10-Q

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 September 30, 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 November 14, 2011 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 September 30, 2011 (unaudited) and March 31, 2011	3
	Condensed Consolidated Statements of Operations for the Three and Six Months ended September 30, 2011 and 2010 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Six Months ended September 30, 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	9 - 11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	11
Item 4.	Controls and Procedures	11 - 12
PART II - OTHER INFORMATION
Item 6.	Exhibits	13
SIGNATURES		14

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

AMERICAN LEARNING CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

	Sept. 30, 2011			Mar. 31, 2011
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	3,361,322		$	2,579,249
Accounts receivable, net		271,315			689,908
Note receivable		180,000			180,000
Prepaid expenses and other current assets		85,027			137,531
Current assets of discontinued operations		—			872,553
Total current assets		3,897,664			4,459,241
Note receivable - net of current portion		195,000			270,000
Goodwill		145,000			145,000
Intangible assets, net		97,261			101,328
Property and equipment, net		124,841			132,810
Other assets		15,915			15,915
Total assets	$	4,475,681		$	5,124,294
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses	$	149,910		$	247,793
Accrued compensation and related taxes		221,068			283,358
Capital leases payable - current portion		—			7,801
Current liabilities of discontinued operations		—			342,913
Total current liabilities		370,978			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		5,981,456			5,599,099
Accumulated deficit		(1,461,627	)		(939,897	)
		4,571,976			4,709,702
Treasury stock, at cost		(467,273	)		(467,273	)
Total stockholders' equity		4,104,703			4,242,429
Total liabilities and stockholders' equity	$	4,475,681		$	5,124,294

See accompanying notes to condensed consolidated financial statements.

3

AMERICAN LEARNING CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

	Three months ended						Six months ended
	Sept. 30,			Sept. 30,			Sept. 30,			Sept. 30,
	2011			2010			2011			2010
Revenues	$	465,754		$	471,591		$	1,345,651		$	1,199,074
Cost of services		320,052			306,861			921,068			779,303
Gross margin		145,702			164,730			424,583			419,771
Selling, general and administrative expenses		529,484			488,376			987,128			975,546
Operating loss from continuing operations		(383,782	)		(323,646	)		(562,545	)		(555,775	)
Other income (expense):
Other income		1,951			1,226			1,951			1,226
Interest income		6,678			1,384			11,231			2,374
Interest expense		—			(447	)		(184	)		(1,119	)
Loss from continuing operations		(375,153	)		(321,483	)		(549,547	)		(553,294	)
Discontinued operations
Gain (loss) from discontinued operations, net of tax		(4,034	)		(44,137	)		27,817			137,704
Net loss	$	(379,187	)	$	(365,620	)	$	(521,730	)	$	(415,590	)
Net income (loss) per share:
From continuing operations – basic and diluted	$	(0.08	)	$	(0.07	)	$	(0.11	)	$	(0.12	)
From discontinued operations – basic and diluted	$	0.00		$	(0.01	)	$	0.01		$	0.03
Weighted average shares - basic and diluted		4,919,615			4,754,900			4,864,710			4,754,900

See accompanying notes to condensed consolidated financial statements.

4

AMERICAN LEARNING CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six months ended
	Sept. 30,			Sept. 30,
	2011			2010
Cash flows from operating activities:
Loss from continuing operations	$	(549,547	)	$	(553,294	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		39,423			50,852
Stock-based compensation expense		87,517			12,000
Changes in assets and liabilities:
Accounts receivable		418,593			230,234
Prepaid expenses and other current assets		52,504			(53,315	)
Accounts payable and accrued expenses		(97,883	)		(32,552	)
Accrued compensation and related taxes		(62,290	)		(61,655	)
Net cash used in operating activities of continuing operations		(111,683	)		(407,730	)
Operating activities of discontinued operations		557,457			(162,136	)
Net cash provided by (used in) operating activities		445,774			(569,866	)
Cash flows from investing activities:
Proceeds from note receivable		75,000			—
Capital expenditures		(27,387	)		(22,445	)
Net cash provided by (used in) investing activities		47,613			(22,445	)
Cash flows from financing activities:
Proceeds from stock issuance		296,487			—
Payment of capital leases payable		(7,801	)		(10,332	)
Net cash provided by (used in) financing activities		288,686			(10,332	)
Net increase (decrease) in cash and cash equivalents		782,073			(602,643	)
Cash and cash equivalents - beginning of period		2,579,249			3,440,493
Cash and cash equivalents - end of period	$	3,361,322		$	2,837,850
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	184		$	1,119

See accompanying notes to condensed consolidated financial statements.

5

AMERICAN LEARNING CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 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

We recognize revenue for services rendered when there is evidence of billable time expended.  Deferred revenue is recorded for amounts attributable to special education programs when invoiced and recognized over the applicable program periods.

6

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 September 30, 2011:

	Estimated	Carrying		Accumulated
	Useful Lives	Value		Amortization			Net
Customer contracts	15 years	$	122,000	$	(24,739	)	$	97,261

Intangible assets are being amortized on a straight-line basis over their estimated useful lives.  For the three and six months ended September 30, 2011, amortization expense was $2,034 and $4,067, 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 $4,066 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 six months ended September 30, 2011 and 2010, the inclusion of common stock equivalents in the calculation of diluted loss per share would be anti-dilutive.

7

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 six months ended September 30, 2011, stock-based compensation totaling $3,500 and $5,267, respectively, was recognized based on the fair value of the stock options granted.  Stock-based compensation totaling $900 and $12,000 was recognized during the three and six months ended September 30, 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 six months ended September 30, 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 September 30, 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 September 30, 2011, the fair value of unamortized stock-based compensation expense related to unvested stock options was approximately $33,111 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 six months ended September 30, 2011:

						Weighted
				Weighted		Average
				Average		Remaining	Aggregate
				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 September 30, 2011		1,291,000		$	2.10	5.8 years	$	146,560
Exercisable at September 30, 2011		1,257,667		$	2.11	5.7 years	$	129,760

Aggregate intrinsic value represents the total pretax intrinsic value, based on options with exercise prices less than the Company’s closing price of $2.06as of September 30, 2011, which would have been recognized by the option holders had these option holders exercised their options as of that date.

On September 27, 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%.

8

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, except as noted in the following paragraph, requiring disclosure in or adjustment to these financial statements.

On November 14, 2011, we entered into an agreement to renew the existing sublease on our executive office space in Jericho, NY.  The seven-year non-cancelable operating sublease with American Para Professional Systems, Inc., an entity under the control of our Company’s Chairman of the Board, expires on November 30, 2018.

Recently Issued Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2011-05, Comprehensive Income, which is included in Accounting Standards Codification (“ASC”) 220, Presentation of Comprehensive Income. This update improves the comparability, consistency, and transparency of financial reporting and increases the prominence of items reported in other comprehensive income. The guidance requires that all nonowner changes in shareholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company elected early adoption, therefore, the guidance will be effective for its interim and annual reporting periods beginning September 30, 2011 and applied retrospectively. The adoption of this guidance did not have a material impact on the Company’s financial condition, results of operations or disclosures.

In September 2011, the FASB issued ASU No. 2011-08, Intangibles – Goodwill and Other, which is included in ASC 350, Testing Goodwill for Impairment. This update reduces the complexity, and potentially the cost, of testing goodwill for impairment. The guidance gives the Company the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, and in some cases skip the two-step impairment test. The guidance will be effective for the Company’s interim and annual reporting periods beginning after January 1, 2012 and applied prospectively. The Company does not expect adoption of this guidance to have a material impact on its financial condition, results of operations or disclosures.

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.

9

Results of Operations – Three and Six Months ended September 30, 2011 and 2010

Revenues for the three months ended September 30, 2011 were $467,754, a decrease of less than 1.0% from the $471,591 reported for the three month period ended September 30, 2010.  Revenues generated under our Special Education Itinerant Teachers (“SEIT”) program increased to $306,457 during the three months ended September 30, 2011 from $251,613 in the corresponding period in the prior fiscal year.  We also achieved growth in school staffing services to charter schools during the current quarter, recording an increase in charter school revenue of $24,571, representing an increase of approximately 18.6% over the quarter ended September 30, 2010.  However, during the three months ended September 30, 2011, revenues from early intervention (“EI”) services decreased $72,977 from EI revenues recorded in the three month period ended September 30, 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.

Revenues for the six months ended September 30, 2011 were $1,345,651, an increase of 12.2% over the $1,199,074 reported for the six months ended September 30, 2010 due to increases in SEIT and school staffing services of approximately 30.3% and 40.0%, respectively, over the comparable periods in the prior fiscal year.

Cost of services as a percentage of revenues for the three and six month periods ended September 30, 2011 were approximately 68.7% and 68.4%, respectively.  During the three and six months ended September 30, 2010, cost of services as a percentage of revenues was 65.0%.  Each year, we are required to file a standardized fiscal cost report with New York State which is used to calculate reconciliation tuition rates/adjustment factors and prospective tuition rates for our SEIT program.  As a result of this rate reconciliation process, the cost of services as a percentage of revenue for the three and six months ended September 30, 2011 increased due to a 4.0% reduction in fees paid by preschools under the rate reconciliation process.  The cost of services as a percentage of revenues in the current three and six month periods also reflects an increase over the prior year’s periods as a result of increased 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.

Selling, general and administrative expenses for the quarterly periods ended September 30, 2011 and 2010 were $529,484 and $488,376, respectively.  During the three months ended September 30, 2011, the Company recorded stock-based compensation expense totaling $85,750 related to the issuance of stock options and warrants as compared to $11,100 of stock-based compensation recorded in the quarterly period ended September 30, 2010.  Selling, general and administrative expenses for the six months ended September 30, 2011 and 2010 were $987,128 and $975,546, respectively.

Interest income for the three and six month periods ended September 30, 2011 was $6,678 and $11,231, respectively. Interest income for the three and six months ended September 30, 2010 was $1,384 and $2,374, respectively.  The increase in interest income was a result of the payment of interest on delinquent receivables by certain charter schools in the current fiscal periods.

Liquidity and Capital Resources

At September 30, 2011, we had working capital of $3,526,686 as compared to working capital of $3,577,376 at March 31, 2011.  We believe that we have sufficient cash resources and working capital to meet our present cash requirements.

During the six months ended September 30, 2011, net cash provided by operating activities was $445,774, predominately attributable to the operating activities of discontinued operations totaling $557,457 and a decrease in accounts receivable of $418,593, offset by an operating loss of $549,547.

10

Cash flows from investing activities for the three months ended September 30, 2011 included $75,000 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	$	83,000
2013		168,000
2014		73,000
2015		47,000
2016		51,000
Thereafter		143,000
Total minimum lease payments	$	565,000

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 $43,558 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 September 30, 2011.

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 September 30, 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.

11

(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 September 30, 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.

12

PART II - OTHER INFORMATION

Item 6.   Exhibits.

Exhibit 10.23	Sublease Agreement, dated November 14, 2011, between American Para Professional Systems, Inc. and the Company with respect to the premises at One Jericho Plaza, Jericho, NY
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

13

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: November 14, 2011	By:	/s/ Gary Gelman
		Gary Gelman
		Chairman of the Board,
		President and Chief Executive Officer
Date: November 14, 2011	By:	/s/ Gary J. Knauer
		Gary J. Knauer
		Chief Financial Officer,
		Treasurer and Secretary

14

 

EX-10.23

EXHIBIT 10.23

SUBLEASE AGREEMENT

THIS SUBLEASE, made as of the 14th day of November, 2011, between AMERICAN PARA PROFESSIONAL SYSTEMS, INC. (hereinafter called "Sublessor"), having an office at One Jericho Plan, Jericho, New York 11753, and AMERICAN LEARNING CORPORATION (hereinafter called "Subtenant"), having an office at One Jericho Plaza, Jericho, New York 11753.

WITNESSETH, that the parties hereto agree as follows:

ARTICLE 1

Premises

1.01        For the purposes of this Sublease, unless the context otherwise requires:

(a)           The term "Underlying Lease" shall mean the lease dated as of August 20, 1993 between One-Two Jericho Plaza Owner LLC (successor-in-interest to Chasco Company LLC), as landlord ("Landlord"), and Sublessor, as tenant, as amended by agreements including the Agreement dated as of December 21, 2010 (the "Latest Amendment"), covering a portion of the main floor (Wing A) as more particularly described in the Underlying Lease (the "Premises") in the building (the "Building") known as One Jericho Plaza, New York.

(b)           The term "Subleased Premises" shall mean that portion of the Premises approximately set forth on Exhibit "A", annexed hereto and made a part hereof.

ARTICLE 2

Term.

2.01        Sublessor hereby leases to Subtenant and Subtenant hereby hires from Sublessor the Subleased Premises, for a term commencing on the Effective Date (as defined in the Underlying Lease) (hereinafter called the "Commencement Date") and ending on the day immediately preceding the Expiration Date (as defined in the Underlying Lease), or such later date to which the term of the Underlying Lease may be extended or such earlier date upon which said term may expire or be terminated pursuant to any of the conditions or covenants of this Sublease or pursuant to law (such date hereinafter referred to as the "Expiration Date").

ARTICLE 3

Underlying Premises.

3.01        The parties agree that this Sublease and Subtenant's tenancy hereunder shall be and remain subject and subordinate to the Underlying Lease, and to all matters and documents to which the Underlying Lease is, or shall become, subject. Photocopies of the Underlying Lease have been delivered to and reviewed by Subtenant.

ARTICLE 4

Incorporation of Terms.

4.01        The terms, covenants, conditions and provisions contained in the Underlying Lease are incorporated herein by reference, and shall, as between Sublessor and Subtenant constitute the terms, covenants, conditions and provisions of this Sublease, except to the extent that they are inapplicable to, inconsistent with, or modified by the provisions of this instrument. The parties agree to observe and perform the terms, covenants, conditions and provisions on their respective parts to be observed and performed hereunder, including but not limited to those terms, covenants, conditions and provisions of the Underlying Lease which are incorporated herein. It is hereby agreed that (a) references in the Underlying Lease to the "Office Space" or "Demised Premises" or "Substitute Office Space" shall be deemed to refer to the "Subleased Premises" hereunder, (b) references in the Underlying Lease to "Landlord" shall be deemed to refer to "Sublessor" hereunder, (c) references in the Underlying Lease to "Tenant" shall be deemed to refer to "Subtenant" hereunder, (d) references in the Underlying Lease to "this Lease" shall be deemed to refer to "this Sublease", (e) references in the Underlying Lease to the "term of this Lease" or words of similar import shall be deemed to mean the "term of this Sublease", and (f) references in the Underlying Lease to "Basic Rent" and "Additional Rent" shall be deemed to refer to the "fixed rent" and "Additional Rent", respectively, hereunder. Any terms used in this Sublease and not otherwise defined herein shall have the meanings ascribed to such terms in the Underlying Lease.

ARTICLE 5

Rent.

5.01        Subtenant shall pay to Sublessor, without notice or demand and without any abatement (except as set forth in Section 5.02 below), deduction or set off whatsoever, in lawful money of the United States of America, fixed annual rent (hereafter sometimes called "fixed rent") in the following amounts:

Period	Annual Basic Rent
December 1, 2011 through November 30, 2012	$	42,990.10
December 1, 2012 through November 30, 2013	$	44,279.81
December 1, 2013 through November 30, 2014	$	45,608.20
December 1, 2014 through November 30, 2015	$	50,250.11
December 1, 2015 through November 30, 2016	$	51,757.62
December 1, 2016 through November 30, 2017	$	53,310.35
December 1, 2017 through Expiration Date	$	54,909.66

5.02        Provided that there has been no event of default by Subtenant, which is continuing beyond any applicable period for notice and cure, Annual Basic Rent for the months of December 2011, January 2012 and December 2012 shall be fully abated, provided, however, that such abated rent may be recovered by Sublessor in any action for damages under Article 15 of the Underlying Lease commenced after the termination of the Underlying Lease due to an event to default.

5.03        If by reason of any of the provisions of this Sublease, the term hereof shall commence with respect to all or any of the Sublease Premises on a day other than the first day of a month, fixed rent for such month shall be prorated on a per diem basis.

5.04        Subtenant shall also pay to Sublessor "Additional Rent" consisting of all such other sums of money as shall become due from and payable by Subtenant to Sublessor under this Sublease.

ARTICLE 6

Termination of Underlying Lease.

6.01        If for any reason the term of the Underlying Lease is terminated prior to the Expiration Date, this Sublease shall thereupon be terminated.

ARTICLE 7

Underlying Lease Modifications, Deletions and Insertions.

7.01        For purposes of incorporation of the Underlying Lease into this Sublease:

A.       Addresses for notice to Sublessor and Subtenant shall be the addresses therefor first hereinabove stated,

B.        References in the Underlying Lease to the Storage Space shall not apply to the Subleased Premises.

2

C.        For purposes of incorporating the Underling Lease into this Sublease, the term "Tenant's Proportionate Share" shall be deemed to mean ".54%".

D.       Any obligation under the Underlying Lease for the performance by Landlord of any alterations, construction, maintenance or repairs or the providing of any services to the Premises shall in no event be or become an obligation of Sublessor and Subtenant shall look solely to Landlord for the performance thereof.

ARTICLE 8

Miscellaneous.

8.01        If any provisions of this Sublease shall be at variance with the provisions of the Underlying Lease, the provisions of this Sublease shall prevail. This Sublease shall not be changed orally but only by an agreement in writing signed by the party against whom the enforcement of such change is sought.

8.02        This Sublease shall be governed in all respects by the laws of the State of New York.

8.03        The marginal notes in this instrument are used for convenience in finding the subject matters, and are not to be taken as part of this instrument; or to be used in determining the intent of the parties, or otherwise interpreting this instrument.

8.04        This Agreement shall apply to and bind the respective heirs, distributees, executors, administrators, successors and assigns of the parties hereto but this Section shall not be construed as a consent to any assignment or subletting by the Subtenant.

IN WITNESS WHEREOF, this Sublease has been duly executed on the day and year first hereinabove written.

AMERICAN PARA PROFESSIONAL
SYSTEMS, INC., Sublessor
By:	/s/ James A. Fritz
	James A. Fritz, President
AMERICAN LEARNING CORPORATION,
Subtenant
By:	/s/ Gary Gelman
	Gary Gelman, President

3

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Gary Gelman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of American Learning Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 14, 2011

/s/ Gary Gelman

Gary Gelman

Chief Executive Officer

 

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Gary J. Knauer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of American Learning Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 14, 2011

/s/ Gary J. Knauer

Gary J. Knauer

Chief Financial Officer

 

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of American Learning Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gary Gelman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Gary Gelman

Gary Gelman

Chief Executive Officer

November 14, 2011

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to American Learning Corporation and will be retained by American Learning Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

 

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of American Learning Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gary J. Knauer, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Gary J. Knauer

Gary J. Knauer

Chief Financial Officer

November 14, 2011

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to American Learning Corporation and will be retained by American Learning Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

 

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Condensed Consolidated Balance Sheets [Parenthetical] (USD $)	Sep. 30, 2011	Mar. 31, 2011
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares Authorized	20,000,000	20,000,000
Common stock, shares issued	5,214,715	5,050,000
Common stock, shares outstanding	4,919,615	4,754,900

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Condensed Consolidated Statements of Operations (USD $)	3 Months Ended		6 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Revenues	$ 465,754	$ 471,591	$ 1,345,651	$ 1,199,074
Cost of services	320,052	306,861	921,068	779,303
Gross margin	145,702	164,730	424,583	419,771
Selling, general and administrative expenses	529,484	488,376	987,128	975,546
Operating loss from continuing operations	(383,782)	(323,646)	(562,545)	(555,775)
Other income (expense):
Other income	1,951	1,226	1,951	1,226
Interest income	6,678	1,384	11,231	2,374
Interest expense	0	(447)	(184)	(1,119)
Loss from continuing operations	(375,153)	(321,483)	(549,547)	(553,294)
Discontinued operations
Gain (loss) from discontinued operations, net of tax	(4,034)	(44,137)	27,817	137,704
Net loss	$ (379,187)	$ (365,620)	$ (521,730)	$ (415,590)
Net income (loss) per share:
From continuing operations - basic and diluted (in dollars per share)	$ (0.08)	$ (0.07)	$ (0.11)	$ (0.12)
From discontinued operations - basic and diluted (in dollars per share)	$ 0	$ (0.01)	$ 0.01	$ 0.03
Weighted average shares - basic and diluted (in shares)	4,919,615	4,754,900	4,864,710	4,754,900

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Document and Entity Information	6 Months Ended
	Sep. 30, 2011	Nov. 14, 2011
Entity Registrant Name	AMERICAN LEARNING Corp
Entity Central Index Key	0000774517
Current Fiscal Year End Date	--03-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	alrn
Entity Common Stock, Shares Outstanding		4,919,615
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2011
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2012

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Goodwill and Intangible Assets

6 Months Ended

Sep. 30, 2011

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure [Text Block]

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 September 30, 2011:

	Estimated	Carrying		Accumulated
	Useful Lives	Value		Amortization			Net
Customer contracts	15 years	$	122,000	$	(24,739	)	$	97,261

Intangible assets are being amortized on a straight-line basis over their estimated useful lives.  For the three and six months ended September 30, 2011, amortization expense was $2,034 and $4,067, 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 $4,066 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. 

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Recently Issued Accounting Pronouncements

6 Months Ended

Sep. 30, 2011

Accounting Changes and Error Corrections [Abstract]

Accounting Changes and Error Corrections [Text Block]

Recently Issued Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2011-05, Comprehensive Income, which is included in Accounting Standards Codification (“ASC”) 220, Presentation of Comprehensive Income . This update improves the comparability, consistency, and transparency of financial reporting and increases the prominence of items reported in other comprehensive income. The guidance requires that all nonowner changes in shareholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company elected early adoption, therefore, the guidance will be effective for its interim and annual reporting periods beginning September 30, 2011 and applied retrospectively. The adoption of this guidance did not have a material impact on the Company’s financial condition, results of operations or disclosures.

In September 2011, the FASB issued ASU No. 2011-08, Intangibles – Goodwill and Other , which is included in ASC 350, Testing Goodwill for Impairment . This update reduces the complexity, and potentially the cost, of testing goodwill for impairment. The guidance gives the Company the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, and in some cases skip the two-step impairment test. The guidance will be effective for the Company’s interim and annual reporting periods beginning after January 1, 2012 and applied prospectively. The Company does not expect adoption of this guidance to have a material impact on its financial condition, results of operations or disclosures.

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Discontinued Operations

6 Months Ended

Sep. 30, 2011

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

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.

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Net Earnings (Loss) Per Share

6 Months Ended

Sep. 30, 2011

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

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 six months ended September 30, 2011 and 2010, the inclusion of common stock equivalents in the calculation of diluted loss per share would be anti-dilutive.

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Stock Option Plans

6 Months Ended

Sep. 30, 2011

Equity [Abstract]

Shareholders' Equity and Share-based Payments [Text Block]

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 six months ended September 30, 2011, stock-based compensation totaling $3,500 and $5,267, respectively, was recognized based on the fair value of the stock options granted.  Stock-based compensation totaling $900 and $12,000 was recognized during the three and six months ended September 30, 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 six months ended September 30, 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 September 30, 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 September 30, 2011, the fair value of unamortized stock-based compensation expense related to unvested stock options was approximately $33,111 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 six months ended September 30, 2011:

						Weighted
				Weighted		Average
				Average		Remaining	Aggregate
				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 September 30, 2011		1,291,000		$	2.10	5.8 years	$	146,560
Exercisable at September 30, 2011		1,257,667		$	2.11	5.7 years	$	129,760

Aggregate intrinsic value represents the total pretax intrinsic value, based on options with exercise prices less than the Company’s closing price of $2.06as of September 30, 2011, which would have been recognized by the option holders had these option holders exercised their options as of that date.

On September 27, 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%.

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Seasonality

6 Months Ended

Sep. 30, 2011

Seasonality [Abstract]

Seasonality [Text Block]

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.

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Overview

6 Months Ended

Sep. 30, 2011

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Nature of Operations [Text Block]

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.

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Use of Estimates

6 Months Ended

Sep. 30, 2011

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Use of Estimates, Policy [Policy Text Block]

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.

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Revenue Recognition

6 Months Ended

Sep. 30, 2011

Accounting Policies [Abstract]

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

We recognize revenue for services rendered when there is evidence of billable time expended.  Deferred revenue is recorded for amounts attributable to special education programs when invoiced and recognized over the applicable program periods.

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Credit Risk

6 Months Ended

Sep. 30, 2011

Risks and Uncertainties [Abstract]

Concentration Risk Disclosure [Text Block]

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.

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Condensed Consolidated Statements of Cash Flows (USD $)	6 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Cash flows from operating activities:
Loss from continuing operations	$ (549,547)	$ (553,294)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	39,423	50,852
Stock-based compensation expense	87,517	12,000
Changes in assets and liabilities:
Accounts receivable	418,593	230,234
Prepaid expenses and other current assets	52,504	(53,315)
Accounts payable and accrued expenses	(97,883)	(32,552)
Accrued compensation and related taxes	(62,290)	(61,655)
Net cash used in operating activities of continuing operations	(111,683)	(407,730)
Operating activities of discontinued operations	557,457	(162,136)
Net cash provided by (used in) operating activities	445,774	(569,866)
Cash flows from investing activities:
Proceeds from note receivable	75,000	0
Capital expenditures	(27,387)	(22,445)
Net cash provided by (used in) investing activities	47,613	(22,445)
Cash flows from financing activities:
Proceeds from stock issuance	296,487	0
Payment of capital leases payable	(7,801)	(10,332)
Net cash provided by (used in) financing activities	288,686	(10,332)
Net increase (decrease) in cash and cash equivalents	782,073	(602,643)
Cash and cash equivalents - beginning of period	2,579,249	3,440,493
Cash and cash equivalents - end of period	3,361,322	2,837,850
Supplemental disclosure of cash flow information:
Interest	$ 184	$ 1,119

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Basis of Presentation

6 Months Ended

Sep. 30, 2011

Accounting Policies [Abstract]

Basis of Accounting [Text Block]

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”).

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Subsequent Events

6 Months Ended

Sep. 30, 2011

Subsequent Events [Abstract]

Subsequent Events [Text Block]

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, except as noted in the following paragraph, requiring disclosure in or adjustment to these financial statements.

On November 14, 2011, we entered into an agreement to renew the existing sublease on our executive office space in Jericho, NY.  The seven-year non-cancelable operating sublease with American Para Professional Systems, Inc., an entity under the control of our Company’s Chairman of the Board, expires on November 30, 2018.

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Condensed Consolidated Balance Sheets (USD $)	Sep. 30, 2011	Mar. 31, 2011
Assets
Cash and cash equivalents	$ 3,361,322	$ 2,579,249
Accounts receivable, net	271,315	689,908
Note receivable	180,000	180,000
Prepaid expenses and other current assets	85,027	137,531
Current assets of discontinued operations	0	872,553
Total current assets	3,897,664	4,459,241
Note receivable - net of current portion	195,000	270,000
Goodwill	145,000	145,000
Intangible assets, net	97,261	101,328
Property and equipment, net	124,841	132,810
Other assets	15,915	15,915
Total assets	4,475,681	5,124,294
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses	149,910	247,793
Accrued compensation and related taxes	221,068	283,358
Capital leases payable - current portion	0	7,801
Current liabilities of discontinued operations	0	342,913
Total current liabilities	370,978	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	5,981,456	5,599,099
Accumulated deficit	(1,461,627)	(939,897)
Stockholders' Equity before Treasury Stock	4,571,976	4,709,702
Treasury stock, at cost	(467,273)	(467,273)
Total stockholders' equity	4,104,703	4,242,429
Total liabilities and stockholders' equity	$ 4,475,681	$ 5,124,294