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 June 30, 2012

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 August 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 June 30, 2012 (unaudited) and March 31, 2012	3
	Condensed Consolidated Statements of Operations for the Three Months ended June 30, 2012 and 2011 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Three Months ended June 30, 2012 and 2011 (unaudited)	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6 - 8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	8 - 10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	10
Item 4.	Controls and Procedures	10
PART II - OTHER INFORMATION
Item 6.	Exhibits	11
SIGNATURES		12

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

AMERICAN LEARNING CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

	June 30, 2012			March 31, 2012
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	3,173,745		$	3,107,253
Accounts receivable, net		569,833			720,005
Note receivable		195,000			195,000
Prepaid expenses and other current assets		83,235			79,284
Total current assets		4,021,813			4,101,542
Note receivable - net of current portion		45,000			90,000
Goodwill		75,000			75,000
Intangible assets, net		91,161			93,194
Property and equipment, net		123,655			111,500
Other assets		17,635			17,635
Total assets	$	4,374,264		$	4,488,871
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses	$	228,801		$	228,169
Accrued compensation and related taxes		294,983			344,665
Total current liabilities		523,784			572,834
Commitments
Stockholders' equity:
Common stock, $.01 par value; authorized 20,000,000 shares; issued 5,214,715 shares and outstanding 4,919,615 shares		52,147			52,147
Additional paid-in capital		6,041,456			5,988,456
Accumulated deficit		(1,775,850	)		(1,657,293	)
		4,317,753			4,383,310
Treasury stock, at cost		(467,273	)		(467,273	)
Total stockholders' equity		3,850,480			3,916,037
Total liabilities and stockholders' equity	$	4,374,264		$	4,488,871

See accompanying notes to condensed consolidated financial statements.

3

AMERICAN LEARNING CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

	Three months ended
	June 30,			June 30,
	2012			2011
Revenues	$	1,105,243		$	879,897
Cost of services		689,191			579,766
Gross profit		416,052			300,131
Selling, general, and administrative expenses		538,762			478,894
Operating loss from continuing operations		(122,710	)		(178,763	)
Other income (expense):
Interest income		4,153			4,553
Interest expense		—			(184	)
Loss from continuing operations		(118,557	)		(174,394	)
Discontinued operations
Gain from discontinued operations, net of tax		—			31,851
Net loss	$	(118,557	)	$	(142,543	)
Net income (loss) per share:
From continuing operations – basic and diluted	$	(0.02	)	$	(0.04	)
From discontinued operations – basic and diluted		0.00			0.01
	$	(0.02	)	$	(0.03	)
Weighted average shares - basic and diluted		4,919,615			4,809,805

See accompanying notes to condensed consolidated financial statements.

4

AMERICAN LEARNING CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three months ended
	June 30,			June 30,
	2012			2011
Cash flows from operating activities:
Net loss	$	(118,557	)	$	(142,543	)
Earnings from discontinued operations		—			(31,851	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		14,878			23,590
Stock-based compensation expense		53,000			1,767
Changes in assets and liabilities:
Accounts receivable		150,172			8,114
Prepaid expenses and other current assets		(3,951	)		5,475
Accounts payable and accrued expenses		632			18,702
Accrued compensation and related taxes		(49,682	)		(48,886	)
Net cash used in operating activities of continuing operations		46,492			(165,632	)
Operating activities of discontinued operations		—			561,491
Net cash provided by operating activities		46,492			395,859
Cash flows from investing activities:
Proceeds from note receivable		45,000			30,000
Capital expenditures		(25,000	)		(17,387	)
Net cash provided by investing activities		20,000			12,613
Cash flows from financing activities:
Proceeds from stock issuance		—			296,487
Payment of capital leases payable		—			(7,801	)
Net cash provided by financing activities		—			288,686
Net increase in cash and cash equivalents		66,492			697,158
Cash and cash equivalents - beginning of period		3,107,253			2,579,249
Cash and cash equivalents - end of period	$	3,173,745		$	3,276,407
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	—		$	184

See accompanying notes to condensed consolidated financial statements.

5

AMERICAN LEARNING CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2012

(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. 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, 2012 (the “Annual Report”), as filed with the Securities and Exchange Commission (“SEC”).

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.

6

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 June 30, 2012:

	Estimated		Carrying		Accumulated
	Useful Lives		Value		Amortization			Net
Customer contracts		15 years	$	122,000	$	(30,839	)	$	91,161

Intangible assets are being amortized on a straight-line basis over their estimated useful lives. For the three months ended June 30, 2012, amortization expense was $2,033. Assuming no changes in our intangible assets, estimated amortization expense for the remainder of the current fiscal year ending March 31, 2013 will be $6,100 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. Potentially dilutive securities consisting of employee and director stock options and warrants to purchase 1,435,000 and 1,391,000 shares of the Company’s common stock as of June 30, 2012 and 2011, respectively, were not included in the diluted net loss per share calculations because their effect would have been 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 months ended June 30 2012 and 2011, stock-based compensation totaling $53,000 and $1,767, respectively, was recognized based on the fair value of the stock options granted.

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 three months ended June 30, 2012 was $0.66 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 97.6%, expected dividend yield of 0%, risk-free interest rate of 0.73% and an expected option term of 5 years.

7

At June 30, 2012, outstanding options to purchase 1,239,999 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 June 30, 2012, the fair value of unamortized stock-based compensation expense related to unvested stock options was approximately $22,033 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 three months ended June 30, 2012:

						Weighted
				Weighted		Average
				Average		Remaining		Agregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term		Value
Outstanding at March 31, 2012		1,291,000		$	2.10		5.3 years
Granted		75,000		$	1.20		10 years
Expired		(106,000	)	$	1.80		-
Outstanding at June 30, 2012		1,260,000		$	2.09		5.8 years	$	11,250
Exercisable at June 30, 2012		1,239,999		$	2.10		5.8 years	$	8,917

Aggregate intrinsic value represents the total pretax intrinsic value, based on options with exercise prices less than the Company’s closing price of $1.15 as of June 30, 2012, which would have been recognized by the option holders had these option holders exercised their options as of that date.

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.

Reclassifications

Certain prior year balances have been reclassified to conform with current year classification. In the accompanying consolidated statement of operations, $21,250 of salaries were reclassified from cost of services to selling, general and administrative expenses for the three months ended June 30, 2011 to more accurately reflect cost of services. These reclassifications have no effect on the Company’s results of operations.

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.

8

Results of Operations – Three Months ended June 30, 2012 and 2011

Revenues for the three months ended June 30, 2012 were $1,105,243, an increase of approximately 25.6% from the $879,897 reported for the three month period ended June 30, 2011. This increase was the result of revenues generated by school staffing services provided to charter schools which totaled $672,007 during the three months ended June 30, 2012. By comparison, school staffing services totaled $453,474 in the corresponding period of the prior fiscal year. Revenues generated under our SEIT program remained consistent during the three months ended June 30, 2012 with revenues in the corresponding period in the prior fiscal year.

Cost of services as a percentage of revenues for the three month periods ended June 30, 2012 and 2011 were approximately 62.4% and 65.9%, respectively. 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 months ended June 30, 2011 increased due to a 4.0% reduction in fees paid by preschools under the rate reconciliation process.

Selling, general and administrative expenses for the quarterly periods ended June 30, 2012 and 2011 were $538,762 and $478,894, respectively. During the three months ended June 30, 2012, the Company recorded stock-based compensation expense totaling $53,000 related to the issuance of stock options and warrants as compared to $1,767 of stock-based compensation recorded in the three months ended June 30, 2011.

Interest income for the three month periods ended June 30, 2012 and 2011 was relatively consistent at $4,153 and $4,553, respectively.

Liquidity and Capital Resources

At June 30, 2012, we had working capital of $3,498,029 as compared to working capital of $3,528,708 at March 31, 2012. We believe that we have sufficient liquidity to meet our needs for beyond the next twelve months.

During the three months ended June 30, 2012, net cash provided by operating activities was $46,492, predominately from a decrease in our accounts receivable of $150,172 offset by an operating loss of $118,557.

Cash flows from investing activities for the three months ended June 30, 2012 of $20,000 included $45,000 of proceeds received from collections of the note receivable offset by capital expenditures of $25,000.

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, 2013 and fiscal years ending thereafter are as follows:

	Operating
	Leases
2013	$	127,000
2014		73,000
2015		47,000
2016		51,000
2017		52,000
Thereafter		90,000
Total minimum lease payments	$	440,000

9

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 June 30, 2012, 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 June 30, 2012 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.

10

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

11

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: August 13, 2012	By:	/s/ Gary Gelman
		Gary Gelman
		Chairman of the Board,
		President and Chief Executive Officer
Date: August 13, 2012	By:	/s/ Gary J. Knauer
		Gary J. Knauer
		Chief Financial Officer,
		Treasurer and Secretary

12

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: August 13, 2012

/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: August 13, 2012

/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 June 30, 2012 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

August 13, 2012

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 June 30, 2012 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

August 13, 2012

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.

XML

Revenue Recognition

3 Months Ended

Jun. 30, 2012

Accounting Policies [Abstract]

Revenue Recognition, Policy [Policy Text Block]

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.

XML

Use of Estimates

3 Months Ended

Jun. 30, 2012

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.

XML

Condensed Consolidated Balance Sheets (USD $)	Jun. 30, 2012	Mar. 31, 2012
Assets
Cash and cash equivalents	$ 3,173,745	$ 3,107,253
Accounts receivable, net	569,833	720,005
Note receivable	195,000	195,000
Prepaid expenses and other current assets	83,235	79,284
Total current assets	4,021,813	4,101,542
Note receivable - net of current portion	45,000	90,000
Goodwill	75,000	75,000
Intangible assets, net	91,161	93,194
Property and equipment, net	123,655	111,500
Other assets	17,635	17,635
Total assets	4,374,264	4,488,871
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses	228,801	228,169
Accrued compensation and related taxes	294,983	344,665
Total current liabilities	523,784	572,834
Commitments
Stockholders' equity:
Common stock, $.01 par value; authorized 20,000,000 shares; issued 5,214,715 shares and outstanding 4,919,615 shares	52,147	52,147
Additional paid-in capital	6,041,456	5,988,456
Accumulated deficit	(1,775,850)	(1,657,293)
Stockholders' Equity before Treasury Stock	4,317,753	4,383,310
Treasury stock, at cost	(467,273)	(467,273)
Total stockholders' equity	3,850,480	3,916,037
Total liabilities and stockholders' equity	$ 4,374,264	$ 4,488,871

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Overview

3 Months Ended

Jun. 30, 2012

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. and Signature Learning Resources, Inc.

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Stock Option Plans (Details) (USD $)	3 Months Ended
	Jun. 30, 2012
Shares Outstanding at March 31, 2012	1,291,000
Shares Granted	75,000
Shares Expired	(106,000)
Shares Outstanding at June 30, 2012	1,260,000
Shares Exercisable at June 30, 2012	1,239,999
Weighted Average Exercise Price Outstanding at March 31, 2012	$ 2.10
Weighted Average Exercise price Granted	$ 1.20
Weighted Average Exercise Price Expired	$ 1.80
Weighted Average Exercise Price Outstanding at June 30, 2012	$ 2.09
Weighted Average Exercise Price Exercisable at June 30, 2012	$ 2.10
Weighted Average Remaining Contractual Term Outstanding at March 31, 2012	5.3
Weighted Average Remaining Contractual Term Granted	10
Weighted Average Remaining Contractual Term Expired	0
Weighted Average Remaining Contractual Term Outstanding at June 30,2012	5.8
Weighted Average Remaining Contractual Term Exercisable at June 30,2012	5.8
Aggregate Intrinsic Value Outstanding at June 30, 2012	$ 11,250
Aggregate Intrinsic Value Exercisable at June 30, 2012	$ 8,917

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Reclassifications (Details) (USD $)	3 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Selling, general, and administrative expenses	$ 538,762	$ 478,894
Reclassifications [Member]
Selling, general, and administrative expenses		$ 21,250

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Basis of Presentation

3 Months Ended

Jun. 30, 2012

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, 2012 (the “Annual Report”), as filed with the Securities and Exchange Commission (“SEC”).

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Condensed Consolidated Balance Sheets [Parenthetical] (USD $)	Jun. 30, 2012	Mar. 31, 2012
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	5,214,715
Common stock, shares outstanding	4,919,615	4,919,615

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Goodwill and Intangible Assets (Tables)

3 Months Ended

Jun. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets by Major Class [Table Text Block]

The following table presents certain information regarding our intangible assets at June 30, 2012:

	Estimated		Carrying		Accumulated
	Useful Lives		Value		Amortization			Net
Customer contracts		15 years	$	122,000	$	(30,839	)	$	91,161

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Document and Entity Information	3 Months Ended
	Jun. 30, 2012	Aug. 13, 2012
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	Jun. 30, 2012
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2013

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Stock Option Plans (Tables)

3 Months Ended

Jun. 30, 2012

Equity [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

The following table summarizes information about stock option activity for the three months ended June 30, 2012:

						Weighted
				Weighted		Average
				Average		Remaining		Agregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term		Value
Outstanding at March 31, 2012		1,291,000		$	2.10		5.3 years
Granted		75,000		$	1.20		10 years
Expired		(106,000	)	$	1.80		-
Outstanding at June 30, 2012		1,260,000		$	2.09		5.8 years	$	11,250
Exercisable at June 30, 2012		1,239,999		$	2.10		5.8 years	$	8,917

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Condensed Consolidated Statements of Operations (USD $)	3 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Revenues	$ 1,105,243	$ 879,897
Cost of services	689,191	579,766
Gross profit	416,052	300,131
Selling, general, and administrative expenses	538,762	478,894
Operating loss from continuing operations	(122,710)	(178,763)
Other income (expense):
Interest income	4,153	4,553
Interest expense	0	(184)
Loss from continuing operations	(118,557)	(174,394)
Discontinued operations
Gain from discontinued operations, net of tax	0	31,851
Net loss	$ (118,557)	$ (142,543)
Net income (loss) per share:
From continuing operations - basic and diluted (in dollars per share)	$ (0.02)	$ (0.04)
From discontinued operations - basic and diluted (in dollars per share)	$ 0.00	$ 0.01
Earnings Per Share, Basic and Diluted (in dollars per share)	$ (0.02)	$ (0.03)
Weighted average shares - basic and diluted (in shares)	4,919,615	4,809,805

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Seasonality

3 Months Ended

Jun. 30, 2012

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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Goodwill and Intangible Assets

3 Months Ended

Jun. 30, 2012

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 June 30, 2012:

	Estimated		Carrying		Accumulated
	Useful Lives		Value		Amortization			Net
Customer contracts		15 years	$	122,000	$	(30,839	)	$	91,161

Intangible assets are being amortized on a straight-line basis over their estimated useful lives. For the three months ended June 30, 2012, amortization expense was $2,033. Assuming no changes in our intangible assets, estimated amortization expense for the remainder of the current fiscal year ending March 31, 2013 will be $6,100 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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Stock Option Plans (Details Textual) (USD $)	3 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Stock-based compensation expense	$ 53,000	$ 1,767
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 0.66
Share Based Compensation Arrangement By Share Based Payment Award Options Vested Number	1,239,999
Sale Of Shares Acquired By Exercising Awarded Options Until First Anniversary Of Grant Date Percentage	50.00%
Sale Of Shares Acquired By Exercising Awarded Options Until Second Anniversary Of Grant Date Remaining Percentage	50.00%
Fair Value Of Unamortized Stock Based Compensation Related To Stock Options Nonvested	$ 22,033
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years
Closing Price Per Share	$ 1.15
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate	97.60%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate	0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate	0.73%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term	5 years

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Goodwill and Intangible Assets (Details) (Customer Contracts [Member], USD $)	3 Months Ended
	Jun. 30, 2012
Customer Contracts [Member]
Estimated Useful Lives	15 years
Carrying Value	$ 122,000
Accumulated Amortization	(30,839)
Net	$ 91,161

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Subsequent Events

3 Months Ended

Jun. 30, 2012

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 requiring disclosure in or adjustment to these financial statements.

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Net Earnings (Loss) Per Share

3 Months Ended

Jun. 30, 2012

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. Potentially dilutive securities consisting of employee and director stock options and warrants to purchase 1,435,000 and 1,391,000 shares of the Company’s common stock as of June 30, 2012 and 2011, respectively, were not included in the diluted net loss per share calculations because their effect would have been anti-dilutive.

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Stock Option Plans

3 Months Ended

Jun. 30, 2012

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 months ended June 30 2012 and 2011, stock-based compensation totaling $53,000 and $1,767, respectively, was recognized based on the fair value of the stock options granted.

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 three months ended June 30, 2012 was $0.66 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 97.6%, expected dividend yield of 0%, risk-free interest rate of 0.73% and an expected option term of 5 years.

At June 30, 2012, outstanding options to purchase 1,239,999 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 June 30, 2012, the fair value of unamortized stock-based compensation expense related to unvested stock options was approximately $22,033 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 three months ended June 30, 2012:

						Weighted
				Weighted		Average
				Average		Remaining		Agregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term		Value
Outstanding at March 31, 2012		1,291,000		$	2.10		5.3 years
Granted		75,000		$	1.20		10 years
Expired		(106,000	)	$	1.80		-
Outstanding at June 30, 2012		1,260,000		$	2.09		5.8 years	$	11,250
Exercisable at June 30, 2012		1,239,999		$	2.10		5.8 years	$	8,917

Aggregate intrinsic value represents the total pretax intrinsic value, based on options with exercise prices less than the Company’s closing price of $1.15 as of June 30, 2012, which would have been recognized by the option holders had these option holders exercised their options as of that date.

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Reclassifications

3 Months Ended

Jun. 30, 2012

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Reclassifications [Text Block]

Reclassifications

Certain prior year balances have been reclassified to conform with current year classification. In the accompanying consolidated statement of operations, $21,250 of salaries were reclassified from cost of services to selling, general and administrative expenses for the three months ended June 30, 2011 to more accurately reflect cost of services. These reclassifications have no effect on the Company’s results of operations.

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Net Earnings (Loss) Per Share (Details Textual)	Jun. 30, 2012	Jun. 30, 2011
Employee and Director Stock Options And Warrants To Purchase Common Stock	1,435,000	1,391,000

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Condensed Consolidated Statements of Cash Flows (USD $)	3 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash flows from operating activities:
Net loss	$ (118,557)	$ (142,543)
Earnings from discontinued operations	0	(31,851)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	14,878	23,590
Stock-based compensation expense	53,000	1,767
Changes in assets and liabilities:
Accounts receivable	150,172	8,114
Prepaid expenses and other current assets	(3,951)	5,475
Accounts payable and accrued expenses	632	18,702
Accrued compensation and related taxes	(49,682)	(48,886)
Net cash used in operating activities of continuing operations	46,492	(165,632)
Operating activities of discontinued operations	0	561,491
Net cash provided by operating activities	46,492	395,859
Cash flows from investing activities:
Proceeds from note receivable	45,000	30,000
Capital expenditures	(25,000)	(17,387)
Net cash provided by investing activities	20,000	12,613
Cash flows from financing activities:
Proceeds from stock issuance	0	296,487
Payment of capital leases payable	0	(7,801)
Net cash provided by financing activities	0	288,686
Net increase in cash and cash equivalents	66,492	697,158
Cash and cash equivalents - beginning of period	3,107,253	2,579,249
Cash and cash equivalents - end of period	3,173,745	3,276,407
Supplemental disclosure of cash flow information:
Interest	$ 0	$ 184

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Credit Risk

3 Months Ended

Jun. 30, 2012

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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Goodwill and Intangible Assets (Details Textual) (USD $)	3 Months Ended
	Jun. 30, 2012	Mar. 31, 2012
Amortization of Intangible Assets	$ 2,033
Future Amortization Expense, Remainder of Fiscal Year		6,100
Future Amortization Expense, Year One		8,133
Future Amortization Expense, Year Two		8,133
Future Amortization Expense, Year Three		8,133
Future Amortization Expense, Year Four		$ 8,133