UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended December 31, 2011

 

or

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from_____ to _____

 

Commission file number: 0-14807

 

AMERICAN LEARNING CORPORATION

(Exact name of registrant as specified in its charter)

 

New York	11-2601199
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One Jericho Plaza, Jericho,  New York	11753
(Address of principal executive offices)	(Zip Code)

 

(516) 938-8000

(Registrant's telephone number, including area code)

 

________________________________________________________________

Former name, former address and former fiscal year, if changed since last report

 

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

 

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

 

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

 

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

  

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

 

The number of shares outstanding of the Registrant’s common stock as of February 13, 2012 was 4,919,615.

 

 

AMERICAN LEARNING CORPORATION AND SUBSIDIARIES

 

INDEX

 

		Page No.
PART I  - FINANCIAL INFORMATION
Item 1.   Financial Statements
	Condensed Consolidated Balance Sheets as of December 31,
	2011 (unaudited) and March 31, 2011	3
	Condensed Consolidated Statements of Operations for the
	Three and Nine Months ended December 31, 2011
	and 2010 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the
	Nine Months ended December 31, 2011 and 2010
	(unaudited)	5
	Notes to Condensed Consolidated Financial Statements
	(unaudited)	6 - 9
Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations		10 – 11
Item 3.   Quantitative and Qualitative Disclosures About Market Risk		12
Item 4.   Controls and Procedures		12
PART II - OTHER INFORMATION
Item 6.   Exhibits		13
SIGNATURES		14

 

 

PART I - FINANCIAL INFORMATION

 

 

Item 1. Financial Statements.

 

AMERICAN LEARNING CORPORATION AND SUBSIDIARIES

 

Condensed Consolidated Balance Sheets

 

		Dec. 31, 2011				Mar. 31, 2011
		(Unaudited)
Assets
Current assets:
Cash and cash equivalents		$	3,057,197			$	2,579,249
Accounts receivable, net			565,021				689,908
Note receivable			180,000				180,000
Prepaid expenses and other current assets			58,588				137,531
Current assets of discontinued operations			—				872,553
Total current assets			3,860,806				4,459,241
Note receivable - net of current portion			150,000				270,000
Goodwill			145,000				145,000
Intangible assets, net			95,228				101,328
Property and equipment, net			123,097				132,810
Other assets			15,915				15,915
Total assets		$	4,390,046			$	5,124,294
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses		$	137,904			$	247,793
Accrued compensation and related taxes			277,819				283,358
Capital leases payable - current portion			—				7,801
Current liabilities of discontinued operations			—				342,913
Total current liabilities			415,723				881,865
Commitments
Stockholders' equity:
Common stock, $.01 par value.  Authorized
20,000,000 shares; issued 5,214,715 and
5,050,000 shares and outstanding 4,919,615
and 4,754,900 shares, respectively			52,147				50,500
Additional paid-in capital			5,984,956				5,599,099
Accumulated deficit			(1,595,507	)			(939,897	)
			4,441,596				4,709,702
Treasury stock, at cost			(467,273	)			(467,273	)
Total stockholders' equity			3,974,323				4,242,429
Total liabilities and stockholders' equity		$	4,390,046			$	5,124,294

 

See accompanying notes to condensed consolidated financial statements.

 

 

AMERICAN LEARNING CORPORATION AND SUBSIDIARIES

 

Condensed Consolidated Statements of Operations

 

(Unaudited)

  

		Three months ended								Nine months ended
		Dec. 31,				Dec. 31,				Dec. 31,				Dec. 31,
		2011				2010				2011				2010
Revenues		$	903,817			$	836,830			$	2,249,468			$	2,035,904
Cost of services			602,918				586,067				1,523,986				1,365,370
Gross margin			300,899				250,763				725,482				670,534
Selling, general and
administrative expenses			439,112				437,538				1,426,240				1,413,084
Operating loss from
continuing operations			(138,213	)			(186,775	)			(700,758	)			(742,550	)
Other income (expense):
Other income			—				—				1,951				1,226
Interest income			4,333				1,017				15,564				3,391
Interest expense			—				(437	)			(184	)			(1,556	)
Loss from continuing operations			(133,880	)			(186,195	)			(683,427	)			(739,489	)
Discontinued operations
Gain from discontinued
operations, net of tax			—				10,948				27,817				148,652
Net loss		$	(133,880	)		$	(175,247	)		$	(655,610	)		$	(590,837	)
Net income (loss) per share:
From continuing operations
– basic and diluted		$	(0.03	)		$	(0.04	)		$	(0.14	)		$	(0.16	)
From discontinued operations
– basic and diluted		$	0.00			$	0.00			$	0.01			$	0.03
Weighted average shares -
basic and diluted			4,919,615				4,754,900				4,883,012				4,754,900

 

See accompanying notes to condensed consolidated financial statements.

 

 

AMERICAN LEARNING CORPORATION AND SUBSIDIARIES

 

Condensed Consolidated Statements of Cash Flows

 

(Unaudited)

  

		Nine months ended
		Dec. 31,				Dec. 31,
		2011				2010
Cash flows from operating activities:
Net loss		$	(655,610	)		$	(590,837	)
Earnings from discontinued operations			(27,817	)			(148,652	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			54,120				75,105
Stock-based compensation expense			91,017				12,900
Bad debt expense			—				16,078
Changes in assets and liabilities:
Accounts receivable			124,887				(133,349	)
Prepaid expenses and other current assets			78,943				(27,389	)
Accounts payable and accrued expenses			(109,889	)			(74,678	)
Accrued compensation and related taxes			(5,539	)			(25,026	)
Net cash used in operating activities of continuing operations			(449,888	)			(895,848	)
Operating activities of discontinued operations			557,457				(118,577	)
Net cash provided by (used in) operating activities			107,569				(1,014,425	)
Cash flows from investing activities:
Proceeds from note receivable			120,000				—
Capital expenditures			(38,307	)			(42,504	)
Net cash provided by (used in) investing activities			81,693				(42,504	)
Cash flows from financing activities:
Proceeds from stock issuance			296,487				—
Payment of capital leases payable			(7,801	)			(15,351	)
Net cash provided by (used in) financing activities			288,686				(15,351	)
Net increase (decrease) in cash and cash equivalents			477,948				(1,072,280	)
Cash and cash equivalents - beginning of period			2,579,249				3,440,493
Cash and cash equivalents - end of period		$	3,057,197			$	2,368,213
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest		$	184			$	1,556

 

See accompanying notes to condensed consolidated financial statements.

 

 

AMERICAN LEARNING CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

December 31, 2011

(Unaudited)

 

Overview

 

American Learning Corporation (together with its subsidiaries, “we,” “our,” “us,” or the “Company”) provides a comprehensive range of services to children with developmental delays and disabilities in New York State and has developed a reputation for providing well-rounded therapeutic solutions through our wholly owned subsidiaries, Interactive Therapy Group Consultants, Inc. (“ITG”) and Signature Learning Resources, Inc.

 

Basis of Presentation

 

The accompanying unaudited consolidated financial statements and footnotes have been condensed and therefore do not contain all disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). In our opinion, these financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to make the consolidated financial position, results of operations and cash flows for the interim periods presented not misleading. Results for interim periods are not necessarily indicative of results which may be achieved for a full year.

 

Accordingly, these condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2011 (the “Annual Report”), as filed with the Securities and Exchange Commission (“SEC”).

 

Discontinued Operations

On March 31, 2011, we completed the disposition of certain assets of ITG, pursuant to an Asset Purchase Agreement (the “Agreement”) among the Company, ITG, Liberty Resources POST, LLC and John Torrens. In consideration of the purchase price provided for in the Agreement, the Company sold certain assets related to ITG’s business in the upstate region of New York State (the “Upstate Region”). ITG continues to operate in the downstate area of New York State (New York City and Long Island). Accordingly, the results of ITG’s operations from the Upstate Region have been classified as discontinued operations in all periods presented.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

 

Revenue Recognition

 

Revenue is recognized on a fee-for-service basis after services have been provided under contract terms, the service price is fixed or determinable, and collectibility is reasonably assured. In addition, revenue is also recognized monthly for services provided under tuition-based programs for our Special Education Itinerant Teachers (“SEIT”) contracts.

 

 

Credit Risk

 

Service revenue is concentrated within a limited number of clients throughout New York State; municipalities within New York State provide substantial and significant revenue to us. This concentration of customers may impact our overall exposure to credit risk, either positively or negatively, in that our customers may be similarly affected by changes in economic or other conditions in New York State. Over the past year, we have experienced delays in payments received from these municipalities as a result of the challenging economic climate and delays in funding to the municipalities from New York State. Although the accounts receivable for our services are deemed collectible, we will continue to actively monitor this issue when evaluating the adequacy of our allowance for doubtful accounts.

 

Goodwill and Intangible Assets

 

Goodwill represents the excess of the purchase price over the fair value of net assets acquired. Goodwill is tested for possible impairment at least annually.  We perform our tests as of March 31, the last day of our fourth fiscal quarter, unless an event occurs that would cause us to believe the value is impaired at an interim date. 

 

The following table presents certain information regarding our intangible assets at December 31, 2011:

		Estimated				Carrying				Accumulated
		Useful Lives				Value				Amortization				Net
Customer contracts			15 years			$	122,000			$	(26,772	)		$	95,228

 

Intangible assets are being amortized on a straight-line basis over their estimated useful lives. For the three and nine months ended December 31, 2011, amortization expense was $2,033 and $6,100, respectively. Assuming no changes in our intangible assets, estimated amortization expense for the remainder of the current fiscal year ending March 31, 2012 will be $2,033 and will be $8,133 in each of the four succeeding fiscal years.

 

We assess the recoverability of the carrying value of the identifiable intangible assets with finite useful lives, whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. 

Seasonality

 

Our business is moderately seasonal in nature based on the school year. Accordingly, our second fiscal quarter (the three month period ending September 30), which includes two full months during which schools are not in session (July and August), is the quarter in which we achieve our lowest volume of revenues.

 

Net Earnings (Loss) Per Share

 

Basic earnings (loss) per share is based on the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share reflects the maximum dilution from potential common shares issuable pursuant to the exercise of stock options and warrants, if dilutive, outstanding during each period. For the three and nine months ended December 31, 2011 and 2010, the inclusion of common stock equivalents in the calculation of diluted loss per share would be anti-dilutive.

 

 

Stock Option Plans

 

Stock-based compensation expense is measured at the grant date, based on the fair value of the award, and is recognized on a straight-line basis over the vesting period. During the three and nine months ended December 31, 2011, stock-based compensation totaling $3,500 and $8,767, respectively, was recognized based on the fair value of the stock options granted. Stock-based compensation totaling $900 and $12,900 was recognized during the three and nine months ended December 31, 2010, respectively.

We estimate the fair value of stock options granted using the Black-Scholes option pricing model. Under this method, the average fair value of stock options granted by the Company during the nine months ended December 31, 2011 was $1.56 per share. In addition to the exercise price of the awards, certain weighted average assumptions were used to estimate the fair value of stock option grants as follows: expected volatility of 95.8%, expected dividend yield of 0%, risk-free interest rate of 1.55% and an expected option term of 6 years.

 

At December 31, 2011, outstanding options to purchase 1,257,667 shares of the Company’s common stock are fully vested. In addition, certain option grants contain disposition restrictions which prohibit the sale of 50% of the shares acquired by exercising the awarded options until the first anniversary of the grant date and the remaining 50% of the shares acquired by exercising the awarded options until the second anniversary of the grant date. As of December 31, 2011, the fair value of unamortized stock-based compensation expense related to unvested stock options was approximately $29,034 which is expected to be recognized over a remaining vesting period of three years.

 

The following table summarizes information about stock option activity for the nine months ended December 31, 2011:

 

										Weighted
						Weighted				Average
						Average				Remaining				Agregate
						Exercise				Contractual				Intrinsic
		Shares				Price				Term				Value
Outstanding at March 31, 2011			1,296,000			$	2.11				6.3 years
Granted			20,000			$	2.14				10 years
Expired			(25,000	)		$	2.50				7.5 years
Outstanding at December 31, 2011			1,291,000			$	2.10				5.6 years			$	95,200
Exercisable at December 31, 2011			1,257,667			$	2.11				5.5 years			$	79,200

 

Aggregate intrinsic value represents the total pretax intrinsic value, based on options with exercise prices less than the Company’s closing price of $2.00 as of December 31, 2011, which would have been recognized by the option holders had these option holders exercised their options as of that date.

 

During September 2011, the Company issued warrants to purchase an aggregate of 75,000 shares of the Company’s common stock in connection with consulting services for investor relations services. The warrants have a four and one-half year term and are currently exercisable as follows: warrants to purchase 25,000 shares of common stock at an exercise price of $3.00 per share; warrants to purchase 25,000 shares of common stock at an exercise price of $4.00 per share; and warrants to purchase 25,000 shares of common stock at an exercise price of $5.00 per share. The shares underlying the warrants are not registered and are subject to certain trading restrictions.

 

The Company recognized $82,250 of stock-based compensation expense related to investor relations services based on a fair value weighted average of the warrants of $1.17. The fair values of the warrants was calculated using the Black-Scholes option pricing model with the following weighted average assumptions: expected volatility, 93.6%; risk-free interest rates of 0.97%; expected option term, four and one-half years; and expected dividend yields of 0%.

 

 

Unregistered Sale of Equity Securities

 

On June 30, 2011, the Company completed a private placement of 164,715 shares of the Company’s common stock (the “Shares”) to non-affiliated accredited investors at a per share price of $1.80, representing a 10% discount from the closing sale price reported on the NASDAQ Capital Market on June 29, 2011. Total aggregate proceeds of $296,487 were received by the Company.

The private placement was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(6) and Rule 506 of Regulation D under the Securities Act. The Company relied upon, among other things, representations from the investors that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as the basis for the exemption.

The Shares purchased under the private placement must be held indefinitely unless such Shares are registered under the Securities Act or an exemption from registration is available. However, the purchasers of the Shares have agreed not to dispose or attempt to dispose of the Shares prior to the one-year anniversary of purchase.

 

Subsequent Events

 

We have completed an evaluation of the impact of any subsequent events through the date these financial statements were issued and determined that there were no subsequent events requiring disclosure in or adjustment to these financial statements.

 

On January 13, 2012, we received a comment letter from the SEC relating to our Form 10-K for the fiscal year ended March 31, 2011 (“Form 10-K”), filed June 28, 2011, and our Quarterly Report on Form 10−Q for the fiscal period ended September 30, 2011 (“Form 10−Q”), filed November 14, 2011. We responded to the comment letter on January 26, 2012.

 

In our response, we provided additional requested information and agreed to revise the language and presentation used on certain disclosures on all future filings. In addition, we agreed to file certain contracts with customers as exhibits which, although not material at the time the agreements were signed, became material to continuing operations subsequent to the sale of net assets related to the Upstate Region. These contracts were filed as exhibits to our Current Report on Form 8-K filed on February 10, 2012.

 

We have made no attempt to modify or update disclosures presented in the Form 10-K or Form 10-Q. The modifications made in response to the comment letter shall not be deemed to be an admission that the Form 10-K or Form 10-Q included any untrue statement of a material fact or omitted to state a material fact necessary to make a statement not misleading.

 

Recently Issued Accounting Pronouncements

 

In September, 2011, the Financial Accounting Standards Board ratified ASU No. 2011-08 (“ASU 2011-08”) Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU 2011-08 permits an entity to first assess qualitative factors to determine whether it is more likely than not (a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount. After assessing qualitative factors, if an entity determines that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, no further testing is necessary.  If an entity determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value, then the traditional two-step goodwill impairment test must be performed.  The Company plans to perform its annual impairment test during the fourth quarter ending March 31, 2012. While ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, early adoption is permitted. The Company is currently evaluating the impact of ASU 2011-08 on its future goodwill impairment tests and early adoption is under consideration.

 

 

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

 

Forward Looking Statements

 

Except for the historical information contained herein, the matters discussed in this Report on Form 10-Q may contain forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, general economic and market conditions and our ability to successfully identify and thereafter consummate one or more acquisitions.

 

Critical Accounting Policies

 

Our significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements included in our Annual Report. A discussion of our critical accounting policies and estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations (the “MD&A”) in our Annual Report. There have been no material changes to the critical accounting policies or estimates reported in the MD&A section of our Annual Report.

 

Results of Operations – Three and Nine Months ended December 31, 2011 and 2010

 

Revenues for the three months ended December 31, 2011 were $903,817, an increase of approximately 8.0% from the $836,830 reported for the three month period ended December 31, 2010. Revenues generated for school staffing services to charter schools accounted for the majority of the increase with revenues of $573,024 during the three months ended December 31, 2011 compared to $463,270 in the corresponding period in the prior fiscal year.

 

Revenues for the nine months ended December 31, 2011 were $2,249,468, an increase of approximately 10.5% over the $2,035,904 reported for the nine months ended December 31, 2010 due to increases in school staffing and SEIT services of approximately 31.7% and 20.5%, respectively, over the comparable periods in the prior fiscal year. However, during the nine months ended December 31, 2011, revenues from early intervention (“EI”) services decreased $216,964 from EI revenues recorded in the nine month period ended December 31, 2010. New York City will not be granting EI contracts to any new providers in the upcoming request for proposal process and our agreement to subcontract our services to another approved provider has not been renewed.

 

Cost of services as a percentage of revenues for the three and nine month periods ended December 31, 2011 were approximately 66.7% and 67.7%, respectively. During the three and nine months ended December 31, 2010, cost of services as a percentage of revenues were approximately 70.0% and 67.1%, respectively. In the prior fiscal year, we experienced an increase in workers compensation premiums caused by a re-categorization of our clinicians into classifications that are associated with higher premium costs. The Company challenged this action and has successfully reversed this reclassification effective with its policy renewal in September 2011. The decrease in the cost of services as a percentage of revenues in the current three month period is in part a result of this reclassification.

 

Selling, general and administrative expenses for the quarterly periods ended December 31, 2011 and 2010 were $439,112 and $437,538, respectively. Selling, general and administrative expenses for the nine months ended December 31, 2011 and 2010 were $1,426,240 and $1,413,084, respectively. During the nine months ended December 31, 2011, the Company recorded stock-based compensation expense totaling $91,017 related to the issuance of stock options and warrants as compared to $12,900 of stock-based compensation recorded in the nine months ended December 31, 2010.

 

 

Interest income for the three and nine month periods ended December 31, 2011 was $4,333 and $15,564, respectively. Interest income for the three and nine months ended December 31, 2010 was $1,017 and $3,391, respectively. The increase in interest income was a result of the payment of interest on the note receivable and on delinquent receivables by certain charter schools in the current fiscal periods.

 

Liquidity and Capital Resources

 

At December 31, 2011, we had working capital of $3,445,083 as compared to working capital of $3,577,376 at March 31, 2011. We believe that we have sufficient liquidity to meet our needs for beyond the next twelve months.

 

During the nine months ended December 31, 2011, net cash provided by operating activities was $107,569, predominately attributable to the operating activities of discontinued operations totaling $557,457 offset by an operating loss of $655,610.

 

Cash flows from investing activities for the nine months ended December 31, 2011 included $120,000 of proceeds received from collections of the note receivable.

 

The Company completed a private placement of 164,715 shares of the Company’s common stock to non-affiliated accredited investors at a price of $1.80 per share on June 30, 2011. Total aggregate proceeds of $296,487 were received by the Company.

 

Future minimum lease payments under non-cancelable operating leases and subleases, exclusive of future escalation charges, for the remainder of the fiscal year ending March 31, 2012 and fiscal years ending thereafter are as follows:

 

		Operating
		Leases
2012		$	42,000
2013			168,000
2014			73,000
2015			47,000
2016			51,000
Thereafter			143,000
Total minimum lease payments		$	524,000

 

The Company remains liable under a lease for office space located in East Syracuse, NY which expires in April 2013. Since the Upstate Region has been classified as a discontinued operation, a provision of $36,424, net of matching payments to be made by the purchaser of the assets of the Upstate Region, has been recorded in the accompanying financial statements at December 31, 2011.

 

We are not aware of any pending or threatened legal action arising from the operations of our business that could have a material adverse effect on our consolidated financial condition or results of operations.

 

While we have not experienced any significant impact on our net revenues and profitability from the general slowdown of the economy or current global credit crisis, the continuing economic deterioration could have a negative impact in future periods.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements.

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

We are subject to interest rate risks that arise from normal business operations. Most of our cash and cash equivalents are invested at variable rates of interest and decreases in market interest rates have caused a related significant reduction in our interest income over prior periods.

 

Item 4. Controls and Procedures.

 

(a) Evaluation of Disclosure Controls and Procedures

 

Disclosure controls and procedures are designed to ensure the reliability of the financial statements and other disclosures included in this Report. As of the end of the fiscal quarter ended December 31, 2011, we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC filings.

 

(b) Changes in Internal Controls over Financial Reporting

 

There were no changes in our internal controls over financial reporting that occurred during the quarter ended December 31, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

 

We are aware that there is a lack of segregation of duties due to the small number of employees dealing with general administrative and financial reporting matters. However, we have decided that considering the employees involved and the control procedures in place, risks associated with such lack of segregation are mitigated by active management involvement and the potential benefits of adding employees to clearly segregate duties do not justify the expenses associated with such increases.

 

 

PART II - OTHER INFORMATION

 

Item 6. Exhibits.

 

Exhibit 31.1 Section 302 Principal Executive Officer Certification

 

Exhibit 31.2 Section 302 Principal Financial Officer Certification

 

Exhibit 32.1 Section 1350 Certification

 

Exhibit 32.2 Section 1350 Certification

 

 

SIGNATURES

 

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

 

	AMERICAN LEARNING CORPORATION
Date: February 14, 2012	By:	/s/ Gary Gelman
	Gary Gelman
	Chairman of the Board,
	President and Chief Executive Officer
Date: February 14, 2012	By:	/s/ Gary J. Knauer
	Gary J. Knauer
	Chief Financial Officer,
	Treasurer and Secretary