Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

v3.21.2
Stockholders' Equity
 12 Months Ended
Apr. 30, 2021
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Stockholders’ Equity
On June 28, 2019, the Company amended its Certificate of Incorporation, as amended, to reduce in the number of shares of common stock the Company is authorized to issue from 250,000,000 to 40,000,000 shares, and the number of shares of preferred stock the Company is authorized to issue from 10,000,000 to 1,000,000 shares. The stockholders of the Company had previously approved the amendment at a special meeting of stockholders held on June 28, 2019.

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 April 30, 2021 and April 30, 2020, we had no shares of preferred stock issued and outstanding.

Common Stock

At April 30, 2021 and 2020, the Company was authorized to issue 40,000,000 shares of common stock.
On August 31, 2020, the Company entered into an Equity Distribution Agreement (the “Agreement”) with Canaccord Genuity LLC (“Canaccord”), pursuant to which the Company may issue and sell from time to time, through Canaccord, up to $12,309,750 of shares of the Company’s common stock (the “Shares”). The Shares were offered and sold pursuant to a prospectus supplement filed with the Securities and Exchange Commission on August 31, 2020. The purpose of this Agreement was, among other things, to allow the Company to sell common stock that has been surrendered from executive officers and directors related to vesting of RSUs and exercise of stock options as well as to receive the funds the Company would otherwise have received if the stock options exercised under the net share program were exercised for cash. During the fiscal year 2021, the Company sold 449,632 shares under the Agreement. On February 8, 2021, the Company provided written notice to Canaccord Genuity of its election to terminate the Equity Distribution Agreement. This action terminates the Company’s at-the-market offering facility effective February 18, 2021.

Under the Agreement, the Company paid Canaccord 3% of the gross proceeds from the sales of the Shares sold under the Agreement. The Company also reimbursed Canaccord for certain specified expenses, including the fees and disbursements of its legal counsel, in the amount of $50,000. Total expenses for the offering, excluding compensation and reimbursement payable to Canaccord under the terms of the Agreement, were approximately $50,000, which is included in general and administrative expense in the consolidated statement of operations.

During the years ended April 30, 2021 and 2020, the Company issued 1,389,463 and 277,678 shares of common stock upon the exercise of stock options for cash and received proceeds of $2,669,247 and $962,650, respectively. As of April 30, 2021, 155,486 shares of common stock related to options exercised by the executive officers were surrendered to cover the option exercise price but have yet to be sold by the company. (See Treasury stock discussion below).

During the years ended April 30, 2021 and 2020, the Company issued 295,557 and 0 shares of common stock upon the vesting of Restricted Stock Units (“RSUs”), respectively.

During the years ended April 30, 2021 and 2020, the Company issued 34,773 and 190,559 shares of common stock upon the cashless exercise of 52,778 and 363,334 stock options, respectively.
During the years ended April 30, 2021, the Company issued 192,049 shares of common stock upon the exercise of warrants for cash and received proceeds of $1,081,792. During the year ended April 30, 2020, the Company issued 76,929 shares of common stock upon the cashless exercise of 164,929 warrants.
During the third quarter of fiscal 2021, the Company issued 2,000 shares of common stock to a former director for services provided. The shares were valued using a grant date share price of $9.95 and the Company recognized $19,900 of expense.

On September 14, 2020, after the closing price of our common stock was at least $10.725 over a 20 consecutive trading day period, the $10 million Convertible Notes (see Note 9) automatically converted into 1,398,602 shares of the Company’s common stock at a conversion price of $7.15 per share.

On January 22, 2020 the Company raised $17,267,250 through the issuance of 2,415,000 shares of common stock at a price of $7.15. The net proceeds were $16,044,879 after deducting underwriting discounts and commissions. The number of shares sold through this public offering includes 315,000 shares of common stock pursuant to an option granted to the underwriters to cover over allotments that were exercised in full.

On November 30, 2019, the Company issued 25,000 shares of common stock for services in connection with the prior CFO transition which immediately vested. The total value of the grant was $177,500. The Company also issued 15,000 shares of
common stock to its former CFO upon the vesting of RSUs previously granted to him for Audit Committee services. The total value of the grant was $103,350.

Restricted Stock

As of April 30, 2021 and 2020, there were 8,224 and 24,672 unvested shares of restricted common stock outstanding, respectively. Total unrecognized compensation expense related to the unvested shares as of April 30, 2021 and 2020 amounted to $28,071 and $70,178, respectively.

On June 18, 2019, in order to correct errors in a third-party software system used to track stock options, the Company granted Andrew Kaplan, a current director, 5,131 shares of restricted common stock and two former directors a total of 25,000 shares of restricted common stock valued at $122,232 and expensed immediately.

The Board approved a grant of 25,000 shares of restricted common stock to the prior CFO in September 2018. The stock price was $7.15 on the date of the grant and was to vest over a period of 36 months. The value of the compensation was approximately $180,000. Upon leaving the Company on November 30, 2019 the remaining two-thirds of restricted stock was immediately vested as part of the separation agreement resulting in accelerated amortization expense of approximately $108,000.

As of April 30, 2021, there was approximately $28,000 of unrecognized compensation costs related to non-vested share-based common and restricted stock arrangements. That cost is expected to be recognized over a weighted-average period of approximately 0.67 years.

Restricted Stock Units

A summary of the Company’s RSU activity which were granted under the 2021 and 2018 Equity Incentive Plans during the year ended April 30, 2021 is presented below:

Restricted Stock Units Number of Shares Weighted Average Grant Price
Unvested balance outstanding, April 30, 2020 643,175  $ 5.64 
Granted 275,521  9.87 
Exercised —  — 
Forfeits (73,167) 9.09 
Vested (295,557) 10.97 
Expired —  — 
Unvested balance outstanding, April 30, 2021 549,972  $ 6.58 

Fiscal 2021 activity

Of the 275,521 RSU grants in fiscal 2021, 15,791 RSUs correspond to RSUs granted to the Board of Directors while the remainder of the RSU grants were to employees. The RSUs granted to the Board of Directors occurred during the three months ending January 31, 2021 and immediately vested with a fair value of $11.13 per share, resulting in a total expense of $175,754. The grant date fair value of the remaining employee awards range from $5.92 to $12.78 per share, or a total of $2.5 million, with an annual vest over three years.

As of April 30, 2021, 549,972 RSUs are unvested. Total unrecognized compensation expense related to these unvested RSUs is approximately $3.6 million which will be amortized over the remaining vesting periods. Included in this amount is approximately $1.2 million of total unrecognized compensation expense related to 195,000 unvested RSUs from the executive RSU grant discussed below.

As of April 30, 2021, there was approximately $3.6 million of unrecognized compensation costs related to non-vested RSU grants. That cost is expected to be recognized over a weighted-average period of approximately 1.72 years.

Fiscal 2020 activity
In December 2019, the former CFO and CAO received grants of 100,000 and 20,000 RSU's, respectively, as part of their employment agreements. These grants were to vest annually over three years and had a combined fair value of $826,800. The former CFO immediately vested in the outstanding shares of approximately 67,000 or $421,000 upon his resignation in the fourth quarter of fiscal 2021.

In December 2019, the former CFO immediately vested in 15,000 RSUs with a total expense of $103,350, which he was granted as Audit Committee Chairman in November 2019.

In November 2019, the Chief Nursing Officer received a grant of 50,000 RSUs as part of her employment agreement. These grants will vest annually over three years and have a fair value of $314,500. The Company also issued 98,675 RSUs to employees vesting over three years subject to continued employment with a fair value of $708,425.

February 4, 2020 RSU grant
On February 4, 2020, the Compensation Committee approved a 375,000 RSU grant to executives under the Company’s 2018 Equity Incentive Plan. As subsequently clarified, the RSUs vest four years from the grant date, if each applicable executive is still employed by the Company on the vesting date and subject to accelerated vesting for all RSUs as follows: (i) if the closing price of the Company’s common stock is at least $9 for 20 consecutive trading days, 10% of the RSUs will vest immediately; (ii) if the closing price of the Company’s common stock is at least $10 for 20 consecutive trading days, 25% of the RSUs will vest immediately; and (iii) 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. On the grant date, the closing price of the Company’s common stock on The Nasdaq Global Market was $9.49 per share. The Company determined that because the terms of the grant include both a market condition and a service condition that must be achieved simultaneously, the appropriate treatment under ASC 718 Stock-based Compensation is to amortize the fair market value of approximately $3.4 million over the longer of the explicit service period of four years and not the shorter of the derived service period of 0.64 years.

On August 31, 2020, the closing price of the Company’s common stock was at least $9 for 20 consecutive trading days, resulting in 10% or 37,500 of the February 4, 2020 RSU grants to executives (see above) vesting immediately. Additionally, on September 2, 2020, the Company’s common stock was at least $10 for 20 consecutive trading days and 25% or 93,750 of the February 4, 2020 RSUs granted to executives (see above) vested immediately. On the grant date, the closing price of the Company's common stock on The Nasdaq Global Market was $9.49 per share. The accelerated amortization expense related to these transactions in the second quarter of fiscal year 2021 was approximately $1.2 million, for the vesting of these 131,250 RSUs, which is included in general and administrative expense in the consolidated statements of operations. The 48,750 unvested RSUs related to the February 4, 2020 grant, $12 tranche discussed above, held by the Company’s former Chief Financial Officer, were forfeited with his resignation in February 2021.
Warrants
A summary of the Company’s warrant activity during the year ended April 30, 2021 is presented below:
Warrants Number of Shares Weighted
Average
Exercise
Price		 Weighted
Average
Remaining
Contractual
Term		 Aggregate
Intrinsic
Value
Balance Outstanding, April 30, 2020 566,223  $ 6.22  3.17 $950,100
Granted —  —  —  — 
Exercised (192,049) 5.63  —  — 
Surrendered —  —  —  — 
Expired —  —  —  — 
Balance Outstanding, April 30, 2021 374,174  $ 6.37  1.9 $ — 
Exercisable, April 30, 2021 374,174  $ 6.37  1.9 $ — 
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
$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 
374,174  374,174 

Fiscal 2021 activity

On June 5, 2020, the Company, as an inducement to exercise, reduced by 5% the exercise price of the common stock purchase warrants issued to The Leon and Toby Cooperman Family Foundation (the “Foundation”), of which Mr. Leon Cooperman, a stockholder of the Company, is the trustee. The warrants were issued on November 5, 2018 (the “2018 Cooperman Warrants”) and on March 5, 2019 (the “2019 Cooperman Warrants”). The 2018 Cooperman Warrants exercise price was reduced from $5.85 to $5.56 per share. The 2019 Cooperman Warrants exercise price was reduced from $6.00 to $5.70 per share. On June 8, 2020, the Foundation immediately exercised the 2018 and 2019 Cooperman Warrants for 192,049 shares on common stock paying the Company $1,081,792 and the Company issued 192,049 shares of common stock to the Foundation. The warrant modification and acceleration charge related to this transaction in the first quarter of fiscal year 2021 was $25,966.

Fiscal 2020 activity

On August 17, 2019 an investor elected a cashless exercise of 13,542 warrants, receiving 6,271 shares. On August 20, 2019 two investors elected cashless exercises of 18,818 and 88,710 warrants, receiving 8,970 and 42,285 shares, respectively.

On June 3, 2019, a former director cashlessly exercised 21,930 warrants, receiving 9,806 shares of common stock. On June 7, 2019, the CEO cashlessly exercised the same amount of warrants receiving 9,597 shares of common stock.

As part of the Credit Facility Agreement executed on November 8, 2018, 92,049 five-year warrants were issued with an exercise price of $5.85 per share.

The Company issued 200,000 warrants on March 5, 2019 related to senior secured loans.

The Company issued 50,000 warrants on April 30, 2020 to an advisory board member for services. The warrants vest ratably over three years.

Stock Incentive Plan and Stock Option Grants to Employees and Directors
On March 13, 2012, the Company adopted the Aspen Group, Inc. 2012 Equity Incentive Plan (the “2012 Plan”) that provides for the grant of 3,500,000 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.
On December 13, 2018, the stockholders of the Company approved the Aspen Group, Inc. 2018 Equity Incentive Plan (the
“2018 Plan”) that provided for the grant of 500,000 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.

On December 30, 2019, 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 500,000 to 1,100,000 shares.

On December 30, 2020, 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 to 1,600,000 shares.
As of April 30, 2021 and 2020, there were 549,739 and 179,380 shares remaining available for future issuance under the 2012 and 2018 Plans, respectively.
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 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 year ended April 30, 2021.

The Company utilized the simplified method to estimate the expected life for stock options granted to employees. The simplified method was used as the Company does not have sufficient historical data regarding stock option exercises. The expected volatility is based on 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 the Company believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased.
A summary of the Company’s stock option activity for employees and directors during the year ended April 30, 2021, is presented below:
Options Number of
Shares		 Weighted
Average
Exercise
Price		 Weighted
Average
Remaining
Contractual
Term		 Aggregate
Intrinsic
Value
Balance Outstanding, April 30, 2020 2,740,539  $ 4.62  1.97 $ 9,146,198 
Granted —  —  —  — 
Exercised (1,442,241) 10.71  —  — 
Forfeited (11,916) 5.56  —  — 
Expired (71,909) 3.98  —  — 
Balance Outstanding, April 30, 2021 1,214,473  $ 6.24  1.88 $ 204,719 
Exercisable, April 30, 2021 1,032,411  $ 6.26  1.78 $ 173,852 
OUTSTANDING OPTIONS EXERCISABLE 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  0.42 10,423 
$3.24 to $4.38
 $3.82  184,222  $3.75  1.07 144,387 
$4.50 to $5.20
 $4.94  360,654  $4.93  1.66 316,427 
$5.95 to $6.28
 $6.10  58,000  $6.12  1.21 58,000 
$7.17 to $7.55
 $7.44  443,425  $7.42  2.36 345,425 
$8.57 to $9.07
 $8.98  157,749  $8.98  1.69 157,749 
1,214,473  1,032,411 

Fiscal 2021 activity

As of April 30, 2021, there was approximately $142,000 of unrecognized compensation costs related to non-vested share-based option arrangements. That cost is expected to be recognized over a weighted-average period of approximately 1.02 years.

For the year ended April 30, 2021, the Company recorded compensation expense of $3,977,983 which consisted of: $560,828, $3,355,148 and $62,007, respectively, in connection with stock option, RSUs and restricted and common stock grants.

Fiscal 2020 activity

For the year ended April 30, 2020, the Company recorded compensation expense in connection with stock options of $1,289,546.

In April 2020, the Company awarded 6,900 options to employees hired during the fiscal third quarter. The fair value of these grants was $11,088 with an average grant price of $4.58.

On December 9, 2019, the Company granted 61,000 options to its directors with an exercise price of $6.92 per share for services performed for the calendar year 2019. The fair value of these options was approximately $116,000 and was fully recognized as of January 31, 2020.

On August 1, 2019, the Company granted 59,000 options with an exercise price of $3.99 per share to 26 employees who had been hired during the first quarter ended July 31, 2019. The fair value of these options was approximately $83,000 and will be recognized over 36 months.
The Company granted a total of 30,000 five years non-qualified stock options on May 13, 2019, which were immediately vested, to certain former directors exercisable at $4.12 per share. The fair value of the options was $33,600 and expensed during the three months ended July 31, 2019.

Treasury Stock

As of April 30, 2021, 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 values aggregating approximately $1,817,414 were based upon the fair market value of shares surrendered as of the date of each applicable exercise date.
On October 16, 2020, the Company retired 16,667 shares of its treasury stock valued at $70,000, which were outstanding at April 30, 2020.