SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)
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|[ ]||Preliminary Proxy Statement||[ ]||Confidential, for Use of the Commission|
|Only (as permitted by Rule 14a-6(e)(2))|
|[X]||Definitive Proxy Statement||[ ]||Definitive Additional Materials|
|[ ]||Soliciting Materials Pursuant to §240.14a-12|
Aspen Group, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Aspen Group, Inc.
276 Fifth Avenue, Suite 505
New York, New York, 10001
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the stockholders of Aspen Group, Inc.:
We are pleased to invite you to attend the 2022 Annual Meeting of the Stockholders (the “Annual Meeting”) of Aspen Group, Inc., a Delaware corporation (the “Company”), which will be held at 9:00 a.m., local time on December 15, 2022 at the Company’s offices located at 4615 E. Elwood Street, Phoenix, Arizona 85040, for the following purposes:
|1.||Elect six members of the Board of Directors for a one-year term expiring at the next annual meeting of stockholders;|
|2.||Ratify the selection of Salberg & Company, P.A. as the Company’s independent registered public accounting firm for the fiscal year ending April 30, 2023;|
|3.||Approve an adjournment of the Annual Meeting to a later date or time, if necessary, to permit further solicitation and vote of proxies if there are not sufficient votes at the time of the Annual Meeting to approve any of the proposals presented for a vote at the Annual Meeting; and|
|4.||Transact such other business as may properly come before the Annual Meeting.|
The Company’s Board of Directors (the “Board”) has fixed the close of business on October 28, 2022 as the date (the “Record Date”) for a determination of the stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof.
If You Plan to Attend
Please note that space limitations make it necessary to limit attendance to stockholders. Registration and seating will begin at 9:00 a.m. Shares can be voted at the Annual Meeting only if the holder is present in person or is represented by valid proxy.
For admission to the Annual Meeting, each stockholder may be asked to present valid picture identification, such as a driver’s license or passport, and proof of stock ownership as of the Record Date, such as the enclosed proxy card or a brokerage statement reflecting stock ownership. Cameras, recording devices and other electronic devices will not be permitted at the meeting.
If you do not plan on attending the meeting, please vote your shares via the internet, by phone or by signing and dating the enclosed proxy and return it in the business envelope provided. Your vote is very important.
|By the Order of the Board of Directors|
|/s/ Michael Mathews|
|Chief Executive Officer|
Dated: November 3, 2022
Whether or not you expect to attend in person, we urge you to vote your shares at your earliest convenience. This will ensure the presence of a quorum at the Annual Meeting. Promptly voting your shares via the Internet, by phone or by signing, dating, and returning the enclosed proxy card will save us the expenses and extra work of additional solicitation. An addressed envelope for which no postage is required if mailed in the United States is enclosed if you wish to vote by mail. Submitting your proxy now will not prevent you from voting your shares at the meeting if you desire to do so, as your proxy is revocable at your option. Your vote is important, so please act today!
Table of Contents
|Questions and Answers Regarding the Annual Meeting of Stockholders||1|
|Proposal 1. Election of Directors||6|
|Transactions with Related Persons||13|
|Security Ownership of Certain Beneficial Owners and Management||15|
|Proposal 2. Ratification of the Selection of Independent Registered Public Accounting Firm||17|
|Audit Committee Report||18|
|Proposal 3. Adjournment||26|
Aspen Group, Inc.
276 Fifth Avenue, Suite 505
New York, New York, 10001
ANNUAL MEETING OF STOCKHOLDERS
This proxy statement (the “Proxy Statement”) is being sent to the holders of shares of voting stock of Aspen Group, Inc., a Delaware corporation (“AGI” or the “Company”) in connection with the solicitation of proxies by our Board of Directors (the “Board”) for use at the 2022 Annual Meeting of Stockholders of the Company (the “Annual Meeting”) which will be held at 9:00 a.m., local time on December 15, 2022 at the offices of Aspen Group, Inc. located at 4615 E. Elwood Street, Phoenix, Arizona 85040.
Who is entitled to vote?
The Board has fixed the close of business on October 28, 2022 as the record date (the “Record Date”) for a determination of the stockholders entitled to notice of, and to vote at, the Annual Meeting. As of the Record Date, there were 25,324,110 shares of common stock outstanding. Each share of the Company’s common stock represents one vote that may be voted on each matter that may come before the Annual Meeting. There are no shares of preferred stock that are entitled to vote.
What is the difference between holding shares as a record holder and as a beneficial owner?
If your shares are registered in your name with Action Stock Transfer Corporation, the Company’s transfer agent, you are the “record holder” of those shares. If you are a record holder as of the Record Date, the Notice and Proxy Statement has been provided directly to you by the Company.
If your shares are held in a stock brokerage account, a bank or other holder of record, you are considered the “beneficial owner” of those shares held in “street name.” If your shares are held in street name as of the Record Date, the Notice and Proxy Statement has been forwarded to you by that organization. As the beneficial owner, you have the right to instruct this organization on how to vote your shares.
Who may attend the meeting?
Record holders and beneficial owners as of the Record Date may attend the Annual Meeting. If your shares are held in street name, you will need to bring a copy of a brokerage statement or other documentation reflecting your stock ownership as of the Record Date. Please see below the instructions on how to vote at the Annual Meeting if your shares are held in street name.
How do I vote?
|1.||Vote by Internet. The website address for Internet voting is on the Notice and your proxy card.|
|2.||Vote by phone. Call 1-800-690-6903 and follow the instructions on the Notice and your proxy card.|
|3.||Vote by mail. Mark, date, sign and mail promptly the proxy card (a postage-paid envelope is provided for mailing in the United States).|
|4.||Vote in person. Attend and vote at the Annual Meeting.|
If you vote by Internet or phone, please DO NOT mail your proxy card.
Beneficial Owner (Holding Shares in Street Name):
|1.||Vote by Internet. The website address for Internet voting is on the Notice and your proxy card.|
|2.||Vote by mail. Mark, date, sign and mail promptly the proxy card (a postage-paid envelope is provided for mailing in the United States).|
|3.||Vote in person. Obtain a valid legal proxy from the organization that holds your shares and attend and vote at the Annual Meeting.|
What constitutes a quorum?
To carry on the business of the Annual Meeting, we must have a quorum. A quorum is present when a majority of the outstanding shares of stock entitled to vote, as of the Record Date, are represented in person or by proxy. Shares owned by the Company are not considered outstanding or considered to be present at the Annual Meeting. Broker non-votes (because there are routine matters presented at the Annual Meeting) and abstentions are counted as present for the purpose of determining the existence of a quorum.
What if a quorum is not present at the Annual Meeting?
If a quorum is not present at the scheduled time of the Annual Meeting, then Mr. Michael Mathews, our Chief Executive Officer and Chairman of the Board, or Dr. Cheri St. Arnauld, our Chief Academic Officer and President of Aspen University Inc., are authorized to adjourn the Annual Meeting until a quorum is present or represented.
What if I do not provide specific voting instructions?
If your shares are held in street name, you must instruct the organization which holds your shares how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any non-routine proposal. This vote is called a “broker non-vote.” If your shares are held in street name and you do not provide specific voting instructions to the organization that holds your shares, the organization may generally vote at its discretion on routine matters. If you sign your proxy card but do not provide instructions on how your broker should vote, your broker may vote your shares as recommended by the Board on any routine matter. See the footnote to the below table on the next page for more information.
If you are a stockholder of record, and you sign and return a proxy card without giving specific voting instructions, the proxy holders will vote your shares in the manner recommended by the Board on all matters being presented at the Annual Meeting and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting.
Which proposals are considered “routine” or “non-routine”?
Proposals 2 and 3 are routine;
Proposal 1 is non-routine.
How many votes are needed for each proposal to pass, is broker discretionary voting allowed and what is the effect of abstentions and broker non-votes?
|Proposals||Vote Required||Broker Discretionary Vote Allowed||Effect of Abstentions and Broker Non-Votes on the Proposal*|
|(1)||Elect six members of the Board of Directors;||Plurality||No||None|
|(2)||Ratify the selection of Salberg & Company, P.A. as the Company’s independent registered public accounting firm for fiscal year ending April 30, 2023;||Majority of the votes cast||Yes||None|
|(3)||Approve an adjournment of the Annual Meeting to a later date or time, if necessary, to permit further solicitation and vote of proxies if there are not sufficient votes at the time of the Annual Meeting to approve any of the proposals presented for a vote at the Annual Meeting.||Majority of the votes cast||Yes||None|
*If you do not provide voting instructions, your shares will not be voted on any non-routine proposal. Proposals 2, and 3 are considered “routine” proposals, while Proposal 1 is considered a “non-routine” proposal. As a result, if you do not provide voting instructions to your nominee organization, your shares will not be voted on Proposal 1. Broker non-votes do not count as a vote “FOR” or “AGAINST” Proposal 1, and accordingly will have no impact on the outcome of that proposal. For Proposals 2 and 3, while broker discretionary voting is permitted under New York Stock Exchange Rules governing broker discretionary voting, an increasing number of brokers and similar organizations which hold shares in street name have elected to either refrain from discretionary voting or engage in a form of proportionate voting such as voting shares in a manner consistent with all other votes cast at the meeting. As a result, while broker discretionary voting could result in a vote “FOR” Proposals 2 or 3 for some or all instances in which a beneficial stockholder declines to provide instructions for voting his, her or its shares, we cannot predict what the ultimate outcome will be as it depends on the organization which has custody of the shares in each such case.
What are the voting procedures?
In voting by proxy with regard to the election of directors, you may vote in favor of all nominees, withhold your votes as to all nominees, or withhold your votes as to specific nominees. With regard to the remaining proposals, you may vote in favor of each proposal or against each proposal, or in favor of some proposals and against others, or you may abstain from voting on any of these proposals. You should specify your respective choices on the accompanying proxy card or your voting instruction form.
Is my proxy revocable?
You may revoke your proxy and reclaim your right to vote up to and including the day of the Annual Meeting by giving written notice to the Corporate Secretary of the Company, by delivering a proxy card dated after the date of the previously mailed proxy card or by voting in person at the Annual Meeting. All written notices of revocation and other communications with respect to revocations of proxies should be addressed to: Aspen Group, Inc., 276 Fifth Avenue, Suite 505, New York, New York 10001, Attention: Corporate Secretary.
Who is paying the expenses of preparing and mailing this proxy statement?
All of the expenses involved in preparing, assembling and mailing the proxy materials for the Annual Meeting and all costs of soliciting proxies will be paid by the Company. In addition to the solicitation by mail, proxies may be solicited by the Company’s officers and regular employees by telephone or in person. Such persons will receive no compensation for their services other than their regular salaries. Arrangements will also be made with brokerage houses and other custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of the shares held of record by such persons, and we may reimburse such persons for reasonable out of pocket expenses incurred by them in so doing.
What happens if additional matters are presented at the Annual Meeting?
Other than the items of business described in this Proxy Statement, we are not aware of any other business to be acted upon at the Annual Meeting. If you submit a signed proxy card, the persons named as proxy holders will have the discretion to vote your shares on any additional matters properly presented for a vote at the Annual Meeting. If for any reason any of the Company’s nominees are not available as a candidate for director, the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by the Board.
What is “householding” and how does it affect me?
Record holders who have the same address and last name will receive only one copy of their proxy materials, unless we are notified that one or more of these record holders wishes to continue receiving individual copies. This procedure will reduce the Company’s printing costs and postage fees. Stockholders who do not participate in householding will continue to receive separate proxy cards.
If you are eligible for householding, but you and other record holders with whom you share an address, receive multiple copies of these proxy materials, or if you hold the Company’s stock in more than one account, and in either case you wish to receive only a single copy of each of these documents for your household, please contact the Company’s Corporate Secretary at: Aspen Group, Inc., 276 Fifth Avenue, Suite 505, New York, New York 10001, Attention: Corporate Secretary.
If you participate in householding and wish to receive a separate copy of these proxy materials, or if you do not wish to continue to participate in householding and prefer to receive separate copies of these documents in the future, please contact the Company’s Corporate Secretary as indicated above. Beneficial owners can request information about householding from their brokers, banks or other holders of record.
Do I have dissenters’ (appraisal) rights?
Appraisal rights are not available to the Company’s stockholders with any of the proposals brought before the Annual Meeting.
Can a stockholder present a proposal to be considered at the 2022 Annual Meeting?
For a stockholder proposal to be considered for inclusion in the Company’s Proxy Statement and proxy card for the next annual meeting of stockholders pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 (the “Exchange Act”) the following is required:
|·||Our Corporate Secretary must receive the written proposal not later than July 6, 2023, which is 120 calendar days prior to the one-year anniversary of the date the Company’s proxy materials were released to stockholders in connection with the Annual Meeting. Such proposals also must comply with the regulations of the Securities and Exchange Commission (the “SEC”) under Rule 14a-8 regarding the inclusion of stockholder proposals in company sponsored materials.|
|·||Our Bylaws include advance notice provisions that require stockholders who desire to recommend or nominate individuals for election as directors or who wish to present a proposal at the next annual meeting to do so in accordance with the terms of the advance notice provisions. For a stockholder proposal or a director nomination that is not intended to be included in the Company’s Proxy Statement and proxy card under Rule 14a-8, our Corporate Secretary must receive the written proposal not later than the close of business on the 120th day (or July 6, 2023) nor earlier than the close of business on the 150th day (or June 6, 2023) prior to the one year anniversary of the date on which the Company released its proxy materials to its stockholders for the Annual Meeting; provided, however, that in the event that the date of the next annual meeting of stockholders is advanced more than 30 days prior to or delayed by more than 30 days after the anniversary of this year’s Annual Meeting, for notice by the stockholder to be timely, such stockholder’s written notice must be delivered to the secretary not later than the close of business on the 90th day prior to the next Annual Meeting or the 10th day following the day on which public announcement of the date of such meeting is first made, whichever is later. Your notice must contain the specific information set forth in our Bylaws.|
|·||Additionally, you must be a record holder at the time you deliver your notice to the Corporate Secretary and be entitled to vote at the next annual meeting of stockholders.|
A nomination or other proposal will be disregarded if it does not comply with the above procedures. All proposals and nominations should be sent to Aspen Group, Inc., 276 Fifth Avenue, Suite 505, New York, New York 10001, Attention: Corporate Secretary.
We reserve the right to amend the Company’s Bylaws and any change will apply to the next Annual Meeting unless otherwise specified in the amendment.
The Board Recommends that the Stockholders Vote “FOR” Proposals 1, 2 and 3.
PROPOSAL 1. ELECTION OF DIRECTORS
The Board currently consists of six directors. The terms of all of the Company’s current directors will expire at the Annual Meeting. On the recommendation of the Corporate Governance and Nominating Committee, the Board has nominated the following current directors: (i) Michael Mathews, (ii) Andrew Kaplan, (iii) Douglas Kass, (iv) Michael Koehneman, (v) Dr. Joan Prince, and (vi) Sanford Rich for election at the Annual Meeting. Directors are to be elected by a plurality vote to serve until the next annual meeting of stockholders of the Company and until their successors have been duly elected and qualified.
If all of the director nominees named in this Proxy Statement are elected at the Annual Meeting, the Board will consist of six directors. The proxies cannot be voted for a greater number of persons than the number of the director nominees named in this Proxy Statement.
The Board recommends a vote “FOR” the election of each of the director nominees.
Set forth below is the information provided by the director nominees regarding their experience and qualifications. All of the nominees are currently serving as directors of the Company and have consented to serve as directors if elected at the Annual Meeting.
|Michael Mathews||61||Chairman of the Board|
|Dr. Joan Prince||68||Director|
Michael Mathews has served as the Company’s Chief Executive Officer and a director since March 2012 and as Chief Executive Officer of Aspen University Inc. (“Aspen University”), a subsidiary of the Company, since May 2011. He served as Chief Executive Officer of Interclick, Inc. (“Interclick”) (Nasdaq: ICLK) from August 28, 2007 until January 31, 2011. From June 2007 until it was acquired by Yahoo, Inc. (Nasdaq: YHOO) in December 2011, Mr. Mathews also served as a director of Interclick. From May 15, 2008, until June 30, 2008, Mr. Mathews served as the interim Chief Financial Officer of Interclick. From 2004 to 2007, Mr. Mathews served as the senior vice-president of marketing and publisher services for World Avenue U.S.A., LLC, an Internet promotional marketing company. Mr. Mathews was selected to serve as a director due to his knowledge of the for profit education industry, his commitment to “making college affordable again”, his track record of success in managing early stage and growing businesses, his extensive knowledge of the Internet marketing industry and his knowledge of running and serving on the boards of public companies.
Andrew Kaplan has served as a director of the Company since June 2014. Since January 1, 2015, Mr. Kaplan has been a Managing General Partner in Education Growth Partners, a private equity firm focused exclusively on the education and training industry. From July 2000 through March 2014, Mr. Kaplan was a partner in Quad Partners (“Quad”) a private equity firm focused exclusively on the education industry. During his tenure with Quad, Mr. Kaplan also served as a Managing Director of Quad College Group, the operational team focused on Quad’s postsecondary portfolio. From March 2014 to December 2014, Mr. Kaplan was a consultant to the education industry. Mr. Kaplan was selected as a director for his extensive knowledge of the education industry.
Douglas Kass has served as a director since July 2020. Mr. Kass has been the President of Seabreeze Partners Management, Inc., which, up to July 2013, was the General Partner of Seabreeze Partners, LP. From 2014 to 2020, Seabreeze managed individual accounts. Since early 2021, Mr. Kass has been the President of Seabreeze Partners Management LLC, a hedge fund sponsor and the General Partner of Seabreeze Capital Partners LP. Mr. Kass served on the board of directors of MVC Capital, Inc. (formerly NYSE: MVC), a non-diversified, closed-end management investment company, from June 2019 until December 2020 when the company was merged with Barings BDC, Inc. (NYSE: BBDC). From July 2011 through May 2017, Mr. Kass served on the board of directors of Empire Resources Inc. (formerly Nasdaq: ERS), a distributor of value added, semi-finished metal products. Mr. Kass was selected as a director due to his prior experience serving on boards of directors of several organizations as well as his background in finance.
Michael Koehneman has served as a director since July 2020. Prior to his recent retirement, Mr. Koehneman previously held various positions at Pricewaterhouse Coopers, a global accounting firm (“PwC”), including the Global Advisory Chief Operating Officer and Human Capital Leader from 2016 through 2019, the U.S. Advisory Operations Leader from 2005 through 2016, and the Lead Engagement Partner for Financial Statement Audits and Internal Control and Security Reviews from 1993 through 2004. Since June 9, 2021, Mr. Koehneman has served as a director of authID Inc., formerly known as Ipsidy Inc. (OTCQB: AUID), a provider of secure, mobile, biometric identity verification solutions. Mr. Koehneman was selected as a director due to his background in accounting and technology.
Dr. Joan Prince, was appointed as a director of the Company effective July 14, 2021. Dr. Prince previously served as the Vice Chancellor of Global Inclusion and Engagement at the University of Wisconsin-Milwaukee from September 2000 to March 1, 2021. During this time, Dr. Prince was the chief administrator for the Divisions of Global Inclusion and Engagement and Partnerships and Innovation the University of Wisconsin-Milwaukee, with responsibilities as the chief inclusion officer. In 2012, President Barack Obama nominated Dr. Prince to the key administrative post of alternate representative to the 67th General Assembly of the United Nations with the honorary rank of ambassador. This diplomatic position also maintained an appointment as a senior advisor to the State Department and Public Delegate. She also served in an advisory capacity to the 2013 United States Delegation to the Commission on the Status of Women. Dr. Prince was selected as a director due to her background and leadership in higher education, and her work to foster diversity and inclusion.
Sanford Rich has served as a director of the Company since March 2012. Since January 2016 Mr. Rich has served as the Executive Director of the New York City Board of Education Retirement System. Mr. Rich is also serving as a member of the Investor Advisory Group of the PCAOB for a term from June 1, 2022 to December 31, 2023. From November 2012 to January 2016, Mr. Rich served as the Chief of Negotiations and Restructuring for the Pension Benefit Guaranty Corporation (a United States Government Agency). From October 2011 to September 2012, Mr. Rich served as Chief Executive Officer of In The Car LLC. Mr. Rich served as a director of Interclick from August 28, 2007 until June 5, 2009 and as Audit Committee Chairman from August 2007 to June 2009. From April 2006 to April 2020, Mr. Rich has served as a director and Audit Committee Chairman for InsPro Technologies (OTCQB: ITCC). Mr. Rich was selected as a director for his 40 years of experience in the financial sector and his experience serving on the audit committees of public companies.
|Michael Mathews||61||Chief Executive Officer|
|Matthew LaVay||53||Chief Financial Officer|
|Gerard Wendolowski||37||Chief Operating Officer|
|Dr. Cheri St. Arnauld||66||Chief Academic Officer|
|Robert Alessi||51||Chief Accounting Officer|
See “Director Biographies” above for Mr. Mathews’ biographical information.
Matthew LaVay has served as the Chief Financial Officer of the Company since August 16, 2021. He has served as Chief Financial Officer of Amerit Fleet Solutions, Inc. from August 2018 to August 2021. Prior to that, Mr. LaVay served as the Executive Vice President and Chief Financial Officer of Ellie Mae, Inc., a cloud-based platform provider for the mortgage finance industry, from April 2017 to June 15, 2018. From October 2014 to March 2017, Mr. LaVay served as the Senior Vice President of Finance of Ellie Mae, Inc. Mr. LaVay is a certified public accountant.
Gerard Wendolowski has been the Company’s Chief Operating Officer since March 11, 2014. From May 2011 until March 11, 2014, Mr. Wendolowski served as Aspen University’s Senior Vice President of Marketing and Business Development.
Dr. Cheri St. Arnauld has been the Company’s Chief Academic Officer since June 11, 2017 and President of Aspen University since October 21, 2020. Dr. St. Arnauld previously served as Aspen University’s Chief Academic Officer since March 6, 2014. From January 2012 until March 6, 2014, Dr. St. Arnauld was an educational consultant for the St. Arnauld Group. From 2008 to 2012, Dr. St. Arnauld was the Provost and Chief Academic Officer of Grand Canyon University.
Robert Alessi has served as Chief Accounting Officer of the Company since December 1, 2019. He served as Interim Chief Financial Officer of the Company from February 25, 2021 to August 16, 2021. Previously from July 15, 2019 until that date, Mr. Alessi was the Company’s Vice President and Controller. Mr. Alessi is a Certified Public Accountant (“CPA”) in the State of New York. Prior to joining the Company, Mr. Alessi served as the Vice President and Financial Controller for Prometheus Global Media, a New York City based media company, from August 2017 through June 2019. Mr. Alessi was previously the Controller for FunctionX, Inc., a social publishing and interactive media platform from January 2017 through August 2017. Between August 2015 and December 2016, Mr. Alessi worked as a Financial Consultant for Anchor Consultants. From May 2015 through July 2015 Mr. Alessi worked for Milestone Consultants. From May 2014 through April 2015, Mr. Alessi performed part time financial consulting and accounting services. From February 2007 through April 2014 Mr. Alessi was the Vice President and Financial Controller at KCAP Financial, Inc., a Business Development Company.
The Board oversees, counsels, and directs management in the long-term interest of the Company and its stockholders. The Board’s responsibilities include establishing broad corporate policies and reviewing the overall performance of the Company. The Board is not, however, involved in the operating details on a day-to-day basis. In December 2017, our Board established an Executive Committee which, subject to the limitations of Delaware law, has since performed the functions of the Board.
Board Committees and Charters
The Board and its committees meet throughout the year and act by written consent from time to time as appropriate. The Board delegates various responsibilities and authority to its Board committees. Committees regularly report on their activities and actions to the Board. The Board currently has and appoints the members of the following standing committees: the Executive Committee, the Audit Committee, the Compensation Committee, the Regulatory Oversight Committee (the “Regulatory Committee”) and the Nominating and Corporate Governance Committee (the “Corporate Governance Committee”). Each of the committees, except for the Executive Committee, has a written charter approved by the Board. The charters of the Audit Committee, the Compensation Committee and the Corporate Governance Committee can be found on our corporate website at http://www.aspu.com/governance-docs.
The following table identifies the independent and non-independent current Board and committee members:
|Dr. Joan Prince||ü||ü|
With the exception of Michael Mathews, all of the directors are independent, as such term is defined under The Nasdaq Stock Market Rules (the “Nasdaq Rules”).
As a result of being employed as an executive officer of the Company, Mr. Mathews is not independent under the Nasdaq Rules.
Messrs. Sanford Rich, Andrew Kaplan, and Michael Koehneman meet the independence requirements under the Nasdaq Rules and the heightened independence requirements for Audit Committee members under the rules of the SEC. Also, our Board has determined that Mr. Douglas Kass and Dr. Joan Prince are independent under the Nasdaq Rules relating to independence standards for Compensation Committee members.
Committees of the Board of Directors
The function of the Executive Committee is to provide a committee for the Company which can approve corporate actions efficiently or in a timely fashion when the full Board is unavailable. The Executive Committee was established in December 2017.
Management has the primary responsibility for the consolidated financial statements and the reporting process, including the system of internal controls. The Audit Committee reviews the Company’s financial reporting process on behalf of the Board and administers our engagement of the independent registered public accounting firm. The Audit Committee meets with the independent registered public accounting firm, with and without management present, to discuss the results of its examinations, the evaluations of our internal controls, and the overall quality of our financial reporting.
Audit Committee Financial Expert
Our Board has determined that Messrs. Rich and Koehneman are each qualified as an Audit Committee Financial Expert, as that term is defined under the rules of the SEC and in compliance with the Sarbanes-Oxley Act of 2002.
The function of the Compensation Committee is to determine the compensation of our executive officers. The Compensation Committee has the power to set performance targets for determining periodic bonuses payable to executive officers and may review and make recommendations with respect to stockholder proposals related to compensation matters. Additionally, the Compensation Committee is responsible for administering the 2012 Equity Incentive Plan, as amended (the “2012 Plan”) and the 2018 Equity Incentive Plan, as amended (the “2018 Plan” and together, the “Plans”). The 2012 Plan expired March 15, 2022 and remains in effect for outstanding grants only, and is no longer available for new grants.
Corporate Governance Committee
The responsibilities of the Corporate Governance Committee include the identification of individuals qualified to become Board members, the selection of nominees to stand for election as directors, the oversight of the selection and composition of committees of the Board, establishing procedures for the nomination process including procedures, oversight of possible conflicts of interests involving the Board and its members, developing corporate governance principles, and the oversight of the evaluations of the Board and management. The Corporate Governance Committee has not established a policy with regard to the consideration of any candidates recommended by stockholders. If we receive any stockholder recommended nominations, the Corporate Governance Committee will carefully review the recommendation(s) and consider such recommendation(s) in good faith.
Since our business is highly regulated, our Board established the Regulatory Committee in October 2019 to assist the Board in meeting its fiduciary duties. Its principal role is to monitor management’s regulatory compliance and communicate with our counsel including our regulatory counsel and bring matters that may be pertinent to the attention of the Board.
Board and Committee Meetings in Fiscal 2022
In the fiscal year ended April 30, 2022 (“Fiscal 2022”), the Board had eleven meetings, the Compensation Committee had one meeting, the Audit Committee had four meetings, and the Regulatory Committee, the Executive Committee, and the Corporate Governance Committee did not have any meetings.
There were no directors (who were incumbent at the time) except for Dr. Joan Prince, who attended fewer than 75 percent of the aggregate total number of Board meetings and meetings of the Board committees of which the director was a member during Fiscal 2022.
While we do not have a formal policy on diversity, our Board considers diversity to include the skill set, background, reputation, type and length of business experience of our Board members as well as a particular nominee’s contributions to that mix. More recently, the Company has included race, gender and other characteristics as key diversity factors. Our Board believes that diversity brings a variety of ideas, judgments and considerations that benefit the Company and its stockholders. Although there are many other factors, the Board seeks individuals with experience on public company boards or the investment community, experience on operating growing businesses, and experience with online universities.
Nasdaq’s Board Diversity Rule requires companies listed on Nasdaq to (i) publicly disclose board-level diversity statistics using a standardized template; and (ii) have, or explain why they do not have, at least two diverse directors. The Rule also provides additional flexibility for smaller reporting companies, which can meet the diversity objective by including two female directors, and for all companies with five or fewer directors, which can meet the diversity objective by including one diverse director.
Because we presently have six directors and are a smaller reporting company, the Nasdaq Board Diversity Rule requires that we either have two diverse directors (both of which may be female) or explain why we do not. The Company only has one diverse director, Dr. Joan Prince who self identifies as Black and female, because the Company’s Board is comprised of individuals with relationships with the Chief Executive Officer and with skills and experience in the education and/or accounting fields which the Board deems relevant to service as a director of our Company. Recognizing the importance of diversity, the Company appointed Dr. Prince as a director, and intends to expand the number of directors who constitute the Board to include at least two diverse directors, provided we can locate the right candidate(s). However, due to our small size and the recent decline in our stock price and regulatory challenges we face, the Company has struggled to attract viable candidates who meet the diversity and other criteria necessary to serve on our Board and contribute to the Company’s mission of providing high class online education while enhancing value for our stockholders. Our Board Diversity Matrix setting forth the diversity-related statistics of our directors has been uploaded on our corporate website, and can be accessed by visiting https://www.aspu.com/governance-docs.
Board Leadership Structure
We have chosen to combine the Chief Executive Officer and Board Chairman positions. We believe that this Board leadership structure is the most appropriate for the Company. Because we are a small company, it is more efficient to have the leadership of the Board in the same hands as the Chief Executive Officer. The challenges faced by us at this stage – implementing our business and marketing plans and continuing and managing our growth – are most efficiently dealt with by one person who is familiar with both the operational aspects as well as the strategic aspects of our business.
Board Role in Risk Oversight
Our risk management function is overseen by our Board. Our management keeps its Board apprised of material risks and provides its directors access to all information necessary for them to understand and evaluate how these risks interrelate, how they affect us, and how management addresses those risks. Mr. Michael Mathews, as our Chief Executive Officer and Chairman of the Board, works closely together with the Board once material risks are identified on how to best address such risks. If the identified risk poses an actual or potential conflict with management, our independent directors may conduct the assessment. Presently, the primary risks affecting us are our ability to continue growing our business, including our programs which have higher long-term values, manage our working capital together with the expansion of our hybrid campus program, increase our enrollment and class starts, and manage our expected growth consistent with regulatory oversight.
Code of Ethics
Our Board has adopted a Code of Ethics that applies to all of our employees, including our Chief Executive Officer and Chief Financial Officer. Although not required, the Code of Ethics also applies to our directors. The Code of Ethics provides written standards that we believe are reasonably designed to deter wrongdoing and promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, full, fair, accurate, timely and understandable disclosure and compliance with laws, rules and regulations, including insider trading, corporate opportunities and whistleblowing or the prompt reporting of illegal or unethical behavior. We will provide a copy, without charge, to anyone that requests a copy of our code of ethics in writing by contacting Aspen Group, Inc., 276 Fifth Avenue, Suite 505, New York, New York 10001, Attention: Corporate Secretary.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, executive officers, and persons who own more than 10% of our common stock to file initial reports of ownership and changes in ownership of our common stock and other equity securities with the SEC. These individuals are required by the regulations of the SEC to furnish us with copies of all Section 16(a) forms they file. Based solely on a review of the copies of the forms furnished to us, and written representations from reporting persons, we believe that all filing requirements applicable to our officers, directors and 10% beneficial owners were complied with during Fiscal 2022 except that one Form 4 for Douglas Kass reporting a purchase of shares of common stock was not timely filed due to an administrative error.
Communication with our Board of Directors
Although we do not have a formal policy regarding communications with the Board, stockholders may communicate with the Board by writing to us at Aspen Group, Inc., 276 Fifth Avenue, Suite 505, New York, New York 10001, Attention: Corporate Secretary. Stockholders who would like their submission directed to a member of the Board may so specify, and the communication will be forwarded, as appropriate.
There are no family relationships among our directors and/or executive officers.
Communication with our Board
Although we do not have a formal policy regarding communications with the Board, stockholders may communicate with the Board by writing to us at Aspen Group, Inc., 276 Fifth Avenue, Suite 505, New York, New York 10001, Attention: Corporate Secretary. Stockholders who would like their submission directed to a member of the Board may so specify, and the communication will be forwarded, as appropriate.
TRANSACTIONS WITH RELATED PERSONS
Set forth below is a brief description of the transactions since May 1, 2020 in excess of $120,000 in which the Company was a participant and in which any director or executive officer of the Company, any known 5% or greater stockholder of the Company or any immediate family member of any of the foregoing persons, had a direct or indirect material interest as defined in Item 404(a) of Regulation S-K. As permitted by the SEC rules, discussion of employment relationships or transactions involving the Company’s executive officers and directors, and compensation solely resulting from such employment relationships or transactions, or service as a director of the Company, as the case may be, has been omitted to the extent disclosed in the sections of this Proxy Statement titled “Executive Compensation” or “Director Compensation”, as applicable.
On March 6, 2019, the Company entered into a loan agreement with a lender. Under the Loan Agreement we borrowed $5 million (the “Loan”), evidenced by a 12% term Promissory Note and Security Agreement due September 6, 2020. The loan was secured by a first priority lien in the Collateral. Concurrently with entering into the Loan Agreement, the Company entered into, and borrowed another $5 million under, a loan agreement with another stockholder of the Company, which is not a related party, on the same terms as are contained in the Loan Agreement. The Company issued 100,000 Warrants to the lender and the other lender exercisable at $6 per share.
On January 22, 2020, the Company refinanced the Loan and the other $5 million loan by issuing each lender a $5 million 7% Convertible Note. The Convertible Notes were convertible at $7.15 per share and due on January 22, 2023. The Convertible Notes automatically converted into common stock if the average closing price of our common stock is at least $10.725 over a 20 consecutive trading day period. On September 14, 2020, the Company issued 1,398,602 shares of its common stock to the two holders of the Convertible Notes upon mandatory conversion of the Convertible Notes pursuant to their terms.
On June 5, 2020, the Leon and Toby Cooperman Family Foundation (the “Lender”), of which Mr. Leon Cooperman, a principal stockholder of the Company, is the trustee, exercised all of its Warrants which the Company had issued to the Lender in connection with prior loan agreements, and received 192,049 shares of common stock in exchange for a 5% discount in the exercise prices. In addition, the Lender agreed to not sell its common stock for at least six months.
On August 31, 2021, the Company entered into a letter agreement (the “Amendment Agreement”) with the Lender to amend the terms of the Credit Facility Agreement, as amended and restated, and the form of the Amended and Restated Revolving Promissory Note, dated March 6, 2019 (the “Note”). Pursuant to the Amendment Agreement, the Credit Facility Agreement which the Company originally entered into with the Lender in November 2018 and the form of the Note were amended to extend the expiration of the commitment period during which the Company can borrow under the Credit Facility Agreement and the final maturity date to November 4, 2022, or the day immediately preceding the fourth anniversary of the original Note. The Credit Facility Agreement provides for a $5 million revolving credit facility with the Lender. Borrowings under the Credit Facility Agreement are evidenced by the Note and bear interest at 12% per annum. The Company granted the Lender a first priority lien in certain deposit accounts of the Company, all current and future accounts receivable of Aspen University Inc. and United States University, Inc., subsidiaries of the Company (the “Subsidiaries”), certain of the deposit accounts of the Subsidiaries and all of the outstanding capital stock of the Subsidiaries (the “Collateral”) on a pari passu basis with the other lender.
On September 1, 2021, the Company borrowed $5 million under the Credit Facility Agreement, as amended by the Amendment Agreement. The loan evidenced by the Note, as amended by the Amendment Agreement, bore interest at the rate of 12% per annum payable monthly and matured on November 4, 2022. Subsequently, on March 14, 2022, the Company entered into an amendment with the lender pursuant to the Credit Facility Agreement for interest at the rate of 14% per annum payable monthly and to extend the maturity date by one year to November 4, 2023.
The Company’s obligations under the Note are secured by a first priority lien in certain deposit accounts of the Company, all current and future accounts receivable of the Subsidiaries, certain of the deposit accounts of the Subsidiaries and all of the outstanding capital stock of the Subsidiaries.
Pursuant to the Amendment Agreement, on August 31, 2021, the Company issued the Lender 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 $5.85 per share.
On March 14, 2022, the Company issued a $5 million convertible note (the “2022 Convertible Note”) to the Lender in exchange for a $5 million note. The Company also issued an identical Convertible Note to Calm Waters Partnership (together with the Lender, collectively, the “Lenders”). The key terms of the Convertible Note are as follows:
|·||At any time after issuance date, the Lenders have the right to convert the principal into our shares of the Company’s common stock at a conversion price of $1.00 per share;|
|·||The Convertible Note automatically converts at $1.00 per share into shares of the Company’s common stock if the average closing price of our common stock is at least $2.00 over a 30 consecutive trading day period. This mandatory conversion is subject to the Lenders' 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 a non-public offering at below a minimum price unless the Company’s stockholders first approve such issuance;|
|·||The Convertible Note is due March 14, 2027 or approximately five years from the closing;|
|·||The interest rate of the Convertible Note is 12% per annum (payable monthly in arrears); and|
|·||The Convertible Note is 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 Note, the Company agreed to pay the Lenders’ legal fees arising from this transaction of $135,362.
On March 14, 2022, the Company entered into Revolving Promissory Note and Security Agreements (the “2022 Revolver Agreements”) with the same two 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”). The Company paid a 1% commitment fee of $200,000 at closing, and paid a second 1% commitment fee in the second quarter of the fiscal year ending April 30, 2023.
Pursuant to the 2022 Convertible Notes and the 2022 Revolving Credit Facility (the “2022 Notes”), all future indebtedness incurred by the Company, other than indebtedness expressly permitted by the 2022 Notes, will be subordinated to the 2022 Notes and the related facility, with an exception for acquisitions of 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.
On March 14, 2022, in connection with the issuance of the 2022 Notes, the Company also entered into an intercreditor agreement (the “Intercreditor Agreement”) among the Company, the two lenders who were issued the 2022 Notes, 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 2022 Notes, the Company also entered into an Investors/Registration Rights Agreement with the lenders (including the Lender) (the “Registration Rights Agreement”) whereby, upon request of a 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 2022 Convertible Notes.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of shares of the Company’s common stock beneficially owned as of the Record Date by (i) those persons known by the Company to be owners of more than 5% of its common stock, (ii) each director, (iii) the Named Executive Officers (as defined under “Executive Compensation-Summary Compensation Table”), and (iv) the Company’s executive officers and directors as a group. Unless otherwise specified in the notes to this table, the address for each person is: c/o Aspen Group, Inc., 276 Fifth Avenue, Suite 505, New York, New York 10001, Attention: Corporate Secretary.
|Title of Class||Beneficial Owner||Amount of Beneficial Ownership (1)||Percent Beneficially Owned (1)|
|Named Executive Officers:|
|Common Stock||Michael Mathews (2)||901,281||3.6||%|
|Common Stock||Dr. Cheri St. Arnauld (3)||243,698||1.0||%|
|Common Stock||Matthew LaVay (4)||—||—|
|Common Stock||Gerard Wendolowski (5)||298,691||1.2||%|
|Common Stock||Andrew Kaplan (6)||179,376||*|
|Common Stock||Douglas Kass (7)||219,894||*|
|Common Stock||Michael Koehneman (8)||26,160||*|
|Common Stock||Dr. Joan Prince (9)||9,060||*|
|Common Stock||Sanford Rich (10)||129,538||*|
|Common Stock||All directors and executive officers as a group (10 persons) (11)||2,053,409||8.0||%|
|Common Stock||Long Focus Capital Management, LLC (12)||1,501,163||5.9||%|
|Common Stock||Calm Waters Partnership (13)||2,436,307||9.6||%|
|Common Stock||Leon G. Cooperman (14)||2,507,087||9.9||%|
* Less than 1%.
|(1)||Beneficial Ownership Note. Applicable percentages are based on 25,324,110 shares of common stock outstanding as of the Record Date, excluding securities held by or for the account of the Company. Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities. A person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days whether upon the exercise of options, warrants or conversion of notes. Unless otherwise indicated in the footnotes to this table, the Company believes that each of the stockholders named in the table has sole voting and investment power with respect to the shares of common stock indicated as beneficially owned by them. This table does not include any unvested stock options except for those vesting within 60 days.|
|(2)||Mathews. Mr. Mathews is our Chairman and Chief Executive Officer. Includes (i) 2,917 shares held jointly with his spouse, and (ii) 8,334 shares held by a trust of which Mr. Mathews is the trustee. Does not include (i) 65,000 shares underlying RSUs that are subject to stock price based vesting or otherwise vesting in 2024, (ii) 15,157 shares underlying RSUs vesting on July 8, 2023, or (iii) 125,000 shares underlying RSUs that vest following the Company’s filing of a quarterly or annual report on Forms 10-Q or 10-K as applicable, which report directly or indirectly reflects that the Company delivered net income on a GAAP basis for the fiscal quarter covered by such report. In connection with the March 202 loan transactions involving the Company, Mr. Mathews pledged his shares of the Company’s common stock to the Lenders. See “Transactions with Related Persons” for more information.|
|(3)||St. Arnauld. Dr. St. Arnauld is our Chief Academic Officer and President of Aspen University. Includes 180,000 shares underlying vested stock options. Does not include (i) 48,750 shares underlying RSUs that are subject to stock price based vesting or otherwise vesting in 2024, (ii) 13,991 shares underlying RSUs vesting on July 8, 2023, or (iii) 80,000 RSUs which vest in three approximately equal annual installments beginning on August 12, 2022.|
|(4)||LaVay. Mr. LaVay is our Chief Financial Officer. Does not include 125,000 shares underlying RSUs which vest in three approximately equal annual installments beginning on August 16, 2022.|
|(5)||Wendolowski. Mr. Wendolowski is our Chief Operating Officer. Includes 180,000 shares underlying vested stock options. Does not include (i) 48,750 shares underlying RSUs that are subject to stock price based vesting or otherwise vesting in 2024, (ii) 13,991 shares underlying RSUs vesting on July 8, 2023, or (iii) 80,000 RSUs which vest in three approximately equal annual installments beginning on August 12, 2022.|
|(6)||Kaplan. Mr. Kaplan is a director. Includes 50,000 shares underlying vested stock options.|
|(7)||Kass. Mr. Kass is a director. Includes 200,000 shares held by Seabreeze Capital Partners LP, of which Mr. Kass is the general partner.|
|(8)||Koehneman. Mr. Koehneman is a director. Includes 2,000 shares held by Michael Koehneman Roth IRA.|
|(9)||Prince. Dr. Prince is a director.|
|(10)||Rich. Mr. Rich is a director. Includes (i) 2,188 shares held in the name of Mr. Rich’s IRA and (ii) 51,000 shares underlying vested stock options.|
|(11)||Directors and Executive Officers as a group. This amount includes ownership by all directors and all current executive officers including those who are not Named Executive Officers under the SEC’s disclosure rules.|
Long Focus Capital Management, LLC. Based on a Schedule 13G filed on May 20, 2022. Mr. John B. Helmers is the Managing Member. Address is 207 Calle Del Parque, A&M Tower, 8th Floor, San Juan, Puerto Rico 00912.
Calm Waters Partnership. Based on a Schedule 13D filed on March 21, 2022. Mr. Richard S. Strong is the Managing Partner. Address is 833 E. Michigan Street, Suite 1800, Milwaukee, Wisconsin 53202.
Cooperman. Based on a Schedule 13G/A filed on February 14, 2022. Mr. Cooperman is the trustee of The Leon and Toby Cooperman Family Foundation. Address is St. Andrew’s Country Club, 7118 Melrose Castle Lane, Boca Raton, FL 33496.
PROPOSAL 2. RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee administers our engagement of the independent registered public accounting firm. The Audit Committee conducts an annual evaluation of the independent registered public accounting firm’s qualifications, performance and independence in order to decide whether to retain the current independent registered public accounting firm or engage a different one. In connection with this evaluation, the Audit Committee considers the advisability and potential impact of selecting a different independent registered public accounting firm. In evaluating and selecting our independent registered public accounting firm, the Audit Committee considers, among other things, historical and recent performance of the current independent registered public accounting firm, expertise in and knowledge of our industry, an analysis of known significant legal or regulatory proceedings related to the firm, external data on audit quality and performance, including recent Public Company Accounting Oversight Board (“PCAOB”) reports, appropriateness of audit and non-audit fees, firm capabilities and audit approach, and its independence and tenure.
In accordance with SEC rules, lead and quality review audit partners are subject to rotation requirements limiting to five years the maximum number of consecutive years each such partner may serve in that capacity. The process for selection of our lead audit partner pursuant to this rotation policy involves a meeting between the Chairman of the Audit Committee and the candidate for the role, as well as discussion by the full Audit Committee and management.
The Audit Committee has selected Salberg & Company, P.A. (“Salberg”), to serve as our independent registered public accounting firm for the fiscal year ending April 30, 2023, and the Board has recommended that such selection be submitted for ratification by the stockholders at the Annual Meeting. Salberg has been the Company’s independent registered public accounting firm since 2012. The Audit Committee and the Board believe that the continued retention of Salberg as our independent registered public accounting firm is in the best interest of the Company and our stockholders. Selection of the Company’s independent registered public accounting firm is not required to be submitted to a vote of the stockholders of the Company for ratification. However, we are submitting this matter to the stockholders as a matter of good corporate governance. Even if the selection is ratified, the Audit Committee may, in its discretion, appoint a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders. If the selection is not ratified, the Audit Committee will consider its options.
A representative of Salberg is not expected to be present at the Annual Meeting.
The Board recommends a vote “FOR” this Proposal 2.
AUDIT COMMITTEE REPORT
The Audit Committee reviews the Company’s financial reporting process on behalf of the Board and administers our engagement of the independent registered public accounting firm. The Audit Committee operates in accordance with a written charter, which was adopted by the Board, a copy of which is available on our corporate website at www.aspu.com/governance-docs. The Audit Committee meets with the independent registered public accounting firm, with and without management present, to discuss the results of its examinations, the evaluations of our internal controls, and the overall quality of our financial reporting. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls.
The Audit Committee has met and held discussions with management and Salberg & Company, P.A. (“Salberg”). Management represented to the Audit Committee that our financial statements were prepared in accordance with generally accepted accounting principles and the Audit Committee has reviewed and discussed the financial statements with management and Salberg. The Audit Committee reviewed with Salberg its judgments as to the quality, not just the acceptability, of our accounting principles and such other matters as are required to be discussed with the Audit Committee under auditing standards generally accepted in the United States.
The Audit Committee has:
|-||reviewed and discussed the audited financial statements with management;|
|-||met privately with the independent registered public accounting firm and discussed matters required by Statement on Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the PCAOB;|
|-||received the written disclosures and the letter from the independent registered public accounting firm, as required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed its independence with the Company;|
|-||considered whether the independent registered public accounting firm’s provision of non-audit services to the Company is compatible with the Salberg’s independence and concluded that the independent registered public accounting firm is independent; and|
|-||in reliance on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended April 30, 2022.|
This report is submitted by the Audit Committee.
Sanford Rich, Chairman
It is not the duty of the Audit Committee to determine that the Company’s financial statements and disclosures are complete and accurate and in accordance with generally accepted accounting principles or to plan or conduct audits. Those are the responsibilities of management and the Company’s independent registered public accounting firm. In giving its recommendation to the Board, the Audit Committee has relied on: (1) management’s representations that such financial statements have been prepared with integrity and objectivity and in conformity with GAAP; and (2) the report of the Company’s independent registered public accounting firm with respect to such financial statements.
Audit Committee’s Pre-Approval Policy
The Audit Committee pre-approves all audit and permissible non-audit services on a case-by-case basis. In its review of non-audit services, the Audit Committee considers whether the engagement could compromise the independence of our independent registered public accounting firm, and whether the reasons of efficiency or convenience is in our best interest to engage our independent registered public accounting firm to perform the services. All of the services provided and fees charged by Salberg were approved by our Audit Committee.
Principal Accountant Fees and Services
All of the services provided and fees charged by Salberg & Company, P.A. (“Salberg”) our principal accountant, were approved by our Audit Committee. The following table shows the fees paid to Salberg for the fiscal years ended April 30, 2022 and 2021.
|Year Ended April 30,|
|Audit Fees (1)||$||196,600||$||178,600|
|Audit Related Fees (2)||—||15,200|
|All Other Fees||—||—|
|(1)||Audit fees – these fees relate to services rendered for the audits of our annual consolidated financial statements, for the review of our quarterly consolidated financial statements, and for services that are normally provided by the auditor in connection with statutory and regulatory filings or engagements including filings with the Department of Education.|
|(2)||Audit related fees – these fees are audit related consulting relating to registration statements.|
Set forth below is the information regarding the compensation paid, distributed or accrued by us for Fiscal 2022 and the fiscal year ended April 30, 2021 (“Fiscal 2021”) to our Chief Executive Officer (principal executive officer) serving during the last fiscal year and the three other most highly compensated executive officers serving at the end of the last fiscal year whose compensation exceeded $100,000 (the “Named Executive Officers”).
|Summary Compensation Table|
|Name and Principal Positions (a)||Fiscal Year (b)||Salary $ (c)||Bonus $ (1) (d)||Stock Awards $ (2) (e)||Non-Equity Inventive Plan Compensation $ (g)||All Other Compensation $ (i)||Total $ (j)|
|Chief Executive Officer||2021||$||334,750||$||100,425||(5)||$||138,080||(6)||$||—||$||106,345||(4)||$||679,600|
|Chief Financial Officer||2021||$||—||$||—||$||—||$||—||$||—||$||—|
|Chief Operating Officer||2021||$||309,000||$||92,700||(5)||$||127,458||(6)||$||—||$||—||$||529,158|
|Cheri St. Arnauld||2022||$||309,000||$||—||$||518,400||(9)||$||—||(10)||$||—||$||827,400|
|Chief Academic Officer||2021||$||309,000||$||92,700||(5)||$||127,458||(6)||$||—||$||—||$||529,158|
(1) Represents cash bonuses earned.
(2) These amounts do not reflect the actual economic value realized by the Named Executive Officers. The amounts in this column represent the grant date fair value of restricted stock units (“RSUs”) granted during each covered fiscal year as computed in accordance with the Financial Accounting Standards Board (“FASB”) ASC Topic 718 and the SEC disclosure rules. Pursuant to SEC rules, the amounts shown disregard the impact of estimated forfeitures related to service-based vesting conditions. See “Note 11. Stockholders' Equity” to the audited consolidated financial statements for Fiscal 2022 included in the Company’s Annual Report on Form 10-K for the assumptions used in calculating the grant date fair value.
(3) 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 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's reported net income on a GAAP basis. At April 30, 2022, the Company was amortizing the expense over three years through July 2024 (the filing date of the Form 10-K for Fiscal Year 2024). The Company assessed the performance condition at July 31, 2022 and determined that it will not be met during the three-year period ending July 2024; therefore, these RSUs have been forfeited.
(4) The Company currently provides and intends to continue to provide perquisites that it feels are necessary to enable the Named Executive Officers to perform their responsibilities efficiently, to minimize distractions and help build a successful culture and business. We believe the benefit, financial or otherwise, the Company receives from providing these perquisites significantly outweighs the cost of providing them. For Fiscal 2022, this amount includes $7,000 per month paid to Mr. Mathews to cover expenses he incurs while traveling to the New York offices following the sale of his New York City area residence. Mr. Mathews, an Arizona resident, split his time during Fiscal 2021 between the Phoenix and New York offices given the majority of the Company’s employees are based in Phoenix. Additionally, this amount includes a total of $24,415 in country club dues in the Phoenix area which the Company paid in accordance with the approval of the Compensation Committee. On a monthly basis, employees of the Phoenix office used the country club as part of a shared team-building experience. Mr. Mathews reimbursed the Company for personal expenses he incurs at the country club. For Fiscal 2021, this amount includes $7,000 per month paid to Mr. Mathews to cover expenses he incurred in maintaining a home in the New York City area. Additionally, this amount includes a total of $22,345 in country club dues in the Phoenix area which the Company paid in accordance with the approval of the Compensation Committee. Effective May 1, 2021, the Compensation Committee of the Board approved an extension of the previously approved $7,000 per month housing allowance for Mr. Mathews to cover the estimated expenses he incurs in maintaining a residence in the New York City area. These sums are disclosed in this Summary Compensation Table pursuant to the SEC Staff’s interpretations, even though the payment of these expenses resulted in a benefit to the Company and saved the Company money.
(5) Represents the cash portion of the discretionary bonus for Fiscal 2021 paid in equal quarterly installments during Fiscal 2022.
(6) Represents the grant date fair value of the RSU portion of the discretionary bonus for Fiscal 2020. The RSUs were granted on July 8, 2020 and vest on July 8, 2023.
(7) 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 and vest in equal annual increments over a three year period ending on August 16, 2024.
(8) The Company currently provides and intends to continue to provide perquisites that it feels are necessary to enable the Named Executive Officers to perform their responsibilities efficiently, to minimize distractions and help build a successful culture and business. We believe the benefit, financial or otherwise, the Company receives from providing these perquisites significantly outweighs the cost of providing them. This amount includes $5,000 per month paid to Mr. LaVay to cover expenses he incurs while traveling to the Arizona offices until he permanently relocates to the Phoenix metro area.
(9) On August 12, 2021, the Compensation Committee approved individual grants of 80,000 RSUs to the Company’s Chief Operating Officer and Chief Academic Officer. Each grant has a grant date fair value of $518,400 based on a closing stock price of $6.48 per share and vest in equal annual increments beginning on August 12, 2022 through August 12, 2024.
(10) As of the date of this Proxy Statement, the Board of Directors has not met to determine the Fiscal 2022 discretionary bonus.
Named Executive Officer Employment Agreements
The Company has entered into Employment Agreements with Michael Mathews, Matthew LaVay, Cheri St. Arnauld and Gerard Wendolowski. Set forth below is the description of the material terms of the Employment Agreements.
Michael Mathews. The Employment Agreement with Mr. Mathews effective July 21, 2021 provides that he will serve as the Chief Executive Officer of the Company for a period of three 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. Mathews receives an annual base salary of $350,000.
Matthew LaVay. The Employment Agreement with Mr. LaVay effective August 16, 2021 provides that he will serve as the Chief Financial Officer of the Company for a period 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 receives an annual base salary of $325,000.
Cheri St. Arnauld. Pursuant to her Employment Agreement effective June 11, 2017, Dr. St. Arnauld will serve as the Chief Academic Officer of the Company for a period of three years, subject to an automatic renewal for successive one-year terms unless prior notice of non-renewal is given by either party. Pursuant to her Employment Agreement, Dr. St. Arnauld receives an annual base salary of $300,000.
Gerard Wendolowski. Mr. Wendolowski’s Employment Agreement effective November 11, 2014, provides that he will serve as the Chief Operating Officer of the Company for a period of three 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. Wendolowski receives an annual base salary of $300,000.
On July 15, 2022, Dr. Anne McNamara, Chief Nursing Officer retired from her position as an officer and terminated her employment with the Company. In connection with Dr. McNamara's retirement, the Company entered into a Severance Agreement with Dr. McNamara (the “Agreement”). Dr. McNamara's Employment Agreement, dated November 1, 2019, terminated upon execution of the Agreement. Under the Agreement, over a six month period, the Company agreed to pay Dr. McNamara's a severance of $125,000 and health insurance and related costs of $10,000. In addition, the Company agreed to the accelerated vesting of 50,000 RSUs at a grant price of $6.29. The remaining price based RSUs terminated and the RSU portion of the discretionary bonus for Fiscal 2020 which was granted on July 8, 2020 also terminated.
As previously disclosed, on February 25, 2021, Frank J. Cotroneo, Chief Financial Officer and director of the Company, resigned from his positions as an officer and director of the Company and terminated his employment with the Company. In connection with Mr. Cotroneo’s resignation, the Company entered into a Confidential Severance Agreement with Mr. Cotroneo (the “Former CFO Agreement”). Mr. Cotroneo’s Employment Agreement, dated December 1, 2020, terminated upon execution of the Former CFO Agreement. Under the Former CFO Agreement, Mr. Cotroneo received severance of $150,000, $18,563 as a final bonus for Fiscal 2020, $33,750 as a final bonus for Fiscal 2021, and $96,250 as reimbursement for relocation costs which the Company had previously agreed to in order to induce Mr. Cotroneo to move. For six months, the Company agreed to pay Mr. Cotroneo’s health insurance and related costs of $5,307. In addition, the Company agreed to the automatic vesting of 13,892 unvested nonqualified stock options exercisable at $5.12 and the accelerated vesting of 80,251 RSUs in the amount of $606,698. The remaining price based RSUs terminated.
For each fiscal year during the term of the Named Executive Officers’ Employment Agreements beginning May 1 and ending April 30 of the applicable fiscal year, each Named Executive Officer, has the opportunity to earn a bonus up to 30%, 66% or 100% of his or her then base salary (the “Target Bonus”) as follows.
When the Company achieves annual Adjusted EBITDA (as defined in their Employment Agreements) at certain threshold levels (each, an “EBITDA Threshold”), the Named Executive Officers shall receive an automatic cash bonus (the “Automatic Cash Bonus”) equal to a percentage of his or her then base salary, and shall receive a grant of fully vested shares of the Company’s common stock having an aggregate Fair Market Value (as such term is defined in the Plan) equal to a percentage of the Named Executive Officer’s then base salary (the “Automatic Equity Bonus”). See “Severance Agreement” above for the discussion of the payments made to Dr. Anne McNamara who retired in July 2022.
The EBITDA Thresholds and corresponding bonus levels are set forth in the table below. For the avoidance of doubt, the Named Executive Officer shall only be eligible to receive the bonuses associated with a single EBITDA Threshold; i.e. in the event the Company attains EBITDA Threshold (2), only the bonuses associated with EBITDA Threshold (2) below (and not the bonuses associated with EBITDA Threshold (1)) shall be applicable.
|EBITDA Threshold||Automatic Cash Bonus||Automatic Equity Bonus|
|$1,000,000 - $1,999,999||7.5||%||7.5||%|
|$2,000,000 - $3,999,999||16.5||%||16.5||%|
|$4,000,000 and over||25.0||%||25.0||%|
The earning of the Automatic Cash Bonus is subject to the Company having at least $2,000,000 in available cash after deducting the Target Bonuses paid to all executive officers of the Company or its subsidiaries under the same Target Bonus formula pursuant to such executives’ employment agreements (the “Cash Threshold”) and the executive officer continuing to provide services under their Employment Agreement on the applicable Target Bonus determination date. If the Company is unable to pay the Automatic Cash Bonus as a result of not meeting the Cash Threshold, no Automatic Cash Bonus will be earned for that fiscal year.
In addition, each of the Named Executive Officers is eligible to receive a discretionary bonus (the “Discretionary Bonus”) consisting of a cash and equity component matching the applicable Target Bonus based on the Board’s determination that the Named Executive Officer has achieved certain annual performance objectives established by the Board. See “Severance Agreement” above for the discussion of the payments made to Dr. Anne McNamara who retired in July 2022.
Under their Employment Agreements, the Named Executive Officers are entitled to severance payments. All of the termination provisions are intended to comply with Section 409A of the Internal Revenue Code of 1986, or the Code, and the Regulations thereunder.
In the event of termination by the Company without “cause” or resignation for “good reason,” each of the Named Executive Officers is entitled to receive 12 months base salary, immediate vesting of unvested equity awards and continued benefits for six months.
In case of termination or change in title upon a change of control event, each of the Named Executive Officers is entitled to receive 18 months base salary, immediate vesting of unvested equity awards, continued benefits for 18 months and 100% of the existing Target Bonus, if any, for that fiscal year when the change of control occurs.
“Change of control” is defined in the Employment Agreements the same way it is defined under Section 409A of the Code. Generally, “good reason” is defined as a material diminution in the Named Executive Officer’s authority, duties or responsibilities due to no fault of his or her own (unless he or she has agreed to such diminution); or (ii) any other action or inaction that constitutes a material breach by the Company under the Employment Agreement; or (iii) generally a relocation of the principal place of employment to a location outside the location specified in the Employment Agreements, including metropolitan New York, New York or Phoenix, Arizona area.
In the event employment is terminated at the end of the term upon the notice of non-renewal and a Named Executive Officer remains employed until the end of the term, such Named Executive Officer will be entitled to receive six months base salary and continued benefits for six months.
Under the terms of the Employment Agreements, the Named Executive Officers are subject to non-competition and non-solicitation covenants during the term of their employment and during one year following termination of employment with the Company. The Employment Agreements also contain customary confidentiality and non-disparagement covenants.
Outstanding Awards at April 30, 2022
Listed below is information with respect to unexercised options that have not vested, and equity incentive plan awards for each Named Executive Officer outstanding as of April 30, 2022. The vesting of all unvested options and RSUs are subject to continued employment on each applicable vesting date.
|Options Awards||Stock Awards|
|Name (a)||Number of Securities Underlying Unexercised Options (#)|
|Number of Securities Underlying Unexercised Options|
Price ($) (e)
|Option Expiration |
|Number of Shares or Units of Stock that Have Not |
Vested (3) (g)
|Market Value of Shares of Units of Stock that Have Not |
Vested ($) (1) (h)
|Cheri St. Arnauld||180,000||—||$||7.55||7/19/23||142,741||$||124,185|
Our employees do not receive compensation for serving as members of our Board. Our non-employee directors receive compensation for their service as directors and members of committees of the Board, consisting of cash and equity awards. Our non-employee directors can elect to receive equity instead of all or a portion of their cash compensation for service as directors. Compensation for service on committees of the Board is paid in shares of restricted common stock. In January 2022, each non-employee director received compensation for Board service in the amount of $35,000 for calendar year 2021 and additional compensation for service on committees of the Board. All non-employee directors elected to receive awards of restricted common stock instead of the annual cash retainer, except for Norman D. Dicks (who resigned as a director on April 1, 2022), C. James Jensen (who resigned as a director on July 14, 2021) and Dr. Joan Prince. Directors are reimbursed for reasonable expenses incurred in attending meetings and carrying out duties as Board and committee members. Under the Plans, our non-employee directors receive grants of restricted common stock as compensation for their services on our Board, as described above. Because we do not pay compensation to employee directors, Mr. Mathews was not compensated for his services as a director in Fiscal 2022 and is omitted from the following table.
In Fiscal 2022, non-employee members of our Board were compensated as follows:
Fees Earned or
Paid in Cash
($) (1) (b)
($) (2) (3) (4) (c)
|Norman D. Dicks (5)||$||35,000||$||48,036||$||83,036|
|C. James Jensen (6)||$||8,750||$||—||$||8,750|
|Dr. Joan Prince||$||35,000||$||21,563||$||56,563|
(1) Represents the portion of cash compensation earned as of April 30, 2022.
(2) The table below sets forth unvested restricted common stock awards and unexercised options held by each of our non-employee directors outstanding as of April 30, 2022.
|Name||Aggregate Number of Restricted Stock Awards Outstanding||Aggregate Number of Unexercised Option Awards Outstanding|
|Norman D. Dicks||—||38,000|
|C. James Jensen||—||35,000|
|Dr. Joan Prince||—||—|
(3) Amounts reported represent the aggregate grant date fair value of awards without regards to forfeitures granted to the independent members of our Board during Fiscal 2022, computed in accordance with ASC 718. This amount does not reflect the actual economic value realized by each director.
(4) Pursuant to their election to receive shares of restricted common stock in lieu of $35,000 in cash compensation, Messrs. Kaplan, Kass, Koehneman, and Rich each received a grant of fully vested restricted common stock in January 2022. Committee service fees were also paid in restricted common stock, which included grants of fully vested restricted common stock in January 2022 to Mr. Dicks and Dr. Prince.
(5) Mr. Dicks retired from the Board effective April 1, 2022.
(6) Mr. Jensen retired from the Board effective July 14, 2021.
PROPOSAL 3. THE ADJOURNMENT PROPOSAL
The Company is asking its stockholders to approve, if necessary, adjournment of the Annual Meeting to solicit additional proxies in favor of one or more proposals submitted to the stockholders at the Annual Meeting. Any adjournment of the Annual Meeting for the purpose of soliciting additional proxies will allow stockholders who have already sent in their proxies to revoke them at any time prior to the time that the proxies are used.
The affirmative vote of a majority of the votes cast is required to approve this Proposal 3. Abstentions will not be considered as votes cast under the Company’s Bylaws, and accordingly will have no effect on the outcome of this Proposal 3.
The Board recommends a vote “FOR” this Proposal 3.
The Company has no knowledge of any other matters that may come before the Annual Meeting and does not intend to present any other matters. However, if any other matters shall properly come before the Annual Meeting or any adjournment, the persons soliciting proxies will have the discretion to vote as they see fit unless directed otherwise.
If you do not plan to attend the Annual Meeting, in order that your shares may be represented and in order to assure the required quorum, please sign, date and return your proxy promptly. In the event you are able to attend the Annual Meeting, at your request, the Company will cancel your previously submitted proxy.
ASPEN GROUP, INC.
276 FIFTH AVENUE, SUITE 505
NEW YORK, NY 10001-4509
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on December 14, 2022. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on December 14, 2022. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
VOTE IN PERSON
You may vote the shares in person by attending the Annual Meeting.
|TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:||KEEP THIS PORTION FOR YOUR RECORDS|
|— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —|
|DETACH AND RETURN THIS PORTION ONLY|
|THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.|
|ASPEN GROUP, INC.|
|To withhold authority to vote for any individual|
|For||Withhold||For All||nominee(s), mark “For All Except” and write the|
|All||All||Except||number(s) of the nominee(s) on the line below.|
|1.||Elect six members of the Board of Directors for a one-year term expiring at the next annual meeting of stockholders.||¨||¨||¨|
|01) Michael Mathews||05) Dr. Joan Prince|
|02) Andrew Kaplan||06) Sanford Rich|
|03) Douglas Kass|
|04) Michael Koehneman|
|The Board of Directors recommends you vote FOR proposals 2 and 3.||For||Against||Abstain|
|2.||Ratify the selection of Salberg & Company, P.A. as the Company’s independent registered public accounting firm for the fiscal year ending April 30, 2023.||¨||¨||¨|
|3.||Approve an adjournment of the Annual Meeting to a later date or time, if necessary, to permit further solicitation and vote of proxies if there are not sufficient votes at the time of the Annual Meeting to approve any of the proposals presented for a vote at the Annual Meeting.||¨||¨||¨|
|NOTE: Such other business as may properly come before the meeting or any adjournment or postponement thereof.|
|For address changes and/or comments, please check this box and write them on the back where indicated. ¨|
|Please indicate if you plan to attend this meeting||¨||¨|
|Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint owners should each sign
personally. All holders must sign. If a corporation or partnership, please sign in full corporate
or partnership name by authorized officer.
|Signature [PLEASE SIGN WITHIN BOX]||Date||Signature (joint Owners)||Date|
|— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —|
|ASPEN GROUP, INC.|
|Annual Meeting of Stockholders|
|December 15, 2022|
|This proxy is solicited on behalf of the Board of Directors|
|Continued and to be signed on reverse side|