		$	0.16		4.9		—
Exercised					—		—		—
Forfeited		(228,123	)	$	0.01		1.4		—
Expired		—			—		—		—
Balance Outstanding, October 31, 2016		22,002,979		$	0.18		3.16	$	1,557,341
Exercisable, October 31, 2016		9,839,872		$	0.21		1.57	$	557,660

Stock Option Grants To Non Employees [Member]

Schedule of Stock Option Activity

A summary of the Company's stock option activity for non-employees during the six months ended October 31, 2016, is presented below:

			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
Options	Shares		Price		Term		Value
Balance Outstanding, April 30, 2016		195,000	$	0.28		0.9	$	—
Granted		—		—		—		—
Exercised		—		—		—		—
Forfeited		—		—		—		—
Expired		—		—		—		—
Balance Outstanding, October 31, 2016		195,000	$	0.29		0.43	$	4,500
Exercisable, October 31, 2016		195,000	$	0.29		0.43	$	4,500

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Fair Value Measurements - Warrant Derivative liability (Tables)

6 Months Ended

Oct. 31, 2016

Fair Value Disclosures [Abstract]

Schedule of Liabilities Measured at Fair Value

Assets and liabilities measured at fair value on a recurring and non-recurring basis consisted of the following at October 31, 2016 which related to 750,000 warrants which contained price protection:

	Carrying
	Value at
	October 31,		Fair value Measurements at October 31, 2016
	2016		(Level 1)		(Level 2)		(Level 3)
Warrant Derivative Liability	$	52,500	$	—	$	—	$	52,500

Summary of Activity of Level 3 Liabilities

The following is a summary of activity of Level 3 liabilities for the six-month period ended October 31, 2016:

Balance April 30, 2016	$	—
Initial valuation of warrant derivative liability		52,500
Change in valuation of warrant derivative liability		—
Balance October 31, 2016	$	52,500

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Nature of Operations and Liquidity (Narrative) (Details) - USD ($)			1 Months Ended			6 Months Ended
	Aug. 31, 2016	Jun. 21, 2016	Apr. 22, 2016	Nov. 30, 2015	Mar. 31, 2014	Oct. 31, 2016	Oct. 31, 2015	Apr. 30, 2016	Apr. 30, 2015
Product Information [Line Items]
Approximate cash position						$ 707,379	$ 1,008,417	$ 783,796	$ 2,159,463
Proceeds from lines of credit				$ 1,100,000		750,000
Line of credit amount								$ 1,783
Repayments of lines of credit						248,783
Cash provided from operating activities						$ 26,323	$ (878,508)
Line of Credit [Member]
Product Information [Line Items]
Exercise price of warrants	$ 0.20
Line of Credit [Member] | Line of Credit With A Bank [Member]
Product Information [Line Items]
Repayments of lines of credit	$ 248,000
Largest Shareholder [Member] | Line of Credit [Member]
Product Information [Line Items]
Proceeds from lines of credit	$ 750,000
Exercise price of warrants	$ 0.20
Line of credit amount	$ 3,000,000
Line of credit interest rate on drawn funds	12.00%
Line of credit interest rate on undrawn funds	2.00%
Mr. Michael Mathews [Member]
Product Information [Line Items]
Shares issued upon conversion			1,591,053
Conversion of note, amount			$ 300,000
Warrant [Member]
Product Information [Line Items]
Shares issued upon conversion		2,500,000	4,855,487
Exercise price of warrants			$ 0.155
Gross proceeds from warrant excercises			$ 752,500
Bachelor Program [Member]
Product Information [Line Items]
Monthly tuition					$ 250
Tuition payment period					72 months
Total tuition					$ 18,000
Nursing Program [Member]
Product Information [Line Items]
Monthly tuition					$ 250
Tuition payment period					39 months
Total tuition					$ 9,750
Master Program [Member]
Product Information [Line Items]
Monthly tuition					$ 325
Tuition payment period					36 months
Total tuition					$ 11,700
Doctoral Program [Member]
Product Information [Line Items]
Monthly tuition					$ 375
Tuition payment period					72 months
Total tuition					$ 27,000

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Significant Accounting Policies (Narrative) (Details) - USD ($)	6 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Apr. 30, 2016
Cash and Cash Equivalents [Line Items]
Amount of cash balance uninsured by FDIC	$ 250,000
Employee Stock Option [Member]
Cash and Cash Equivalents [Line Items]
Antidilutive securities	22,197,979	16,857,313
Warrant [Member]
Cash and Cash Equivalents [Line Items]
Antidilutive securities	11,214,659	28,871,757
Convertible Debt [Member]
Cash and Cash Equivalents [Line Items]
Antidilutive securities	907,143	1,207,143
Convertible debt	$ 350,000	$ 650,000
Two Separate Institutions [Member]
Cash and Cash Equivalents [Line Items]
Amount of cash balance uninsured by FDIC	$ 426,487		$ 1,224,863
Sales Revenue, Net [Member] | Non-US [Member]
Cash and Cash Equivalents [Line Items]
Percentage of revenues from students outside the United States	3.50%

XML

Significant Accounting Policies (Schedule of Basic and diluted income per share) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Oct. 31, 2015
Numerator
Net income (loss)	$ 116,541	$ (744,420)	$ (388,907)	$ (1,463,126)
Denominator
Weighted average common shares outstanding	137,758,145	128,303,606	136,833,008	128,239,022
Denominator	145,683,166	128,303,606	136,833,008	128,239,022
Basic [Member]
Numerator
Net income applicable to common stock	$ 116,541
Convertible debt interest
Net income (loss)	$ 116,541
Denominator
Weighted average common shares outstanding	137,758,145
Convertible debt
Warrants and options
Denominator	137,758,145
Net income per share	$ 0
Diluted [Member]
Numerator
Net income applicable to common stock	$ 116,541
Convertible debt interest	8,021
Net income (loss)	$ 124,562
Denominator
Weighted average common shares outstanding	137,758,145
Convertible debt	907,143
Warrants and options	7,017,878
Denominator	145,683,166
Net income per share	$ 0

XML

Secured Note and Accounts Receivable - Related Parties (Details) - USD ($)		1 Months Ended		12 Months Ended
	Apr. 29, 2015	Dec. 31, 2008	Mar. 31, 2008	Apr. 30, 2014	Oct. 31, 2016	Apr. 30, 2016	Jan. 31, 2016	Sep. 30, 2014	Jun. 30, 2014	Mar. 13, 2012	Sep. 16, 2011
Related Party Transaction [Line Items]
Price per share	$ 0.155
Accounts receivable, secured - related party, net of allowance					$ 45,329	$ 45,329
Allowance for doubtful accounts, noncurrent accounts receivables					625,963	625,963
Proceeds from issuance of common shares and warrants, net	$ 101,502
Accounts receivable, before allowance	$ 671,291
Parent Company [Member]
Related Party Transaction [Line Items]
Courseware sales		$ 600,000	$ 455,000
Series C Preferred Shares pledged by HEMG											772,793
Series C Preferred Shares pledged by HEMG, converted to common shares										654,850
Accounts receivable, secured - related party, net of allowance					$ 45,329	$ 45,329
Receivable Collateral Valuation Reserve				$ 123,647
Due amount HEMG has failed to pay despite due demand								$ 772,793
Common stock, shares to be sold							654,850
CEO [Member]
Related Party Transaction [Line Items]
Price per share									$ 0.19

XML

Property and Equipment (Schedule of Property and Equipment) (Details) - USD ($)	Oct. 31, 2016	Apr. 30, 2016
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 2,787,598	$ 2,829,319
Accumulated depreciation and amortization	(1,515,529)	(1,680,687)
Property and equipment, net	1,272,069	1,148,632
Call Center Hardware [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	39,567	79,199
Computer And Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	80,171	67,773
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	216,652	114,964
Software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 2,451,208	$ 2,567,383

XML

Property and Equipment (Schedule of Software, Net) (Details) - USD ($)	Oct. 31, 2016	Apr. 30, 2016
Property, Plant and Equipment [Line Items]
Intangible asset, net	$ 170,481	$ 194,932
Software [Member]
Property, Plant and Equipment [Line Items]
Intangible asset, gross	2,451,208	2,567,383
Accumulated amortization	(1,429,668)	(1,560,932)
Intangible asset, net	$ 1,021,540	$ 1,006,451

XML

Property and Equipment (Schedule Of Depreciation And Amortization Expense) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Oct. 31, 2015
Property and equipment:
Depreciation and Amortization Expense	$ 123,906	$ 130,154	$ 259,054	$ 254,925
Software Amortization Expense	$ 112,888	$ 118,237	$ 237,067	$ 232,069

XML

Property and Equipment (Schedule of Estimated Amortization Expense of Software) (Details) - USD ($)	Oct. 31, 2016	Apr. 30, 2016
Property, Plant and Equipment [Line Items]
Intangible asset, net	$ 170,481	$ 194,932
Software [Member]
Property, Plant and Equipment [Line Items]
2017	198,363
2018	317,445
2019	234,272
2020	164,430
2021	107,030
Intangible asset, net	$ 1,021,540	$ 1,006,451

XML

Courseware (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Oct. 31, 2015	Sep. 30, 2015
Finite-Lived Intangible Assets [Line Items]
Amortization Expense of courseware, written off					$ 1,970,670
Courseware [Member]
Finite-Lived Intangible Assets [Line Items]
Courseware costs capitalized			$ 6,550	$ 63,634
Amortization Expense	$ 15,099	$ 18,104	$ 31,001	$ 36,792

XML

Courseware (Schedule of Courseware, Net) (Details) - USD ($)	Oct. 31, 2016	Apr. 30, 2016
Finite-Lived Intangible Assets [Line Items]
Intangible asset, net	$ 170,481	$ 194,932
Courseware [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible asset, gross	318,297	319,267
Accumulated amortization	(147,816)	(124,335)
Intangible asset, net	$ 170,481	$ 194,932

XML

Courseware (Schedule of Estimated Future Amortization Expense) (Details) - USD ($)	Oct. 31, 2016	Apr. 30, 2016
Finite-Lived Intangible Assets [Line Items]
Intangible asset, net	$ 170,481	$ 194,932
Courseware [Member]
Finite-Lived Intangible Assets [Line Items]
2017	27,246
2018	50,492
2019	49,019
2020	35,177
2021	8,547
Intangible asset, net	$ 170,481	$ 194,932

XML

Loan Payable Officer - Related Party (Details) - Loan Payable Officer Related Party Dated June Twenty Eight Two Thousand Thirteen [Member] - CEO [Member]	1 Months Ended
	Jun. 30, 2013 USD ($)
Short-term Debt [Line Items]
Debt instrument, face amount	$ 1,000,000
Term of debentures	6 months
Interest rate	10.00%
Maturity date	May 05, 2018

XML

Convertible Notes, Convertible Notes - Related Party (Details) - USD ($)	Apr. 22, 2016	Aug. 14, 2012	Mar. 13, 2012	Feb. 29, 2012
2 Year Promissory Notes [Member]
Debt Instrument [Line Items]
Interest rate				0.19%
Debt conversion, price per share				$ 1.00
Convertible Promissory Note Dated February 29, 2012 [Member]
Debt Instrument [Line Items]
Face value of loan				$ 50,000
CEO [Member] | Note Payable Related Party Dated August 14, 2012 [Member]
Debt Instrument [Line Items]
Interest rate		5.00%
Debt conversion, price per share		$ 0.35
Face value of loan		$ 300,000
CEO [Member] | Note Payable Related Party Dated March 13, 2012 [Member]
Debt Instrument [Line Items]
Interest rate			0.19%
Debt conversion, price per share	$ 0.19		$ 1.00
Face value of loan			$ 300,000
Shares issued for convertible debt	1,591,053

XML

Commitments and Contingencies (Narrative) (Details) - USD ($)			1 Months Ended		6 Months Ended
	Aug. 31, 2016	Jun. 30, 2016	Nov. 30, 2015	Nov. 30, 2013	Oct. 31, 2016	Oct. 31, 2015	Apr. 30, 2016	Apr. 29, 2015	Feb. 26, 2015	Jan. 31, 2014
Line of Credit Facility [Line Items]
Proceeds from lines of credit			$ 1,100,000		$ 750,000
Repayments of lines of credit					248,783
Amortization fees					$ 6,250
Average of closing price of common stock								$ 0.155
Line of credit, outstanding							$ 1,783
Amount of settlement		$ 69,000
Remittance of Title IV funds to the Department of Education due to students ineligibility to receive the funds				$ 102,810
Title IV Funds received as a percentage of revenue					28.00%
Amount of accrued expense							$ 87,500
Line of Credit [Member]
Line of Credit Facility [Line Items]
Origination fee percentage	2.00%
Payment of origination fees	$ 60,000
Common stock warrants issued, shares	750,000
Common stock warrants issued, price per share	$ 0.20
Line of credit, maximum borrowing capacity					$ 250,000
Payment period					5 years
Line of Credit [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Average of closing price of common stock	$ 0.25
Line of Credit [Member] | Line of Credit With A Bank [Member]
Line of Credit Facility [Line Items]
Repayments of lines of credit	$ 248,000
Line of Credit [Member] | Largest Shareholder [Member]
Line of Credit Facility [Line Items]
Proceeds from lines of credit	$ 750,000
Line of credit interest rate on drawn funds	12.00%
Origination fee percentage	2.00%
Payment of origination fees	$ 60,000
Common stock warrants issued, shares	750,000
Common stock warrants issued, price per share	$ 0.20
Amortization fees	$ 6,250
Line of credit, interest rate at period end	2.00%
Line of credit, outstanding	$ 3,000,000
Line of credit, remaining available	$ 3,000,000
Line of Credit [Member] | Largest Shareholder [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Common stock warrants issued, price per share	$ 0.25
Letter of Credit [Member]
Line of Credit Facility [Line Items]
Line of credit, outstanding									$ 2,244,971	$ 1,696,445
Line of credit, remaining available									$ 1,122,485	$ 848,225

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Stockholders' Equity (Common Stock and Warrants Narrative) (Details) - USD ($)				1 Months Ended		6 Months Ended
	Aug. 31, 2016	Jul. 31, 2016	Jun. 21, 2016	Apr. 22, 2016	Jan. 19, 2016	Oct. 31, 2016	Oct. 31, 2015
Stockholders Equity [Line Items]
Repurchase of shares under settlement agreement					$ 29,500
Repurchase of shares under settlement agreement, shares					42,000
Expenses for settlement					$ 23,662
Payment for warrant buyback						$ 400,000
Shares issued for services rendered						$ 75,002
Shares issued for services rendered, shares		500,000
Line of Credit [Member]
Stockholders Equity [Line Items]
Exercise price of warrants	$ 0.20
Origination fee percentage	2.00%
Payment of origination fees	$ 60,000
Common stock warrants issued, price per share	$ 0.20
Largest Shareholder [Member] | Line of Credit [Member]
Stockholders Equity [Line Items]
Exercise price of warrants	$ 0.20
Line of credit, remaining available	$ 3,000,000
Origination fee percentage	2.00%
Payment of origination fees	$ 60,000
Common stock warrants issued, price per share	$ 0.20
Largest Shareholder [Member] | Line of Credit [Member] | Minimum [Member]
Stockholders Equity [Line Items]
Exercise price of warrants	0.25
Common stock warrants issued, price per share	$ 0.25
Warrant [Member]
Stockholders Equity [Line Items]
Warrant buyback, shares			13,451,611
Shares issued upon conversion			2,500,000	4,855,487
Value of shares issued upon conversion			$ 400,000
Payment for warrant buyback			400,000
Exercise price of warrants				$ 0.155
Warrant modification expense			206,000
Fair value of warrants outstanding			$ 594,000
Gross proceeds from warrant exercises				$ 752,500
Common stock warrants issued, price per share				$ 0.155
Contract One [Member]
Stockholders Equity [Line Items]
Shares issued for services rendered		$ 30,000
Shares issued for services rendered, shares		200,000
Duration of contract		6 months
Contract Two [Member]
Stockholders Equity [Line Items]
Shares issued for services rendered		$ 45,000
Shares issued for services rendered, shares		300,000
Duration of contract		1 year

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Stockholders' Equity (Schedule of Warrants) (Details) - Warrant [Member]	6 Months Ended
	Oct. 31, 2016 USD ($) $ / shares shares
Number of Shares
Balance Outstanding | shares	23,916,270
Granted | shares	750,000
Exercised | shares
Forfeited | shares	(13,451,611)
Expired | shares
Balance Outstanding | shares	11,214,659
Exercisable | shares	11,214,659
Weighted Average Exercise Price
Balance Outstanding | $ / shares	$ 0.19
Granted | $ / shares	0.20
Exercised | $ / shares
Forfeited | $ / shares	0.16
Expired | $ / shares
Balance Outstanding | $ / shares	0.24
Exercisable | $ / shares	$ 0.24
Weighted Average Remaining Contractual Term
Balance Outstanding, October 31, 2016	2 years
Exercisable	2 years
Aggregate Intrinsic Value
Balance Outstanding | $	$ 616,335
Granted | $	37,500
Balance Outstanding | $	653,835
Exercisable | $	$ 653,835

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Stockholders' Equity (Stock Options Narrative) (Details) - USD ($)				3 Months Ended		6 Months Ended
	Sep. 12, 2016	Jun. 23, 2016	May 19, 2016	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Jul. 31, 2016	Jun. 30, 2016	Nov. 30, 2015	Apr. 29, 2015	Sep. 30, 2014	Jul. 31, 2014	Mar. 13, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Price per share										$ 0.155
Unrecognized compensation cost				$ 583,000		$ 583,000
Weighted average recognition period						2 years 8 months 12 days
Share based compensation expense				$ 157,335	$ 128,987
Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity Incentive Plan, shares authorized								25,300,000	20,300,000		16,300,000	14,300,000	9,300,000
Equity Incentive Plan, shares remaining							3,102,021
Chief Operating Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options issued during period		2,000,000
Options granted, exercise price		$ 0.166
Vesting period		3 years
Weighted average grant-date fair value of stock options granted		$ 100,000
Chief Academic Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options issued during period		700,000
Options granted, exercise price		$ 0.166
Vesting period		3 years
Weighted average grant-date fair value of stock options granted		$ 35,000
Chief Financial Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options issued during period		300,000
Options granted, exercise price		$ 0.166
Vesting period		3 years
Weighted average grant-date fair value of stock options granted		$ 15,000
Chairman of Audit Committee [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options issued during period			50,000
Option expiration period			5 years
Options granted, exercise price			$ 0.16
Vesting period			3 years
Weighted average grant-date fair value of stock options granted			$ 10,000
Chairman of Compensation Committee [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options issued during period			50,000
Option expiration period			5 years
Options granted, exercise price			$ 0.16
Vesting period			3 years
Weighted average grant-date fair value of stock options granted			$ 10,000
Eight Non-Employee Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options issued during period			150,000
Option expiration period			5 years
Options granted, exercise price			$ 0.16
Vesting period			3 years
Weighted average grant-date fair value of stock options granted			$ 7,500
Extended Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options issued during period	5,000,000
Option expiration period	3 years
Vesting period	3 years
Share based compensation expense	$ 150,000

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Stockholders' Equity (Schedule of Assumptions Used to Value Stock Options) (Details) - Stock Incentive Plan and Stock Option Grants to Employees and Directors [Member]	3 Months Ended
	Oct. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility, minimum	40.00%
Expected volatility, maximum	43.00%
Weighted-average volatility	0.38%
Risk-free interest rate	0.00%
Dividend yield	0.00%
Expected forfeiture rate
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (years)	4 years
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (years)	6 years 6 months

XML

Stockholders' Equity (Schedule of Stock Options Activity) (Details)	6 Months Ended
	Oct. 31, 2016 USD ($) $ / shares shares
Stock Incentive Plan and Stock Option Grants to Employees and Directors [Member]
Number of Shares
Balance Outstanding | shares	17,931,102
Granted | shares	4,300,000
Forfeited | shares	(228,123)
Expired | shares
Balance Outstanding | shares	22,002,979
Exercisable | shares	9,839,872
Weighted Average Exercise Price
Balance Outstanding	$ 0.21
Granted	0.16
Exercised
Forfeited	0.01
Expired
Balance Outstanding	0.18
Exercisable	$ 0.21
Beginning balance Outstanding	3 years 3 months 18 days
Granted	4 years 10 months 24 days
Forfeited	1 year 4 months 24 days
Ending balance Outstanding	3 years 1 month 28 days
Exercisable	1 year 6 months 26 days
Aggregate Intrinsic Value
Balance Outstanding | $
Granted | $
Forfeited | $
Balance Outstanding | $	1,557,341
Exercisable | $	$ 557,660
Stock Option Grants To Non Employees [Member]
Number of Shares
Balance Outstanding | shares	195,000
Granted | shares
Exercised | shares
Forfeited | shares
Expired | shares
Balance Outstanding | shares	195,000
Exercisable | shares	195,000
Weighted Average Exercise Price
Balance Outstanding	$ 0.28
Granted
Exercised
Forfeited
Expired
Balance Outstanding	0.29
Exercisable	$ 0.29
Beginning balance Outstanding	10 months 24 days
Ending balance Outstanding	5 months 5 days
Exercisable	5 months 5 days
Aggregate Intrinsic Value
Balance Outstanding | $
Granted | $
Forfeited | $
Balance Outstanding | $	4,500
Exercisable | $	$ 4,500

XML

Fair Value Measurements - Warrant Derivative Liability (Narrative) (Details) - Warrants With Price Protection [Member]	Oct. 31, 2016 $ / shares shares
Number of warrants containing price protection | shares	750,000
Redemption value | $ / shares	$ 0.07

XML

Fair Value Measurements - Warrant Derivative Liability (Measured On A Recurring Basis) (Details) - Fair Value, Measurements, Recurring [Member]	Sep. 30, 2016 USD ($)
Warrant Derivative Liability	$ 52,500
Fair Value, Inputs, Level 1 [Member]
Warrant Derivative Liability
Fair Value, Inputs, Level 2 [Member]
Warrant Derivative Liability
Fair Value, Inputs, Level 3 [Member]
Warrant Derivative Liability	$ 52,500

XML

Fair Value Measurements - Warrant Derivative Liability (Activity in Level 3) (Details)	6 Months Ended
	Oct. 31, 2016 USD ($)
Fair Value Measurements - Warrant Derivative Liability Activity In Level 3 Details
Balance April 30, 2016
Initial valuation in valuation of warrant derivative liability	52,500
Change in valuation of warrant derivative liability
Balance October 31, 2016	$ 52,500

XML

Subsequent Events (Details) - Subsequent Event [Member]	Nov. 18, 2016 USD ($) $ / shares shares
Number of options granted | shares	500,000
Expiration period of options	5 years
Option exercise price | $ / shares	$ 0.27
Options value | $	$ 40,000
Vesting period	3 years