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Document and Entity Information
3 Months Ended
Jul. 31, 2013
Sep. 13, 2013
Document And Entity Information Abstract
Document Type 10-Q
Amendment Flag false
Document Period End Date Jul 31, 2013
Entity Registrant Name ASPEN GROUP, INC.
Entity Central Index Key 0001487198
Current Fiscal Year End Date --04-30
Document Fiscal Year Focus 2014
Document Fiscal Period Focus Q1
Entity Filer Category Smaller Reporting Company
Entity Common Stock, Shares Outstanding 59,190,365
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CONSOLIDATED BALANCE SHEETS (USD $)
Jul. 31, 2013
Apr. 30, 2013
Current assets:
Cash and cash equivalents $ 641,009 $ 724,982
Restricted cash 265,310 265,173
Accounts receivable, net of allowance of $86,372 and $72,535, respectively 493,587 364,788
Prepaid expenses 350,022 165,426
Net assets from discontinued operations (Note 1) 257,322 113,822
Total current assets 2,007,250 1,634,191
Property and equipment:
Call center equipment 121,313 121,313
Computer and office equipment 64,336 61,036
Furniture and fixtures 32,914 32,914
Library (online) 100,000 100,000
Software 1,619,226 1,518,142
Total 1,937,789 1,833,405
Less accumulated depreciation and amortization (648,629) (569,665)
Total property and equipment, net 1,289,160 1,263,740
Courseware, net 178,124 208,095
Accounts receivable, secured - related party, net of allowance of $502,315 and $502,315, respectively 270,478 270,478
Other assets 25,181 25,181
Total assets 3,770,193 3,401,685
Current liabilities:
Accounts payable 431,855 313,405
Accrued expenses 126,462 128,569
Deferred revenue 997,662 1,158,473
Loan payable to stockholders 1,000,491 491
Deferred rent, current portion 11,238 10,418
Convertible notes payable, current portion 200,000 200,000
Net liabilities from discontinued operations (Note 1) 332,817 124,504
Total current liabilities 3,100,525 1,935,860
Line of credit 245,482 250,000
Convertible notes payable (related party) 600,000 600,000
Deferred rent 18,271 21,450
Total liabilities 3,964,278 2,807,310
Commitments and contingencies - See Note 8      
Stockholders' equity (deficiency):
Preferred stock, $0.001 par value; 10,000,000 shares authorized      
Common stock, $0.001 par value; 120,000,000 shares authorized, 59,390,365 issued and 59,190,365 outstanding at July 31, 2013 and 58,573,222 issued and 58,373,222 outstanding at April 30, 2013 59,190 58,573
Additional paid-in capital 13,662,387 13,345,888
Treasury stock (200,000 shares) (70,000) (70,000)
Accumulated deficit (13,845,662) (12,740,086)
Total stockholders' equity (deficiency) (194,085) 594,375
Total liabilities and stockholders' equity (deficiency) $ 3,770,193 $ 3,401,685
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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
Jul. 31, 2013
Apr. 30, 2013
Assets
Allowance for doubtful accounts, current accounts receivables $ 86,372 $ 72,535
Allowance for doubtful accounts, noncurrent accounts receivables $ 502,315 $ 502,315
Stockholders' Equity:
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 10,000,000 10,000,000
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 120,000,000 120,000,000
Common stock, shares issued 59,390,365 58,573,222
Common stock, shares outstanding 59,190,365 58,373,222
Treasury stock, shares 200,000 200,000
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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
3 Months Ended
Jul. 31, 2013
Jul. 31, 2012
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]
Revenues $ 929,993 $ 698,152
Operating expenses
Cost of revenues (exclusive of depreciation and amortization shown separately below) 559,470 611,772
General and administrative 1,373,056 1,393,282
Receivable collateral valuation reserve    309,117
Depreciation and amortization 109,435 98,571
Total operating expenses 2,041,961 2,412,742
Operating loss from continuing operations (1,111,968) (1,714,590)
Other income (expense):
Interest income 289 104
Interest expense (16,160) (127,784)
Total other expense, net (15,871) (127,680)
Loss from continuing operations before income taxes (1,127,839) (1,842,270)
Income tax expense (benefit)      
Loss from continuing operations (1,127,839) (1,842,270)
Discontinued operations (Note 1)
Income from discontinued operations, net of income taxes 22,263 90,043
Net loss $ (1,105,576) $ (1,752,227)
Loss per share from continuing operations - basic and diluted $ (0.02) $ (0.05)
Income per share from discontinued operations - basic and diluted $ 0 $ 0
Net loss per share - basic and diluted $ (0.02) $ (0.05)
Weighted average number of common shares outstanding:
basic and diluted 58,527,790 35,295,204
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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY) (USD $)
Total
Common Stock [Member]
Additional Paid-In Capital [Member]
Treasury Stock [Member]
Accumulated Deficit [Member]
Beginning balance at Apr. 30, 2013 $ 594,375 $ 58,573 $ 13,345,888 $ (70,000) $ (12,740,086)
Beginning balance, shares at Apr. 30, 2013 58,573,222
Issuance of common shares for investor relations services, shares 617,143
Issuance of common shares for investor relations services 216,000 617 215,383      
Offering cost for professional services from private placement (48,240)    (48,240)      
Stock-based compensation 149,356    149,356      
Net loss (1,105,576)          (1,105,576)
Ending balance at Jul. 31, 2013 $ (194,085) $ 59,190 $ 13,662,387 $ (70,000) $ (13,845,662)
Ending balance, shares at Jul. 31, 2013 59,190,365
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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
3 Months Ended
Jul. 31, 2013
Jul. 31, 2012
Cash flows from operating activities:
Net loss $ (1,105,576) $ (1,752,227)
Less income (loss) from discontinued operations 22,263 90,043
Loss from continuing operations (1,127,839) (1,842,270)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense 13,837 51,521
Receivable collateral valuation reserve    309,117
Depreciation and amortization 109,435 98,571
Stock-based compensation 149,356 52,701
Amortization of prepaid shares for services 25,060   
Changes in operating assets and liabilities:
Accounts receivable (142,635) (184,347)
Prepaid expenses 6,345 31,187
Other assets    (20,000)
Accounts payable 118,450 48,867
Accrued expenses (2,107) (23,561)
Deferred rent (2,359) (1,430)
Deferred revenue (160,811) 16,862
Net cash used in operating activities (1,013,268) (1,462,782)
Cash flows from investing activities:
Purchases of property and equipment (104,385) (91,661)
Purchases of courseware (500) (13,200)
Increase in restricted cash (137)   
Net cash used in investing activities (105,022) (104,861)
Cash flows from financing activities:
Proceeds from (repayments on) line of credit, net (4,518) 25,000
Proceeds from loan from related party 1,000,000 22,000
Proceeds from convertible debentures    947,000
Offering cost for professional services from private placement (48,240)   
Disbursements for debt issuance costs    (68,888)
Net cash provided by financing activities 947,242 925,112
Cash flows from discontinued operations:
Cash flows from operating activities 87,075 255,774
Net cash provided by discontinued operations 87,075 255,774
Net decrease in cash and cash equivalents (83,973) (386,757)
Cash and cash equivalents at beginning of period 724,982 591,990
Cash and cash equivalents at end of period 641,009 205,233
Supplemental disclosure of cash flow information:
Cash paid for interest 11,158 2,196
Cash paid for income taxes      
Supplemental disclosure of non-cash investing and financing activities
Common stock issued for prepaid services $ 216,000   
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Nature of Operations and Going Concern
3 Months Ended
Jul. 31, 2013
Nature of Operations and Going Concern [Abstract]
Nature of Operations and Going Concern

Note 1.Nature of Operations and Going Concern


Overview


Aspen Group, Inc. (together with its subsidiary, the "Company" or "Aspen") was founded in Colorado in 1987 as the International School of Information Management. On September 30, 2004, it was acquired by Higher Education Management Group, Inc. ("HEMG") and changed its name to Aspen University Inc. On March 13, 2012, the Company was recapitalized in a reverse merger. All references to the Company or Aspen before March 13, 2012 are to Aspen University Inc.


On April 5, 2013, the Company gave 120-day notice to CLS 123, LLC of its intent to terminate the agreement between the Company and CLS 123, LLC dated November 9, 2011. Moreover, at the end of the 120-day period, the Company shall no longer be offering the "Certificate in Information Technology with a specialization in Smart Home Integration" program. Accordingly, the activities related to CLS (or the "Smart Home Integration Certificate" program) are treated as discontinued operations. As this component of the business was not sold, there was no gain or loss on the disposition of this component (see below "Basis of Presentation").


On April 25, 2013, our Board of Directors approved a change in our fiscal year-end from December 31 to April 30, with the change to the calendar year reporting cycle beginning May 1, 2013. Consequently, we filed a Transition Report on Form 10-KT for the four-month transition period ended April 30, 2013.


Aspen's mission is to become an institution of choice for adult learners by offering cost-effective, comprehensive, and relevant online education. One of the key differences between Aspen and other publicly-traded, exclusively online, for-profit universities is that approximately 86% of our full-time degree-seeking students (as of July 31, 2013) were enrolled in graduate degree programs (Master or Doctorate degree program). Since 1993, we have been nationally accredited by the Distance Education and Training Council ("DETC"), a national accrediting agency recognized by the U.S. Department of Education (the "DOE").


Basis of Presentation


1. Interim Financial Statements


The interim condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). In the opinion of the Company's management, all adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) necessary to present fairly our results of operations for the three months ended July 31, 2013 and 2012, our cash flows for the three months ended July 31, 2013 and 2012, and our financial position as of July 31, 2013 have been made. The results of operations for such interim periods are not necessarily indicative of the operating results to be expected for the full year.


Certain information and disclosures normally included in the notes to the annual consolidated financial statements have been condensed or omitted from these interim consolidated financial statements. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Report on Form 10-KT for the period ended April 30, 2013 as filed with the SEC on July 30, 2013. The April 30, 2013 balance sheet is derived from those statements.


2. Discontinued Operations


As of March 31, 2013, the Company decided to discontinue business activities related to its "Certificate in Information Technology with a specialization in Smart Home Integration" program so that it may focus on growing its full-time, degree-seeking student programs, which have higher gross margins. On April 5, 2013, the Company gave 120-day notice to CLS 123, LLC of its intent to terminate the agreement between the Company and CLS 123, LLC dated November 9, 2011. Thus, as of August 3, 2013, the Company shall no longer be offering the "Certificate in Information Technology with a specialization in Smart Home Integration" program. The termination of the "Smart Home Integration Certificate" program qualifies as a discontinued operation and accordingly the Company has excluded results for this component from its continuing operations in the condensed consolidated statements of operations for all periods presented. The following table shows the results of the "Smart Home Integration Certificate" program component included in the income (loss) from discontinued operations:


                 

 

 

For the

Three Months Ended

 

 

 

July 31,

 

 

 

2013

 

 

2012

 

 

 

 

 

 

 

 

Revenues

 

$

222,625

 

 

$

659,790

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

Instructional costs and services

 

 

200,362

 

 

 

569,747

 

Total costs and expenses

 

 

200,362

 

 

 

569,747

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations, net of income taxes

 

$

22,263

 

 

$

90,043

 


The major classes of assets and liabilities of discontinued operations on the balance sheet are as follows:


                 

 

 

July 31,

 

 

April 30,

 

 

 

2013

 

 

2013

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

-

 

 

$

-

 

Accounts receivable, net of allowance of $295,045 and $295,045, respectively

 

 

257,322

 

 

 

113,822

 

Other current assets

 

 

-

 

 

 

-

 

Net assets from discontinued operations

 

$

257,322

 

 

$

113,822

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,178

 

 

$

1,178

 

Accrued expenses

 

 

202,389

 

 

 

70,201

 

Deferred revenue

 

 

129,250

 

 

 

53,125

 

Net liabilities from discontinued operations

 

$

332,817

 

 

$

124,504

 


Going Concern


The Company had a net loss of $1,105,576 and negative cash flows from operations of $1,013,268 for the three months ended July 31, 2013. While management expects operating trends to improve over the course of 2013, if the realization of the expected improvement fails to occur, it is possible the Company's ability to continue as a going concern may be contingent on securing additional debt or equity financing from outside investors. These matters raise substantial doubt about the Company's ability to continue as a going concern.


Management has continued to implement its business plan and fund operations through equity securities and convertible debt. In September 2013, the Company and an institutional investor (the "Institutional Investor") signed a Term Sheet with respect to a loan of up to $2,240,000 to be evidenced by 18 month original issue discount convertible debentures (the "Debentures") with gross proceeds of $2,000,000. The investor has agreed, subject to completion of due diligence, execution of a definitive Securities Purchase Agreement and customary closing conditions to lend the Company $1,500,000. The Company expects to receive the remaining $500,000 from other investors. To this end, in September 2013 Company entered into an engagement agreement with Laidlaw & Co. ("Laidlaw") to act as placement agent for the offering and receive customary compensation. Laidlaw has introduced the Institutional Investor. In addition, in September 2013 the Company entered into a letter of intent with Olympus Securities, LLC to raise the remaining $500,000 in exchange for customary compensation.


The unaudited consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

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Significant Accounting Policies
3 Months Ended
Jul. 31, 2013
Significant Accounting Policies [Abstract]
Significant Accounting Policies

Note 2. Significant Accounting Policies


Principles of Consolidation


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


Use of Estimates


The preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts in the unaudited condensed consolidated financial statements. Actual results could differ from those estimates. Significant estimates in the accompanying unaudited condensed consolidated financial statements include the allowance for doubtful accounts and other receivables, the valuation of collateral on certain receivables, amortization periods and valuation of courseware and software development costs, valuation of stock-based compensation, the valuation of net assets and liabilities from discontinued operations and the valuation allowance on deferred tax assets.


Restricted Cash


Restricted cash represents amounts pledged as security for letters of credit for transactions involving Title IV programs. The Company considers $265,310 as restricted cash (shown as a current asset as of July 31, 2013) until such letter of credit expires on December 31, 2013. As of July 31, 2013, the account bears interest of 0.20%.


Fair Value Measurements


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


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

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

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


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


Revenue Recognition and Deferred Revenue


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


Revenue Recognition and Deferred Revenue - Discontinued Operations


The Company enters into certain revenue sharing arrangements with consultants whereby the consultants will develop course content primarily for technology-related courses, recommend, but not select, faculty, lease equipment on behalf of the Company for instructional purposes for the on-site laboratory portion of distance learning courses and make introductions to corporate and government sponsoring organizations that provide students for the courses. The Company has evaluated ASC 605-45 "Principal Agent Considerations" and determined that there are more indicators than not that the Company is the primary obligor in the arrangements since the Company establishes the tuition, interfaces with the student or sponsoring organization, selects the faculty, is responsible for delivering the course, is responsible for issuing any degrees or certificates, and is responsible for collecting the tuition and fees. The gross tuition and fees are included in revenues while the revenue sharing payments are included in instructional costs and services, an operating expense. As a result of presenting this component as discontinued operations, the revenues are now included in income (loss) from discontinued operations, net of income taxes for all periods presented (See Note 1).


Net Loss Per Share


Net loss per common share is based on the weighted average number of common shares outstanding during each period. Options to purchase 9,110,592 and 2,070,000 common shares, warrants to purchase 9,090,292 and 882,500 common shares, and $800,000 and $650,000 of convertible debt (convertible into 1,357,143 and 951,126 common shares) were outstanding during the three months ended July 31, 2013 and 2012, respectively, but were not included in the computation of diluted loss per share because the effects would have been anti-dilutive. The options, warrants and convertible debt are considered to be common stock equivalents and are only included in the calculation of diluted earnings per common share when their effect is dilutive.


Recent Accounting Pronouncements


We have implemented all new accounting standards that are in effect and that may impact our unaudited consolidated financial statements and do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our consolidated financial position or results of operations.


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Secured Note and Accounts Receivable - Related Parties
3 Months Ended
Jul. 31, 2013
Secured Note and Accounts Receivable - Related Parties [Abstract]
Secured Note and Accounts Receivable - Related Parties

Note 3. Secured Note and Accounts Receivable - Related Parties


On March 30, 2008 and December 1, 2008, the Company sold courseware pursuant to marketing agreements to HEMG, a related party and principal stockholder of the Company whose president is Mr. Patrick Spada, the former Chairman of the Company, in the amount of $455,000 and $600,000, respectively; UCC filings were filed accordingly. Under the marketing agreements, the receivables are due net 60 months. On September 16, 2011, HEMG pledged 772,793 Series C preferred shares (automatically converted to 654,850 common shares on March 13, 2012) of the Company as collateral for this account receivable. On March 8, 2012, due to the impending reduction in the value of the collateral as the result of the Series C conversion ratio and the Company's inability to engage Mr. Spada in good faith negotiations to increase HEMG's pledge, Michael Mathews, the Company's CEO, pledged 117,943 common shares of the Company, owned personally by him, valued at $1.00 per share based on recent sales of capital stock as additional collateral to the accounts receivable, secured - related party. On March 13, 2012, the Company deemed the receivables stemming from the sale of courseware curricula to be in default. On April 4, 2012, the Company entered into an agreement with: (i) an individual, (ii) HEMG, a related party and principal stockholder of the Company whose president is Mr. Patrick Spada, the former Chairman of the Company and (iii) Mr. Patrick Spada. Under the agreement, (a) the individual purchased and HEMG sold to the individual 400,000 common shares of the Company at $0.50 per share; (b) the Company guaranteed it would purchase at least 600,000 common shares of the Company at $0.50 per share within 90 days of the agreement and the Company would use its best efforts to purchase from HEMG and resell to investors an additional 1,400,000 common shares of the Company at $0.50 per share within 180 days of the agreement; (c) provided HEMG and Mr. Patrick Spada fulfilled their obligations under (a) and (b) above, the Company shall consent to additional private transfers by HEMG and/or Mr. Patrick Spada of up to 500,000 common shares of the Company on or before March 13, 2013; (d) HEMG agreed to not sell, pledge or otherwise transfer 142,500 common shares of the Company pending resolution of a dispute regarding the Company's claim that HEMG sold 131,500 common shares of the Company without having enough authorized shares and a stockholder did not receive 11,000 common shares of the Company owed to him as a result of a stock dividend; and (e) the Company waived any default of the accounts receivable, secured - related party and extend the due date to September 30, 2014. As of September 30, 2012, third party investors purchased 336,000 shares for $168,000 and the Company purchased 264,000 shares for $132,000 per section (b) above. Based on proceeds received on September 28, 2012 under a Unit private placement that equates to approximately $0.35 per common share, the value of the aforementioned collateral decreased. Accordingly, as of December 31, 2012, the Company has recognized an allowance of $502,315 for this account receivable. As of July 31, 2013 and April 30, 2013, the balance of the account receivable, net of allowance, was $270,478, based on continuing private placement sales equating to approximately $0.35 per share, and is shown as accounts receivable, secured - related party, net (See Note 10).

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Property and Equipment
3 Months Ended
Jul. 31, 2013
Property and Equipment [Abstract]
Property and Equipment

Note 4. Property and Equipment


Property and equipment consisted of the following at July 31, 2013 and April 30, 2013:


                 

 

 

July 31,

 

 

April 30,

 

 

 

2013

 

 

2013

 

Call center equipment

 

$

121,313

 

 

$

121,313

 

Computer and office equipment

 

 

64,336

 

 

 

61,036

 

Furniture and fixtures

 

 

32,914

 

 

 

32,914

 

Library (online)

 

 

100,000

 

 

 

100,000

 

Software

 

 

1,619,226

 

 

 

1,518,142

 

 

 

 

1,937,789

 

 

 

1,833,405

 

Accumulated depreciation and amortization

 

 

(648,629

)

 

 

(569,665

)

Property and equipment, net

 

$

1,289,160

 

 

$

1,263,740

 


Depreciation and amortization expense for the three months ended July 31, 2013 and July 31, 2012 was $78,694 and $62,994, respectively.


Amortization expense for software, included in the above amounts, for the three months ended July 31, 2013 and July 31, 2012 was $71,920 and $55,755, respectively. Software consisted of the following at July 31, 2013 and April 30, 2013:


                 

 

 

July 31,

 

 

April 30,

 

 

 

2013

 

 

2013

 

Software

 

$

1,619,226

 

 

$

1,518,142

 

Accumulated amortization

 

 

(458,519

)

 

 

(386,599

)

Software, net

 

$

1,160,707

 

 

$

1,131,543

 


The following is a schedule of estimated future amortization expense of software at July 31, 2013:


         

Year Ending April 30,

 

 

 

2014

 

$

242,884

 

2015

 

 

323,845

 

2016

 

 

322,999

 

2017

 

 

200,267

 

2018

 

 

70,712

 

Total

 

$

1,160,707

 


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Courseware
3 Months Ended
Jul. 31, 2013
Courseware [Abstract]
Courseware

Note 5. Courseware


Courseware costs capitalized were $500 for the three months ended July 31, 2013.


Courseware consisted of the following at July 31, 2013 and April 30, 2013:


                 

 

 

July 31,

 

 

April 30,

 

 

 

2013

 

 

2013

 

Courseware

 

$

2,098,038

 

 

$

2,097,538

 

Accumulated amortization

 

 

(1,919,914

)

 

 

(1,889,443

)

Courseware, net

 

$

178,124

 

 

$

208,095

 


Amortization expense of courseware for the three months ended July 31, 2013 and July 31, 2012 was $30,471 and $35,578, respectively.


The following is a schedule of estimated future amortization expense of courseware at July 31, 2013:


         

Year Ending April 30,

 

 

 

2014

 

$

74,859

 

2015

 

 

65,117

 

2016

 

 

27,830

 

2017

 

 

9,196

 

2018

 

 

1,122

 

Total

 

$

178,124

 


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Loans Payable
3 Months Ended
Jul. 31, 2013
Loans Payable [Abstract]
Loans Payable

Note 6. Loans Payable


On June 28, 2013, the Company received $1,000,000 as a loan from the Chief Executive Officer. This loan is for a term of 6 months with an annual interest rate of 10%, payable monthly. The loan is included with current liabilities and has a due date of December 31, 2013.

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Convertible Notes Payable
3 Months Ended
Jul. 31, 2013
Convertible Notes Payable [Abstract]
Convertible Notes Payable

Note 7. Convertible Notes Payable


On February 25, 2012, February 27, 2012 and February 29, 2012, loans payable of $100,000, $50,000 and $50,000, respectively, were converted into two-year convertible promissory notes, bearing interest of 0.19% per annum. Beginning March 31, 2012, the notes are convertible into common shares of the Company at the rate of $1.00 per share. The Company evaluated the convertible notes and determined that, for the embedded conversion option, there was no beneficial conversion value to record as the conversion price is considered to be the fair market value of the common shares on the note issue dates. As these loans (now convertible promissory notes) are due in February 2014, they have been included in current liabilities as of July 31, 2013 and April 30, 2013.


On March 13, 2012, the Company's CEO loaned the Company $300,000 and received a convertible promissory note due March 31, 2013, bearing interest at 0.19% per annum. The note is convertible into common shares of the Company at the rate of $1.00 per share upon five days written notice to the Company. The Company evaluated the convertible note and determined that, for the embedded conversion option, there was no beneficial conversion value to record as the conversion price is considered to be the fair market value of the common shares on the note issue date. On September 4, 2012, the maturity date was extended to August 31, 2013. On December 17, 2012, the maturity date was extended to August 31, 2014. There was no accounting effect for these two modifications (See Note 10).


On August 14, 2012, the Company's CEO loaned the Company $300,000 and received a convertible promissory note, payable on demand, bearing interest at 5% per annum. The note is convertible into shares of common stock of the Company at a rate of $0.35 per share (based on proceeds received on September 28, 2012 under a private placement at $0.35 per unit). The Company evaluated the convertible notes and determined that, for the embedded conversion option, there was no beneficial conversion value to record as the conversion price is considered to be the fair market value of the shares of common stock on the note issue date. On September 4, 2012, the maturity date was extended to August 31, 2013. On December 17, 2012 the maturity date was extended to August 31, 2014 (See Note 10.


As of July 31, 2013, the aggregate amount of convertible notes payable outstanding was $800,000, of which $200,000 is included in current liabilities and $600,000 due August 31, 2014 is included in long-term liabilities.

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Commitments and Contingencies
3 Months Ended
Jul. 31, 2013
Commitments and Contingencies [Abstract]
Commitments and Contingencies

Note 8. Commitments and Contingencies


Line of Credit


The Company maintains a line of credit with a bank, up to a maximum credit line of $250,000. The line of credit bears interest equal to the prime rate plus 0.50% (overall interest rate of 3.75% at July 31, 2013). The line of credit requires minimum monthly payments consisting of interest only. The line of credit is secured by all business assets, inventory, equipment, accounts, general intangibles, chattel paper, documents, instruments and letter of credit rights of the Company. The line of credit is for an unspecified time until the bank notifies the Company of the Final Availability Date, at which time payments on the line of credit become the sum of: (a) accrued interest and (b) 1/60th of the unpaid principal balance immediately following the Final Availability Date, which equates to a five-year payment period. The balance due on the line of credit as of July 31, 2013 was $245,482. Since the earliest the line of credit is due and payable is over a five year period and the Company believes that it could obtain a comparable replacement line of credit elsewhere, the entire line of credit is included in long-term liabilities. The unused amount under the line of credit available to the Company at July 31, 2013 was $4,518.


Employment Agreements


From time to time, the Company enters into employment agreements with certain of its employees. These agreements typically include bonuses, some of which were performance-based in nature. During the three months ended July 31, 2013, the Company renegotiated employment agreements.  In contrast to the previous employment agreement, the new employment agreements do not include any guaranteed annual bonuses.


Legal Matters


From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of July 31, 2013, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations and there are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest other than described below.


On February 11, 2013, HEMG and Mr. Spada sued us, certain senior management members and our directors in state court in New York seeking damages arising from losses and other matters incurred in the operation of the Company's business since May 2011, our filings with the SEC and the DOE where we stated that HEMG and Mr. Spada borrowed $2.2 million without board authority and our failure to use our best efforts to purchase certain shares of common stock from HEMG following an April 2012 agreement. While we have been advised by our counsel that the lawsuit is baseless, we cannot assure you that we will be successful. Defending the litigation will be expensive and divert our management from the Company's business. If we are unsuccessful, the damages we pay may be material.


Regulatory Matters


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


To participate in the Title IV programs, an institution must be authorized to offer its programs of instruction by the relevant agencies of the State in which it is located, and since July 2011, potentially in the States where an institution offers postsecondary education through distance education. In addition, an institution must be accredited by an accrediting agency recognized by the DOE and certified as eligible by the DOE. The DOE will certify an institution to participate in the Title IV programs only after the institution has demonstrated compliance with the HEA and the DOE's extensive academic, administrative, and financial regulations regarding institutional eligibility and certification. An institution must also demonstrate its compliance with these requirements to the DOE on an ongoing basis. Aspen University performs periodic reviews of its compliance with the various applicable regulatory requirements. As Title IV funds received in fiscal 2012 represented approximately 18% of the Company's cash revenues (including revenues from discontinued operations), as calculated in accordance with Department of Education guidelines, the loss of Title IV funding would have a material effect on the Company's future financial performance.


On March 27, 2012 and on August 31, 2012, Aspen University provided the DOE with letters of credit for which the due date was extended to December 31, 2013. The DOE may impose additional or different terms and conditions in any final provisional program participation agreement that it may issue (See Note 2 "Restricted Cash").


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


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


Return of Title IV Funds


An institution participating in Title IV programs must correctly calculate the amount of unearned Title IV program funds that have been disbursed to students who withdraw from their educational programs before completion and must return those unearned funds in a timely manner, generally within 45 days of the date the school determines that the student has withdrawn. Under Department regulations, failure to make timely returns of Title IV program funds for 5% or more of students sampled on the institution's annual compliance audit in either of its two most recently completed fiscal years can result in the institution having to post a letter of credit in an amount equal to 25% of its required Title IV returns during its most recently completed fiscal year. If unearned funds are not properly calculated and returned in a timely manner, an institution is also subject to monetary liabilities or an action to impose a fine or to limit, suspend or terminate its participation in Title IV programs.


Delaware Approval to Confer Degrees


Aspen University is a Delaware corporation. Delaware law requires an institution to obtain approval from the Delaware Department of Education ("Delaware DOE") before it may incorporate with the power to confer degrees. On July 3, 2012, Aspen University received notice from the Delaware DOE that it is granted provisional approval status effective until June 30, 2015. Aspen University is authorized by the Colorado Commission on Education to operate in Colorado as a degree granting institution.


Letter of Credit


The Company maintains a letter of credit under a DOE requirement (See Note 2 "Restricted Cash").

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Stockholders' Equity
3 Months Ended
Jul. 31, 2013
Stockholders' Equity [Abstract]
Stockholders' Equity

Note 9. Stockholders' Equity


Common Stock


As part of two contracts entered into during the three months ended July 31, 2013, the Company issued restricted stock to two firms as part of their fees for services. The fair value of the stock issued was set up as a prepaid expense and is being amortized over the service period of the contract. On June 27, 2013, the Company issued one firm 317,143 shares of its common stock valued at $0.35 per share (based on recent sales of shares by the Company) to an investor relations firm pursuant to a service agreement with two service components, one for three months and one for 12 months. The $111,000 of expense is being recognized in two pieces, $90,000 over 12 months and $21,000 over three months. On July 24, 2013, the Company issued the second firm 300,000 shares of its common stock valued at $0.35 per share (based on recent sales of shares by the Company) to a business development consultant pursuant to a six month consulting agreement. The $105,000 of expense is being recognized over the service period of the contract.


Warrants


A summary of the Company's warrant activity during the three months ended July 31, 2013 is presented below:


                                 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

Weighted

 

 

Average

 

 

 

 

 

 

 

 

 

Average

 

 

Remaining

 

 

Aggregate

 

 

 

Number of

 

 

Exercise

 

 

Contractual

 

 

Intrinsic

 

Warrants

 

Shares

 

 

Price

 

 

Term

 

 

Value

 

Balance Outstanding, April 30, 2013

 

 

9,090,292

 

 

$

0.46

 

 

 

 

 

 

 

Granted

 

 

1,115,026

 

 

 

0.33

 

 

 

 

 

 

 

Exercised

 

 

-

 

 

 

-

 

 

 

 

 

 

 

Forfeited

 

 

(40,000

)

 

 

0.50

 

 

 

 

 

 

 

Expired

 

 

-

 

 

 

-

 

 

 

 

 

 

 

Balance Outstanding, July 31, 2013

 

 

10,165,318

 

 

$

0.45

 

 

 

4.1

 

 

$

51,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable, July 31, 2013

 

 

10,165,318

 

 

$

0.45

 

 

 

4.1

 

 

$

51,862

 


The Company issued 1,115,026 warrants to a placement agent as a fee related to prior investments. There was no accounting effect for this warrant issuance.


Certain of the Company's warrants contain price protection. The Company evaluated whether the price protection provision of the warrant would cause derivative treatment. In its assessment, the Company determined that since its shares are not readily convertible to cash due to an inactive trading market, the warrants are excluded from derivative treatment.


Stock Incentive Plan and Stock Option Grants to Employees and Directors


Immediately following the closing of the Reverse Merger, on March 13, 2012, the Company adopted the 2012 Equity Incentive Plan (the "Plan") that provides for the grant of 2,500,000 shares (increased to 5,600,000 shares effective September 28, 2012, to 8,000,000 shares effective January 16, 2013 and to 9,300,000 on May 14, 2013) in the form of incentive stock options, non-qualified stock options, restricted shares, stock appreciation rights and restricted stock units to employees, consultants, officers and directors. On January 16, 2013, 1,291,167 options were modified to be Plan options. There was no accounting effect for such modifications. As of July 31, 2013, 459,408 shares were remaining under the Plan for future issuance.


During the three months ended July 31, 2013, the Company granted to employees 1,536,211 stock options, all of which were under the Plan, having an exercise price of $0.35 per share. 200,000 of these options vest pro rata over two years on each anniversary date, 545,000 of these options vest pro rata over three years on each anniversary date and 791,211 vest over 7 months starting June 30, 2013. All options expire five years from the grant date. The total fair value of stock options granted to employees during the three months ended July 31, 2013 was $184,345, which is being recognized over the respective vesting periods. The Company recorded compensation expense of $148,608 for the three months ended July 31, 2013, in connection with outstanding employee stock options. The Company recorded compensation expense of $52,701 for the three months ended July 31, 2012, in connection with outstanding employee stock options.


The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of the Company's stock price over the expected term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates. The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors which are subject to ASC Topic 718 requirements. These amounts are estimates and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes compensation on a straight-line basis over the requisite service period for each award. The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted to employees during the three months ended July 31, 2013:


     

 

 

July 31,

Assumptions

 

2013

Expected life (years)

 

3.5

Expected volatility

 

46.5%

Weighted-average volatility

 

46.5%

Risk-free interest rate

 

0.38%

Dividend yield

 

0.00%

Expected forfeiture rate

 

3.9%


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


A summary of the Company's stock option activity for employees and directors during the three months ended July 31, 2013 is presented below:


                                 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

Weighted

 

 

Average

 

 

 

 

 

 

 

 

 

Average

 

 

Remaining

 

 

Aggregate

 

 

 

Number of

 

 

Exercise

 

 

Contractual

 

 

Intrinsic

 

Options

 

Shares

 

 

Price

 

 

Term

 

 

Value

 

Balance Outstanding, April 30, 2013

 

 

7,344,381

 

 

$

0.35

 

 

 

 

 

 

 

Granted

 

 

1,536,211

 

 

$

0.35

 

 

 

 

 

 

 

Exercised

 

 

-

 

 

 

 

 

 

 

 

 

 

 

Forfeited

 

 

(40,000

)

 

$

0.35

 

 

 

 

 

 

 

Expired

 

 

-

 

 

 

 

 

 

 

 

 

 

 

Balance Outstanding, July 31, 2013

 

 

8,840,592

 

 

$

0.35

 

 

 

4.2

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable, July 31, 2013

 

 

2,051,998

 

 

$

0.35

 

 

 

4.1

 

 

$

-

 


The weighted-average grant-date fair value of options granted to employees during the three months ended July 31, 2013 was $0.12.


As of July 31, 2013, there was $494,292 of total unrecognized compensation costs related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 4.23 years.


Stock Option Grants to Non-Employees


On March 15, 2012, the Company granted 175,000 stock options to non-employees, all of which were under the Plan, having an exercise price of $1.00 per share. The options vest pro rata over three years on each anniversary date; all options expire five years from the grant date. The total fair value of the stock options granted was $57,750, all of which was recognized immediately as these stock options were issued for prior services rendered. On December 17, 2012, the Company repriced the stock options issued from having an exercise price of $1.00 per share to $0.35 per share. Accordingly, the incremental increase in the fair value of $15,750 was recognized immediately.


There were no stock options granted to non-employees during the three months ended July 31, 2013. The Company recorded compensation expense of $748 and $0 for the three months ended July 31, 2013 and 2012, in connection with non-employee stock options.


The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted to non-employees during the three months ended July 31, 2013:


     

 

 

July 31,

Assumptions

 

2013

Expected life (years)

 

N/A

Expected volatility

 

N/A

Weighted-average volatility

 

N/A

Risk-free interest rate

 

N/A

Dividend yield

 

N/A


A summary of the Company's stock option activity for non-employees during the three months ended July 31, 2013 is presented below:


                                 

 

 

 

 

 

Weighted

 

 

Average

 

 

 

 

 

 

 

 

 

Average

 

 

Remaining

 

 

Aggregate

 

 

 

Number of

 

 

Exercise

 

 

Contractual

 

 

Intrinsic

 

Options

 

Shares

 

 

Price

 

 

Term

 

 

Value

 

Balance Outstanding, April 30, 2013

 

 

270,000

 

 

$

0.35

 

 

 

 

 

 

 

Granted

 

 

-

 

 

$

-

 

 

 

 

 

 

 

Exercised

 

 

-

 

 

 

 

 

 

 

 

 

 

 

Forfeited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expired

 

 

-

 

 

 

 

 

 

 

 

 

 

 

Balance Outstanding, July 31, 2013

 

 

270,000

 

 

$

0.35

 

 

 

4.3

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable, July 31, 2013

 

 

47,250

 

 

 

N/A

 

 

 

N/A

 

 

 

N/A

 


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Related Party Transactions
3 Months Ended
Jul. 31, 2013
Related Party Transactions [Abstract]
Related Party Transactions

Note 10. Related Party Transactions


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

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Subsequent Events
3 Months Ended
Jul. 31, 2013
Subsequent Events [Abstract]
Subsequent Events

Note 11. Subsequent Events


In September 2013, the Company and an institutional investor (the "Institutional Investor") signed a Term Sheet with respect to a loan of up to $2,240,000 to be evidenced by 18 month original issue discount convertible debentures (the "Debentures") with gross proceeds of $2,000,000. The investor has agreed, subject to completion of due diligence, execution of a definitive Securities Purchase Agreement and customary closing conditions to lend the Company $1,500,000.  Payments on the Debentures are due 25% on November 1, 2014, 25% on January 1, 2015 and the remaining 50% on April 1, 2015 as a final payment. The Company has the option to pay the interest or principal in stock subject to certain "Equity Conditions" such as giving notice of its intent 20 trading days beforehand. The Company expects to receive the remaining $500,000 from other investors. To this end, in September 2013 Company entered into an engagement agreement with Laidlaw & Co. ("Laidlaw") to act as placement agent for the offering and receive customary compensation. Laidlaw has introduced the Institutional Investor. In addition, in September 2013 the Company entered into a letter of intent with Olympus Securities, LLC to raise the remaining $500,000 in exchange for customary compensation.


The Term Sheet provides that the Debentures may be converted at the holder's option at $0.3325 per share at any time after the closing. Warrants for 100% of the number of shares of common stock that could be bought at the conversion price will be issued at closing.  The warrants will have a five-year term and be exercisable for cash if an outstanding registration statement is in effect within 90 days of closing. The Debentures will bear 8% per annum interest and be amortizable in installments over their term. There can be no assurances that the offering will close and that the Company will receive any net proceeds.

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Significant Accounting Policies (Policies)
3 Months Ended
Jul. 31, 2013
Significant Accounting Policies [Abstract]
Principles of Consolidation

Principles of Consolidation


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

Use of Estimates

Use of Estimates


The preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts in the unaudited condensed consolidated financial statements. Actual results could differ from those estimates. Significant estimates in the accompanying unaudited condensed consolidated financial statements include the allowance for doubtful accounts and other receivables, the valuation of collateral on certain receivables, amortization periods and valuation of courseware and software development costs, valuation of stock-based compensation, the valuation of net assets and liabilities from discontinued operations and the valuation allowance on deferred tax assets.

Restricted cash

Restricted Cash


Restricted cash represents amounts pledged as security for letters of credit for transactions involving Title IV programs. The Company considers $265,310 as restricted cash (shown as a current asset as of July 31, 2013) until such letter of credit expires on December 31, 2013. As of July 31, 2013, the account bears interest of 0.20%.

Fair Value Measurements

Fair Value Measurements


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


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

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

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


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

Revenue Recognition and Deferred Revenue

Revenue Recognition and Deferred Revenue


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

Revenue Recognition and Deferred Revenue - Discontinued Operations

Revenue Recognition and Deferred Revenue - Discontinued Operations


The Company enters into certain revenue sharing arrangements with consultants whereby the consultants will develop course content primarily for technology-related courses, recommend, but not select, faculty, lease equipment on behalf of the Company for instructional purposes for the on-site laboratory portion of distance learning courses and make introductions to corporate and government sponsoring organizations that provide students for the courses. The Company has evaluated ASC 605-45 "Principal Agent Considerations" and determined that there are more indicators than not that the Company is the primary obligor in the arrangements since the Company establishes the tuition, interfaces with the student or sponsoring organization, selects the faculty, is responsible for delivering the course, is responsible for issuing any degrees or certificates, and is responsible for collecting the tuition and fees. The gross tuition and fees are included in revenues while the revenue sharing payments are included in instructional costs and services, an operating expense. As a result of presenting this component as discontinued operations, the revenues are now included in income (loss) from discontinued operations, net of income taxes for all periods presented (See Note 1).

Net Loss Per Share

Net Loss Per Share


Net loss per common share is based on the weighted average number of common shares outstanding during each period. Options to purchase 9,110,592 and 2,070,000 common shares, warrants to purchase 9,090,292 and 882,500 common shares, and $800,000 and $650,000 of convertible debt (convertible into 1,357,143 and 951,126 common shares) were outstanding during the three months ended July 31, 2013 and 2012, respectively, but were not included in the computation of diluted loss per share because the effects would have been anti-dilutive. The options, warrants and convertible debt are considered to be common stock equivalents and are only included in the calculation of diluted earnings per common share when their effect is dilutive.

Recent Accounting Pronouncements

Recent Accounting Pronouncements


We have implemented all new accounting standards that are in effect and that may impact our unaudited consolidated financial statements and do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our consolidated financial position or results of operations.

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Nature of Operations and Going Concern (Tables)
3 Months Ended
Jul. 31, 2013
Nature of Operations and Going Concern [Abstract]
Schedule of Discontinued Operations

The following table shows the results of the "Smart Home Integration Certificate" program component included in the income (loss) from discontinued operations:


                 

 

 

For the

Three Months Ended

 

 

 

July 31,

 

 

 

2013

 

 

2012

 

 

 

 

 

 

 

 

Revenues

 

$

222,625

 

 

$

659,790

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

Instructional costs and services

 

 

200,362

 

 

 

569,747

 

Total costs and expenses

 

 

200,362

 

 

 

569,747

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations, net of income taxes

 

$

22,263

 

 

$

90,043

 


The major classes of assets and liabilities of discontinued operations on the balance sheet are as follows:


                 

 

 

July 31,

 

 

April 30,

 

 

 

2013

 

 

2013

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

-

 

 

$

-

 

Accounts receivable, net of allowance of $295,045 and $295,045, respectively

 

 

257,322

 

 

 

113,822

 

Other current assets

 

 

-

 

 

 

-

 

Net assets from discontinued operations

 

$

257,322

 

 

$

113,822

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,178

 

 

$

1,178

 

Accrued expenses

 

 

202,389

 

 

 

70,201

 

Deferred revenue

 

 

129,250

 

 

 

53,125

 

Net liabilities from discontinued operations

 

$

332,817

 

 

$

124,504

 


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Property and Equipment (Tables)
3 Months Ended
Jul. 31, 2013
Property and Equipment [Abstract]
Schedule of Property and Equipment

Property and equipment consisted of the following at July 31, 2013 and April 30, 2013:


                 

 

 

July 31,

 

 

April 30,

 

 

 

2013

 

 

2013

 

Call center equipment

 

$

121,313

 

 

$

121,313

 

Computer and office equipment

 

 

64,336

 

 

 

61,036

 

Furniture and fixtures

 

 

32,914

 

 

 

32,914

 

Library (online)

 

 

100,000

 

 

 

100,000

 

Software

 

 

1,619,226

 

 

 

1,518,142

 

 

 

 

1,937,789

 

 

 

1,833,405

 

Accumulated depreciation and amortization

 

 

(648,629

)

 

 

(569,665

)

Property and equipment, net

 

$

1,289,160

 

 

$

1,263,740

 


Schedule of Software, net

Software consisted of the following at July 31, 2013 and April 30, 2013:


                 

 

 

July 31,

 

 

April 30,

 

 

 

2013

 

 

2013

 

Software

 

$

1,619,226

 

 

$

1,518,142

 

Accumulated amortization

 

 

(458,519

)

 

 

(386,599

)

Software, net

 

$

1,160,707

 

 

$

1,131,543

 


Schedule of estimated future amortization expense

The following is a schedule of estimated future amortization expense of software at July 31, 2013:


         

Year Ending April 30,

 

 

 

2014

 

$

242,884

 

2015

 

 

323,845

 

2016

 

 

322,999

 

2017

 

 

200,267

 

2018

 

 

70,712

 

Total

 

$

1,160,707

 


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Courseware (Tables)
3 Months Ended
Jul. 31, 2013
Courseware [Abstract]
Schdule of Courseware, Net

Courseware consisted of the following at July 31, 2013 and April 30, 2013:


                 

 

 

July 31,

 

 

April 30,

 

 

 

2013

 

 

2013

 

Courseware

 

$

2,098,038

 

 

$

2,097,538

 

Accumulated amortization

 

 

(1,919,914

)

 

 

(1,889,443

)

Courseware, net

 

$

178,124

 

 

$

208,095

 


Schedule of Courseware Future Amortization Expense

The following is a schedule of estimated future amortization expense of courseware at July 31, 2013:


         

Year Ending April 30,

 

 

 

2014

 

$

74,859

 

2015

 

 

65,117

 

2016

 

 

27,830

 

2017

 

 

9,196

 

2018

 

 

1,122

 

Total

 

$

178,124

 


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Stockholders' Equity (Tables)
3 Months Ended
Jul. 31, 2013
Stockholders' Equity [Abstract]
Schedule of Warrants Activity

A summary of the Company's warrant activity during the three months ended July 31, 2013 is presented below:


                                 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

Weighted

 

 

Average

 

 

 

 

 

 

 

 

 

Average

 

 

Remaining

 

 

Aggregate

 

 

 

Number of

 

 

Exercise

 

 

Contractual

 

 

Intrinsic

 

Warrants

 

Shares

 

 

Price

 

 

Term

 

 

Value

 

Balance Outstanding, April 30, 2013

 

 

9,090,292

 

 

$

0.46

 

 

 

 

 

 

 

Granted

 

 

1,115,026

 

 

 

0.33

 

 

 

 

 

 

 

Exercised

 

 

-

 

 

 

-

 

 

 

 

 

 

 

Forfeited

 

 

(40,000

)

 

 

0.50

 

 

 

 

 

 

 

Expired

 

 

-

 

 

 

-

 

 

 

 

 

 

 

Balance Outstanding, July 31, 2013

 

 

10,165,318

 

 

$

0.45

 

 

 

4.1

 

 

$

51,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable, July 31, 2013

 

 

10,165,318

 

 

$

0.45

 

 

 

4.1

 

 

$

51,862

 


Schedule of Assumptions Used In Valuing Employee Stock Options

The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted to employees during the three months ended July 31, 2013:


     

 

 

July 31,

Assumptions

 

2013

Expected life (years)

 

3.5

Expected volatility

 

46.5%

Weighted-average volatility

 

46.5%

Risk-free interest rate

 

0.38%

Dividend yield

 

0.00%

Expected forfeiture rate

 

3.9%


Schedule of Employee and Director Stock Option Activity

A summary of the Company's stock option activity for employees and directors during the three months ended July 31, 2013 is presented below:


                                 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

Weighted

 

 

Average

 

 

 

 

 

 

 

 

 

Average

 

 

Remaining

 

 

Aggregate

 

 

 

Number of

 

 

Exercise

 

 

Contractual

 

 

Intrinsic

 

Options

 

Shares

 

 

Price

 

 

Term

 

 

Value

 

Balance Outstanding, April 30, 2013

 

 

7,344,381

 

 

$

0.35

 

 

 

 

 

 

 

Granted

 

 

1,536,211

 

 

$

0.35

 

 

 

 

 

 

 

Exercised

 

 

-

 

 

 

 

 

 

 

 

 

 

 

Forfeited

 

 

(40,000

)

 

$

0.35

 

 

 

 

 

 

 

Expired

 

 

-

 

 

 

 

 

 

 

 

 

 

 

Balance Outstanding, July 31, 2013

 

 

8,840,592

 

 

$

0.35

 

 

 

4.2

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable, July 31, 2013

 

 

2,051,998

 

 

$

0.35

 

 

 

4.1

 

 

$

-

 


Schedule of Assumptions Used In Valuing Non-Employee Stock Options

The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted to non-employees during the three months ended July 31, 2013:


     

 

 

July 31,

Assumptions

 

2013

Expected life (years)

 

N/A

Expected volatility

 

N/A

Weighted-average volatility

 

N/A

Risk-free interest rate

 

N/A

Dividend yield

 

N/A

Schedule of Non-Employee Stock Option Activity

A summary of the Company's stock option activity for non-employees during the three months ended July 31, 2013 is presented below:


                                 

 

 

 

 

 

Weighted

 

 

Average

 

 

 

 

 

 

 

 

 

Average

 

 

Remaining

 

 

Aggregate

 

 

 

Number of

 

 

Exercise

 

 

Contractual

 

 

Intrinsic

 

Options

 

Shares

 

 

Price

 

 

Term

 

 

Value

 

Balance Outstanding, April 30, 2013

 

 

270,000

 

 

$

0.35

 

 

 

 

 

 

 

Granted

 

 

-

 

 

$

-

 

 

 

 

 

 

 

Exercised

 

 

-

 

 

 

 

 

 

 

 

 

 

 

Forfeited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expired

 

 

-

 

 

 

 

 

 

 

 

 

 

 

Balance Outstanding, July 31, 2013

 

 

270,000

 

 

$

0.35

 

 

 

4.3

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable, July 31, 2013

 

 

47,250

 

 

 

N/A

 

 

 

N/A

 

 

 

N/A

 


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Nature of Operations and Going Concern (Details) (USD $)
1 Months Ended 3 Months Ended 1 Months Ended
Feb. 29, 2012
Feb. 27, 2012
Feb. 25, 2012
Jul. 31, 2013
Jul. 31, 2012
Sep. 30, 2013
Subsequent Event [Member]
Scenario, Forecast [Member]
Sep. 30, 2013
Subsequent Event [Member]
Minimum [Member]
Scenario, Forecast [Member]
Sep. 30, 2013
Subsequent Event [Member]
Maximum [Member]
Scenario, Forecast [Member]
Nature of Operations and Going Concern [Abstract]
Net loss $ 1,105,576 $ 1,752,227
Negative cash flows from operations 1,013,268 1,462,782
Subsequent Event [Line Items]
Discount convertible debentures 1,500,000 2,240,000
Term of debentures 2 years 2 years 2 years 18 months
Proceeds from convertible debentures    947,000 2,000,000
Proceeds to be received from other investors $ 500,000
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Nature of Operations and Going Concern (Schedule of Discontinued Operations) (Details) (USD $)
3 Months Ended
Jul. 31, 2013
Jul. 31, 2012
Apr. 30, 2013
Discontinued Operations
Revenues $ 222,625 $ 659,790
Instructional costs and services 200,362 569,747
Total costs and expenses 200,362 569,747
Income (loss) from discontinued operations, net of income taxes 22,263 90,043
Assets
Cash and cash equivalents      
Accounts receivable, net of allowance of $295,045 and $295,045, respectively 257,322 113,822
Other current assets      
Net assets from discontinued operations 257,322 113,822 113,822
Liabilities
Accounts payable 1,178 1,178
Accrued expenses 202,389 70,201
Deferred revenue 129,250 53,125
Net liabilities from discontinued operations $ 332,817 $ 124,504
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Significant Accounting Policies (Details) (USD $)
Jul. 31, 2013
Apr. 30, 2013
Jul. 31, 2013
Stock Options [Member]
Jul. 31, 2012
Stock Options [Member]
Jul. 31, 2013
Warrant [Member]
Jul. 31, 2012
Warrant [Member]
Jul. 31, 2013
Convertible Debt [Member]
Jul. 31, 2012
Convertible Debt [Member]
Significant Accounting Policies [Abstract]
Restricted cash $ 265,310 $ 265,173
Letter of credit interest rate 0.20%
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities 9,110,592 2,070,000 9,090,292 882,500 1,357,143 951,126
Convertible debt $ 800,000 $ 650,000
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Secured Note and Accounts Receivable - Related Parties (Details) (USD $)
1 Months Ended 1 Months Ended
Mar. 13, 2012
Jul. 31, 2013
Jul. 24, 2013
Jun. 27, 2013
Apr. 30, 2013
Sep. 30, 2012
Mar. 08, 2012
CEO [Member]
Dec. 01, 2008
Parent Company [Member]
Mar. 30, 2008
Parent Company [Member]
Mar. 13, 2012
Parent Company [Member]
Sep. 16, 2011
Parent Company [Member]
Mar. 13, 2012
Third Party [Member]
Related Party Transaction [Line Items]
Courseware sales $ 600,000 $ 455,000
Series C Preferred Shares pledged by HEMG 772,793
Series C Preferred Shares pledeged by HEMG, converted to common shares 654,850
Common Shares Pledged 117,943
Share Price $ 0.5 $ 0.35 $ 0.35 $ 0.35 $ 1 $ 0.5
Accounts receivable, secured - related party, net of allowance 270,478 270,478
Allowance for doubtful accounts 502,315 502,315
Third Party Investors Purchased Shares 336,000 400,000
Purchase Value Of Shares 168,000
Company Purchased Shares 264,000
Company Purchased Shares Value $ 132,000
Accounts Receivable Secured Related Party Extended Due Date Sep 30, 2014
Shares guaranteed to be purchased by the Company 600,000
Shares the Company guaranteed it would use its best efforts to purchase from HEMG and resell to investors 1,400,000
Shares Company shall consent to additional private transfers 500,000
Shares HEMG agreed to not sell, pledge or otherwise transfer 142,500
Dispute regarding the Company's claim that HEMG sold 131,500 common shares of the Company without having enough authorized shares 131,500
Shares a stockholder did not receive 11,000
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Property and Equipment (Details) (USD $)
3 Months Ended
Jul. 31, 2013
Jul. 31, 2012
Property and Equipment [Abstract]
Depreciation and amortization $ 78,694 $ 62,994
Software amortization expense $ 71,920 $ 55,755
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Property and Equipment (Schedule of Property and Equipment) (Details) (USD $)
Jul. 31, 2013
Apr. 30, 2013
Property, Plant and Equipment [Line Items]
Property and equipment, gross $ 1,937,789 $ 1,833,405
Less accumulated depreciation and amortization (648,629) (569,665)
Total property and equipment, net 1,289,160 1,263,740
Call center equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross 121,313 121,313
Computer and office equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross 64,336 61,036
Furniture and fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross 32,914 32,914
Library (online) [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross 100,000 100,000
Software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross $ 1,619,226 $ 1,518,142
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Property and Equipment (Schedule of Software, Net) (Details) (Software [Member], USD $)
Jul. 31, 2013
Apr. 30, 2013
Software [Member]
Property, Plant and Equipment [Line Items]
Software $ 1,619,226 $ 1,518,142
Accumulated amortization (458,519) (386,599)
Total $ 1,160,707 $ 1,131,543
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Property and Equipment (Schedule of Estimated Future Amortization Expense) (Details) (Software [Member], USD $)
Jul. 31, 2013
Apr. 30, 2013
Software [Member]
Property, Plant and Equipment [Line Items]
2014 $ 242,884
2015 323,845
2016 322,999
2017 200,267
2018 70,712
Total $ 1,160,707 $ 1,131,543
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Courseware (Details) (USD $)
3 Months Ended
Jul. 31, 2013
Jul. 31, 2012
Courseware [Abstract]
Courseware Costs Capitalized $ 500
Courseware Amortization Expense $ 30,471 $ 35,578
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Courseware (Schedule of Courseware, Net) (Details) (Courseware [Member], USD $)
Jul. 31, 2013
Apr. 30, 2013
Courseware [Member]
Finite-Lived Intangible Assets [Line Items]
Courseware $ 2,098,038 $ 2,097,538
Accumulated amortization (1,919,914) (1,889,443)
Total $ 178,124 $ 208,095
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Courseware (Schedule of Courseware Future Amortization Expense) (Details) (Courseware [Member], USD $)
Jul. 31, 2013
Apr. 30, 2013
Courseware [Member]
Finite-Lived Intangible Assets [Line Items]
2014 $ 74,859
2015 65,117
2016 27,830
2017 9,196
2018 1,122
Total $ 178,124 $ 208,095
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Loans Payable (Details) (USD $)
1 Months Ended 3 Months Ended 1 Months Ended
Feb. 29, 2012
Feb. 27, 2012
Feb. 25, 2012
Jul. 31, 2013
Apr. 30, 2013
Jun. 28, 2013
CEO [Member]
Aug. 14, 2012
CEO [Member]
Mar. 13, 2012
CEO [Member]
Short-term Debt [Line Items]
Loan payable $ 1,000,491 $ 491 $ 1,000,000
Term of debentures 2 years 2 years 2 years 6 months
Interest rate 0.19% 0.19% 0.19% 10.00% 5.00% 0.19%
Maturity date Aug 31, 2014 Dec 31, 2013 Aug 31, 2014 Aug 31, 2014
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Convertible Notes Payable (Details) (USD $)
1 Months Ended 3 Months Ended 1 Months Ended
Feb. 29, 2012
Feb. 27, 2012
Feb. 25, 2012
Jul. 31, 2013
Apr. 30, 2013
Jun. 28, 2013
CEO [Member]
Aug. 14, 2012
CEO [Member]
Mar. 13, 2012
CEO [Member]
Debt Instrument [Line Items]
Convertible notes payable $ 50,000 $ 50,000 $ 100,000 $ 300,000 $ 300,000
Interest rate 0.19% 0.19% 0.19% 10.00% 5.00% 0.19%
Term of debentures 2 years 2 years 2 years 6 months
Debt conversion, price per share $ 1 $ 1 $ 1 $ 0.35 $ 1
Maturity date Aug 31, 2014 Dec 31, 2013 Aug 31, 2014 Aug 31, 2014
Convertible notes payable, current portion 200,000 200,000
Convertible notes payable, noncurrent portion 600,000 600,000
Convertible notes payable, total $ 50,000 $ 50,000 $ 100,000 $ 300,000 $ 300,000
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Commitments and Contingencies (Details) (USD $)
12 Months Ended
Apr. 30, 2013
Jul. 31, 2013
Commitments and Contingencies [Abstract]
Line of credit, maximum borrowing capacity $ 250,000
Line of credit, interest rate at period end 3.75%
Line of credit, outstanding 245,482
Line of credit, remaining available $ 4,518
Title IV Funds received as a percentage of revenue 18.00%
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Stockholders' Equity (Details) (USD $)
1 Months Ended 3 Months Ended
Jul. 24, 2013
Jun. 27, 2013
Jul. 31, 2013
May 14, 2013
Jan. 16, 2013
Sep. 30, 2012
Sep. 28, 2012
Mar. 13, 2012
Stockholders' Equity [Abstract]
Issuance of common shares for services, shares 300,000 317,143
Common stock, price per share $ 0.35 $ 0.35 $ 0.35 $ 0.5
Issuance of common shares for services $ 105,000 $ 111,000 $ 216,000
Equity Incentive Plan, shares authorized 9,300,000 8,000,000 5,600,000 2,500,000
Shares available for grant 459,408
Option expiration period 5 years
Stock options modified to be plan options 1,291,167
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Stockholders' Equity (Schedule of Warrants) (Details) (Warrant [Member], USD $)
3 Months Ended
Jul. 31, 2013
Warrant [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning Balance 9,090,292
Granted 1,115,026
Exercised   
Forfeited (40,000)
Expired   
Ending Balance 10,165,318
Weighted average exercise price, beginning $ 0.46
Weighted average exercise price, granted $ 0.33
Weighted average exercise price, forfeited $ 0.5
Weighted average exercise price, ending $ 0.45
Weighted Average Remaining Contractual Term, Outstanding 4 years 1 month 6 days
Aggregate Intrinsic Value, Outstanding $ 51,862
Exercisable 10,165,318
Weighted Average Exercise Price, Exercisable $ 0.45
Weighted Average Remaining Contractual Term, Exercisable 4 years 1 month 6 days
Aggregate Intrinsic Value, Exercisable $ 51,862
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Stockholders' Equity (Schedule of Assumptions Used In Valuing Stock Options) (Details)
3 Months Ended
Jul. 31, 2013
Stock Incentive Plan To Employees And Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (years) 3 years 6 months
Expected volatility 46.50%
Weighted-average volatility 46.50%
Risk-free interest rate 0.38%
Dividend yield 0.00%
Expected forfeiture rate 3.90%
Stock Incentive Plan To Non Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility   
Weighted-average volatility   
Risk-free interest rate   
Dividend yield   
Expected forfeiture rate   
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Stockholders' Equity (Schedule of Stock Option Activity) (Details) (USD $)
1 Months Ended 3 Months Ended
Dec. 17, 2012
Mar. 15, 2012
Jul. 31, 2013
Jul. 31, 2012
Stock Incentive Plan To Employees And Directors [Member]
Weighted Average Exercise Price
Weighted Average Exercise Price Outstanding, Beginning $ 0.35
Granted $ 0.35
Forfeited $ 0.35
Weighted Average Exercise Price Outstanding, Ending $ 0.35
Number of Shares
Options Outstanding, beginning balance 7,344,381
Granted 1,536,211
Exercised   
Forfeited (40,000)
Expired   
Options Outstanding, ending balance 8,840,592
Options Exercisable, Weighted Average Exercise Price $ 0.35
Options Exercisable, Weighted Average Remaining Contractual Life (Years) 4 years 1 month 6 days
Options Outstanding, Weighted Average Remaining Contractual Life (Years) 4 years 2 months 12 days
Options Exercisable, shares 2,051,998
Weighted average grant-date fair value of stock options granted $ 0.12
Unrecognized compensation cost $ 494,292
Weighted average recognition period 4 years 2 months 23 days
Options granted fair value $ 184,345
Share based compensation related to employees 148,608 52,701
Stock Incentive Plan To Employees And Directors [Member] | Two Year Prorata Vesting [Member]
Number of Shares
Granted 200,000
Vesting period 2 years
Stock Incentive Plan To Employees And Directors [Member] | Three Year Prorata Vesting [Member]
Number of Shares
Granted 545,000
Vesting period 3 years
Stock Incentive Plan To Employees And Directors [Member] | Seven Month Vesting [Member]
Number of Shares
Granted 791,211
Vesting period 7 months
Stock Incentive Plan To Non Employees [Member]
Weighted Average Exercise Price
Weighted Average Exercise Price Outstanding, Beginning $ 0.35
Granted $ 1
Weighted Average Exercise Price Outstanding, Ending $ 0.35
Number of Shares
Options Outstanding, beginning balance 270,000
Granted 175,000   
Exercised   
Forfeited   
Expired   
Options Outstanding, ending balance 270,000
Options Outstanding, Weighted Average Remaining Contractual Life (Years) 4 years 3 months 18 days
Options Exercisable, shares 47,250
Options granted fair value $ 57,750 $ 57,750
Share based compensation related to non-employees 748   
Award Modification, Incremental Compensation Cost $ 15,750
Award Modification Repriced stock options issued, decreased exercise price from $1.00 per share to $0.35 per share
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Subsequent Events (Details) (USD $)
1 Months Ended 3 Months Ended 1 Months Ended
Feb. 29, 2012
Feb. 27, 2012
Feb. 25, 2012
Jul. 31, 2013
Jul. 31, 2012
Sep. 30, 2013
Subsequent Event [Member]
Scenario, Forecast [Member]
Sep. 30, 2013
Subsequent Event [Member]
Minimum [Member]
Scenario, Forecast [Member]
Sep. 30, 2013
Subsequent Event [Member]
Maximum [Member]
Scenario, Forecast [Member]
Subsequent Event [Line Items]
Discount convertible debentures $ 1,500,000 $ 2,240,000
Term of debentures 2 years 2 years 2 years 18 months
Proceeds from convertible debentures    947,000 2,000,000
Interest rate 0.19% 0.19% 0.19% 8.00%
Debt conversion, price per share $ 1 $ 1 $ 1 $ 0.3325
Proceeds to be received from other investors $ 500,000
Warrant term 5 years
Warrant coverage of debentures 100.00%
Percentage of the note balance due on November 1, 2014 25.00%
Percentage of the note balance due on January 1, 2015 25.00%
Percentage of the note balance due on April 1, 2015 50.00%
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