Summary of Significant Accounting Policies

12 Months Ended

Mar. 31, 2012

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

(1) Summary of Significant Accounting Policies

(a) Nature of Business

American Learning Corporation (the “Company”) operates in a single segment that provides comprehensive services to children with developmental delays and disabilities through its wholly-owned subsidiaries, Interactive Therapy Group Consultants, Inc. (“ITG”) and Signature Learning Resources, Inc.

On March 31, 2011, the Company completed the disposition of certain assets of ITG’s operations in the Upstate Region of New York State (the “Upstate Region”) pursuant to an asset purchase agreement. Accordingly, the financial statements present the results of ITG’s Upstate Region as discontinued operations. The following footnotes relate only to the Company’s continuing operations, unless otherwise noted.

(b) Principles of Consolidation

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

(c) Cash and Cash Equivalents

All highly liquid investments with a maturity of three months or less at the date of purchase are considered to be cash equivalents. From time to time, the Company invests its excess cash in money market accounts that are stated at cost and approximate market value.

(d) Allowance for Doubtful Accounts

The Company must make estimates of the uncollectability of all accounts receivable. Management specifically analyzes receivables, historical bad debts and changes in circumstances when evaluating the adequacy of the allowance for doubtful accounts.

(e) 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 contracts.

(f) Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements are amortized over the shorter of the estimated lives of the improvements or the remaining term of the lease.

(g) Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net assets acquired. Goodwill is tested for impairment at least annually for possible impairment.  The Company performs its tests as of March 31, the last day of its fourth fiscal quarter, unless an event occurs that would cause the Company to believe the value is impaired at an interim date.  There was no impairment of goodwill and no adjustments were deemed necessary as a result of our impairment testing at March 31, 2012.

At March 31, 2011, the Company’s test for goodwill impairment subsequent to the sale of the Upstate Region indicated that $70,000 of recorded goodwill attributable to the Upstate Region had been impaired. Accordingly, the Company wrote off $70,000 of goodwill and recorded the charge as a reduction in the gain on the sale of discontinued operations in the accompanying Statement of Operations at March 31, 2011.

The Company assesses the recoverability of the carrying value of its 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.  Intangible assets are amortized on a straight-line basis based on their estimated useful lives.

(h) Income Taxes

Deferred tax assets and liabilities are recognized for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. Deferred taxes are recognized for the estimated taxes ultimately payable or recoverable based on enacted tax laws. Changes in enacted tax rates are reflected in the financial statements in the periods they occur. Deferred tax assets are reduced by a valuation allowance if it is deemed more likely than not that some or all of the deferred tax assets will not be realized.

The Company measures and recognizes the tax implications of positions taken or expected to be taken in its tax returns on an ongoing basis. The Company has no unrecognized tax benefits or liabilities, and no adjustment to its financial position, results of operations or cash flows relating to uncertain tax positions taken on all open tax years.

(i) Earnings (Loss) per Share

Basic earnings (loss) per share is computed on the weighted average number of common shares outstanding. Diluted earnings per share reflects the maximum dilution from potential common shares issuable pursuant to the exercise of stock options, if dilutive, outstanding during each period. For the years ended March 31, 2012 and 2011, the inclusion of common stock equivalents in the calculation of diluted loss per share would be anti-dilutive.

(j) Fair Value of Financial Instruments

The carrying values of the Company’s monetary assets and liabilities approximate fair value as a result of the short-term nature of such assets and liabilities.

(k) Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to 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.

(l) Stock-Based Compensation

Stock-based compensation cost 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.

(m) Reclassifications

Certain prior year balances have been reclassified to conform with current year classification. These reclassifications have no effect on the Company’s results of operations.

(n) Restatement of the Consolidated Financial Statements

On June 15, 2012, the Company concluded that the previously filed consolidated financial statements as of and for the year ended March 31, 2011 and the subsequent quarterly periods ended June 30, 2011, September 30, 2011 and December 31, 2011 were no longer reliable. The restatement was necessary to reflect a goodwill impairment charge of $70,000 attributable to the sale of the Upstate Region. The charge was recorded as a reduction of the gain on the sale of discontinued operations in the accompanying Statement of Operations at March 31, 2011.

The effects of the restatements on the consolidated financial statements for the year ended March 31, 2011 are as follows:

	Year ended March 31, 2011
	Previously
	Reported			Adjustments			Restated
Consolidated Balance Sheet
Goodwill	$	145,000		$	(70,000	)	$	75,000
Accumulated deficit		(939,897	)		(70,000	)		(1,009,897	)
Consolidated Statement of Operations
Gain on sale of discontinued operations - net of tax	$	360,703		$	(70,000	)	$	290,703
Net loss		(1,115,706	)		(70,000	)		(1,185,706	)
Net income (loss) per share:
From continuing operations - basic and diluted	$	(0.33	)	$	-		$	(0.33	)
From discontinued operations - basic and diluted		0.10			(0.02	)		0.08
		(0.23	)		(0.02	)		(0.25	)
Consolidated Statement of Cash Flows
Net loss	$	(1,115,706	)	$	(70,000	)	$	(1,185,706	)
Earnings from discontinued operations		458,168			(70,000	)		388,168

The effects on the restatement of the consolidated financial statements for the quarterly periods ended June 30, 2011, September 30, 2011 and December 31, 2011, respectively, are as follows:

	June 30, 2011
		Previously
		Reported			Adjustments			Restated
Consolidated Balance Sheet
Goodwill	$	145,000		$	(70,000	)	$	75,000
Accumulated deficit		(1,082,440	)		(70,000	)		(1,152,440	)

	September 30, 2011
		Previously
		Reported			Adjustments			Restated
Consolidated Balance Sheet
Goodwill	$	145,000		$	(70,000	)	$	75,000
Accumulated deficit		(1,461,627	)		(70,000	)		(1,531,627	)

	December 31, 2011
		Previously
		Reported			Adjustments			Restated
Consolidated Balance Sheet
Goodwill	$	145,000		$	(70,000	)	$	75,000
Accumulated deficit		(1,595,507	)		(70,000	)		(1,665,507	)

(o) Subsequent Events

The Company 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.

(p) Recently Issued Accounting Pronouncements

In September, 2011, the Financial Accounting Standards Board ratified Accounting Standards Update No. 2011-08 Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment (“ASU 2011-08”). 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.  ASU 2011-08 is effective for fiscal years beginning after December 15, 2011 and the Company has concluded that the adoption of ASU 2011-08 will not have a material effect on its consolidated financial statements.

Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on its consolidated financial statements.