UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended July 31, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from ___________ to ___________

Commission file number 001-38175

ASPEN GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

27-1933597

State or Other Jurisdiction of Incorporation or Organization

I.R.S. Employer Identification No.

276 Fifth Avenue, Suite 505, New York, New York

10001

Address of Principal Executive Offices

Zip Code

(646) 448-5144

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001	ASPU	The Nasdaq Stock Market (The Nasdaq Global Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


			Large accelerated filer ¨			Accelerated filer ¨
			Non-accelerated filer ☑			Smaller reporting company ☑
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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


Class						Outstanding as of September ~~10, 2021~~9, 2022
Common Stock, $0.001 par value per share						~~24,931,565~~25,217,456 shares

Table of Contents

TABLE OF CONTENTS


		Page Number
	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations (Unaudited)	3
	Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)	4
	Consolidated Statements of Cash Flows (Unaudited)	5
	Condensed Notes to Consolidated Financial Statements (Unaudited)	7
	Note 1. Nature of Operations	7
	Note 2. Significant Accounting Policies	87
	Note 3. Property and Equipment	109
	Note 4. Courseware and Accreditation	10
	Note 5. ~~Secured Note and Accounts Receivable~~Long-term Debt, Net	1110
	Note 6. ~~Debt~~Stockholders' Equity	1112
	Note 7. ~~Stockholders' Equity~~	11
	~~Note 8.~~ Revenue	15
	~~Note 9. Leases~~	16
	~~Note 10. Income Taxes~~	17
	Note ~~11. Commitments and Contingencies~~8. Leases	18
	Note ~~12. Subsequent Events~~9. Taxes	2019
	Note 10. Commitments and Contingencies	19
	Note 11. Subsequent Event	23

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2125

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	3338

Item 4.	Controls and Procedures.	3338

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	3439

Item 1A.	Risk Factors.	3439

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	3439

Item 3.	Defaults Upon Senior Securities.	3539

Item 4.	Mine Safety Disclosures.	3539

Item 5.	Other Information.	3539

Item 6.	Exhibits.	3539

	SIGNATURES		3742

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


		July 31, 2021		April 30, 2021			July 31, 2022		April 30, 2022
		(Unaudited)					(Unaudited)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	6,554,423	$	8,513,290	Cash and cash equivalents	$	2,374,224	$	6,482,750
Restricted cash	Restricted cash	3,722,831		5,152,789		Restricted cash	6,433,397		6,433,397
Accounts receivable, net of allowance of $3,272,977 and $3,289,816, respectively		17,190,238		16,724,744
Accounts receivable, net of allowance of $3,653,072 and $3,460,288, respectively						Accounts receivable, net of allowance of $3,653,072 and $3,460,288, respectively	24,699,267		24,359,241
Prepaid expenses	Prepaid expenses	914,216		1,077,831		Prepaid expenses	1,745,565		1,358,635
Other current assets	Other current assets	13,890		68,529		Other current assets	988,641		748,568
Total current assets	Total current assets	28,395,598		31,537,183		Total current assets	36,241,094		39,382,591

Property and equipment:	Property and equipment:					Property and equipment:
Computer equipment and hardware	Computer equipment and hardware	1,193,278		956,463		Computer equipment and hardware	1,570,850		1,516,475
Furniture and fixtures	Furniture and fixtures	1,793,686		1,705,101		Furniture and fixtures	2,197,920		2,193,261
Leasehold improvements	Leasehold improvements	6,182,239		5,729,324		Leasehold improvements	7,179,896		7,179,896
Instructional equipment	Instructional equipment	491,597		421,039		Instructional equipment	756,568		715,652
Software	Software	8,951,241		8,488,635		Software	10,661,079		10,285,096
Construction in progress	Construction in progress	88,367		247,767		Construction in progress	3,000		2,100
		18,700,408		17,548,329			22,369,313		21,892,480
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	(5,962,034)		(4,892,987)		Less: accumulated depreciation and amortization	(9,294,089)		(8,395,001)
Total property and equipment, net	Total property and equipment, net	12,738,374		12,655,342		Total property and equipment, net	13,075,224		13,497,479
Goodwill	Goodwill	5,011,432		5,011,432		Goodwill	5,011,432		5,011,432
Intangible assets, net	Intangible assets, net	7,907,932		7,908,360		Intangible assets, net	7,900,000		7,900,000
Courseware, net	Courseware, net	303,020		187,296		Courseware, net	267,526		274,047
Accounts receivable, net of allowance of $— and $625,963, respectively		—		45,329
Long term contractual accounts receivable		11,313,657		10,249,833
Debt issue cost, net		9,722		18,056
Operating lease right of use assets, net		12,242,456		12,714,863
Long-term contractual accounts receivable						Long-term contractual accounts receivable	12,429,962		11,406,525
Deferred financing costs						Deferred financing costs	302,834		369,902
Operating lease right-of-use assets, net						Operating lease right-of-use assets, net	12,361,707		12,645,950
Deposits and other assets	Deposits and other assets	468,361		479,212		Deposits and other assets	566,244		578,125
Total assets	Total assets	$	78,390,552	$	80,806,906	Total assets	$	88,156,023	$	91,066,051

(Continued)

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

Table of Contents

ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED)


		July 31, 2021		April 30, 2021			July 31, 2022		April 30, 2022
		(Unaudited)					(Unaudited)
Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity					Liabilities and Stockholders’ Equity
Liabilities:						Liabilities:
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	1,627,731	$	1,466,488	Accounts payable	$	1,851,533	$	1,893,287
Accrued expenses	Accrued expenses	2,361,271		2,040,896		Accrued expenses	3,146,956		2,821,432
Deferred revenue	Deferred revenue	4,691,087		6,825,014		Deferred revenue	6,245,530		5,889,911
Due to students	Due to students	2,905,192		2,747,484		Due to students	3,963,709		4,063,811
Operating lease obligations, current portion	Operating lease obligations, current portion	2,086,076		2,029,821		Operating lease obligations, current portion	2,123,914		2,036,570
Other current liabilities	Other current liabilities	57,847		307,921		Other current liabilities	751,349		130,262
Total current liabilities	Total current liabilities	13,729,204		15,417,624		Total current liabilities	18,082,991		16,835,273

Long-term debt, net						Long-term debt, net	14,909,625		14,875,735
Operating lease obligations, less current portion	Operating lease obligations, less current portion	15,865,044		16,298,808		Operating lease obligations, less current portion	16,279,324		16,809,319
Total liabilities	Total liabilities	29,594,248		31,716,432		Total liabilities	49,271,940		48,520,327

Commitments and contingencies – see Note 11		0		0
Commitments and contingencies – see Note 10						Commitments and contingencies – see Note 10

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $0.001 par value; 1,000,000 shares authorized,	Preferred stock, $0.001 par value; 1,000,000 shares authorized,					Preferred stock, $0.001 par value; 1,000,000 shares authorized,
0 issued and 0 outstanding at July 31, 2021 and April 30, 2021		—		—
Common stock, $0.001 par value; 40,000,000 shares authorized,
25,087,051 issued and 24,931,565 outstanding at July 31, 2021
25,066,297 issued and 24,910,811 outstanding at April 30, 2021		25,088		25,067
0 issued and 0 outstanding at July 31, 2022 and April 30, 2022						0 issued and 0 outstanding at July 31, 2022 and April 30, 2022	—		—
Common stock, $0.001 par value; 60,000,000 shares authorized,						Common stock, $0.001 par value; 60,000,000 shares authorized,
25,357,764 issued and 25,202,278 outstanding at July 31, 2022						25,357,764 issued and 25,202,278 outstanding at July 31, 2022
25,357,764 issued and 25,202,278 outstanding at April 30, 2022						25,357,764 issued and 25,202,278 outstanding at April 30, 2022	25,358		25,358
Additional paid-in capital	Additional paid-in capital	109,617,521		109,040,824		Additional paid-in capital	112,134,894		112,081,564
Treasury stock (155,486 at both July 31, 2021 and April 30, 2021)		(1,817,414)		(1,817,414)
Treasury stock (155,486 at both July 31, 2022 and April 30, 2022)						Treasury stock (155,486 at both July 31, 2022 and April 30, 2022)	(1,817,414)		(1,817,414)
Accumulated deficit	Accumulated deficit	(59,028,891)		(58,158,003)		Accumulated deficit	(71,458,755)		(67,743,784)
Total stockholders’ equity	Total stockholders’ equity	48,796,304		49,090,474		Total stockholders’ equity	38,884,083		42,545,724
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	78,390,552	$	80,806,906	Total liabilities and stockholders’ equity	$	88,156,023	$	91,066,051

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

Table of Contents

ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


		Three Months Ended July 31,					Three Months Ended July 31,
		2021		2020			2022		2021
Revenue	Revenue	$	19,430,995	$	15,165,562	Revenue	$	18,893,913	$	19,430,995

Operating expenses:	Operating expenses:					Operating expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below)	Cost of revenue (exclusive of depreciation and amortization shown separately below)	8,593,568		5,847,523		Cost of revenue (exclusive of depreciation and amortization shown separately below)	10,205,551		8,593,568
General and administrative	General and administrative	10,946,477		8,793,756		General and administrative	10,532,020		10,946,477
Bad debt expense	Bad debt expense	350,000		400,000		Bad debt expense	350,000		350,000
Depreciation and amortization	Depreciation and amortization	779,409		490,624		Depreciation and amortization	921,108		779,409
Total operating expenses	Total operating expenses	20,669,454		15,531,903		Total operating expenses	22,008,679		20,669,454

Operating loss	Operating loss	(1,238,459)		(366,341)		Operating loss	(3,114,766)		(1,238,459)

Other income (expense):	Other income (expense):					Other income (expense):
Interest expense	Interest expense	(33,539)		(455,457)		Interest expense	(581,293)		(33,539)
Other income (expense), net		552,120		(123,298)
Total other income (expense), net		518,581		(578,755)
Other income, net						Other income, net	11,409		552,120
Total other (expense) income, net						Total other (expense) income, net	(569,884)		518,581

Loss before income taxes	Loss before income taxes	(719,878)		(945,096)		Loss before income taxes	(3,684,650)		(719,878)

Income tax expense (benefit)		151,010		(1,900)
Income tax expense						Income tax expense	30,321		151,010

Net loss	Net loss	$	(870,888)	$	(943,196)	Net loss	$	(3,714,971)	$	(870,888)

Net loss per share - basic and diluted	Net loss per share - basic and diluted	$	(0.03)	$	(0.04)	Net loss per share - basic and diluted	$	(0.15)	$	(0.03)

Weighted average number of common stock outstanding - basic and diluted	Weighted average number of common stock outstanding - basic and diluted	25,070,072		22,094,409		Weighted average number of common stock outstanding - basic and diluted	25,202,278		25,070,072

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

Table of Contents

ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Three Months Ended July 31, ~~2021~~2022 and ~~2020~~2021

(Unaudited)

Common Stock Additional
Paid-In
Capital Treasury
Stock Accumulated
Deficit Total
Stockholders’
Equity
Shares Amount
Balance at April 30, 2021 25,066,297 $ 25,067 $ 109,040,824 $ (1,817,414) $ (58,158,003) $ 49,090,474
Stock-based compensation — — 542,712 — — 542,712
Common stock issued for stock options exercised for cash 5,097 5 22,543 — — 22,548
Common stock issued for vested restricted stock units 15,657 16 (16) — — —
Amortization of warrant based cost — — 11,458 — — 11,458
Net loss — — — — (870,888) (870,888)
Balance at July 31, 2021 25,087,051 $ 25,088 $ 109,617,521 $ (1,817,414) $ (59,028,891) $ 48,796,304
Common Stock Additional
Paid-In
Capital Treasury
Stock Accumulated
Deficit Total
Stockholders’
Equity
Shares Amount
Balance at April 30, 2020 21,770,520 $ 21,771 $ 89,505,216 $ (70,000) $ (47,709,030) $ 41,747,957
Stock-based compensation — — 487,110 — — 487,110
Common stock issued for stock options exercised for cash 415,175 415 1,269,567 — — 1,269,982
Common stock issued for warrants exercised for cash 192,049 192 1,081,600 — — 1,081,792
Modification charge for warrants exercised — — 25,966 — — 25,966
Amortization of warrant based cost — — 9,125 — — 9,125
Net loss — — — — (943,196) (943,196)
Balance at July 31, 2020 22,377,744 $ 22,378 $ 92,378,584 $ (70,000) $ (48,652,226) $ 43,678,736


	Common Stock			Additional Paid-In Capital		Treasury Stock		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at April 30, 2022	25,357,764	$	25,358	$	112,081,564	$	(1,817,414)	$	(67,743,784)	$	42,545,724
Stock-based compensation	—	—		46,330		—		—		46,330
Amortization of warrant-based cost issued for services	—	—		7,000		—		—		7,000
Net loss	—	—		—		—		(3,714,971)		(3,714,971)
Balance at July 31, 2022	25,357,764	$	25,358	$	112,134,894	$	(1,817,414)	$	(71,458,755)	$	38,884,083


	Common Stock			Additional Paid-In Capital		Treasury Stock		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at April 30, 2021	25,066,297	$	25,067	$	109,040,824	$	(1,817,414)	$	(58,158,003)	$	49,090,474
Stock-based compensation	—	—		542,712		—		—		542,712
Common stock issued for stock options exercised for cash	5,097	5		22,543		—		—		22,548
Common stock issued for vested restricted stock units	15,657	16		(16)		—		—		—
Amortization of warrant-based cost issued for services	—	—		11,458		—		—		11,458
Net loss	—	—		—		—		(870,888)		(870,888)
Balance at July 31, 2021	25,087,051	$	25,088	$	109,617,521	$	(1,817,414)	$	(59,028,891)	$	48,796,304

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

Table of Contents

ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		Three Months Ended July 31,					Three Months Ended July 31,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net loss	Net loss	$	(870,888)	$	(943,196)	Net loss	$	(3,714,971)	$	(870,888)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense	Bad debt expense	350,000		400,000		Bad debt expense	350,000		350,000
Depreciation and amortization	Depreciation and amortization	779,409		490,624		Depreciation and amortization	921,108		779,409
Stock-based compensation	Stock-based compensation	542,712		487,110		Stock-based compensation	46,330		542,712
Amortization of warrant based cost		11,458		9,125
Amortization of warrant-based cost						Amortization of warrant-based cost	7,000		11,458
Amortization of deferred financing costs						Amortization of deferred financing costs	67,068		—
Amortization of debt discounts	Amortization of debt discounts	—		141,026		Amortization of debt discounts	33,890		8,334
Amortization of debt issue costs		8,334		139,362
Modification charge for warrants exercised		—		(25,966)
Loss on asset disposition	Loss on asset disposition	1,144		—		Loss on asset disposition	—		1,144
Lease expense		8,307		—
Non-cash lease (benefit) expense						Non-cash lease (benefit) expense	(158,410)		8,307
Tenant improvement allowances received from landlords	Tenant improvement allowances received from landlords	86,591		—		Tenant improvement allowances received from landlords	—		86,591
Other adjustments, net		—		10,587
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(1,879,318)		(2,747,322)		Accounts receivable	(1,713,462)		(1,879,318)
Prepaid expenses	Prepaid expenses	163,615		(51,870)		Prepaid expenses	(386,930)		163,615
Other receivables		—		23,097
Other current assets	Other current assets	54,639		59,966		Other current assets	(240,073)		54,639
Accounts receivable, other	Accounts receivable, other	45,329		—		Accounts receivable, other	—		45,329
Deposits and other assets	Deposits and other assets	10,852		205,425		Deposits and other assets	11,883		10,852
Accounts payable	Accounts payable	161,243		258,855		Accounts payable	(41,754)		161,243
Accrued expenses	Accrued expenses	320,375		590,579		Accrued expenses	325,524		320,375
Due to students	Due to students	157,708		(480,342)		Due to students	(100,102)		157,708
Deferred revenue	Deferred revenue	(2,133,927)		1,053,859		Deferred revenue	355,619		(2,133,927)
Other current liabilities	Other current liabilities	(250,074)		(257,678)		Other current liabilities	621,087		(250,074)
Net cash used in operating activities	Net cash used in operating activities	(2,432,491)		(636,759)		Net cash used in operating activities	(3,616,193)		(2,432,491)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchases of courseware and accreditation	Purchases of courseware and accreditation	(131,669)		(3,050)		Purchases of courseware and accreditation	(15,500)		(131,669)
Purchases of property and equipment	Purchases of property and equipment	(847,213)		(659,168)		Purchases of property and equipment	(476,833)		(847,213)
Net cash used in investing activities	Net cash used in investing activities	(978,882)		(662,218)		Net cash used in investing activities	(492,333)		(978,882)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from stock options exercised	Proceeds from stock options exercised	22,548		1,269,982		Proceeds from stock options exercised	—		22,548
Proceeds from warrants exercised		—		1,081,792
Net cash provided by financing activities	Net cash provided by financing activities	22,548		2,351,774		Net cash provided by financing activities	—		22,548

(Continued)

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

Table of Contents

ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(Unaudited)


		Three Months Ended July 31,					Three Months Ended July 31,
		2021		2020			2022		2021
Net (decrease) increase in cash, cash equivalents and restricted cash		$	(3,388,825)	$	1,052,797
Net decrease in cash, cash equivalents and restricted cash						Net decrease in cash, cash equivalents and restricted cash	$	(4,108,526)	$	(3,388,825)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	13,666,079		17,906,765		Cash, cash equivalents and restricted cash at beginning of period	12,916,147		13,666,079
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	10,277,254	$	18,959,562	Cash, cash equivalents and restricted cash at end of period	$	8,807,621	$	10,277,254

Supplemental disclosure cash flow information
Supplemental disclosure cash flow information:						Supplemental disclosure cash flow information:
Cash paid for interest	Cash paid for interest	$	24,384	$	199,178	Cash paid for interest	$	416,164	$	24,384
Cash paid for income taxes	Cash paid for income taxes	$	98,105	$	1,600	Cash paid for income taxes	$	4,721	$	98,105

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the accompanying consolidated balance sheet to the total amounts shown in the accompanying unaudited consolidated statements of cash flows:
July 31, 2021 July 31, 2020
Cash and cash equivalents $ 6,554,423 $ 15,899,293
Restricted cash 3,722,831 3,060,269
Total cash, cash equivalents and restricted cash $ 10,277,254 $ 18,959,562


	July 31,
	2022		2021
Cash and cash equivalents	$	2,374,224	$	6,554,423
Restricted cash	6,433,397		3,722,831
Total cash, cash equivalents and restricted cash	$	8,807,621	$	10,277,254

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

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ASPEN GROUP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

July 31, ~~2021~~2022

(Unaudited)

Note 1. Nature of Operations

Overview

Aspen Group, Inc. ("AGI") is an education technology holding company. AGI has 2two subsidiaries, Aspen University Inc. ("Aspen University" or "AU"), organized in 1987, and United States University Inc. ("United States University" or "USU").

All references to the “Company”, “AGI”, “Aspen Group”, “we”, “our” and “us” refer to Aspen Group, Inc., unless the context otherwise indicates.

AGI leverages its education technology infrastructure and expertise to allow its two universities, Aspen University and United States University, to deliver on the vision of making college affordable again. Because we believe higher education should be a catalyst to our students’ long-term economic success, we exert financial prudence by offering affordable tuition that is one of the greatest values in higher education. AGI’s primary focus relative to future growth is to target the high growth nursing profession.

Since 1993, Aspen University has been ~~nationally~~institutionally accredited by the Distance Education ~~and~~ Accrediting Council (“DEAC”), ~~a national~~an accrediting agency recognized by the United States Department of Education (the “DOE”), through January 2024.

Since 2009, USU has been ~~regionally~~institutionally accredited by WASC Senior College and University Commission. (“WSCUC”).

Both universities are qualified to participate under the Higher Education Act of 1965, as amended ~~(HEA)~~("HEA") and the Federal student financial assistance programs (Title IV, HEA programs). USU has a provisional certification resulting from the ownership change of control in connection with the acquisition by AGI on December 1, 2017.

~~COVID-19 Update~~

Nursing students represented 87% or 12,058 of the Company’s total student body of 13,879 students at the end of the first quarter of fiscal 2022. Of the 12,058 nursing students, 2,364 are BSN Pre-Licensure students located across our 4 metro locations (Phoenix, Austin, Tampa and Nashville). The remaining 9,694 nursing students are licensed registered nurses (RNs) studying to earn an advanced degree (RN to BSN, MSN or DNP degree programs).These 9,694 post-licensure nursing students therefore represent 70% of the Company’s total student body and are the population of AGI students that have been primarily affected by the COVID-19 pandemic. Given that AGI has the highest student body concentration of RNs among publicly-traded higher education companies in the U.S., the COVID-19 pandemic has necessitated the need to track RN behaviors and attitudes carefully for the past 18 months. Below are the effects the Company has seen to date relative to class starts among our RN active student body.

The Company previously reported that RN course starts at both universities were approximately 4% lower than historically expected during the months of September, 2020 – January, 2021, which resulted in approximately $520,000 less revenue in the fiscal 2021 third quarter. However, beginning in late February 2021, RN course starts returned to historically normal levels throughout the remainder of the fourth fiscal quarter which resulted in revenue of $19.1 million for the quarter, approximately $500,000 higher than the midpoint of our forecast.

Starting in the second half of the month of June and continuing throughout the month of July 2021, the Company saw lower course starts than seasonally expected among our RN student body. For example, at Aspen University, course starts among RNs in June were flat year-over-year and July was slightly down year-over-year which was not surprising given the rise of the Delta variant and the spike in hospitalizations. Revenue for the first quarter was relatively unaffected given that the lower RN class starts occurred in the second half of the fiscal quarter. We cannot be certain what impact the Delta variant and other variants will have on the Company’s results as we progress through the second and future quarters in fiscal 2022.

Basis of Presentation

Interim Financial Statements

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~~(Unaudited)~~

The interim unaudited 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 months ended July 31, ~~2021~~2022 and ~~2020,~~2021, our cash flows for the three months ended July 31, 2022 and 2021, and ~~2020, and~~ our consolidated financial position as of July 31, ~~2021~~2022 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 unaudited consolidated financial statements. Accordingly, these interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended April 30, ~~2021~~2022 as filed with the SEC on July ~~13, 2021.~~29, 2022. The April 30, ~~2021~~2022 consolidated balance sheet is derived from those statements.

Note 2. Significant Accounting Policies

Basis of Presentation and Consolidation

The Company prepares its consolidated financial statements in accordance with U.S. generally accepted accounting principles ("GAAP").

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

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A full listing of our significant accounting policies is described in Note ~~2 “Summary~~2. Summary of Significant Accounting ~~Policies”~~Policies of our Annual Report on Form 10-K for the fiscal year ended April 30, ~~2021~~2022 as filed with the SEC on July ~~13, 2021.~~29, 2022.

Accounting Estimates

Management of the Company is required to make certain estimates, judgments and assumptions during the preparation of its consolidated financial statements in accordance with GAAP. These estimates, judgments and assumptions impact the reported amounts of assets, liabilities, revenue and expenses and the related disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

Significant estimates in the accompanying consolidated financial statements include the allowance for doubtful accounts, ~~and other receivables,~~ the valuation of lease liabilities and the carrying value of the related right-of-use assets ("~~ROU"~~ROU assets") ~~assets,~~, depreciable lives of property and equipment, amortization periods and valuation of courseware, intangibles and software development costs, valuation of goodwill, valuation of loss contingencies, valuation of stock-based compensation and the valuation allowance on deferred tax assets.

Cash, Cash Equivalents, and Restricted Cash

For the purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Restricted cash as of both July 31, ~~2021~~2022 and April 30, 2022 of ~~$3,722,831 primarily~~$6,433,397 consists of ~~$934,125~~$5 million, which is collateral for an approximately $18.3 million surety bond required by the Arizona State Board for Postsecondary Education, $1,173,525 which is collateral for letters of credit for the Aspen University and USU facility operating leases, $9,872 which is collateral for a letter of credit for USU required to be posted based on the level of Title IV funding in connection with USU's most recent Compliance Audit, and a $250,000 compensating balance under a secured credit line. Also included are funds held for students for unbilled educational services that were received from Title IV and non-Title IV programs totaling $2,528,834. As an administrator of these Title IV program funds, the Company is required to maintain and restrict these funds pursuant to the terms of the program participation agreement with the U.S. Department of Education.

Restricted cash as of April 30, 2021 of $5,152,789 primarily consisted of $934,125 which is collateral for letters of credit for the Aspen University and USU facility operating leases, $9,872 which is collateral for a letter of credit for USU required to be

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~~(Unaudited)~~

posted based on the level of Title IV funding in connection with USU's most recent Compliance Audit, and a $250,000 compensating balance under a secured credit line. Also included are funds held for students for unbilled educational services that were received from Title IV and non-Title IV programs totaling $3,958,792. As an administrator of these Title IV program funds, the Company is required to maintain and restrict these funds pursuant to the terms of the program participation agreement with the U.S. Department of Education.

Concentration of Credit Risk

The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits of $250,000 per financial institution. The Company has not experienced any losses in such accounts from inception through July 31, ~~2021.~~2022. As of July 31, ~~2021~~2022 and April 30, ~~2021,~~2022, the Company maintained deposits exceeding federally insured limits by approximately ~~$9,732,634~~$3,683,384 and ~~$13,005,537,~~$7,749,715, respectively, held in two separate institutions.

Revenue Recognition and Deferred Revenue

The Company follows Accounting Standards Codification 606 (ASC 606). ASC 606 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASC also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer purchase orders, including significant judgments.

Revenue consists primarily of tuition and course fees derived from courses taught by the Company online and in-person as well as from related educational resources and services that the Company provides to its students. Under ASC 606, tuition and course fee revenue is recognized pro-rata over the applicable period of instruction and are not considered separate performance obligations. Non-tuition related revenue and fees are recognized as services are provided or when the goods are received by the student. ~~(See Note 8)~~Students may receive discounts, scholarships, or refunds, which gives rise to variable consideration. Discounts or scholarships are applied to individual student accounts when such amounts are awarded. Therefore, the tuition is reduced directly by these discounts or scholarships from the amount of the standard tuition rate charged.

Deferred revenue, a contract liability, 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.

Net Loss Per Share

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Net loss per share is based on the weighted average number of shares of common stock outstanding during each period.

Options, ~~to purchase 1,141,396 and 1,032,411 shares of common stock, 653,937 and 549,972~~warrants, restricted stock units ("RSUs"), ~~warrants to purchase~~ ~~374,174~~unvested restricted stock and ~~374,174~~Convertible Notes (convertible into 10 million shares of common stock ~~and unvested restricted stock~~as of ~~8,224 and 8,224 were outstanding at~~ July 31, ~~2021 and April 30, 2021, respectively.~~

~~All shares mentioned above were~~2022) are not included in the computation of diluted net loss per share because the effects would have been anti-dilutive. ~~The options, warrants, RSUs, unvested restricted stock and Convertible Notes are considered to be~~These common stock equivalents ~~and~~ are only included in the calculation of diluted earnings per share of common stock when their effect is dilutive. See Note 6. Stockholders’ Equity.

Segment Information

The Company operates in 1one reportable segment as a single educational delivery operation using a core infrastructure that serves the curriculum and educational delivery needs of its online and campus students regardless of geography. The Company's chief operating decision makers, its Chief Executive Officer, Chief Operating Officer and Chief Academic Officer, manage the Company's operations as a whole.

Recent Accounting Pronouncement Not Yet Adopted

ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

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~~(Unaudited)~~

In June 2016, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ~~ASU~~Accounting Standard Update ("ASU") No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which significantly changes how entities will measure credit losses for most financial assets, including accounts receivable. ASU No. 2016-13 will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. On November 15, 2019, the FASB delayed the effective date of Topic 326 for certain small public companies and other private companies until fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the SEC’s definition, as well as private companies and not-for-profit entities. The Company is currently evaluating the new guidance and ~~has~~does not ~~yet determined whether~~expect the adoption of the new standard ~~will~~to have a material impact on its consolidated financial statements.

In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The guidance was issued as improvements to ASU No. 2016-13 described above. The vintage disclosure changes require an entity to disclose current-period gross write-offs by year of origination for financing receivables. The guidance is effective for financial statements orissued for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The amendments should be applied prospectively. Early adoption of the ~~method of adoption.~~amendments is permitted, including adoption in an interim period. The amendments will impact our disclosures but will not otherwise impact the consolidated financial statements. The Company is currently evaluating the new guidance.

Note 3. Property and Equipment

As property and equipment reach the end of their useful lives, the fully expired assets are written off against the associated accumulated depreciation and amortization. ~~There~~

When assets are disposed of before reaching the end of their useful lives both the recorded cost of the fixed asset and the corresponding amount of accumulated depreciation is ~~no expense impact for such write offs.~~reversed. Any remaining difference between the two is recognized as either other income or expense.

Software consisted of the following:


		July 31, 2021		April 30, 2021			July 31, 2022		April 30, 2022
Software	Software	$	8,951,241	$	8,488,635	Software	$	10,661,079	$	10,285,096
Accumulated amortization	Accumulated amortization	(3,855,985)		(3,444,325)		Accumulated amortization	(5,641,106)		(5,170,943)
Software, net	Software, net	$	5,095,256	$	5,044,310	Software, net	$	5,019,973	$	5,114,153

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(Unaudited)

Depreciation and amortization expense for property and equipment and software is summarized below:


		Three Months Ended July 31,					Three Months Ended July 31,
		2021		2020			2022		2021
Depreciation and amortization expense:	Depreciation and amortization expense:					Depreciation and amortization expense:
Property and equipment, excluding software	Property and equipment, excluding software	$	351,373	$	163,570	Property and equipment, excluding software	$	428,925	$	351,373
Software	Software	$	411,661	$	315,107	Software	$	470,163	$	411,661

Note 4. Courseware and Accreditation

~~For the three months ended July 31, 2021 and 2020, additional courseware and accreditation costs capitalized were $131,669 and $3,050.~~ As courseware and accreditation reach the end of their useful life, they are written off against the accumulated amortization. There was no expense impact for such write-offs for the three months ended July 31, ~~2021~~2022 and ~~2020.~~2021.

Courseware and accreditation consisted of the following:


		July 31, 2021		April 30, 2021			July 31, 2022		April 30, 2022
Courseware	Courseware	$	539,893	$	408,222	Courseware	$	599,283	$	575,283
Accreditation	Accreditation	59,350		59,350		Accreditation	59,350		59,350
		599,243		467,572			658,633		634,633
Accumulated amortization	Accumulated amortization	(296,223)		(280,276)		Accumulated amortization	(391,107)		(360,586)
Courseware and accreditation, net	Courseware and accreditation, net	$	303,020	$	187,296	Courseware and accreditation, net	$	267,526	$	274,047

Amortization expense for courseware and accreditation is summarized below:
Three Months Ended July 31,
2021 2020
Amortization expense $ 15,948 $ 11,947


	Three Months Ended July 31,
	2022		2021
Courseware and accreditation amortization expense	$	22,020	$	15,948

Amortization expense is included in "Depreciation and amortization" in the unaudited consolidated statements of operations.

Note 5. Long-term Debt, Net


	July 31, 2022		April 30, 2022
Credit Facility due March 14, 2023 (the "2022 Revolving Credit Facility")	$	—	$	—
Credit Facility due November 4, 2023 (the "2018 Credit Facility"); interest payable monthly in arrears	5,000,000		5,000,000
12% Convertible Notes due March 14, 2027 (the "2022 Convertible Notes"); interest payable monthly in arrears	10,000,000		10,000,000
Total long-term debt	15,000,000		15,000,000
Less: Unamortized debt discount	90,375		124,265
Total long-term debt, net	$	14,909,625	$	14,875,735

2022 Convertible Notes

On March 14, 2022, the Company issued $10 million in principal convertible notes (the "2022 Convertible Notes") to two unaffiliated lenders (individually a "Lender" and collectively, the "Lenders") in exchange for $5 million notes to each of the two unaffiliated Lenders. The proceeds are used for general corporate purposes, including funding the Company’s expansion of its BSN Pre-Licensure nursing degree program. The key terms of the Convertible Notes are as follows:

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(Unaudited)

~~Amortization expense~~•At any time after issuance date, the Lenders had the right to convert the principal into shares of the Company’s common stock at a conversion price of $1.00 per share;

•The Convertible Notes automatically convert at $1.00 per share into shares of the Company’s common stock if the average closing price of our common stock is ~~included~~at least $2.00 over a 30 consecutive trading day period. This mandatory conversion is subject to each Lender’s 9.9% beneficial ownership limitation and is also subject to the Nasdaq combined 19.99% requirement which generally provides that a listed issuer may not issue 20% or more of its outstanding common stock or voting power in ~~"Depreciation~~a non-public offering at below a minimum price unless the Company’s stockholders first approve such issuance;

•The Convertible Notes are due March 14, 2027 or approximately five years from the closing;

•The interest rate of the Convertible Notes is 12% per annum (payable monthly in arrears); and ~~amortization"~~

•The Convertible Notes are secured by a first priority lien in all current and future accounts receivable of the Company’s subsidiaries, certain of the deposit accounts of the Company and its subsidiaries and a pledge of the common stock of the Company held by its Chief Executive Officer (the “2022 Collateral”).

At closing of the 2022 Convertible Notes, the Company agreed to pay each Lender's legal fees arising from this transaction of $135,562, which has been recorded as a deferred financing cost debt discount and is being amortized over a one-year period in "Interest expense" in the ~~unaudited~~accompanying consolidated ~~statements of operations.~~financial statements.

2022 Revolving Credit Facility

~~Note 5. Secured~~On March 14, 2022, the Company entered into Revolving Promissory Note and ~~Accounts Receivable~~

~~On March 30, 2008 and December 1, 2008, Aspen University sold courseware pursuant to marketing agreements to Higher Education Management Group, Inc. (“HEMG”~~Security Agreements (the "2022 Revolver Agreements"), with the same two unaffiliated Lenders of the 2022 Convertible Notes for a one-year, $20 million secured revolving line of credit that requires monthly interest payments on sums borrowed at the rate of 12% per annum (the "2022 Revolving Credit Facility"). At July 31, 2022, there were no outstanding borrowings under the 2022 Revolving Credit Facility. The Company paid a 1% commitment fee of $200,000 at closing, which was ~~then~~recorded as a ~~related party~~deferred financing cost, non-current asset, and ~~principal stockholder~~is being amortized over the term of the ~~Company. Ultimately,~~loan of one-year, and if the ~~sum due to Aspen University was reduced to $772,793, and Aspen Universityobtained a judgment for that amount. HEMG thenfiled a bankruptcy petition~~revolving credit facility has not been replaced in ~~2015. As of April 30, 2021, the balance~~six months of the ~~account receivable, net~~closing date, it must pay another 1% commitment fee.

Pursuant to the 2022 Convertible Notes and the 2022 Revolving Credit Facility (the "Notes"), all future indebtedness incurred by the Company, other than indebtedness expressly permitted by the Notes, will be subordinated to the Notes and the Prior Credit Facility, as defined below, with an exception for acquisitions of ~~allowance, was $45,329.~~software and equipment under purchase money agreements and capital leases.

The Company’s obligations under the 2022 Revolver Agreements are secured by a first priority lien in the same 2022 Collateral as described above under "2022 Convertible Notes."

On ~~July 21, 2021,~~March 14, 2022, in connection with the issuance of the Notes, the Company ~~received~~also entered into an intercreditor agreement (the “Intercreditor Agreement”) among the Company, the Lenders and the lender under a prior credit facility dated November 5, 2018 (as amended, the “2018 Credit Facility”). The Intercreditor Agreement provides among other things that the Company's obligations under, and the security interests in the Collateral granted pursuant to, the Note and the 2018 Credit Facility shall rank pari passu to one another.

In connection with the issuance of the Notes, the Company also entered into an Investors/Registration Rights Agreement with the Lenders (the “Registration Rights Agreement”) whereby, upon request of either Lender on or after August 15, 2022 the Company must file and obtain and maintain the effectiveness of a registration statement registering the shares of common stock issued or issuable upon conversion of the Convertible Notes. No lender requests have been made as of the date of this filing.

On March 14, 2022, the Company entered into an amendment with the lender pursuant to the 2018 Credit Facility to extend the maturity date of the 2018 Credit Facility by one year to November 4, 2023.

On March 14, 2022, the Company entered into a letter agreement with the Lenders (the “Letter Agreement”). Pursuant to the Letter Agreement, the Company and its ~~distribution from~~subsidiaries made certain representations and warranties to the~~bankruptcy trustee court~~ Lenders. The Letter Agreement also contained certain conditions precedent to the closing of ~~$498,120,~~the transactions.

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(Unaudited)

On April 22, 2022, the Company entered into an agreement with an insurance company which issued an approximately $18.3 million surety bond which was required by the Arizona State Board for Private Postsecondary Education. In order to cause the insurance company to deliver the surety bond, the Company entered into a First Amendment to the Intercreditor Agreement with the two Lenders of the March 14, 2022, financing arrangements to amend the Intercreditor Agreement entered into by the same parties on March 14, 2022 (the “Amendment”). The Amendment provides that the Company and each of the Lenders, at all times prior to the delivery of the Termination Certificate (as defined below), excluding funding as directed by the surety bond as described more fully below, (i) the Company shall not be permitted to make any draw request or borrow any funds under the 2022 Revolver Agreements and (ii) the Lenders shall not be required to fund any loan or advance any funds under the 2022 Revolver Agreements. Upon that certain surety bond ceasing to be outstanding, the Company shall deliver to the lenders a certificate (such certificate, the “Termination Certificate”), certifying that the surety bond is ~~included~~no longer outstanding and that there are no further obligations in ~~"other income (expense), net"~~respect of the surety bond owing by the Company to the insurance company. Prior to issuance of the Termination Certificate and during the time the surety bond is in effect, the insurance company may cause the Company to draw on funds for the express purposes of resolving claims filed under the surety bond. In addition to the draw restriction on the 2022 Revolver Agreements, the insurance company required the Company to restrict $5 million of cash. As consideration for the Lenders agreeing to enter into the Amendment, the Company agreed to issue each Lender 100,000 five-year warrants exercisable at $1.00 per share. The fair value of the warrants is $118,000 and is being amortized over the remaining term of the debt. The fair value of the warrants are treated as deferred financing costs, a non-current asset, in the accompanying ~~unaudited~~ consolidated ~~statements of operations. As a result, the Company wrote off the net receivable of $45,329, described above,~~balance sheets at April 30, 2022. Total unamortized costs at July 31, ~~2021. No further assets are available for distribution.~~2022 were $112,100. See Note 116. Stockholders’ Equity for additional ~~information.~~information related to these warrants.

~~Note 6. Debt~~

~~Revolving~~2018 Credit Facility

On November 5, 2018, the Company entered into ~~a loan agreement (the “Credit~~the 2018 Credit Facility ~~Agreement”)~~Agreement with the Leon and Toby Cooperman Family Foundation (the “Foundation”). The Credit Facility Agreement provides for a $5,000,000 revolving credit facility (the ~~“Facility”~~"2018 Credit Facility") evidenced by a revolving promissory note (the “Revolving Note”). Borrowings under the 2018 Credit Facility Agreement bear interest at 12% per annum. ~~The~~Interest payments are due monthly through the term of the 2018 Credit Facility.

On August 31, 2021, the Company extended the 2018 Credit Facility ~~matures on~~Agreement with the Foundation by one year from November 4, ~~2021.~~2021, to November 4, 2022 (see below, which were extended by one year). In conjunction with the extension of the 2018 Credit Facility, the Company drew down funds of $5,000,000. At each July 31, ~~2021~~2022 and April 30, ~~2021,~~2022, there ~~was no~~were $5,000,000 outstanding borrowings under the ~~Revolving~~2018 Credit Facility.

~~Pursuant to the terms of the Credit Facility Agreement,~~Additionally, on August 31, 2021, the Company ~~agreed to pay~~issued to the Foundation ~~a $100,000 one-time upfront Facility fee. The Company also agreed~~warrants, as an extension fee, to ~~pay~~purchase 50,000 shares of the ~~Foundation a commitment fee, payable quarterly~~Company’s common stock exercisable for five years from the date of issuance at the ~~rate~~exercise price of 2%$5.85 per ~~annum on the undrawn portion~~share. The fair value of the warrants is $137,500 and is being amortized to interest expense through the maturity date of November 4, 2023, as extended on March 14, 2022. On March 14, 2022, the Company extended its existing $5 million Credit Facility by one year to November 4, 2023, at an increased interest rate from 12% to 14% per annum. The fair value of the warrants are treated as deferred financing costs, a non-current asset, in the accompanying consolidated balance sheets at April 30, 2022, to be amortized over the term of the 2018 Credit Facility. Total unamortized costs at July 31, 2022 were $57,401. See Note 6. Stockholders’ Equity for additional information related to these warrants.

The 2018 Credit Facility Agreement contains customary representations and warranties and events of default. Pursuant to the Loan Agreement and the Revolving Note, all future or contemporaneous indebtedness incurred by the Company, other than indebtedness expressly permitted by the 2018 Credit Facility Agreement and the Revolving Note, will be subordinated to the Facility.

~~On August 31, 2021, the Company extended the Facility maturity one-year to November 4, 2022 and drew down $5,000,000 on the Facility. See Note 12 for additional information.~~

Pursuant to the Credit Facility Agreement, on November 5, 2018 the Company issued to the Foundation warrants to purchase 92,049 shares of the Company’s common stock exercisable for five years from the date of issuance at the exercise price of $5.85 per share which were deemed to have a relative fair value of $255,071 (the "2018 Cooperman Warrants"). These warrants were exercised on June 8, 2020. The relative fair value of the warrants along with the upfront Facility fee were treated as debt issue cost assets to be amortized over the term of the loan, as the facility has not been drawn on. Total unamortized costs at July 31, 2021 and April 30, 2021 were $9,722 and $18,056, respectively.

On March 6, 2019, the Company amended and restated the Credit Facility Agreement (the “Amended and Restated Facility Agreement”) and the Revolving Note. The Amended and Restated Facility Agreement provides among other things that the Company’s obligations thereunder are secured by a first priority lien in certain deposit accounts of the Company, all current and future accounts receivable of Aspen University and USU, certain of the deposit accounts of Aspen University and USU and all of the outstanding capital stock of Aspen University and USU.

Note 7.6. Stockholders’ Equity

AGI maintains 2two stock-based incentive plans: the 2012 Equity Incentive Plan (the “2012 Plan”) and the 2018 Equity Incentive Plan (the “2018 Plan”) that ~~provides~~provide for the grant of shares in the form of incentive stock options, non-qualified stock options, restricted shares, stock appreciation rights and RSUs to employees, consultants, officers and directors. The 2012 Plan

1112

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(Unaudited)

expired on March 15, 2022, and remains in effect for outstanding grants only, and is no longer available for new grants. On March 8, 2022, we transferred the 129,009 unused shares under the 2012 Plan to the 2018 Plan.

As of July 31, 2022 and April 30, 2022, there were 1,050,591 and 812,763 shares, respectively, remaining available for future issuance under the 2018 Plan.

On July 6, 2022, the Company amended its Certificate of Incorporation, as amended, to increase the number of authorized shares of common stock the Company is authorized to issue from 40,000,000 to 60,000,000 authorized shares, which was approved at a special meeting of the Company's stockholders held on July 6, 2022.

On December ~~30, 2020,~~22, 2021, the Company held its Annual Meeting of Shareholders at which the shareholders voted to amend the 2018 Plan to increase the number of shares of common stock available for issuance under the 2018 Plan from ~~1,100,000~~1,600,000 to ~~1,600,000~~2,350,000 shares.

Preferred Stock

The Company is authorized to issue 1,000,000 shares of “blank check” preferred stock with designations, rights and preferences as may be determined from time to time by our Board of Directors. As of July 31, ~~2021~~2022 and April 30, ~~2021 there were 431,869~~2022, we had no shares of preferred stock issued and ~~549,739~~outstanding.

Common Stock

At both July 31, 2022 and April 30, 2022, the Company was authorized to issue 60,000,000 shares ~~remaining available for future issuance under the 2012 and the 2018 Plans,~~of common stock, respectively.

Restricted Stock

As of both July 31, ~~2021~~2022 and ~~2020,~~April 30, 2022, there were ~~8,224 and 16,448~~no unvested shares of restricted common stock ~~outstanding, respectively. Total~~outstanding. During the three months ended July 31, 2022 and 2021, there were no new restricted stock grants, forfeitures, or expirations. There is no unrecognized compensation expense related to ~~the unvested shares~~restricted stock as of July 31, ~~2021 was $17,545, and is expected to be recognized over a weighted-average period of approximately 0.42 years.~~2022.

Restricted Stock Units

A summary of the Company’s RSU activity, granted under the 2012 and 2018 Equity Incentive Plans, during the three months ended July 31, ~~2021~~2022 is presented below:


Restricted Stock Units	Restricted Stock Units	Number of Shares	Weighted Average Grant Price		Restricted Stock Units	Number of Shares	Weighted Average Grant Date Fair Value
Unvested balance outstanding, April 30, 2021		549,972	$	6.58
Unvested balance outstanding, April 30, 2022					Unvested balance outstanding, April 30, 2022	929,928	$	6.12
Granted	Granted	127,542	6.97		Granted	—	—
Forfeits	Forfeits	(7,920)	9.37		Forfeits	(172,828)	7.65
Vested	Vested	(15,657)	6.26		Vested	(14,345)	0.97
Expired	Expired	—	—		Expired	—	—
Unvested balance outstanding, July 31, 2021		653,937	$	6.07
Unvested balance outstanding, July 31, 2022					Unvested balance outstanding, July 31, 2022	742,755	$	5.86

~~Of t~~
~~he 127,542~~

On August 16, 2021, the Compensation Committee approved a 125,000 RSU grant to the Company’s newly hired Chief Financial Officer as part of his employment agreement. The grant has a grant date fair value of $725,000 based on a closing stock price of $5.80 per share. On August 12, 2021, the Compensation Committee approved individual grants of 80,000 RSUs ~~granted in~~to the Company’s Chief Operating Officer and Chief Academic Officer. The grants have a total grant date fair value of $1.0 million based on a closing stock price of $6.48 per share.

The three executive grants discussed above are under the Company’s 2018 Plan and are set to vest annually over a period of three years and are subject to continued employment as an officer of the Company on each applicable vesting date. The

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(Unaudited)

amortization expense related to these grants for the three months ended July 31, ~~2021, 125,000 RSUs~~ ~~correspond to~~2022 was $146,817, which is included in "general and administrative expense" in the ~~Chief Executive Officer grant.~~ accompanying consolidated statement of operations.

On July 21, 2021, as part of a new employment agreement, the Compensation Committee approved a 125,000 RSU grant to the Company's Chief Executive Officer under the Company's 2018 ~~Equity Incentive~~ Plan. The grant has a grant date fair value of $873,750 based on a closing stock price of $6.99 per share. As stipulated in the grant, vesting is subject to continued employment with the Company and will occur in full on the date the Company files with the SEC a quarterly or annual report on Forms 10-Q or 10-K, as applicable, which reflects the ~~Company~~Company's reported net income on a GAAP basis. The Company iswas amortizing the expense over ~~one year~~three years through July ~~2022~~2024 (the filing date of the Form 10-K for Fiscal Year ~~2022)~~2024). At ~~each reporting period of Fiscal Year~~July 31, 2022, the Company ~~will re-assess the likelihood of~~assessed that the performance condition will not be met. Therefore, the amortization expense related to ~~be met in the fourth quarter~~this grant of ~~2022. If the RSUs do not vest within three years from the July 21, 2021 effective date, they will expire and automatically be forfeited.~~$242,708 was reversed. The amortization expense related to this grant for the three months ended July 31, 2021 was $72,813, which is included in general and administrative expense in the consolidated statements of ~~operations. The remaining 2,542~~operations prior to the reversal.

Of the 742,755 unvested RSUs ~~were granted to employees and have a grant date fair value that ranges from $4.92 to $6.50 per share, or a total of $14,943, vesting annually over three years.~~

~~Of the~~ ~~653,937 unvested RSU~~s outstanding at July 31, ~~2021, there are 195,000 RSUs remaining~~2022, 162,500 remain from the February 4, 2020 executive grant. These RSUs vest four years from the grant date, if each applicable executive is still employed by the Company on the vesting date, and are subject to accelerated vesting for all RSUs if the closing price of the Company’s common stock is at least $12 for 20 consecutive trading ~~days, all of the unvested RSUs will vest immediately.~~days. On the grant date, the closing price of the Company's common stock on The Nasdaq Global Market was $9.49 per share. The a~~mortization~~amortization expense related to ~~these transactions~~this grant for the three months ended July 31, 2022 was a net reversal of $34,150 due to the resignation of the Chief Nursing Officer on July 15, 2022. The amortization expense related to this grant for the three months ended July 31, 2021 ~~and 2020,~~ was ~~approximately $112,155 and $111,211, respectively, which~~$112,155. The amortization expense is included in general and administrative expense in the consolidated statements of operations. The remaining unvested RSUs during the three months ended July 31, 2022 were granted to employees.

At July 31, ~~2021,~~2022, total unrecognized compensation expense related to unvested RSUs is ~~$3,972,803~~$2,635,885 and is expected to be recognized over a weighted-average period of approximately ~~1.49~~1.37 years.~~The total unrecognized compensation expense related to the February 4, 2020 executive RSU grant, discussed above, is~~ ~~$1,121,555~~.

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~~ASPEN GROUP, INC. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~July 31, 2021~~

~~(Unaudited)~~

Warrants

The Company estimates the fair value of warrants utilizing the Black-Scholes pricing model, which is dependent upon several variables such as the expected term, expected volatility of the Company’s stock price over the expected term, expected risk-free interest rate over the expected term and expected dividend yield rate over the expected term. The Company believes this valuation methodology is appropriate for estimating the fair value of warrants issued ~~to 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 expense on a straight-line basis over the vesting period of each warrant issued.

A summary of the Company’s warrant activity during the three months ended July 31, ~~2021~~2022 is presented below:


Warrants	Warrants	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value		Warrants	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Balance Outstanding, April 30, 2021		374,174	$	6.37	1.90	$	—
Balance Outstanding, April 30, 2022								Balance Outstanding, April 30, 2022	649,174	$	4.70	1.96	$	—
Granted	Granted	25,000	$	6.99	4.98	—		Granted	—	$	—	—	—
Exercised	Exercised	—	$	—	—	—		Exercised	—	$	—	—	—
Surrendered	Surrendered	—	$	—	—	—		Surrendered	—	$	—	—	—
Expired	Expired	—	$	—	—	—		Expired	(224,174)	$	6.87	—	—
Balance Outstanding, July 31, 2021		399,174	$	6.41	1.85	$	144,000
Balance Outstanding, July 31, 2022								Balance Outstanding, July 31, 2022	425,000	$	4.70	1.96	$	—

Exercisable, July 31, 2021		374,174	$	6.37	1.54	$	144,000
Exercisable, July 31, 2022								Exercisable, July 31, 2022	400,000	$	4.89	1.80	$	—

OUTSTANDING WARRANTS EXERCISABLE WARRANTS
Exercise
Price Weighted
Average
Exercise
Price Outstanding
No. of
Warrants Weighted
Average
Exercise
Price Weighted
Average
Remaining Life
In Years Exercisable
No. of
Warrants
$ 4.89 $ 4.89 50,000 $ 4.89 3.44 50,000
$ 6.00 $ 6.00 100,000 $ 6.00 3.09 100,000
$ 6.87 $ 6.87 224,174 $ 6.87 1.48 224,174
$ 6.99 $ 6.99 25,000 $ — 0.00 —
399,174 374,174

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(Unaudited)


OUTSTANDING WARRANTS					EXERCISABLE WARRANTS
Exercise Price		Weighted Average Exercise Price		Outstanding Number of Warrants	Weighted Average Exercise Price		Weighted Average Remaining Life In Years	Exercisable Number of Warrants
$	1.00	1.00		200,000	$	1.00	4.74	200,000
$	4.89	$	4.89	50,000	$	4.89	1.70	50,000
$	5.85	$	5.85	50,000	$	5.85	4.09	50,000
$	6.00	$	6.00	100,000	$	6.00	1.60	100,000
$	6.99	$	6.99	25,000	$	0.00	0.00	—
				425,000				400,000

On April 22, 2022, as consideration for amending the Intercreditor Agreement, the Company issued warrants to the same two unaffiliated Lenders of the 2022 Convertible Notes, to each purchase 100,000 shares of the Company’s common stock exercisable for five years from the date of issuance at the exercise price of $1.00 per share. See Note 5. Long-term Debt, Net. The fair value of the warrants is $118,000 and is being amortized over the remaining term of the debt. The fair value of the warrants is treated as deferred financing costs, a non-current asset, in the accompanying consolidated balance sheets at July 31, 2022 and April 30, 2022. Total unamortized costs at July 31, 2022 and April 30, 2022 was $112,100 and $118,000, respectively. The Company has recognized $5,900 of amortization expense in connection with the fair value of the warrants for the three months ended July 31, 2022, which is included in "interest expense" in the accompanying consolidated statement of operations.

On August 31, 2021, the Compensation Committee approved the issuance of warrants to the Leon and Toby Cooperman Family Foundation as an extension fee in connection with the extension of the 2018 Credit Facility Agreement. The warrants allow for the purchase of 50,000 shares of the Company’s common stock and have an exercise price of $5.85. The warrants have an exercise period of five years from the August 31, 2021 issuance date and will terminate automatically and immediately upon the expiration of the exercise period. The fair value of the warrants is $137,500 and is being amortized over the 14-month line of credit period. The Company has recognized $11,167 of amortization expense in connection with the fair value of the warrants for the three months ended July 31, 2022, which is included in "interest expense" in the accompanying consolidated statement of operations.

On July 21, 2021, the ~~Compensation~~Executive Committee approved the issuance of warrants to a former member of the Board of Directors for the purchase of 25,000 shares of the Company's common stock with an exercise price of $6.99 per share. The warrants have an exercise period of five years from the July 21, 2021 issuance date and vest annually over a ~~three year~~three-year period subject to continued service on the Company's Advisory Board on each applicable vesting date. The warrants will terminate automatically and immediately upon the expiration of the exercise period. The ~~relative~~ fair value of the warrants is $84,000 and is being amortized over the ~~three year~~three-year vesting period. TheThe Company has recognized ~~$2,333~~$7,000 of amortization expense in connection with the fair value of the warrants for the three months ending July 31, ~~2021,~~2022, which is included in ~~“general~~general and ~~administrative”~~administrative expense in the ~~consolidated statement of operations.~~

During the three months ended July 31, 2020, there was a warrant modification and acceleration charge of $25,966 related to the exercise of 192,049 warrants by the Leon and Toby Cooperman Family Foundation, which was included in “other income (expense), net” in theaccompanying consolidated statement of operations.

Stock Option Grants to Employees and Directors

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~~ASPEN GROUP, INC. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~July 31, 2021~~

~~(Unaudited)~~

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 and expected dividend yield rate over the expected option term. 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 Company utilizes 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 historical volatility. 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

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(Unaudited)

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.

There were no options granted to employees during the three months ended July 31, 2022 and 2021.

A summary of the Company’s stock option activity for employees and directors during the three months ended July 31, ~~2021,~~2022, is presented below:


Options	Options	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value		Options	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Balance Outstanding, April 30, 2021		1,214,473	$	6.24	1.88	$	204,719
Balance Outstanding, April 30, 2022								Balance Outstanding, April 30, 2022	860,182	$	7.03	1.25	$	—
Granted	Granted	—	—		—	—		Granted	—	—		—	—
Exercised	Exercised	(5,097)	6.16		—	—		Exercised	—	—		—	—
Forfeited	Forfeited	(1,752)	4.68		—	—		Forfeited	(36,000)	8.98		—	—
Expired	Expired	—	—		—	—		Expired	(29,000)	4.19		—	—
Balance Outstanding, July 31, 2021		1,207,624	$	6.29	1.65	$	1,150,849
Balance Outstanding, July 31, 2022								Balance Outstanding, July 31, 2022	795,182	$	7.05	1.07	$	—

Exercisable, July 31, 2021		1,141,396	$	6.36	1.60	$	1,044,364
Exercisable, July 31, 2022								Exercisable, July 31, 2022	786,549	$	7.05	1.06	$	—

~~During the three months ended July 31, 2021 and 2020, the Company received proceeds from the exercise of stock options for cash of $22,548 and $1,269,982, respectively.~~


OUTSTANDING OPTIONS	OUTSTANDING OPTIONS				EXERCISABLE OPTIONS				OUTSTANDING OPTIONS				EXERCISABLE OPTIONS
Exercise Price	Exercise Price	Weighted Average Exercise Price		Outstanding Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Life In Years	Exercisable Number of Options	Exercise Price	Weighted Average Exercise Price		Outstanding Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Life In Years	Exercisable Number of Options
$2.28 to $2.76		$	2.76	10,423	$	2.76	0.17	10,423
$3.24 to $4.38	$3.24 to $4.38	$	3.82	183,249	$	3.80	1.03	168,914	$3.24 to $4.38	$	3.82	36,331	$	4.00	2.00	36,331
$4.50 to $5.20	$4.50 to $5.20	$	4.94	354,778	$	4.93	1.39	310,885	$4.50 to $5.20	$	4.94	135,510	$	4.99	1.52	134,877
$5.95 to $6.28	$5.95 to $6.28	$	5.95	28,000	$	5.95	1.06	28,000	$5.95 to $6.28	$	5.95	28,000	$	5.95	0.06	28,000
$7.17 to $7.55	$7.17 to $7.55	$	7.45	473,425	$	7.46	2.07	465,425	$7.17 to $7.55	$	7.45	472,592	$	7.46	1.07	464,592
$8.57 to $9.07	$8.57 to $9.07	$	8.98	157,749	$	8.98	1.44	157,749	$8.57 to $9.07	$	8.98	122,749	$	8.96	0.44	122,749
				1,207,624				1,141,396				795,182				786,549

As of July 31, ~~2021,~~2022, there was approximately ~~$55,007~~$130 of unrecognized compensation costs related to unvested stock options. That cost is expected to be recognized over a weighted-average period of approximately ~~1.00 year.~~0.42 years.

Stock-based compensation related to RSUs, restricted stock and stock options

A summary of the Company’s stock-based compensation expense, which is included in "general and administrative" expense in the consolidated statement of operations is presented below:


	Three Months Ended July 31,
	2022		2021
RSUs	$	41,053	$	446,777
Restricted Stock	—		10,527
Stock options	5,277		85,408
Total stock-based compensation expense	$	46,330	$	542,712

Treasury Stock

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

July 31, ~~2021~~2022

(Unaudited)

For the three months ended July 31, 2021, the Company recorded compensation expense of $542,712 which consisted of: $85,408, $446,777 and $10,527, respectively, in connection with stock options, RSUs and restricted stock grants, which is included in “general and administrative” expense in the unaudited consolidated statements of operations.

For the three months ended July 31, 2020, the Company recorded compensation expense of $487,110 which consisted of: $168,734, $307,852 and $10,524, respectively, in connection with stock options, RSUs and restricted stock grants, ~~which is included in “general and administrative” expense in the unaudited consolidated statements of operations.~~

~~Treasury Stock~~

As of both July 31, ~~2021~~2022 and April 30, ~~2021,~~2022, 155,486 shares of common stock were held in treasury representing shares of common stock surrendered upon the exercise of stock options in payment of the exercise prices and the taxes and similar amounts due arising from the option exercises. The ~~value of these shares is approximately $1.8 million and represents~~values aggregating $1,817,414 were based upon the fair market value of shares surrendered as of the date of each applicable exercise date.

Note 8.7. Revenue

Revenue consists 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~~its online materials and learning management system. 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 fees for library and technology costs, which are recognized over the related service period and are not considered separate performance obligations. Other services, books, and exam fees are recognized as services are provided or when goods are received by the student. The Company’s contract liabilities are reported as deferred revenue and due to students. 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.

The following table represents ~~our~~the Company's revenue disaggregated by the nature and timing of services:


		Three Months Ended July 31,					Three Months Ended July 31,
		2021		2020			2022		2021
Tuition - recognized over period of instruction	Tuition - recognized over period of instruction	$	17,121,680	$	13,367,308	Tuition - recognized over period of instruction	$	16,295,410	$	17,121,680
Course fees - recognized over period of instruction	Course fees - recognized over period of instruction	2,003,340		1,599,693		Course fees - recognized over period of instruction	2,116,079		2,003,340
Book fees - recognized at a point in time	Book fees - recognized at a point in time	27,759		39,138		Book fees - recognized at a point in time	—		27,759
Exam fees - recognized at a point in time	Exam fees - recognized at a point in time	196,042		70,655		Exam fees - recognized at a point in time	239,068		196,042
Service fees - recognized at a point in time	Service fees - recognized at a point in time	82,174		88,768		Service fees - recognized at a point in time	243,356		82,174
		$	19,430,995	$	15,165,562
Revenue						Revenue	$	18,893,913	$	19,430,995

Contract Balances and Performance Obligations

The Company recognizes deferred revenue as a student participates in a course which continues past the consolidated balance sheet date.

~~Of the total~~The deferred revenue ~~earned during~~balance as of July 31, 2022 and April 30, 2022, was $6,245,530 and $5,889,911, respectively. During the three months ended July 31, ~~2021 and 2020, approximately $6.8 million and $3.7 million came from~~2022, the Company recognized $4,634,974 of revenue ~~which were~~that was included in the deferred atrevenue balance as of April 30, ~~2021 and 2020, respectively.~~2022. The Company classifies deferred revenue as current when the remaining term of the course, including the affect to the refund policy, is one year or less.

When the Company begins providing the performance obligation by beginning instruction in a course, a ~~contract~~contractual receivable is created, resulting in accounts receivable. The Company accounts for receivables in accordance with ASC 310, Receivables. The Company uses the portfolio approach.

Cash Receipts

~~Our~~The Company's students finance costs through a variety of funding sources, including, among others, monthly payment plans, installment plans, federal loan and grant programs (Title IV), employer reimbursement, and various ~~veterans~~veteran and military funding and

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~~ASPEN GROUP, INC. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~July 31, 2021~~

~~(Unaudited)~~

grants, and cash payments. Most students elect to use our monthly payment plan. This plan allows them to make ~~continuous~~fixed monthly payments ~~during~~over the length of ~~their program and through~~ the ~~length of their~~ payment plan. Title IV and military funding typically ~~arrives~~arrive during the period of instruction. Students who receive reimbursement from employers typically do so after completion of a course. Students who choose to pay cash for a class typically do so before beginning the class.

Significant ~~Judgments~~Judgment

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

July 31, 2022

(Unaudited)

We analyze revenue recognition on a portfolio approach under ASC 606-10-10-4. Significant judgment is utilized in determining the appropriate portfolios to assess for meeting the criteria to recognize revenue under ASC Topic 606. We have determined that all of our students can be grouped into one portfolio. Students behave similarly, regardless of their payment method. Enrollment agreements and refund policies are similar for all of our students. We do not expect that revenue earned for the portfolio is significantly different as compared to revenue that would be earned if we were to assess each student contract separately.

The Company maintains institutional tuition refund policies, 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 had revenue from students outside the United States totaling approximately 2% and 1% of consolidated revenue for ~~each of~~ the three months ended July 31, 2022 and 2021, ~~and 2020.~~respectively.

Note 9.8. Leases

~~We determine~~The Company determines if a contract contains a lease at inception. ~~We have~~The Company has entered into operating leases totaling approximately ~~154,528~~191,328 square feet of office and classroom space in Phoenix, San Diego, New York City, Denver, Austin, Tampa, Nashville, Atlanta and the New Brunswick Province in Canada. These leases expire at various dates through April 2031, and the majority contain annual base rent escalation clauses. Most of these leases include options to ~~terminate for a fee or~~ extend for additional five-year periods. ~~Leases~~As permitted by ASC 842, leases with an initial term of 12twelve months or less are not recorded on the accompanying consolidated balance sheet. The Company does not have any financing leases.

As of July 31, ~~2021,~~2022, our ~~longer term~~longer-term operating leases are located in Tampa, Phoenix, Austin and ~~Phoenix~~Nashville and are set to expire in ~~ten~~six, to eight~~, and seven years, respectively.~~ years. These leases make up ~~94%~~approximately 97% of the total future minimum lease payments.

Operating lease ~~assets are right of use assets ("~~ROU ~~assets"),~~assets, which represent the right to use an underlying asset for the lease term. Operating lease liabilities represent the obligation to make lease payments arising from the lease. Operating leases are included in "Operating lease ~~right of use~~right- of-use assets, net", "Operating lease obligations, current portion" and "Operating lease obligations, less current portion" in the consolidated balance ~~sheet~~sheets at July 31, ~~2021~~2022 and April 30, ~~2021.~~2022. These assets and lease liabilities are recognized based on the present value of remaining lease payments over the lease term. Variable lease costs such as common area maintenance, property taxes and insurance are expensed as incurred. When the lease does not provide an implicit interest rate, the Company uses an incremental borrowing rate of 12% to determine the present value of the lease payments.

Lease incentives are deducted from the ~~right of use~~ROU assets. Incentives such as tenant improvement allowances are amortized as ~~leasehold-improvements,~~leasehold improvements, separately, over the life of the lease term. For the three months ended July 31, ~~2021~~2022 and ~~2020,~~2021, the amortization expense for these ~~tenant improvement allowances~~leasehold improvements was $173,698 and $150,387, respe ~~$150,387 and $0, respectively.~~ctively.

Lease expense for operating leases is recognized on a straight-line basis over the lease term. Lease expense for the three months ended July 31, 2022 and 2021 was $1,010,512 and ~~2020 wa~~s $936,737, ~~and $397,238,~~ respectively, which is included in general and administrative expenses in the consolidated statements of operations.

ROU assets are summarized below:


	July 31, 2022		April 30, 2022
ROU assets - Operating facility leases	$	16,135,178	$	15,958,721
Less: accumulated amortization	(3,773,471)		(3,312,771)
Total ROU assets	$	12,361,707	$	12,645,950

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

July 31, ~~2021~~2022

(Unaudited)

~~ROU assets are summarized below:~~
July 31, 2021 April 30, 2021
ROU assets - Operating facility leases $ 14,308,296 $ 14,308,296
Less: accumulated reduction (2,065,840) (1,593,433)
Total ROU assets $ 12,242,456 $ 12,714,863

Operating lease obligations, related to the ROU assets are summarized below:


		July 31, 2021		April 30, 2021			July 31, 2022		April 30, 2022
Total lease liabilities	Total lease liabilities	$	19,946,229	$	19,946,229	Total lease liabilities	$	22,693,812	$	22,517,355
Reduction of lease liabilities	Reduction of lease liabilities	(1,995,109)		(1,617,600)		Reduction of lease liabilities	(4,290,574)		(3,671,466)
Total operating lease obligations	Total operating lease obligations	$	17,951,120	$	18,328,629	Total operating lease obligations	$	18,403,238	$	18,845,889

The following is a schedule by ~~fiscal years of~~ future minimum lease payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of July 31, ~~2021~~2022 (a) (by fiscal year).


Maturity of Lease Obligations	Maturity of Lease Obligations	Lease Payments		Maturity of Lease Obligations	Lease Payments
2022 (remaining)		$	3,076,200
2023		3,647,737
2023 (remaining)				2023 (remaining)	$	3,150,097
2024	2024	3,514,179		2024	4,021,638
2025	2025	3,288,066		2025	3,805,716
2026	2026	3,383,530		2026	3,911,083
2027				2027	3,991,386
Thereafter	Thereafter	10,417,592		Thereafter	7,971,840
Total future minimum lease payments	Total future minimum lease payments	27,327,304		Total future minimum lease payments	26,851,760
Less: imputed interest	Less: imputed interest	(9,376,184)		Less: imputed interest	(8,448,522)
Present value of operating lease liabilities	Present value of operating lease liabilities	$	17,951,120	Present value of operating lease liabilities	$	18,403,238

_____________________

(a) Lease payments exclude ~~$3.5~~$3.7 million of legally binding minimum lease payments for the new BSN Pre-Licensure campus location in ~~Nashville, Tennessee~~Atlanta, Georgia and excludes $1.5 million of legally binding lease payments for the new USU campus location in San Diego, California. Both leases were signed, but not yet commenced.


Balance Sheet Classification	Balance Sheet Classification	July 31, 2021		April 30, 2021		Balance Sheet Classification	July 31, 2022		April 30, 2022
Operating lease obligations, current portion	Operating lease obligations, current portion	$	2,086,076	$	2,029,821	Operating lease obligations, current portion	$	2,123,914	$	2,036,570
Operating lease obligations, less current portion	Operating lease obligations, less current portion	15,865,044		16,298,808		Operating lease obligations, less current portion	16,279,324		16,809,319
Total operating lease liabilities		$	17,951,120	$	18,328,629
Total operating lease obligations						Total operating lease obligations	$	18,403,238	$	18,845,889


~~Other Information~~	~~July 31, 2021~~
~~Weighted average remaining lease term (in years)~~	~~7.29~~
~~Weighted average discount rate~~	12	%


Other Information	July 31, 2022		April 30, 2022
Weighted average remaining lease term (in years)	6.58		6.81
Weighted average discount rate	12	%	12	%

Note ~~10.~~9. Income Taxes

The Company determined that it has a permanent establishment in Canada, as defined by article V(2)(c) of the Convention between Canada and the United States of America with Respect to Taxes on Income and on Capital (the “Treaty”), which would be subject to Canadian taxation as levied under the Income Tax Act. The Company ~~has filed~~is preparing to file Canadian T2 Corporation Income Tax Returns and related information returns under the Voluntary Disclosure Program with the Canada Revenue Agency ("CRA") to cover the 2013 through 2021 tax years during which a permanent establishment was in place. ~~As of July 31, 2021,~~

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~~the CRA has not yet responded to the voluntary disclosure.~~ The Company will also file an annual Canadian T2 Corporation Income Tax return to report the ongoing activity of the permanent establishment for ~~the~~ 2022 through 2023, and future taxation years.

As of July 31, ~~2021,~~2022, the Company recorded a reserve of approximately ~~$150,000~~$300,000 for the estimate of the 2013 through 2021 tax year foreign income tax liability; and a ~~multi-year~~reserve of approximately $25,000 and $100,000 for the 2023 and 2022 tax year, respectively, for the related foreign income tax liability.

Note ~~11.~~10. Commitments and Contingencies

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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 may or may not be performance-based in nature.

Legal Matters

From time to time, wethe Company may be involved in litigation relating to claims arising out of ~~our~~its operations in the normal course of business. As of ~~July 31, 2021,~~the date of this Report, except as discussed below, ~~there were no~~we are not aware of any other pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our ~~consolidated~~ operations, and there are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

On April 6, 2022, Aspen University was served with a class action claim in Arizona Superior Court, alleging violations of the Arizona Consumer Fraud Act and Unjust Enrichment, based on the class representative’s claims that Aspen University misstated the quality of its pre-licensure nursing program. This complaint was likely in response to the Arizona Board of Nursing actions against Aspen University relating to the program, as outlined below. At this time, the only action taken by Aspen University was to file for change of venue which was granted. The size of the potential class action claim is not yet known.

On February 11, 2013, HEMG, and its Chairman, Mr. Patrick Spada, sued the Company, certain senior management members and our directors in state court in New York seeking damages arising principally from (i) allegedly false and misleading statements in the filings with the SEC and the DOE where the Company disclosed that HEMG and Mr. Spada borrowed $2.2 million without board authority, (ii) the alleged breach of an April 2012 agreement whereby the Company had agreed, subject to numerous conditions and time limitations, to purchase certain shares of the Company from HEMG, and (iii) alleged diminution to the value of HEMG’s shares of the Company due to Mr. Spada’s disagreement with certain business transactions the Company engaged in, all with Board approval.

On December 10, 2013, the Company filed a series of counterclaims against HEMG and Mr. Spada in the same state court of New York. By order dated August 4, 2014, the New York court denied HEMG and Spada’s motion to dismiss the fraud counterclaim the Company asserted against them.

While the Company has been advised by its counsel that HEMG’s and Spada’s claims in the New York lawsuit is baseless, the Company cannot provide any assurance as to the ultimate outcome of the case. Defending the lawsuit maybe expensive and will require the expenditure of time which could otherwise be spent on the Company’s business. While unlikely, if Mr. Spada’s and HEMG’s claims in the New York litigation were to be successful, the damages the Company could pay could potentially be material.

In November 2014, the Company and Aspen University sued HEMG seeking to recover sums due under two 2008 Agreements where Aspen University sold course materials to HEMG in exchange for long-term future payments. On September 29, 2015, the Company and Aspen University obtained a default judgment in the amount of $772,793. This default judgment precipitated the bankruptcy petition discussed in the next paragraph.

On October 15, 2015, HEMG filed bankruptcy pursuant to Chapter 7. As a result, the remaining claims and Aspen’s counterclaims in the New York lawsuit are currently stayed. The bankrupt estate’s sole asset consisted of 208,000 shares of AGI common stock, plus a claim filed by the bankruptcy trustee against Spada’s brother and a third party to recover approximately 167,000 shares. On February 8, 2019, the bankruptcy court issued an order reducing AGI’s claim to $888,638 which consisted of the judgment and a $200,000 claim for failure to disclose certain liabilities. On July 21, 2021, the bankruptcy trustee paid the Company $498,120 based on assets available in the trust, which is included in "other income (expense), net" in the accompanying consolidated statements of operations. As a result, the Company wrote off the net receivable of $45,329 ~~described~~against the payment received as settlement in ~~Note 5, at July 31, 2021.~~the first quarter of fiscal year 2022 and recognized a gain. No further assets are available for distribution.

On September 13, 2022, Spada, the remaining plaintiff, and the Company entered into a Stipulation Discontinuing Action under which the complaint and counterclaims were dismissed with prejudice.

Regulatory Matters

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The Company’s subsidiaries, Aspen University and United States University, are 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 the subsidiaries 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.

On August 22, 2017, the DOE informed Aspen University of its determination that the institution has qualified to participate under the HEA and the Federal student financial assistance programs (Title IV, HEA programs) and set a subsequent program

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participation agreement reapplication date of March 31, 2021. On April 16, 2021, the DOE granted provisional certification for a two-year timeframe, and set a subsequent program participation reapplication date of September 30, 2023.

On May 14, 2019, USU ~~currently has~~was granted temporary provisional certification to participate in the Title IV Programs due to its acquisition by the Company. The provisional certification ~~allows~~allowed the school to continue to receive Title IV funding as it did prior to the change of ownership. The provisional certification expired on December 31, 2020. ~~While the~~The institution submitted its recertification application timely in October 2020, ~~the DOE has not~~and received full certification on May 6, 2022, and a new PPA was issued ~~its final certification. The institution is able to continue operating under its current participation agreement~~with an effective period until ~~the DOE issues its recertification.~~December 31, 2025.

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 our subsidiaries operate in a highly regulated industry, each 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.

The Company is also subject to regulation by self-regulatory bodies such as accreditors and by state regulators in certain states including states where the Company has a physical presence. Aspen University’s first-time pass rates for our BSN pre-licensure students taking the NCLEX-RN test in Arizona fell from 80% in 2020 to 58% in 2021, which is below the minimum 80% standard set by the Arizona State Board of Nursing (“AZBN”). As a result of the decline in NCLEX pass rates and other issues, and in alignment with a recommendation from the AZBN, the university voluntarily suspended BSN pre-licensure enrollments and the formation of new cohorts at its two Phoenix pre-licensure locations, effective February 2022. In March 2022, Aspen University entered into a Consent Agreement for Probation and a Civil Penalty (the “Consent Agreement”) with the Arizona State Board of Nursing in which Aspen University’s Provisional Approval was revoked, with the revocation stayed pending Aspen University’s compliance with the terms and conditions of the Consent Agreement. The probationary period is 36 months from the date of the Consent Agreement. In June 2022, the AZBN granted approval of Aspen University’s request for provisional approval as long as the program is in compliance with the consent agreement through March 31, 2025. The stay is broken into two phases, the first lasting through the end of Calendar Year 2022. During Phase I, Aspen University is not permitted to enroll any new students into the core component of its pre-licensure nursing program in Arizona and must achieve the AZBN-required 80% NCLEX pass rate for the Calendar Year 2022 annual reporting cycle. If this benchmark is not achieved, the AZBN may lift the stay and initiate the revocation. If Phase I is completed successfully, Phase II will commence with Aspen University on Probation (regular or “stayed revocation” probation, depending on the outcome of Phase I). Aspen University is permitted to begin enrollments into the core component of its pre-licensure nursing program in Arizona once four consecutive quarters of 80% NCLEX first-time pass rates occur. However, once achieved, if the NCLEX pass rate falls below 80% for any quarter, the AZBN may limit enrollments, and repeated failures may result in a required cessation of enrollments and teach-out of the program. The terms of the Consent Agreement also include requirements that the Company provide the AZBN with monthly reports, provide that our faculty and administrators undergo additional training, retain an approved consultant to prepare and submit evaluations to the AZBN, and hire a minimum of 35% full-time qualified faculty by September 30, 2022. To date, Aspen University has provided the required reports to the AZBN timely, contracted for and held the required faculty and administrator trainings, and hired and begun working with the AZBN-approved consultant whose report to the AZBN was submitted on August 30, 2022. Aspen University continues to work towards the 35% full-time faculty requirement and has hired a recruiting firm to assist in that endeavor. Aspen University is not currently enrolling students in the BSN Pre-licensure program in Arizona. For the calendar quarters ended March 31, 2022 and June 30, 2022, Aspen University's NCLEX-RN test pass rates were 73.33% and 69.64%, respectively.

Aspen University has also entered into a Stipulated Agreement with the Arizona State Board for Private Postsecondary Education (“AZBPPE”) which required the University to post a surety bond for $18.3 million in the fourth quarter of fiscal year 2022. The Stipulated Agreement required the cessation of enrollment in both the pre-professional nursing and core components of the BSN Pre-licensure program in Arizona, the submission of student records monthly, the removal of Arizona start date information from websites and catalogs, and monthly reporting to the Board staff. The cash collateral of $5 million for this $18.3 million surety bond is included in "Restricted cash" in the consolidated balance sheets. On September 7, 2022, the Arizona State Board for Private Postsecondary Education sent Aspen University a draft, updated stipulated agreement which

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must be responded to on or before September 21, 2022. The updated stipulated agreement added new proposed terms, including probation for a period of one year from the effective date of the updated stipulated agreement, a $12,000 civil monetary penalty, and a change in electronic records to include all students. If agreement is not reached as to the proposed stipulated agreement, Aspen University has a right to a public administrative hearing concerning each alleged violation that AZBPPE claims supports the updated stipulated agreement.

Aspen University’s State Authorization Reciprocity Agreement ("SARA"), which is overseen by a National Council ("NC-SARA"), annual approval through the Colorado SARA State Portal Entity must be renewed by January 30 each year. Aspen University applied on January 18, 2022, and received its 2022 approval effective February 8, 2022. On February 23, 2022, Aspen University received a Notification of Provisional SARA Status from the Colorado SARA State Portal Entity. On March 4, 2022, the DOE provided the final approval for Aspen University’s move from Colorado to Arizona. On March 29, 2022, Aspen University received a Notification of Loss of Eligibility for SARA through Colorado which permitted continued SARA coverage for students enrolled for courses between February 1, 2022 and August 2, 2022. On April 10, 2022, Aspen University submitted an official appeal of the eligibility loss to the Colorado SARA State Portal Entity. Aspen University sought a return to the prior provisional status while the appeal was pending or until the completion of the existing SARA term to February 2023 or until there was approval by the Arizona SARA Council. On April 12, 2022, Aspen University was restored to Provisional Status by the Colorado SARA State Portal Entity according to the terms of the February 23, 2022 letter. On May 17, 2022, Aspen University was informed that its appeal was denied and on June 10, 2022, Aspen University received a letter from the Colorado SARA State Portal Entry indicating that students currently enrolled in academic terms in progress as of May 17, 2022, are covered under SARA for 16 weeks, until September 6, 2022.

In the meantime, Aspen University submitted an application to the Arizona State Portal Entry. This application to obtain approval to become an institutional participant again in NC-SARA from its new primary location in Arizona, was deferred at the September 8, 2022 meeting, and will be considered at the January 2023 meeting. Since February 2022, the start of the regulatory concerns over SARA approval, Aspen University has been seeking individual state authorizations for its students. Aspen University has succeeded in securing full approval, or has determined approval is not required, in 31 states, while 13 additional states allow our currently enrolled students to continue while applications are under review or in process. Students in these states represent 91% of the current student body.

With respect to the remaining 6 impacted states— the states of Texas (for online nursing students only, excluding pre-licensure students), Nevada, Minnesota, and Maryland, as well as the District of Columbia—Aspen is awaiting individual state approval for currently enrolled students to continue in their studies and is actively engaged in efforts to expedite the process in these states, to the extent possible. As Aspen University receives authorizations for these states, students will receive notice that they are again able to register for classes and continue their educational program. The two remaining states—Rhode Island and Wisconsin—have indicated that they will not permit currently enrolled students to continue. Regarding Rhode Island and Wisconsin students (and to the extent Aspen is unable to secure approval in Texas, Nevada, Minnesota, and Maryland, or the District of Columbia), Aspen University is working closely with its accreditor to provide options for students to continue their programs of study in an alternative approved forum.

Title IV Funding

Aspen University and United States University derive a portion of their revenue from financial aid received by ~~its~~their students under programs authorized by Title IV of the HEA, which ~~are~~is administered by the US Department of Education. When ~~Aspen University~~ students seek funding from the federal government, they receive loans and grants to fund their education under the following Title IV Programs: (1) the Federal Direct Loan program, or Direct Loan; (2) the Federal Pell Grant program, or Pell; (3) Federal Work Study and (4) Federal Supplemental Opportunity Grants. For the fiscal year ended April 30, ~~2020, approximately 31%~~2021, 44.72% of Aspen University’s and ~~33%~~33.81% for United States University's cash-basis revenue for eligible tuition and fees were derived from Title IV Programs.

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.

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Under the DOE 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 compliance audit in 2015, Educacion Significativa, LLC (“ESL”), the predecessor to USU, recognized that it had not fully complied with all requirements for calculating and making timely returns of Title IV funds (R2T4). In 2016, ESL had a material finding related to the same issue and was required to maintain a letter of credit in the amount of $71,634 as a result of this finding. The letter of credit was provided to the DOE by AGI since it assumed this obligation in its purchase of USU. This letter of credit expired in early 2021 and the cash was returned to the Company.

On September 28, 2020, the DOE notified USU that the funds held for a letter of credit in the amount of $255,708, based on the audited same day balance sheet requirements that apply in a change of control, which was funded by the University’s sole shareholder, AGI, were released. In August 2020, the DOE informed USU that it is required to post a new letter of credit in the amount of $379,345, based on the current level of Title IV funding. This irrevocable letter of credit was to expire on August 25, 2021. Pursuant to USU’s provisional Program Participation Agreement ("PPA"), the DOE indicated that USU must agree to participate in Title IV under the HCM1 funding process; however, the DOE does retain discretion on whether or not to implement that term of the agreement. Although DOE has not, to date, notified USU that it has been placed in the HCM1

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~~(Unaudited)~~

funding process, nor does the DOE’s public disclosure website identify USU as being on HCM1, it is possible that prior to the end of the PPA term, the DOE may notify USU that it must begin funding under the HCM1 procedure. If this occurs, the Company believes this will not have a material impact on the consolidated financial statements. In December 2020, the DOE reduced USU's existing letter of credit by ~~$369,473, which was required to be posted based on the level of Title IV funding.~~$369,473. In connection with USU's most recent Compliance Audit, USU ~~currently~~ maintains a letter of credit of $9,872 at July 31, ~~2021.~~

2022. As noted above, with the recent full certification of USU, the DOE released this remaining letter of credit in August 2022.

Approval to Confer Degrees

Aspen University is a Delaware corporation and is approved to operate in the State of Delaware. Aspen University is authorized by the ~~Colorado Commission on Education in the State of Colorado and the~~ Arizona State Board for Private ~~Post-Secondary~~Postsecondary Education in the State of Arizona to operate as a ~~degree granting~~degree-granting institution for all degrees. Aspen University is authorized to operate as a degree granting institution for bachelor degrees by the Texas Higher Education Coordinating Board in the State of Texas. Aspen University has been granted Optional Expedited Authorization as a postsecondary educational institution in Tennessee for its Bachelor of Science in Nursing (Pre-Licensure) degree program. Aspen University has received a ~~Provisional~~ License for its Bachelor of Science in Nursing (Pre-Licensure) degree program to operate in the ~~state~~State of Florida by the Commission for Independent Education of the Florida Department of ~~Education and is~~Education. Aspen University has received a Certificate of Authorization for its Bachelor of Science in Nursing (Pre-Licensure) degree program to operate in the ~~process for full licensure.~~State of Georgia by the Georgia Nonpublic Postsecondary Education Commission.

USU is also a Delaware corporation and received initial approval from the Delaware DOE to confer degrees through June 2023. ~~United States University~~USU is authorized by the California Bureau of Private Postsecondary Education ~~and the Arizona State Board for Private Post-Secondary Education~~ to operate as ~~degree granting institutions~~a degree-granting institution for all degrees.

Note ~~12.~~11. Subsequent ~~Events~~Event

On August ~~31, 2021,~~18, 2022, Aspen Group, Inc. entered into an Equity Distribution Agreement (the “Agreement”) with Northland Securities, Inc. (“Northland”), pursuant to which the Company ~~extended the Credit Facility Agreement with the Foundation discussed in Note 6 by one year~~may issue and sell from time to November 4, 2022. The Credit Facility Agreement provides for a $5,000,000 Facility evidenced by the Revolving Note. Borrowings under the Credit Facility Agreement bear interest at 12% per annum. In conjunction with the extension of the Facility, the Company drew down $5,000,000 of funds from the Facility at 12% interest per annum due November 4, 2022. Additionally, on August 31, 2021 the Company issued to the Foundation warrants to purchase 50,000time, through Northland, shares of the Company’s common stock ~~exercisable for five years from the date~~(the “Shares”), with offering proceeds of ~~issuance at the exercise price of $5.89 per share.~~up to $3,000,000.

~~Effective August 16, 2021, the Company entered into an Employment Agreement with Matthew LaVay, who had been appointed as the Chief Financial Officer~~

Sales of the ~~Company on July 8, 2021 with the effective date of August 16, 2021. The Employment Agreement provides that Mr. LaVay will serve~~Shares, if any, may be made by any method permitted by law deemed to be an “at-the-market” offering as ~~the Chief Financial Officer~~defined in Rule 415 of the ~~Company for a period~~Securities Act of four years, subject to an automatic renewal for successive one-year terms unless prior notice of non-renewal is given by either party. Pursuant to his Employment Agreement, Mr. LaVay will receive annual base salary of $325,000, such other compensation and benefits as set forth in the Employment Agreement, and will be eligible to participate in the Company’s executive performance bonus plan. Additionally,1933 (the “Securities Act”), including without limitation sales made directly on August 16, 2021, Mr. LaVay received a grant of 125,000 RSUs, pursuant to his Employment Agreement. The RSUs will vest in 3 approximately equal annual increments with the first increment vesting on August 16, 2022, subject to continued employment on each applicable vesting date. Each RSU represents a right to receive 1 share of the Company’s common stock. The RSUs were granted under the Aspen Group, Inc. 2018 Plan. On the grant date, the closing price of the Company's common stock onor through The Nasdaq Global Market, ~~was $5.80 per share. The amortization expense related to this transaction over~~ the ~~three year vesting term will be $725,000, which will be included in general and administrative expense in the consolidated statements of operations.~~

On August 12, 2021, Mr. Gerard Wendolowski, the Chief Operating Officer of the Company, and Dr. Cheri St. Arnauld, the Company’s Chief Academic Officer, received a grant of 80,000 RSUs each. The RSUs will vest in 3 nearly equal annual increments with the first increment vesting on August 12, 2022, subject to continued service as an officer of the Company on each applicable vesting date. Each RSU represents a contingent right to receive 1 share oftrading market for the Company’s common ~~stock. The RSUs were granted~~stock, on any other existing trading market in the United States for the Company’s common stock, or to or through a market maker. Northland will use commercially reasonable efforts to sell on the Company’s behalf all of the Shares requested to be sold by the Company, consistent with its normal trading and sales practices, subject to the terms of the Agreement. Under the Agreement, Northland will be entitled to compensation of 3% of the gross proceeds from the sales of the Shares sold under the ~~Aspen Group, Inc. 2018 Plan~~Agreement. The Company also agreed to reimburse Northland for certain specified expenses, including the fees and ~~were approved by~~disbursements of its legal counsel, in an amount not to exceed $50,000. The Company estimates that the ~~Compensation Committee~~total expenses for the offering, excluding compensation and reimbursement payable to Northland under the terms of the ~~Board~~Agreement, will be approximately $100,000. Through the date of ~~Directors~~this filing, the Company has sold an insignificant number of ~~the Company.~~shares.

2023

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The Shares are being offered and sold pursuant to a prospectus supplement filed with the Securities and Exchange Commission (the “Commission”) on August 18, 2022 and the accompanying base prospectus which is part of the Company’s effective Registration Statement on Form S-3 (File No. 333-251459) (the “Registration Statement”).

The Agreement contains representations, warranties and covenants customary for the transactions of this kind.

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

You should read the following discussion in conjunction with our unaudited consolidated financial statements, which are included elsewhere in this Form 10-Q. This Quarterly Report on Form 10-Q contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. See "Cautionary Note Regarding Forward Looking Statements" for more information.

Key Terms

In connection with the management of our businesses, we identify, measure and assess a variety of operating metrics. The principal metrics we use in managing our businesses are set forth below:

Operating Metrics

•Lifetime Value ("LTV") - ~~Lifetime Value as~~is the weighted average total amount of tuition and fees paid by every new student that enrolls in the Company’s universities, after giving effect to attrition.

•Bookings - defined by multiplying LTV by new student enrollments for each operating unit.

•Average Revenue per Enrollment ("ARPU") - defined by dividing total bookings by total enrollments for each operating unit.

Operating costs and expenses

•Cost of revenue - consists of instructional costs and services and marketing and promotional costs.

◦Instructional costs - consist primarily of costs related to the administration and delivery of the Company's educational programs. This expense category includes compensation costs associated with online faculty, technology license costs and costs associated with other support groups that provide services directly to the students and are included in cost of revenue.

◦Marketing and promotional costs - include costs associated with producing marketing materials and advertising, and outside sales costs. Such costs are generally affected by the cost of advertising media, the efficiency of the Company's marketing and recruiting efforts, and expenditures on advertising initiatives for new and existing academic programs. ~~Non-direct~~We engage non-direct response advertising activities, which are expensed as incurred, or the first time the advertising takes place, depending on the type of advertising ~~activity and~~activity. These costs are included in cost of revenue.

•General and administrative expense - consists primarily of compensation expense (including stock-based compensation expense) and other employee-related costs for personnel engaged in executive and academic management and operations, finance, legal, tax, information technology and human resources, fees for professional services, financial aid processing costs, non-capitalizable courseware and software costs, corporate taxes and facilities costs.

Non-GAAP financial measures:

•Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") - is a non-GAAP financial measure. See "Non-GAAP Financial Measures" for a reconciliation of net loss to EBITDA for the three months ended July 31, ~~2021~~2022 and ~~2020.~~2021.

•Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") - is a non-GAAP financial measure. See "Non-GAAP Financial Measures" for a reconciliation of net loss to Adjusted EBITDA for the three months ended July 31, ~~2021~~2022 and ~~2020.~~

•~~Adjusted EBITDA Margin -~~ ~~is a non-GAAP financial measure. See "Non-GAAP Financial Measures" for a reconciliation of net loss to Adjusted EBITDA for the three months ended July 31, 2021 and 2020.~~2021.

Company Overview

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~~Company Overview~~

Aspen Group, Inc. is an education technology holding company. It operates two universities, Aspen University Inc. ("Aspen University" or "AU") and United States University Inc. ("United States University" or "USU").

All references to the “Company”, “AGI”, “Aspen Group”, “we”, “our” and “us” refer to Aspen Group, Inc., unless the context otherwise indicates.

As of July 31, 2022, 10,394 of 12,048 or 86% of all active students across both universities are degree-seeking nursing students. Students seeking nursing degrees were 10,394, or 86% of total active students at both universities. Of the students seeking nursing degrees, 8,910 are RNs studying to earn an advanced degree, including 6,202 at Aspen University and 2,708 at USU. In contrast, the ~~fourth quarter of fiscal 2021, the Company announced its~~remaining 1,484 nursing students are enrolled in Aspen 2.0 business plan to decrease advertising spend on our lower efficiency unit and shift that spend to the higher efficiency business units. Aspen 2.0 is anticipated to reduce our advertising spend as a percentage of revenue for the fiscal year while supporting growth in our new pre-licensure metros and the USU Masters of Nursing-Family Nurse Practitioner (“FNP”) program. As we advance through fiscal year 2022, we expect profitability gains from Aspen 2.0 to have the most significant impactUniversity’s BSN Pre-Licensure program in the ~~second half~~Phoenix, Austin, Tampa, Nashville and Atlanta metros. The majority of the ~~fiscal year given~~year-over-year decrease in Aspen University's nursing student body resulted from the expected growth in our highest efficiency businesses. As we move through the year, Aspen 2.0 is designed to generate profitability by our fourth fiscal quarter, setting the Company up for consistent, sustained profitable growthenrollment stoppage in the ~~coming years.~~Phoenix pre-licensure program.

~~In March 2014,~~ Aspen University ~~began~~has been offering a monthly payment ~~plans~~plan that is available to all students across every online degree program offered, ~~by Aspen University.~~since March 2014. The monthly payment plan is designed so that students will make one fixed payment per month, and that monthly payment is applied towards the total cost of attendance (tuition and fees, excluding textbooks). The monthly payment plan offers online undergraduate students the opportunity to pay their tuition and fees at $250/month, online ~~master~~master's students $325/month, and online doctoral students $375/month, interest free, thereby giving students a monthly payment option versus taking out a federal financial aid loan.

USU ~~began~~has been offering monthly payment plans insince the summer of 2017. Today, USU monthly payment plans are available for the online RN to BSN program ($250/month), online MBA/MAEd/MSN programs ($325/month), online hybrid Bachelor of Arts in Liberal Studies, Teacher Credentialing tracks approved by the California Commission on Teacher Credentialing ($350/month), and the ~~FNP~~online hybrid Master of Science in Nursing-Family Nurse Practitioner ("FNP") program ($375/month).

Since 1993, Aspen University has been ~~nationally~~institutionally accredited by the DEAC, ~~a national~~an institutional accrediting agency recognized by the ~~DOE~~Department of Education and ~~CHEA.~~the Council for Higher Education Accreditation. On February 25, 2019, the DEAC informed Aspen University that it had renewed its accreditation for five years to January 2024.

Since 2009, USU has been ~~regionally~~institutionally accredited by WSCUC.

Both universities are qualified to participate under the Higher Education Act and the Federal student financial assistance programs (Title IV, HEA programs).

AGI Student Population Overview

AGI’s ~~overall~~ active degree-seeking student body, ~~(includes both Aspen University~~including AU and ~~USU) grew 14%~~USU, declined 13% year-over-year to ~~13,879 as of~~12,048 at July 31, ~~2021~~2022 from ~~12,128 as of~~13,879 at July 31, ~~2020 and students~~2021. AU's total active student body decreased by 16% year-over-year to 9,133 at July 31, 2022 from 10,911 at July 31, 2021. On a year-over-year basis, USU's total active student body decreased by 2% to 2,915 at July 31, 2022 from 2,968 at July 31, 2021.

Total active student body for the past five quarters is shown below:


	Q1'22	Q2'22	Q3'22	Q4'22	Q1'23
Aspen University	10,911	11,184	10,736	10,225	9,133
USU	2,968	3,134	2,988	3,109	2,915
Total	13,879	14,318	13,724	13,334	12,048

AGI Nursing Student Population

Students seeking nursing degrees were ~~12,058~~10,394, or ~~87%~~86% of total active students at both universities. Of the ~~12,058~~ students seeking nursing degrees, ~~9,694~~8,910 are ~~Registered Nurses (RNs)~~RNs studying to earn an advanced degree, including ~~6,905~~6,202 at Aspen University and ~~2,789~~2,708 at ~~USU, while~~USU. In contrast, the remaining ~~2,364~~1,484 nursing students are enrolled in Aspen University’s BSN Pre-Licensure program in the Phoenix, ~~Austin, Tampa and Nashville metros.~~

AU's total active student body increased by 9% year-over-year to 10,911 in Q1 Fiscal 2022 from 9,975 in Q1 Fiscal 2021. On a year-over-year basis, USU’s total active student body grew by 38% to 2,968 from 2,153. The chart below shows five quarters of active student body results. Active student body is comprised of active degree-seeking students, enrolled in a course at the end of the first quarter of fiscal year 2022 or are registered for an upcoming course.

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Austin, Tampa, Nashville and Atlanta metros. The majority of the year-over-year Aspen University nursing student body decrease is a result of the enrollment stoppage in the Phoenix pre-licensure program. Additionally, the sequential decrease in the student body from Q4 Fiscal 2022 was also impacted by the reduction in Q4 Fiscal 2022 marketing spend by $1 million over the prior quarter.

Nursing student body for the past five quarters are shown below:


	Q1'22	Q2'22	Q3'22	Q4'22	Q1'23
Aspen University	9,269	9,531	9,116	8,632	7,686
USU	2,789	2,911	2,773	2,890	2,708
Total	12,058	12,442	11,889	11,522	10,394

AGI New Student Enrollments

New student enrollments at USU grew by 15% sequentially and 18% year-over-year, from 572 a year ago to a quarterly record of 675. Aspen’s Online Nursing + Other unit declined by 3% sequentially and 7% year-over-year as expected, given the previously announced ‘Aspen 2.0’ plan to reduce spending in the legacy business by $1.3 million in the 2022 fiscal year.

BSN Pre-Licensure enrollments grew by 21% sequentially and were down 17% year-over-year as a result of the planned reduction of enrollments in the Phoenix metro year-over-year, from 490 to 258 (a decrease of 232 enrollments). This planned decrease in enrollments in the Phoenix metro is expected to cause a year-over-year aggregate decrease in the second quarter as well, and then beginning in the third quarter the Company expects to deliver material aggregate enrollment increases year-over-year in the BSN Pre-Licensure unit.

On a Company-wide basis, new student enrollments ~~increased sequentially from 2,182 to 2,276 or 4%. On a year-over-year basis, new~~were down 42% year-over-year. New student enrollments ~~for~~at AU decreased 46% year-over-year and at USU by 34% year-over-year. New student enrollments were primarily impacted by the ~~Company were down 3%, however, excluding~~enrollment stoppage at our Phoenix pre-licensure campuses, and the ~~232 planned enrollment~~ reduction in Q4 Fiscal 2022 marketing spend by $1 million over the ~~Phoenix pre-licensure metro, Company-wide enrollments would have been up year-over-year by 7%.~~prior quarter.

New student enrollments for the past five quarters are shown below:

New Student Quarterly Enrollments
Q1'21 Q2'21 Q3'21 Q4'21 Q1'22
Aspen University 1,779 2,010 1,593 1,593 1,601
USU 572 649 536 589 675
Total 2,351 2,659 2,129 2,182 2,276


	Q1'22	Q2'22	Q3'22	Q4'22	Q1'23
Aspen University	1,601	1,750	1,301	1,010	868
USU	675	630	481	525	447
Total	2,276	2,380	1,782	1,535	1,315

Bookings Analysis and ARPU

On a year-over-year basis, Q1 Fiscal ~~2022~~2023 Bookings ~~decreased 2%~~decreased 46%, to $18.8 million from $35.2 million ~~from $36.1 million~~ in the prior year. As previously discussed, the ~~proactive~~ Phoenix pre-licensure enrollment reduction stoppage and the reduction in Q4 Fiscal 2022 marketing spend caused Bookings to decrease year-over-year.

On a year-over-year basis, Q1 Fiscal ~~2022~~2023 ARPU decreased 7% from ~~490~~the prior year period due primarily to ~~258 (or~~ a ~~reduction of 232) enrollments year-over-year, caused Bookings~~decrease in bookings at Aspen University in the Phoenix metro ~~to decrease by $7 million year-over-year. Excluding~~of the ~~Phoenix~~ pre-licensure ~~metro, Company-wide Bookings would have increased by 17% year-over-year.~~program.


		First Quarter Bookings1 and Average Revenue Per Enrollment (ARPU)1									First Quarter Bookings1 and Average Revenue Per Enrollment (ARPU)1
		Q1'21 Enrollments	Q1'21 Bookings 1		Q1'22 Enrollments	Q1'22 Bookings 1		Percent Change Total Bookings & ARPU 1			Q1'22 Enrollments	Q1'22 Bookings 1		Q1'23 Enrollments	Q1'23 Bookings 1		Percent Change Total Bookings & ARPU 1
Aspen University	Aspen University	1,779	$	25,880,400	1,601	$	23,150,850			Aspen University	1,601	$	23,150,850	868	$	10,882,200
USU	USU	572	$	10,193,040	675	$	12,028,500			USU	675	$	12,028,500	447	$	7,965,540
Total	Total	2,351	$	36,073,440	2,276	$	35,179,350	(2)	%	Total	2,276	$	35,179,350	1,315	$	18,847,740	(46)	%
ARPU	ARPU		$	15,344		$	15,457	1	%	ARPU		$	15,457		$	14,333	(7)	%

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1 “Bookings” are defined by multiplying Lifetime Value (LTV) by new student enrollments for each operating unit. “Average Revenue Per Enrollment” (ARPU) is defined by dividing total Bookings by total new student enrollments for each operating unit.

During the Q1 Fiscal ~~2022,~~2023, the Company continued to focus its growth capital almost exclusively on its two licensure degree programs which have higher lifetime values. Set forth below is the description of these two key licensure degree programs. Set forth below is the description of these two key licensure degree programs.

Bachelor of Science in Nursing (BSN) Pre-Licensure Program

~~Aspen University offers~~Table of Contents

Aspen’s BSN Pre-licensure program provides students with opportunities to become a ~~Bachelor~~BSN-educated nurse and learn the essential skills needed to practice as a professional registered nurse (RN). Skills lab, clinical simulation, seminars and community-based clinical experiences anchor the curriculum. Upon completion of ~~Science~~their studies, students are eligible to take the National Council Licensure Examination (NCLEX) in the state or territory in which they choose to practice (the NCLEX is the national registered nurse examination used by all states for potential registered nursing licensure). Students provide their state board of nursing applicable forms to the School of Nursing ~~Pre-Licensure degree program (the “BSN Pre-Licensure Program”).This innovative hybrid (online/on-campus) program allows most~~and Health Sciences, which completes them on behalf of the ~~credits~~individual student, and take the exam in the state in which they choose to ~~be completed online (83~~practice. Upon passing the NCLEX, students then work with their state Board of ~~120 credits or 69%), with pricing offered at current low tuition rates of $150/credit hour~~Nursing to finalize their professional licensure.

We designed this program for ~~online general education courses, $325/credit hour for online core~~students who do not currently hold a state registered nurse license and have little to no prior nursing ~~courses, and $495 for core clinical courses.~~experience. For students with no prior college credits, the total cost of attendance is ~~less than $50,000.~~$52,175 ($41,445 Tuition, $10,730 Fees), not including textbooks.

Phoenix, AZ ~~Campus~~ Locations

Aspen University began offering the BSN Pre-Licensure program in July 2018 at its initial campus in Phoenix, Arizona.As a result of overwhelming demand in the Phoenix metropolitan area, in January 2019 Aspen University began offering both day (July, November, March) and evening/weekend (January, May, September) terms, equaling six term starts per year. In September 2019, Aspen University opened a second campus in the Phoenix metropolitan area in partnership with HonorHealth.

~~Due~~Aspen University voluntarily suspended new student enrollments and the formation of new cohorts immediately (starting with February 2022 cohort) after receiving guidance from the Arizona State Board of Nursing at its January 28, 2022 meeting. It is now in a probationary period under the Consent Agreement with the Arizona State Board of Nursing wherein certain conditions must be met before new cohorts can again begin to ~~the significant demand~~be formed, including maintaining a minimum 80% NCLEX first-time pass rate each quarter for four consecutive quarters. We will not form any additional nursing cohorts in the Phoenix metropolitan area without completing the probationary period and receiving prior approval from the Arizona State Board of Nursing. Aspen University is not currently enrolling students in the BSN Pre-licensure program in Arizona. See Note 10. Commitments and Contingencies to the Consolidated Financial Statements.

Our Pre-Licensure locations that opened outside of Arizona were launched with curricular improvements, a NCLEX test prep product and NCLEX coaches in place and these new cohorts have been required to have higher incoming GPA requirements and have been subject to stiffer requirements relative to HESI A2 entrance exam scores, among other requirements outlined in the competitive evaluation process for the core nursing program. As a result, these cohorts are expected to deliver first-time NCLEX pass rates that comply with each state’s requirements. Although three of these locations are in smaller Tier-two metros, each metro ~~on February 2, 2021,~~is experiencing high population growth rates that are expected to increase the long-term demand for nursing degrees.

Atlanta, GA

On January 20, 2022, the Company ~~began implementing its first double cohort enrollment at its main campus in Phoenix.~~

announced that Aspen University received the final required state and board of registered nursing regulatory approvals for their new BSN Pre-Licensure ~~Campus Locations Opened~~location in ~~Fiscal Year 2021~~Atlanta, Georgia. The Atlanta site was occupied by the University of Phoenix, located at 859 Mt. Vernon Highway NE, Suite 100, which is situated just off Interstate 285 in the Sandy Springs suburb in the inner ring of Atlanta. Aspen University began enrolling first-year Pre-Professional Nursing (“PPN”) students in Atlanta in February 2022, and expects to enroll Nursing Core students (Years 2-3) in Winter 2022.

Austin, TX

Aspen University’s BSN Pre-Licensure program in Austin is based in the Frontera Crossing office building located at 101 W. Louis Henna Boulevard in the suburb of Round Rock. The building is situated at the junction of Interstate 35 and State Highway 45, one of the most heavily trafficked freeway exchanges in the metropolitan area with visibility to approximately 143,362 cars per day. Aspen University's initial PPN ~~nursing student~~ enrollments began on the September 29, 2020, ~~semester~~ start ~~date.~~

Aspen University has executed a clinical affiliation agreement with Baylor Scott & White Health – Central division, the largest not-for-profit healthcare system in Texas and one of the largest in the United States. Baylor Scott & White Health includes 48 hospitals, more than 800 patient care sites, more than 7,800 active physicians, over 47,000 employeesdate and the ~~Scott & White Health Plan.~~first core cohort began in February 2021.

Tampa, FL

Aspen University’s BSN Pre-Licensure program in Tampa is located at 12802 Tampa Oaks Boulevard. The building is visible from the intersection of Interstate 75 and East Fletcher Avenue, near the University of South Florida, providing visibility to approximately 126,500 cars per day. Aspen University's initial PPN ~~nursing student~~ enrollments began on the December 8, 2020, ~~semester~~ start ~~date.~~

~~Aspen University has executed a clinical affiliation agreement with Bayfront Health, a regional network of seven hospitals~~date and ~~over 1,900 staff medical professionals serving~~ the ~~residents of the Tampa Bay area to provide required clinical placements for its nursing students. In addition, clinical affiliation agreements have been signed~~first core cohort began in ~~the Tampa metropolitan area with John Hopkins All Children’s Hospital, Inc., Care Connections at Home, Global Nurse Network, LLC and The American National Red Cross.~~

~~Expected Near Term BSN Pre-Licensure Campus Opening~~

~~Nashville, TN~~

On March 8, 2021, the Company announced that Aspen University received the final required state and board of registered nursing regulatory approvals for their new BSN Pre-Licensure campus location in Nashville, Tennessee, with permission toJune 2021.

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~~commence marketing~~Nashville, TN

Aspen University’s BSN Pre-licensure program in Nashville is located at 1809 Dabbs Ave. The campus is within easy access of Intersection of Interstate 40 and ~~begin~~the 155, near the Sonesta Nashville Airport. On April 27, 2021, Aspen University began to enroll first-year PPN students ~~effective immediately. Aspen University is targeting to begin its initial (years 2-3)~~in Nashville, Tennessee. The first core ~~program semester in Nashville~~cohort began in October 2021.

The Nashville campus will be located at 1809 Dabbs Avenue, which is situated right on Interstate 40 east of downtown Nashville, four miles west of the Nashville airport. Clinical affiliation agreements have been executed with NorthCrest Medical Center, Trust Point Hospital, and Nashville General Hospital, among others.

USU Master of Science in Nursing-Family Nurse Practitioner (MSN-FNP)

USU offers a number of nursing degree programs and other degree programs in health sciences, business & technology and education. Its primary enrollment program is its MSN-FNP which is designed for BSN-prepared registered nurses who are seeking a Nurse Practitioner license. The MSN-FNP is an online-hybrid ~~50-credit~~48-credit degree program with 100% of the curriculum online, including the curricular component to complete 540 clinical and 32 lab hours.

While MSN-FNP lab hours have been done at USU’s San Diego facility through the end of calendar year 2020, the rapid growth of the MSN-FNP program has caused AGI to open two additional immersion locations in 2021. Specifically, the Company built-out an additional ~~suite~~suites on the ground ~~floor of~~floors at our main facility in Phoenix (by the airport) and ~~recently opened the~~our location in Tampa, ~~clinical facility.~~FL. Consequently, students now have the option to attend their weekend immersions at ~~three~~two different metro locations: San Diego and Phoenix and ~~Tampa.~~Tampa will follow once regulatory approval is received.

Accounts Receivable - Monthly Payment Plan ("MPP")

The Company offers several payment options to its students including a monthly payment plan (MPP), installment plans and financial aid. Our growth in accounts receivable over the last several years has predominantly been a result of students taking advantage of our groundbreaking monthly payment plan which we introduced in 2014 at Aspen University and subsequently in Fiscal Year 2018 at USU. At July 31, ~~2021,~~2022, Gross MPP accounts receivable was ~~90%~~87% of total gross accounts receivable. Of the Gross MPP accounts receivable, ~~53% and 47%~~approximately 50% was generated at each AU and ~~USU, respectively.~~USU.

The Monthly Payment Plan ~~offered by both Aspen University and United State University,~~ is a private education loan with a 0% fixed rate of interest (0% APR) and no down payment. Each month the student will make one payment of $250, $325, $350 or $375 (depending on the program) until the program tuition is paid ~~for.~~in full. The attractive aspect of being able to pay for a degree over a fixed period of time has fueled the growth of this ~~plan.~~plan and as a result our short-term and long-term accounts receivable. The MPP is designed so students can build the cost of their degree into their monthly budget.

Long-Term Accounts Receivable

When a student signs up for the monthly payment plan, there is a contractual amount that the Company can expect to earn over the life of the student’s program. This full contractual amount cannot be recorded as an account receivable upon enrollment. As a student takes a class, revenue is earned over that eight-week class. Some students accelerate their program, taking two classes every eight-week period, and that increases the student’s accounts receivable balance. If any portion of ~~that~~the accounts receivable balance will be paid in a period greater than 12 months, that portion is reflected as long-term accounts receivable.

As a result of the growing acceptance of our monthly payment plans, our long-term accounts receivable balance has grown from ~~$10,249,833~~$11,406,525 at April 30, ~~2021~~2022 to ~~$11,313,657~~$12,429,962 at July 31, ~~2021. These are MPP~~2022. Generally, students ~~who~~in the USU MSN-FNP program make ~~monthly~~ payments over ~~36, 39~~a 72-month period, and ~~72 months. The average student completes their academic program in 30 months; therefore, most~~as a result, a portion of the Company’s accounts receivable are short-term. However, when students graduate earlier than the 30 month average completion duration, they transition to long-term accounts receivable. This is the primary factor that has driven an increase inUSU's 72-month payment plan becomes long-term accounts receivable.

Accounts receivable is considered short-term to the extent the remaining payments are 12 months or less. Payments due in greater than 12 months are considered long-term. Here is a graphic of both short-term and long-term receivables, as well as contractual value:


A	B	C
~~Payments~~The portion of remaining payments owed for classes taken ~~where~~under a monthly payment ~~plans for classes are less than~~plan due in 12 months or less ~~monthly payments received~~	~~Payments~~The portion of remaining payments owed for classes taken ~~where~~under a monthly payment ~~plans are~~plan due greater than 12 months	Expected future classes to be taken over balance of program.
Short-Term Accounts Receivable	Long-term Accounts Receivable	Not recorded in financial statements
The Sum of A, B and C will equal the total cost of the program.

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~~COVID-19 Update~~

Nursing students represented 87% or 12,058 of the Company’s total student body of 13,879 students at the end of the first quarter of fiscal 2022. Of the 12,058 nursing students, 2,364 are BSN Pre-Licensure students located across our four metro locations (Phoenix, Austin, Tampa and Nashville). The remaining 9,694 nursing students are licensed registered nurses (RNs) studying to earn an advanced degree (RN to BSN, MSN or DNP degree programs).These 9,694 post-licensure nursing students therefore represent 70% of the Company’s total student body and are the population of AGI students that have been primarily affected by the COVID-19 pandemic. Given that AGI has the highest student body concentration of RNs among publicly-traded higher education companies in the U.S., the COVID-19 pandemic has necessitated the need to track RN behaviors and attitudes carefully for the past 18 months. Below are the effects the Company has seen to date relative to class starts and enrollments.

Results of Operations

Set forth below is the discussion of the results of operations of the Company for the three months ended July 31, ~~2021~~2022 (“Q1 Fiscal ~~2022”~~2023”) compared to the three months ended July 31, ~~2020~~2021 (“Q1 Fiscal ~~2021”~~2022”).

Revenue
Three Months Ended July 31,
2021 $ Change % Change 2020
Revenue $19,430,995 $4,265,433 28% $15,165,562

The ~~increase was primarily~~following table presents selected consolidated statement of operations as a percentage of revenue (differences due to rounding):


	Three Months Ended July 31,
	2022		2021
Revenue	100	%	100	%

Operating expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below)
Instructional costs and services	30	%	23	%
Marketing and promotional costs	24	%	21	%
Total cost of revenue (exclusive of depreciation and amortization shown separately below)	54	%	44	%
General and administrative	56	%	56	%
Bad debt expense	2	%	2	%
Depreciation and amortization	5	%	4	%
Total operating expenses	116	%	106	%

Operating loss	(16)	%	(6)	%

Other income (expense):
Interest expense	(3)	%	—	%
Other income, net	—	%	3	%
Total other (expense) income, net	(3)	%	3	%

Loss before income taxes	(20)	%	(4)	%

Income tax expense	—	%	1	%

Net loss	(20)	%	(4)	%

The following table presents our revenue, ~~growth~~both per-subsidiary and total:


	Three Months Ended July 31,
	2022		$ Change		% Change	2021
AU	$	11,948,094	$	(1,301,558)	(10)%	$	13,249,652
USU	6,945,819		764,476		12%	6,181,343
Revenue	$	18,893,913	$	(537,082)	(3)%	$	19,430,995

AU and USU combined revenue decreased 3% in ~~USU’s MSN-FNP and Aspen’s~~Q1 Fiscal 2023 compared to Q1 Fiscal 2022.The AU revenue decline year-over-year reflects the enrollment stoppage at the BSN Pre-Licensure program campuses in Arizona and the effect of the marketing spend reduction in Q4 2022 of $1 million. This AU revenue decrease was offset by the USU revenue increase of

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12% in Q1 Fiscal 2023 compared to Q1 Fiscal 2022 due primarily to USU's MSN-FNP program, the USU degree ~~programs~~program with the highest ~~LTV. The Company expects~~concentration of students and the ~~majority of its revenue growth in future periods to be derived from these two business units as we continue prioritizing our~~ highest ~~LTV degree programs to achieve our long-term growth plans.~~

Aspen University's traditional post-licensure online nursing + other business unit and doctoral unit contributed 45% of total Company revenue in Q1 Fiscal 2022, while Aspen University’s BSN Pre-Licensure program delivered 23% of the Company’s revenue in Q1 Fiscal 2022. Finally, USU contributed 32% of the total revenue for Q1 Fiscal 2022.

~~Aspen University’s revenue in Q1 Fiscal 2022 increased 24% year-over-year, while USU's revenue in Q1 Fiscal 2022 increased 39% year-over-year.~~LTV.

Cost of revenue (exclusive of depreciation and amortization shown separately below)
Three Months Ended July 31,
2021 $ Change % Change 2020
Cost of Revenue (exclusive of depreciation and amortization shown separately below) $8,593,568 $2,746,045 47% $5,847,523
As a percentage of revenue 44% 39%

Total cost of revenue increased, including as a percentage of revenue, due primarily to an increase in class starts year-over-year and additional full-time faculty staffing in the USU MSN-FNP program and faculty hiring in the BSN Pre-Licensure campus locations in Phoenix, Austin and Tampa; and planned advertising spending increase throughout Fiscal Year 2022, targeted

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primarily to our highest LTV programs. Total advertising spend in Q1 Fiscal 2022 increased 46% year-over-year, however, on a sequential basis was down by 2%. The majority of the year-over-year advertising spending increase is directed to the new pre-licensure metro locations: Austin, Nashville and Tampa, as well as USU's MSN-FNP program.


	Three Months Ended July 31,
	2022		$ Change		% Change	2021
Instructional costs and services	$	5,702,978	$	1,202,965	27%	$	4,500,013
Marketing and promotional	4,502,573		$	409,018	10%	4,093,555
Cost of Revenue (exclusive of depreciation and amortization shown separately below)	$	10,205,551	$	1,611,983	19%	$	8,593,568

Instructional Costs and Services

~~Instructional~~Consolidated instructional costs and services for Q1 Fiscal ~~2022~~2023 increased to ~~$4,500,013 or 23%~~30% of revenue from ~~$3,056,713 or 20%~~23% of revenue for Q1 Fiscal ~~2021, an increase of $1,443,300 or 47%.~~2022, related to the factors described below.

~~Aspen University~~AU instructional costs and services ~~represented~~were 32% and 23% of ~~Aspen University~~AU revenue for Q1 Fiscal 2023 and Q1 Fiscal 2022, ~~while~~ respectively. As a percentage of revenue, instructional costs and services increased due primarily to the inflationary impact on faculty compensation and the need for more instructors in the BSN Pre-Licensure program, which is the result of more students entering the core curriculum. The core curriculum requires an increase in the ratio of instructors to students, especially as students enter the clinical portion of the program. The core student population is growing in the Phoenix locations as a result of the progression of double cohorts and in the other new locations as students move into the core portion of the program for the first time.

USU instructional costs and services ~~was~~were 27% and 24% of USU revenue ~~during~~for Q1 Fiscal ~~2022.~~2023 and Q1 Fiscal 2022, respectively. As a percentage of revenue, instructional costs and services increased due primarily to the growth in the USU MSN-FNP program, which resulted in increased immersions at additional campuses.

Marketing and Promotional

~~Marketing~~Consolidated marketing and promotional costs for Q1 Fiscal ~~2022~~2023 were ~~$4,093,555 or 21%~~24% of revenue compared to ~~$2,790,810 or 18%~~21% of revenue for Q1 Fiscal ~~2021, an~~2022. This follows the $1 million reduction in marketing spend in Q4 Fiscal 2022 to ensure sufficient collateral for a surety bond required by the Arizona State Board for Private Postsecondary Education. The year-over-year increase in marketing and promotional costs is the result of ~~$1,302,745 or 47%.~~the planned Q1 Fiscal 2023 resumption of market spend at a level consistent with Q3 Fiscal 2022. A break-down of marketing spend by unit is as follows:

~~Aspen University~~AU marketing and promotional costs represented 25% and 21% of ~~Aspen University~~AU revenue for Q1 Fiscal 2023 and Q1 Fiscal 2022, respectively.

USU marketing and promotional costs remained flat at 16% of USU revenue for each Q1 Fiscal 2023 and Q1 Fiscal 2022, respectively.

Corporate marketing and promotional costs were $374,313 in Q1 Fiscal 2023 compared to $324,265 in Q1 Fiscal 2022, an increase of $50,048 or 15%.

As part of the Company's recent restructuring initiatives, marketing spend will be reduced to maintenance levels starting in Q2 Fiscal 2023.

General and administrative


	Three Months Ended July 31,
	2022		$ Change		% Change		2021
General and administrative	$	10,532,020	$	(414,457)	(4)	%	$	10,946,477

Consolidated general and administrative expense for Q1 Fiscal 2023 was $10,532,020 or 56% of revenue compared to $10,946,477 or 56% of revenue for Q1 Fiscal 2022, ~~while USU marketing and promotional costs was 16%~~a decrease of ~~USU revenue for Q1 Fiscal 2022.~~

~~AGI corporate marketing expenses were $324,265 for Q1 Fiscal 2022 compared to $232,851 for Q1 Fiscal 2021, an increase~~$414,457 or 4%. As part of ~~$91,414 or 39%.~~

~~General and administrative~~
Three Months Ended July 31,
2021 $ Change % Change 2020
General and administrative $10,946,477 $2,152,721 24% $8,793,756
As a percentage of revenue 56% 58%

~~General~~the Company's recent restructuring initiatives, general and administrative expense ~~increased primarily due~~will continue to ~~higher headcount~~decrease with staff reductions through the Company as well as marketing and ~~related increase~~IT personnel. The decrease in ~~compensation~~general and ~~benefits~~administrative expense ~~to support the growth of the business and other-employee related costs, including stock-based compensation, and increases in facilities and technology costs across both universities.~~

~~The remaining $12 tranche~~is related to the February 2020 Executive RSU grant has approximately $1.2 million of total unrecognized compensation expense at July 31, 2021, which is being amortized over the remaining period through February 4, 2024 when all RSUs will vest subject to continued employment, that could accelerate during the next two years. If our common stock meets the $12 price target, all remaining amortization will accelerate.

~~Aspen University general and administrative costs, which are included in the above amount, represented 34% and 33% of Aspen University revenue for Q1 Fiscal 2022 and Q1 Fiscal 2021, respectively.~~

~~USU general and administrative costs represented 39% and 40% of USU revenue for Q1 Fiscal 2022 and Q1 Fiscal 2021, respectively.~~

AGI corporate general and administrative costs for Q1 Fiscal 2022 and Q1 Fiscal 2021, which are included in the above amounts, were $4.1 million and $3.5 million, respectively. The increase was primarily due to increases in compensation and other employee-related costs, insurance expense, which includes the annual renewal period, and technology costs.

~~Bad debt expense~~
Three Months Ended July 31,
2021 $ Change % Change 2020
Bad debt expense $350,000 $(50,000) (13)% $400,000
As a percentage of revenue 2% 3%

~~Bad debt expense decreased as a percentage of total revenue as the prior year reflected the need for higher reserves based on the Company's review of aged accounts receivable.~~factors described below.

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AU general and administrative expense decreased approximately $200,000 year-over-year and was 36% and 34% of AU revenue for Q1 Fiscal 2023 and Q1 Fiscal 2022, respectively. In the year-over-year periods, increases in fixed expenses related to new campus openings in the pre-licensure program were offset by decreases in employee-related compensation due to cost controls implemented by management.

USU general and administrative expense remained flat year-over-year and was 34% and 39% of USU revenue for Q1 Fiscal 2023 and Q1 Fiscal 2022, respectively. In the year-over-year periods, increases in fixed expenses related to expansion of the USU MSN-FNP program were offset by decreases in employee-related compensation due to cost controls implemented by management.

Corporate general and administrative expense was $3.9 million and $4.1 million in Q1 Fiscal 2023 and Q1 Fiscal 2022, respectively. The decrease was primarily due to planned Corporate cost control.

Bad debt expense


	Three Months Ended July 31,
	2022		$ Change		% Change		2021
Bad debt expense	$	350,000	$	—	—	%	$	350,000

For Q1 Fiscal 2023 compared to Q1 Fiscal 2022, bad debt expense remained flat as a percentage of total revenue. Based on our review of additional student accounts associated with increased revenue and existing accounts receivable and historical write-off trends, the Company evaluated its reserve methodology and adjusted reserves for AU and USU accordingly. At each AU and USU, approximately $0.1 million of student accounts receivable were written off against the accounts receivable allowance during Q1 Fiscal 2023.

Depreciation and amortization
Three Months Ended July 31,
2021 $ Change % Change 2020
Depreciation and amortization $779,409 $288,785 59% $490,624
As a percentage of revenue 4% 3%


	Three Months Ended July 31,
	2022		$ Change		% Change		2021
Depreciation and amortization	$	921,108	$	141,699	18	%	$	779,409

~~The~~For Q1 Fiscal 2023 compared to Q1 Fiscal 2022, the increase in depreciation is primarily due to investments in new campuses, including capital expenditures of leasehold improvements and computer equipment, and an increase in amortization of internally developed capitalized software placed into service to support the Company's services and the opening of a new campus, partially offset by a decrease ofrelated to fully depreciated assets.

~~Other income (expense), net~~Interest expense
Three Months Ended July 31,
2021 $ Change % Change 2020
Other income (expense), net $518,581 $1,097,336 NM $(578,755)


	Three Months Ended July 31,
	2022		$ Change		% Change	2021
Interest Expense	$	581,293	$	547,754	NM	$	33,539

NM - Not meaningful

Interest expense increased in Q1 Fiscal 2023 from Q1 Fiscal 2022 due principally to the borrowings under the 2022 Convertible Notes, amortization expense related the 2% annual commitment fee on the undrawn portion 2022 Revolving Credit Facility and the drawdown and extension of the maturity of the 2018 Credit Facility.

Other income, net


	Three Months Ended July 31,
	2022		$ Change		% Change		2021
Other income, net	$	11,409	$	(540,711)	(98)	%	$	552,120

Other income, net in Q1 Fiscal 2022 ~~of $518,581~~ primarily includes $498,120 of a litigation settlement amount received on July 21, ~~2021, partially offset by interest expense related to the 2% commitment fee on the undrawn portion~~2021.

Table of ~~the $5 million Revolving Credit Facility payable quarterly.~~

Contents

Other expense, net in Q1 Fiscal 2021 of $578,755 primarily includes: an adjustment of $296,471 related to the previously reported earned revenue fee calculation deemed immaterial to our Fiscal 2019 revenue; interest expense of $331,510 on the Convertible Notes issued on January 22, 2020 as well as the commitment fee on the Revolving Credit Facility; and modification and accelerated amortization charges of $149,913 related to the exercise of the 2018 and 2019 Cooperman Warrants on June 5, 2020; partially offset by $198,000 of other immaterial adjustments.

Income tax expense ~~(benefit)~~
Three Months Ended July 31,
2021 $ Change % Change 2020
Income tax expense (benefit) $151,010 NM NM $(1,900)


	Three Months Ended July 31,
	2022		$ Change		% Change		2021
Income tax expense	$	30,321	$	(120,689)	(80)	%	$	151,010

Income tax expense in Q1 Fiscal 2023 includes a reserve of approximately $25,000 for the estimated Fiscal Year 2023 Canada foreign income tax liability which covers the 2023 tax year for which a permanent establishment is in place in Canada. The Company will file an annual Canadian T2 Corporation Income Tax return and related information returns under the Voluntary Disclosure Program with the Canada Revenue Agency ("CRA") to report the ongoing activity of the permanent establishment.

Income tax expense in Q1 Fiscal 2022 includes a reserve of approximately $150,000 for the estimate of the Canada foreign income tax liability which covers the 2013 through 2021 tax years during which a permanent establishment was in place in Canada. ~~In Q1 Fiscal 2022,~~This amount has not yet been remitted to the ~~Company filed multi-year Canadian T2 Corporation Income Tax Returns and related information returns under the Voluntary Disclosure Program with the Canada Revenue Agency ("CRA").~~CRA.

Non-GAAP Financial Measures

This 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 (loss), operating income (loss), and cash flow from operating activities, liquidity or any other financial measures. They may not be indicative of the historical operating results of AGI 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 EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Gross Profit, which are non-GAAP financial measures. We believe that management, analysts and shareholders benefit from referring to the following non-GAAP financial measures to evaluate and assess our core operating results from period-to-period after removing the impact of items that affect comparability. Our management recognizes that the non-GAAP financial measures have inherent limitations because of the excluded items described below.

~~Table of Contents~~

We have included a reconciliation of our non-GAAP financial measures to the most comparable financial measures 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 AGI 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.

EBITDA and Adjusted EBITDA

AGI defines Adjusted EBITDA as EBITDA excluding: (1) bad debt expense; (2) stock-based compensation; and (3) non-recurring charges or gains. The following table presents a reconciliation of net loss to EBITDA and Adjusted EBITDA and of net loss margin to ~~the~~ Adjusted EBITDA ~~margin:~~margin

Three Months Ended July 31,
2021 2020
Net loss $ (870,888) $ (943,196)
Interest expense, net 32,132 455,223
Taxes 151,010 (1,900)
Depreciation and amortization 779,409 490,624
EBITDA 91,663 751
Bad debt expense 350,000 400,000
Stock-based compensation 542,712 487,110
Non-recurring charges - Severance 19,665 44,000
Non-recurring (income) charges - Other (498,120) 375,437
Adjusted EBITDA $ 505,920 $ 1,307,298
Net loss Margin (4) % (6) %
Adjusted EBITDA Margin 3 % 9 %

Table of Contents


	Three Months Ended July 31,
	2022		2021
Net loss	$	(3,714,971)	$	(870,888)
Interest expense, net	580,580		32,132
Taxes	30,321		151,010
Depreciation and amortization	921,108		779,409
EBITDA	(2,182,962)		91,663
Bad debt expense	350,000		350,000
Stock-based compensation	46,330		542,712
Non-recurring charges - Severance	125,000		19,665
Non-recurring charges (income) - Other	484,932		(498,120)
Adjusted EBITDA	$	(1,176,700)	$	505,920
Net loss Margin	(20)%		(4)%
Adjusted EBITDA Margin	(6)%		3%

In Q1 Fiscal 2023, EBITDA loss is attributable to lower revenue and higher instructional costs; partially offset by a reduction in general and administrative costs associated with planned cost control. Non-recurring charges - Severance of $125,000 relates to the resignation of the Chief Nursing Office, effective July 15, 2022. Non-recurring charges - Other of $484,932 includes non-recurring professional fees and consulting costs.

In Q1 Fiscal 2022, EBITDA was attributable to the ~~non-recurring~~Company's highest LTV programs. Non-recurring income - Other of $498,120 ~~is from~~relates to a litigation settlement which is included in other income (expense), net. In Q1 Fiscal 2021, there was an additional non-recurring item of $123,947, which is included in interest expense, net, that arose from the acceleration of amortization arising from the exercise of warrants issued to a lender.amount received on July 21, 2021.

The following tables present a reconciliation of net loss to EBITDA and Adjusted EBITDA and of net loss margin to the Adjusted EBITDA margin by ~~business unit:~~subsidiary:
Three Months Ended July 31, 2021
Consolidated AGI Corporate Aspen BSN Pre-Licensure AU Online AU Total USU
Net income (loss) $ (870,888) $ (4,458,536) $ 889,460 $ 1,444,997 $ 2,334,457 $ 1,253,191
Interest expense, net 32,132 33,272 — (1,000) (1,000) (140)
Taxes 151,010 1,163 — 149,807 149,807 40
Depreciation and amortization 779,409 31,043 126,068 537,625 663,693 84,673
EBITDA 91,663 (4,393,058) 1,015,528 2,131,429 3,146,957 1,337,764
Bad debt expense 350,000 — — 250,000 250,000 100,000
Stock-based compensation 542,712 443,279 — 69,595 69,595 29,838
Non-recurring charges - Severance 19,665 — — — — 19,665
Non-recurring income - Other (498,120) — — (498,120) (498,120) —
Adjusted EBITDA $ 505,920 $ (3,949,779) $ 1,015,528 $ 1,952,904 $ 2,968,432 $ 1,487,267
Net income (loss) Margin (4) % NM 19 % 17 % 18 % 20 %
Adjusted EBITDA Margin 3 % NM 22 % 22 % 22 % 24 %

~~NM - Not meaningful~~


	Three Months Ended July 31, 2022
	Consolidated		AGI Corporate		AU		USU
Net income (loss)	$	(3,714,971)	$	(4,898,587)	$	(209,429)	$	1,393,045
Interest expense, net	580,580		581,279		(578)		(121)
Taxes	30,321		5,600		14,721		10,000
Depreciation and amortization	921,108		69,442		744,744		106,922
EBITDA	(2,182,962)		(4,242,266)		549,458		1,509,846
Bad debt expense	350,000		—		225,000		125,000
Stock-based compensation	46,330		(25,330)		51,924		19,736
Non-recurring charges - Severance	125,000		125,000		—		—
Non-recurring (income) charges - Other	484,932		484,932		—		—
Adjusted EBITDA	$	(1,176,700)	$	(3,657,664)	$	826,382	$	1,654,582


Net income (loss) Margin	(20)	%	NM	(2)	%	20	%
Adjusted EBITDA Margin	(6)	%	NM	7	%	24	%

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		Three Months Ended July 31, 2020																		Three Months Ended July 31, 2021
		Consolidated			AGI Corporate		Aspen BSN Pre-Licensure			AU Online			AU Total			USU				Consolidated		AGI Corporate		AU		USU
Net income (loss)	Net income (loss)	$	(943,196)		$	(4,255,735)	$	965,203		$	1,344,560		$	2,309,763		$	1,002,776		Net income (loss)	$	(870,888)	$	(4,458,536)	$	2,334,457	$	1,253,191
Interest expense, net	Interest expense, net	455,223			455,223		—			—			—			—			Interest expense, net	32,132		33,272		(1,000)		(140)
Taxes	Taxes	(1,900)			(1,900)		—			—			—			—			Taxes	151,010		1,163		149,807		40
Depreciation and amortization	Depreciation and amortization	490,624			13,092		25,000			425,054			450,054			27,478			Depreciation and amortization	779,409		31,043		663,693		84,673
EBITDA	EBITDA	751			(3,789,320)		990,203			1,769,614			2,759,817			1,030,254			EBITDA	91,663		(4,393,058)		3,146,957		1,337,764
Bad debt expense	Bad debt expense	400,000			—		—			340,000			340,000			60,000			Bad debt expense	350,000		—		250,000		100,000
Stock-based compensation	Stock-based compensation	487,110			392,043		—			61,317			61,317			33,750			Stock-based compensation	542,712		443,279		69,595		29,838
Non-recurring charges - Severance	Non-recurring charges - Severance	44,000			44,000		—			—			—			—			Non-recurring charges - Severance	19,665		—		—		19,665
Non-recurring charges - Other	Non-recurring charges - Other	375,437			375,437		—			—			—			—			Non-recurring charges - Other	(498,120)		—		(498,120)		—
Adjusted EBITDA	Adjusted EBITDA	$	1,307,298		$	(2,977,840)	$	990,203		$	2,170,931		$	3,161,134		$	1,124,004		Adjusted EBITDA	$	505,920	$	(3,949,779)	$	2,968,432	$	1,487,267
Net income (loss) Margin		(6)		%	NM		36		%	17		%	22		%	23		%
Adjusted EBITDA Margin		9		%	NM		37		%	27		%	29		%	25		%


Net income (loss) Margin	(4)	%	NM	18	%	20	%
Adjusted EBITDA Margin	3	%	NM	22	%	24	%

The Adjusted EBITDA ~~margin decreased~~Margin declined to a loss of 6% in Q1 Fiscal 2023 from 3% in Q1 Fiscal 2022 ~~from 9% in Q1 Fiscal 2021,~~ due primarily to ~~new campus investments in~~factors associated with the ~~current period.~~BSN Pre-Licensure program including the student enrollment stoppage and higher instructional costs.

Adjusted Gross Profit

~~AGI~~GAAP Gross Profit is revenue less cost of revenue less amortization expense. The Company defines Adjusted Gross Profit as GAAP Gross Profit ~~including~~adjusted to exclude amortization ~~expense which is excluded from cost of revenue on the statements of operations.~~expense. The following table presents a reconciliation of GAAP Gross Profit to Adjusted Gross ~~Profit inclusive of amortization:~~Profit:

Three Months Ended July 31,
2021 2020
GAAP Gross Profit $10,423,184 $8,990,985
Add back amortization expense included in cost of revenue:
Intangible asset amortization 10,492 11,947
Call center software/website amortization 403,751 315,107
Total amortization included in cost of revenue 414,243 327,054
Adjusted Gross Profit $10,837,427 $9,318,039
Revenue $19,430,995 $15,165,562
Cost of Revenue 8,593,568 5,847,523
Adjusted Gross Profit $10,837,427 $9,318,039
GAAP Gross Profit as a percentage of revenue 54 % 59 %
Adjusted Gross Profit as a percentage of revenue 56 % 61 %


	Three Months Ended July 31,
	2022	2021
Revenue	$18,893,913	$19,430,995
Cost of Revenue	10,205,551	8,593,568
Adjusted Gross Profit	8,688,362	10,837,427
Less amortization expense included in cost of revenue:
Intangible asset amortization	22,020	10,492
Call center software/website amortization	466,920	403,751
Total amortization expense included in cost of revenue	488,940	414,243
GAAP Gross Profit	$8,199,422	$10,423,184

GAAP Gross Profit as a percentage of revenue	43%	54%
Adjusted Gross Profit as a percentage of revenue	46%	56%

~~Adjusted~~GAAP Gross profit and gross ~~profit as a percentage of~~margin for Q1 Fiscal 2023 were $8,199,422 and 43%, respectively, compared to $10,423,184 and 54%, respectively, for Q1 Fiscal 2022. The decline in gross margin was primarily due to lower revenue ~~decreased~~and increased instructional costs and services. At AU, instructional costs and services increased due primarily to the inflationary impact on faculty compensation and the need for more instructors in BSN Pre-Licensure program, which is the result of more students entering the core curriculum. The core curriculum requires an increase in ~~class starts year-over-year~~the ratio of instructors to students, especially as students enter the clinical portion of the program. The core student population is growing in the Phoenix locations as a result of the progression of double cohorts and ~~additional full-time faculty staffing~~in the other new locations as students move into the core portion of the program for the first time. At USU, instructional costs and services increased due primarily to the growth in the USU MSN-FNP program, which resulted in increased immersions at additional campuses.

Liquidity and faculty hiring in the BSN Pre-Licensure campus locations in Phoenix, Austin and Tampa; and planned advertising spending increase throughout Fiscal Year 2022, targeted primarily to our highest LTV programs. The majority of the advertising spending increase is directed to the new pre-licensure metro locations: Austin, Nashville and Tampa, as well as USU's MSN-FNP program. Additionally, capitalized call center costs increased in the current period.Capital Resources

Cash flow information

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~~Aspen University GAAP Gross Profit represented 53% of Aspen University revenue for Q1 Fiscal Year 2022, and USU GAAP Gross Profit represented 60% of USU revenue for Q1 Fiscal Year 2022.~~

~~Liquidity and Capital Resources~~

A summary of the Company's cash flows is as follows:


		Three Months Ended July 31,					Three Months Ended July 31,
		2021		2020			2022		2021
Net cash (used in) provided by	Net cash (used in) provided by					Net cash (used in) provided by
Operating activities	Operating activities	$	(2,432,491)	$	(636,759)	Operating activities	$	(3,616,193)	$	(2,432,491)
Investing activities	Investing activities	(978,882)		(662,218)		Investing activities	(492,333)		(978,882)
Financing activities	Financing activities	22,548		2,351,774		Financing activities	—		22,548
Net (decrease) increase in cash		$	(3,388,825)	$	1,052,797
Net decrease in cash						Net decrease in cash	$	(4,108,526)	$	(3,388,825)

Net Cash Used in Operating Activities

Net cash used in operating activities ~~for~~increased from $2,432,491 in Q1 Fiscal 2022 to $3,616,193 in Q1 Fiscal 2023. Approximately $2.2 million of the ~~three months ended July 31, 2021 consists~~cash used in operations in Fiscal Year 2023 is attributed to the EBITDA loss and $1.2 million of ~~net loss adjusted for non-cash items~~cash used in operations is attributed to increased working capital most of which is attributed to growth in our short-term and ~~the effect of changes~~long-term monthly payment plan accounts receivable.

The increase in working capital. Non-cash adjustments include stock-based compensation, bad debt expense, depreciation and amortization expense, amortization of debt discounts and issue costs, warrants issued for services, modification charge for warrants exercised, common shares issued for services and other adjustments.

Adjustments to net loss consist primarily of depreciation and amortization expense of $779,409, stock-based compensation of $542,712, bad debt expense of $350,000, tenant improvement allowances received from landlords of $86,591, and amortization of debt issue costs of $8,334. The increasecash from changes in working capital primarily consists of ~~decreases~~an increase in ~~deferred revenue of $2.1 million and increases in gross~~ accounts receivable, ~~(both short~~prepaid expenses and ~~long term accounts receivable, before allowance for doubtful accounts) of $1,879,318. The decrease~~other current assets, partially offset by an increase in other current liabilities, accrued expenses and deferred revenue is due primarily to timing of billings for class starts. The increase in accounts receivable is primarily attributed to the growth in ~~revenue~~revenues from ~~increased enrollments and~~ students paying through the monthly payment plan as well as the timing of billings for class ~~starts.~~starts and the timing of cash receipts. Prepaid expenses increased due primarily to a fee for the surety bond required by the Arizona State Board for Private Postsecondary Education, which is being amortized over one year. The increase in other current assets and other current liabilities was primarily related to the financing of the Company's insurance policy coverage. The increase in accrued expenses is due primarily to increases in accrued marketing and accrued graduations expenses; and Fiscal Year 2023 Canadian foreign tax accrual.

The decrease in non-cash adjustments primarily consists of lower stock-based compensation expense related to the reversal of $242,708 of amortization expense related to the CEO's performance-based RSU grant that the Company assessed will not be met as of July 31, 2022; and the reversal of $34,150 of amortization expense related to the resignation of the Chief Nursing Officer on July 15, 2022 of the February 4, 2020 executive price vesting RSU grant. Offsetting this decrease is the amortization of deferred financing costs related to the long-term debt and lower tenant improvements allowances from the landlords which only includes the Atlanta campus.

The Company expects ~~a favorable trend in~~ working capital and long-term student accounts receivable to trend higher over time ~~but~~as more students utilize our monthly payment plan. Additionally, there may be working capital volatility from quarter to ~~quarter. In aggregate~~quarter, regarding the ~~Company expects a general~~timing of financial aid payments and student course starts that impact deferred revenue and accounts receivable balances. Offsetting the trend toward ~~lower cash used in operations in future quarters; however, some quarters could have~~ higher ~~cash used in operations as a result of more cash used to support changes in working capital. Program start timings and the related federal financial aid drawdowns also impact cash timing.~~

Net cash used in operations for the three months ended July 31, 2020 consist primarily of depreciation and amortization expense of $490,624, stock-based compensation of $487,110, bad debt expense of $400,000 and amortization of debt discounts $0.1 million and amortization of debt issue costs $0.1 million. The increase from changes in working capital ~~primarily consists of an increase in gross~~and long-term student accounts receivable (both short and long term accounts receivable, before allowance for doubtful accounts) of $2.7 million, partially offset by increases in deferred revenue of $1.1 million. The increase in accounts receivable is primarily attributedwill be a trend toward improved adjusted EBITDA as we continue to the growth in revenue from increased enrollments and students paying through the monthly payment plan as well as timing of billings for class starts. The increase in deferred revenue is due primarily to timing of billings for class starts.grow our high LTV programs.

Net Cash Used in Investing Activities

Net cash used in investing activities ~~for the three months ended July 31, 2021 includes purchases of property and equipment of $0.8 million~~in Q1 Fiscal 2023 decreased from Q1 Fiscal 2022 primarily due to ~~investments in leasehold improvements, computer equipment and hardware, Company developed software and new campuses and purchases of courseware and accreditation of $0.1 million.~~

~~Net cash used in investing activities for the three months ended July 31, 2020 primarily includes purchases of property and equipment of $0.7 million mostly attributed to investments~~lower capital expenditures in the ~~purchase~~current year associated with the opening of ~~property~~pre-licensure locations and ~~equipment as we build out our campuses.~~a decrease in courseware updates.

Net Cash Provided By Financing Activities

~~Table of Contents~~

Net cash provided by financing activities for the three months ended July 31, 2021 ~~includes~~was from the proceeds from stock options exercised of $22,548.

Net cash provided by financing activities for the three months ended July 31, 2020 includes proceeds from stock options exercised of $1,269,982 and proceeds from warrants exercised of $1,081,792 received from the cash exercise of warrants associated with the Term Loans and Revolving Credit Facility.

Liquidity and Capital Resources

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

~~The~~Financing Arrangements

Table of Contents

Convertible Note and Revolving Credit Facility

On March 14, 2022, the Company ~~also has access to~~closed an offering of a $5$10 million convertible note and a $20 million Revolving Credit ~~Facility. At July 31, 2021~~Facility (the “Revolving Credit Facility”). The Company received the proceeds from the $10 million convertible note at the closing. Subsequent to the closing of the $10 million convertible note, $5 million was restricted as collateral for a surety bond, which was required by the Arizona State Board for Private Postsecondary Education. The remaining $5 million is available for general corporate purposes, including funding the Company’s expansion of its BSN Pre-Licensure nursing degree program.

The $20 million revolving credit facility has not been drawn upon and ~~April 30, 2021, there were no outstanding borrowings under this credit facility.~~was pledged as additional collateral for the surety bond required by the Arizona State Board for Private Postsecondary Education.

Credit Facility

On August 31, 2021, the Company extended ~~the Revolving~~its $5 million Credit Facility by one year to November 4, 2022. The Credit Facility ~~Agreement provides for a $5,000,000 revolving credit facility~~is evidenced by a revolving promissory note. Borrowings under the Credit Facility Agreement bear interest at 12% per annum. In conjunction with the extension of the ~~Revolving~~ Credit Facility, the Company drew down ~~$5,000,000~~$5 million of funds ~~from the Revolving Credit Facility~~ at 12% interest per annum due November 4, 2022. Pursuant to this agreement, on August 31, 2021 the Company issued to the Foundation warrants to purchase 50,000 shares of the Company’s common stock exercisable for five years from the date of issuance at the exercise price of ~~$5.89~~$5.85 per share. Additionally on March 14, 2022, the Company extended the $5 million Credit Facility by one additional year to November 4, 2023, at an increased interest rate of 14% per annum. The Company ~~expects to use~~uses these funds for general business purposes, including the roll out of the new campuses. ~~The~~

At both July 31, 2022 and April 30, 2022, there were $5 million of borrowings outstanding under the Credit Facility.

Sufficiency of Working Capital

As of September 9, 2022, the Company ~~anticipates~~had $3.3 million of unrestricted cash on hand. In order to meet our short-term working capital requirements and to achieve our operational goals during the next 12 months, we expect to either raise sufficient capital or reduce our expenditures. We expect that with these reductions, we will have sufficient cash to meet our working capital needs for the ~~Aspen 2.0 business~~next 12 months.

Q1 Fiscal 2023, we implemented a restructuring plan ~~with lower advertising budget~~ that ~~targets~~will result in significant cash benefits for the ~~highest LTV programs, will reduce~~Company starting in Q2 Fiscal 2023 and continuing for the ~~need to borrow funds~~remainder of the fiscal year. There are two key components of the plan. First, in the ~~future.~~second quarter we scaled back marketing ad spend to maintenance levels of $150,000 per quarter which will result in savings of $3.6 million in Q2 Fiscal 2023 and $3.8 million in each of Q3 Fiscal 2023 and Q4 Fiscal 2023. The savings estimates are based on a normalized marketing ad spend run rate of $4.2 million per quarter. Second, the plan resulted in the elimination of approximately 70 positions mostly within the general and administrative functions at Aspen University. As a result, additional restructuring savings of $750,000 in Q2 Fiscal 2023 and $1.1 million in each of Q3 Fiscal 2023 and Q4 Fiscal 2023 are expected. The estimated general and administrative spend reductions are based on our Q1 Fiscal 2023 expenses. Total spend reductions will be $4.4 million in Q2 Fiscal 2023 and $4.9 million in each of Q3 Fiscal 2023 and Q4 Fiscal 2023.

Capital and other expenditures

The Company anticipates that it will need to make capital and other expenditures in connection with the development and expansion of its campus ~~operations. The Company's Fiscal year 2022 capital expenditures are expected to be lower than Fiscal Year 2021 capital expenditures by approximately $0.5 million related to~~operations and the implementation of new ~~campus costs. Additionally, the Company expects additional cash commitments for letters of credit related to securing new campus locations.~~

The Company expects that its existing cash resources will be sufficient to fund its working capital, including capital expenditures, investing and other needs for more than the next 12 months. As disclosed in our Annual Report on Form 10-K for the fiscal year ended April 30, 2021 as filed with the SEC on July 13, 2021, the Company intends to be net income positive by Fiscal Q4 2022.online programs.

Critical Accounting Policies and Estimates

At July 31, ~~2021,~~2022, there were no material changes to our critical accounting policies and estimates. A full listing of our critical accounting policies and estimates is described in the "Critical Accounting Policies and Estimates" of our Annual Report on Form 10-K for the fiscal year ended April 30, ~~2021~~2022 and listed here below:

•Revenue Recognition and Deferred Revenue

•Accounts Receivable and Allowance for Doubtful Accounts Receivable

•Goodwill and Intangibles

•Stock-based compensation

Off Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements as of July 31, ~~2021.~~2022.

Table of Contents

Cautionary Note Regarding Forward Looking ~~Statements~~Statements.

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our goal of achieving positive GAAP net income by Q4 of the fiscal year 2022, our plan to decrease advertising spend on our lower efficiency unit and shift that spend to the highest LTV units, the anticipated impact of this plan on our future operating results, liquidity and growth, and the expected ~~timing~~NCLEX first time pass rate improvements at Aspen University’s outside of ~~such impact, the anticipated near-term changes~~Arizona, continued general and administrative cost reductions, expected increases in ~~enrollments, the expected growth in our highest efficiency businesses, our estimates concerning LTV~~working capital and ~~ARPU, our expectations regarding~~long-term accounts receivable, ~~the expected continued revenue growth in Aspen University’s BSN Pre-Licensure~~improved Adjusted EBITDA, reduced marketing expenses, and ~~USU’s MSN-FNP programs, the expected timing of subsequent campus openings, including Nashville, TN, the~~

~~Table of Contents~~

~~impact of bookings and ARPU,~~ our ~~beliefs with respect to the impact of COVID-19 on class starts and enrollments, the impact of the new federal vaccination mandate on our future results of operations,~~the expected sources of future revenue growth, our anticipated working capital trends, the intended use of proceeds from the drawdown under the revolving credit facility and the expected capital expenditures related to new campus openings and letters of credit.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, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements include, without limitation, our ability to successfully ~~implement~~resolve the ~~fiscal year 2022 business plan and the accuracy of the assumptions used in estimating the results of such implementation, unanticipated issues~~Arizona regulatory matters, maintain enrollments with ~~and delays in, launching phase two of our in-house CRM and~~limited marketing, the continued ~~ability~~demand of nursing students for the CRM to perform as expected, continued high demand for nurses, the continued effectiveness of our marketing efforts, the effectiveness of our collection efforts and process improvements, our ability to obtain the necessary regulatory approvals to launch our future campuses in a timely fashion or at all,new programs, student attrition, national and local economic factors including a possible recession and increasing unemployment, uncertainties arising from the ~~substantial impact~~Russian invasion of ~~the COVID-19 pandemic~~Ukraine including its effect on the U.S. economy, supply chain issues, competition from nursing schools in local markets, ~~risks stemming from the new federal vaccination program,~~ the competitive impact from the trend of major non-profit universities using online education ~~unfavorable regulatory changes,~~and consolidation among our ~~failure to continue obtaining enrollments at low acquisition costs and keeping teaching costs down, and potential loss of employees as a result of the COVID-19 vaccine mandate.~~competitors. Further information on the risks and uncertainties affecting our business is contained in our filings with the SEC, including this Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended April 30, ~~2021.~~2022. 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.

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Table of Contents

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. Other than the previously disclosed receipt of payment of $498,120 as a final distribution by the bankruptcy trustee in HEMG bankruptcy proceedings, during the period covered by this report, there were no material changes to the description of legal proceedings set forth in our Annual Report on Form 10-K for the fiscal year ended April 30, ~~2021.~~2022.

ITEM 1A. RISK FACTORS

~~The information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in our Annual Report on Form 10-K for the fiscal year ended April 30, 2021.~~

~~The proposed new regulation concerning mandatory COVID-19 vaccination of employees could have a material adverse impact on our business and results of operations.~~

On September 9, 2021, President Biden announced a proposed new rule requiring all employers with at least 100 employees to ensure that their employees are fully vaccinated or require unvaccinated workers to get a negative test at least once a week. The Department of Labor’s Occupational Safety and Health Administration is drafting an emergency regulation to carry out this mandate, which is expected to take effect in the coming weeks. It remains unclear, among other things, if the vaccine mandate will apply to all employees or only to employees who work in the office, and how compliance will be documented.

It is currently not possible to predict with certainty the exact impact the new regulation would have on us. As a company with more than 100 employees, we would be required to mandate COVID-19 vaccination of our workforce or our unvaccinated employees would require weekly testing. This may result in employee attrition, which could be material as a substantial number of our employees are based in Arizona where vaccination rates are below the national average. If we were to lose employees, it could have an adverse effect on future revenues and costs, which could be material.~~Accordingly, the proposed new regulation when implemented could have a material adverse effect on our business and results of operations.~~None.

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

~~On July 21, 2021, the Company issued 25,000 common stock purchase warrants to a former member~~

Other than as set forth in "Item 5. Other Information" which is incorporated herein by reference, all recent sales of the Board of Directors. The warrants are exercisable for a period of five years from the issuance date and vest annually over a three year period subject to continued service on the Company's Advisory Board on each applicable vesting date. The warrants will terminate automatically and immediately upon the expiration of the exercise period. The issuance of the warrants was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933 (the “Securities Act”) and Rule 506 of Regulation D promulgated thereunder.

On July 21, 2021, as part of his new Employment Agreement, the Company granted 125,000 RSUs to Michael Mathews, the Company's Chief Executive Officer, under the 2018 Plan. Vesting is subject to continued employment with the Company and will occur in full on the date the Company files with the SEC a quarterly or annual report on Forms 10-Q or 10-K, as applicable, which reflects the Company reported net income on a GAAP basis. If the RSUs do not vest within three years from the July 21, 2021 grant date, they will expire and automatically be forfeited. The issuance of the RSUs was exempt from registration pursuant to Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder.

~~On August 12, 2021, Mr. Gerard Wendolowski, the Chief Operating Officer of the Company, and Dr. Cheri St. Arnauld, the Company’s~~ ~~Chief~~ Academic Officer, received a grant of 80,000 RSUs each. The RSUs will vest in three nearly equal annual increments with the first increment vesting on August 12, 2022, subject to continued service as an officer of the Company on each applicable vesting date. Each RSU represents a contingent right to receive one share of the Company’s common stock. The RSUs were granted under the 2018 Plan. The issuance of the RSUs was exempt from registration pursuant to Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder.

On August 16, 2021, Mr. Matthew LaVay, the Chief Financial Officer of the Company, received a grant of 125,000 RSUs pursuant to his Employment Agreement. The RSUs will vest in three approximately equal annual increments with the first increment vesting on August 16, 2022, subject to continued employment on each applicable vesting date. Each RSU represents a contingent right to receive one share of the Company’s common stock. The RSUs were granted under the 2018 Plan. The issuance of the RSUs was exempt from registration pursuant to Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder.

unregistered securities have been previously reported.

~~Table of Contents~~

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

On August 18, 2022, Aspen Group, Inc. entered into an Equity Distribution Agreement (the “Agreement”) with Northland Securities, Inc. (“Northland”), pursuant to which the Company may issue and sell from time to time, through Northland shares of the Company’s common stock (the “Shares”), with offering proceeds of up to $3,000,000.

~~Not applicable.~~Sales of the Shares, if any, may be made by any method permitted by law deemed to be an “at-the-market” offering as defined in Rule 415 of the Securities Act of 1933 (the “Securities Act”), including without limitation sales made directly on or through The Nasdaq Global Market, the trading market for the Company’s common stock, on any other existing trading market in the United States for the Company’s common stock, or to or through a market maker. Northland will use commercially reasonable efforts to sell on the Company’s behalf all of the Shares requested to be sold by the Company, consistent with its normal trading and sales practices, subject to the terms of the Agreement. Under the Agreement, Northland will be entitled to compensation of 3% of the gross proceeds from the sales of the Shares sold under the Agreement. The Company also agreed to reimburse Northland for certain specified expenses, including the fees and disbursements of its legal counsel, in an amount not to exceed $50,000. The Company estimates that the total expenses for the offering, excluding compensation and reimbursement payable to Northland under the terms of the Agreement, will be approximately $100,000.

The Agreement contains representations, warranties and covenants customary for the transactions of this kind.

ITEM 6. EXHIBITS

See the Exhibit Index at the end of this report.

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Table of Contents

EXHIBIT INDEX
Incorporated by Reference Filed or
Furnished
Herewith
Exhibit # Exhibit Description Form Date Number
3.1
Certificate of Incorporation, as amended 10-K 7/9/19 3.1
3.2
Bylaws, as amended 10-Q 3/15/18 3.2
10.1
Warrant dated July 21, 2021 Filed
10.2
Employment Agreement, effective July 21, 2021, by the Company and Michael Mathews* 8-K 7/23/21 10.1
10.3
Employment Agreement, effective August 16, 2021, by the Company and Matthew LaVay* 8-K 8/16/21 10.1
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 Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH Inline XBRL Taxonomy Extension Schema Document Filed
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Filed
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Filed
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Filed
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Filed
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Incorporated by Reference

Filed or
Furnished
Herewith

Exhibit #

Exhibit Description

Form

Date

Number

3.1

Certificate of Incorporation, as amended

10-K

7/9/2019

3.1

3.1(a)

Certificate of Amendment to Articles of Incorporation - authorized shares

8-K

7/12/2022

3.1

3.2

Bylaws, as amended

10-Q

3/15/2018

3.2

4.1

Description of securities registered under Section 12 of the Exchange Act of 1934

10-K

7/9/2019

4.1

10.1

Aspen Group, Inc. 2012 Equity Incentive Plan, as amended*

S-8

9/21/2020

10.1

10.2

Aspen Group, Inc. 2018 Equity Incentive Plan, as amended*

10-Q

3/16/2021

10.1

10.2(a)

Amendment No. 3 to the Aspen Group, Inc. 2018 Equity Incentive Plan*

DEF 14A

11/5/2021

Annex A

10.2(b)

Amendment No. 4 to the Aspen Group, Inc. 2018 Equity Incentive Plan*

10-Q

3/15/2022

10.7

10.3

Employment Agreement effective July 21, 2021, by the Company and Michael Mathews*

8-K

7/23/2021

10.1

10.4

Employment Agreement dated November 24, 2014 - Gerard Wendolowski*

10-K

7/28/2015

10.19

10.5

Employment Agreement dated June 11, 2017 – Cheri St. Arnauld*

10-K

7/25/2017

10.5

10.6

Employment Agreement dated November 1, 2019 – Anne McNamara*

10-K

7/7/2020

10.6

10.7

Employment Agreement dated December 1, 2020 - Robert Alessi*

10-Q

3/16/2021

10.2

10.8

Employment Agreement, effective August 16, 2021, by the Company and Matthew LaVay*

8-K

8/16/2021

10.1

10.9

Form of Restricted Stock Unit Agreement*

10-K

7/7/2020

10.9

10.10

Form of Restricted Stock Unit Agreement – price based vesting*

10-K

7/7/2020

10.10

10.11

Form of Stock Option Agreement*

10-K

7/7/2020

10.11

10.12

Amended and Restated Revolving Promissory Note and Security Agreement, dated March 6, 2019

10-Q

3/11/2019

10.5

10.13

Form of Investors/Registration Rights Agreement dated January 22, 2020

8-K

1/23/2020

10.3

10.14

Confidential Severance Agreement, dated February 25, 2021, by and between the Company and Frank J. Cotroneo

10-K

7/13/2021

10.13

10.15

Warrant dated July 21, 2021

10-Q

9/14/2021

10.1

10.16

Form of Revolving Promissory Note and Security Agreement+

10-Q

3/15/2022

10.1

10.17

Form of Convertible Promissory Note and Security Agreement+

10-Q

3/15/2022

10.2

10.18

Form of Intercreditor Agreement

10-Q

3/15/2022

10.3

10.19

Form of Investors/Registration Rights Agreement dated March 14, 2022

10-Q

3/15/2022

10.4

10.20

Form of Third Amendment to the Amended and Restated Revolving Promissory Note and Security Agreement

10-Q

3/15/2022

10.5

10.21

Form of Letter Agreement +

10-Q

3/15/2022

10.6

Table of Contents

10.22

Consent Agreement dated March 31, 2022

8-K

4/1/2022

99.1

10.23

First Amendment to Intercreditor Agreement dated April 22, 2022

8-K

4/27/2022

10.1

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

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

Filed

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Filed

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

Filed

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

Filed

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Filed

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

_____________________

* Management contract or compensatory plan or arrangement.

** 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.

+ Certain schedules and other attachments have been omitted. The Company undertakes to furnish the omitted schedules and attachments to the Commission upon request.

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.

3641

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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.

September 14, ~~2021~~2022	By:	/s/ Michael Mathews
		Michael Mathews Chief Executive Officer (Principal Executive Officer)


September 14, ~~2021~~2022	By:	/s/ Matthew LaVay
		Matthew LaVay Chief Financial Officer (Principal Financial Officer)


September 14, ~~2021~~2022	By:	/s/ Robert Alessi
		Robert Alessi Chief Accounting Officer (Principal Accounting Officer)

3742


	July 31, 2021		July 31, 2020
Cash and cash equivalents	$	6,554,423	$	15,899,293
Restricted cash	3,722,831		3,060,269
Total cash, cash equivalents and restricted cash	$	10,277,254	$	18,959,562


	New Student Quarterly Enrollments
	Q1'21	Q2'21	Q3'21	Q4'21	Q1'22
Aspen University	1,779	2,010	1,593	1,593	1,601
USU	572	649	536	589	675
Total	2,351	2,659	2,129	2,182	2,276