SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission file number 000-22785
AMERICAN CAREER CENTERS, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 87-0636498
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2490 South 300 West, South Salt Lake City, Utah, 84115
(Address of principal executive offices)
(801) 485-6200
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 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 X No ___
The number of shares outstanding of the issuer's common stock
as of March 31, 2000, was 6,092,070.
AMERICAN CAREER CENTERS, INC.
FORM 10-QSB
TABLE OF CONTENTS
Page
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance sheets -
As of March 31, 2000 and December 31, 1999 - 1
Consolidated Statements of operations (unaudited) -
Three months ended March 31, 2000 and 1999 2
Consolidated Statements of cash flows (unaudited) -
Three months ended March 31, 2000 and 3
Notes to financial statements 4
Item 2. Management's Discussion and Analysis of Plan of Operation 5
PART II. Other Information
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 10
AMERICAN CAREER CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March
31, 2000 December
ASSETS (unaudited) 31, 1999
CURRENT ASSETS
Cash $ 260,345 $ 42,879
Accounts receivable, net 136,505 83,988
Inventories 6,096 3,447
Prepaid expenses and other assets 8,143 357
------- -------
Total Current Assets 411,089 130,671
------- -------
PROPERTY AND EQUIPMENT - NET 141,021 122,538
------- -------
OTHER ASSETS
Intangibles, net 91,933 115,106
Deposits 12,289 14,464
Total Other Assets 104,222 129,570
------- -------
TOTAL ASSETS $ 656,332 $ 382,779
======= =======
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable and other accrued expenses $ 278,701 $ 256,892
Payroll taxes payable 215,901 238,076
Accrued payroll and payroll taxes 192,240 317,594
Deferred revenue 279,227 273,736
Notes payable 171,250 162,500
--------- ---------
Total Current Liabilities 1,137,319 1,248,798
========= =========
STOCKHOLDERS' DEFICIENCY
Preferred stock, $.0001 par value,
20,000,000 shares authorized,
None issued - -
Common stock, $.0001 par value, 100,000,000
shares authorized, 6,092,070 and 5,902,500
shares issued and outstanding,
respectively 609 590
Additional paid in capital 1,853,725 1,258,962
Accumulated deficit (2,319,071) (2,064,321)
Accumulated other comprehensive loss - -
--------- ---------
(464,737) 804,769
Less subscriptions receivable (16,250) (61,250)
--------- ---------
Total Stockholders' Deficiency (480,987) (866,019)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIENCY $ 656,332 $ 382,779
========= =========
See accompanying notes to consolidated financial statements
AMERICAN CAREER CENTERS, INC. AND SUBSIDARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Quarter Quarter
ended ended
March 31 March 31,
2000 1999
REVENUES $ 427,367 $ 266,867
COST OF SALES 162,223 128,656
------- -------
GROSS PROFIT 265,144 138,211
------- -------
OPERATING EXPENSES
Selling and marketing 223,303 117,751
General and administrative 286,527 197,576
------- -------
Total Operating Expense 509,830 315,327
------- -------
LOSS FROM OPERATIONS (244,686) (177,116)
------- -------
OTHER INCOME (EXPENSE)
Gain on exchange of securities - -
Interest income 204 -
Interest expense (8,393) (6,151)
Tax penalties (1,875) (1,347)
Other expenses - (7,700)
------- -------
Total Other Income (Expense) (10,064) (15,198)
------- -------
NET LOSS $ (254,750) (192,314)
OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized gain (loss) on short term
investments - 10,000
------- -------
COMPREHENSIVE LOSS $ (254,750) $ (182,314)
======= =======
Net loss per common share and equivalents
- - basic and diluted $ (0.04) $ (0.06)
======= =======
Weighted average shares outstanding during
the period - basic and diluted 5,928,751 2,877,422
========= =========
See accompanying notes to consolidated financial statements
AMERICAN CAREER CENTERS, INC. AND SUBSIDARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Quarter ended Quarter ended
March 31, March 31,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (254,750) $ (182,314)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and Amortization 32,573 15,674
Gain on exchange of securities - (10,000)
Provision for doubtful accounts - -
(Increase) in accounts receivable (52,518) (19,278)
(Increase) in inventories (2,649) (3,143)
(Increase) in prepaid expenses and
other assets (7,786) 1,318
Increase in accounts payable and
accrued expenses 21,810 36,488
Increase in payroll taxes payable (22,176) 34,003
Increase in accrued payroll and payroll
taxes (125,353) 137,163
Increase in deferred revenue 5,491 (2,508)
------- -------
Net Cash Used In Operating Activities (405,358) 7,403
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (27,883) (3,465)
Deposits 2,175 (2,175)
------- -------
Net Cash Used in Investing Activities (25,708) (5,640)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment on notes payable (16,250) (11,500)
Loan proceeds 25,000 -
Proceeds from collection of subscription
receivable 45,000 -
Proceeds from issuance of common stock 594,782 (12)
------- -------
Net Cash Provided By Used In Financing
Activities 648,532 (11,512)
------- -------
NET INCREASE IN CASH 217,466 (9,749)
CASH, BEGINNING OF QUARTER 42,879 11,246
------- -------
CASH, END OF QUARTER $ 260,345 $ 1,497
======= =======
See accompanying notes to consolidated financial statements
AMERICAN CAREER CENTERS, INC. AND SUBSIDARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 20
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles and
the rules and regulations of the Securities and Exchange Commission for
the interim financial information. Accordingly, they do not include all
the information and footnotes necessary for a comprehensive presentation
of financial position and results of operations.
It is management's opinion, however, that all adjustments (consisting of
normal recurring adjustments) have been made which are necessary for a
fair financial statements presentation. The results for the interim period
are not necessarily indicative of the results to be expected for the year.
For further information, refer to the consolidated financial statements
and footnotes included in the company's Form 10-KSB for the year ended
December 31, 1999.
NOTE 2 STOCKHOLDERS' DEFICIENCY
(A) Preferred Stock
The Company authorized 20,000,000 shares of preferred stock at $.0001 par
value to be issued in one or more series with such rights, preferences,
and restrictions as determined by the Board of Directors at the time of
authorization of issuance. At March 31, 2000 and December 31, 1999, no
shares had been issued.
(B) Common Stock Issuances
During January 2000, the Company issued 55,000 restricted shares of common
stock for a total of $152,500 or an average of $2.77 per share.
During March 2000, the Company issued 134,570 restricted shares of common
stock for a total of $442,282 or an average of $3.29 per share.
During 1999, an individual subscribed to 65,000 shares of common stock, for
$16,250. This was still outstanding as of March 31, 2000.
NOTE 3 SUBSEQUENT EVENTS
During April 2000, the Company issued 90,000 restricted shares of common
stock for a total of $270,000 or $3.00 per share.
Also during April, the Company collected the $16,250 Subscription
Receivable outstanding at March 31, 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Forward-Looking Statements
Certain of the matters and subject areas discussed in this Quarterly
Report on Form 10-QSB contain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. All
statements other than statements of historical information provided herein
are forward-looking statements and may contain information about financial
results, economic conditions, trends and known uncertainties based on the
Company's current expectations, assumptions, estimates and projections about
its business and the Company's industry. These forward-looking statements
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of several factors, including the availability of sufficient
financing to implement the Company's business plan, ability to generate
revenues through its training schools, increased levels of competition, new
products and technological changes, and regulatory factors. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which reflect management's analysis, judgment, belief or expectation only
as of the date hereof. The forward-looking statements made in this Quarterly
Report on Form 10-QSB relate only to events as of the date on which the
statements are made. The Company undertakes no obligation to publicly update
any forward-looking statements for any reason, even if new information
becomes available or other events occur in the future.
Overview
American Career Centers. Inc. (hereinafter referred to as "ACCI" or the
"Company") was formed in June 1999 as a holding company for the acquisition
of Information Technology career training centers and related businesses.
ACCI completed its first acquisition in June 1999 through the purchase of
100% of the capital stock of Alpha Computer Solutions, Inc., a Utah
corporation. Alpha began operations in June 1998 and trained over 14,000
students in its first two years of operation. The Alpha Computer Solutions
training facility in Salt Lake City, Utah is the largest in the state, and
ACCI plans to expand its Alpha Computer Solutions Career Centers to more
than 12 cities by the end of 2001.
Effective December 3, 1999 ACCI acquired 100% of the outstanding shares of
Tunlaw International Corporation ("Tunlaw"), a public company for reporting
purposes under the Securities Exchange Act of 1934. With the completion of
the acquisition, ACCI became the successor issuer to Tunlaw and retains that
public company's reporting status.
Trends in the Computer Training Industry
Several converging trends have contributed to the accelerated growth of the
Computer Training industry. A strong economy, corresponding increases in
high-tech positions, and higher salaries have substantially impacted market
demographics. As global competition has fostered ever-increasing
computerization, shifts in technology have advanced the mainframe paradigm
to PCs, then to LANs, WANs, the Internet and finally B2B models. The result
has been an explosion of computers, software, applications, networks and
Internet sites. But while demand for trained IT personnel has exploded, the
number of experienced professionals has grown slowly. In fact, demand has
exceeded supply for several years and the gap is now
growing at an accelerated rate.
ACCI's Strategic Perspective
The Computer Training marketplace is generally segmented into corporations
and other organizations with specific employee training needs and
individuals seeking advancement or a new career. Corporations and
organizations are marketed on the basis of increased productivity, while
individuals are marketed on the basis of a more challenging career and
increased earning power. Unlike its competitors, ACCI targets both
market segments because contact with businesses provides the ultimate
forecast of demand in the marketplace for specific types of training and
the associated high-paying careers
Alpha Computer Solutions, Inc.
Alpha Computer Solutions, Inc. was founded in May 1998. It offers over
300 different instructor-led computer training courses from a 16,000 square
foot classroom facility in its Salt Lake City, UT location. Day, evening
and weekend classes are provided and Alpha trained over 14,000 students in
its first two
years of operation. Alpha's training orientation is marked by
instructor-led classes that combine real-world knowledge, testing
preparation, computer-based curriculum, and the latest in hardware and
software and Internet access for each student. Over 2000 major
corporations and organizations train their employees at Alpha including
American Express, American Stores, AT&T, Barnes & Noble, Delta Airlines,
IBM, IRS, Kennecott, Novell, US West and the State of Utah.
Alpha Computer Solutions Products
Alpha's products are all applicable to both individual and corporate market
segments and fall into three broad categories: applications, certification
tracks and proprietary curriculum such as the Internet Webmaster Pyramid.
This product offers in-depth training in all aspects of web site design and
is unique in the computer training industry.
Strategic Implications of the Internet
The Internet and E-commerce revolution are at the center of Alpha's plans
for expansion and growth. There is no question that the Internet represents
a paradigm shift in the Information Technology industry. Use of the Net is
the fastest growing technological advance in history. It has provided new
models for communications, sales, marketing and distribution and promises
unparalleled growth and profitability for companies that win the race for
"next big thing". Not only have existing organizations embraced the
Internet, but new companies in new industries have been created and
blossomed to huge market values in very little time pursuing the dream of
Internet riches. The implications for the computer training industry are
fairly clear. There is a competitive mania to create Internet Web sites.
There is a huge market for trained personnel who can participate in the
creation of Web sites and the demand (and associated pay) is accelerating.
The Alpha Internet Webmaster Pyramid
In this environment, the ideal computer training curriculum for the Internet
has the following characteristics:
1 In-depth training and hands-on experience in all aspects of web site
design
2 Classes that bridge all levels of difficulty from overview to advanced
technical specialties
3 Complete career preparation in a matter of months, not years
4 Affordable and priced incrementally.
Alpha has designed the Webmaster Pyramid curriculum to fully address each of
these issues. The Pyramid encompasses all aspects of Internet Web site
creation and is unique in the computer training industry. The Alpha
Webmaster Pyramid curriculum is divided into three areas of specialization:
design, programming and technical administration. Students progress down
the Pyramid as they advance to more difficult areas of specialization.
Marketing Channels
Alpha utilizes a variety of marketing channels including print and media ads,
outbound telemarketing, seminars, trade shows and its Internet Web Site.
Geographic Expansion
As part of its overall growth plan, ACCI plans to acquire Information
Technology training facilities in various locations throughout the United
States. The primary criteria for acquisition will include proven
profitability, local reputation, local market potential, similarity of
current programs to the Alpha model and stringent ROI analysis. Alpha has
ranked expansion cities based on 10 factors including population, per
capita IT spending, per capita IT training spending, population and Internet
infrastructure and plans to open in 12 cities by the end of 2001.
Alpha began operations in June of 1998. Throughout 1998 and 1999, the
Company focused on building the foundation for geographic expansion. This
process involved several steps:
1 Recruiting management talent
2 Raising additional capital
3 Recruiting training and sales staffs
4 Developing proprietary curriculum that would be replicable in multiple
locations
5 Designing effective marketing programs
6 Perfecting training delivery and management systems
Results of Operations
For the quarter ended March 31, 2000, the Company had revenues of $427,367
and a net loss from operations of $254,750.
Quarter Ended March 31, 2000 Versus Quarter Ended March 31, 1999
During 1999, the Company focused heavily on recruiting, curriculum
development and the design of effective marketing programs. As the Company
entered the year 2000, revenues began to ramp up significantly as new
marketing programs drove increased sales of new product. In addition, ACCI
continued to increase both its fund raising activities and its acquisition
search activities.
For the quarter ended March 31, 2000, the Company increased consolidated
revenues 60% to $427,367 with a net loss from operations of $254,750. As a
percent of sales, Gross Profit, at $265,144, improved to 62% compared to 52%
a year earlier while general and administrative expenses, at $286,527,
decreased to 67% compared to 74% a year earlier. Selling and marketing
expenses, at $223,303, increased to 52% compared to 44% a year earlier as
sales and marketing personnel were recruited, marketing programs were
implemented and new marketing channels were instituted. The Company's cash
balance at March 31, 2000 increased to $260,345 from $42,879 at December 31,
1999 due to additional investment and increased sales.
Plan of Operations
There are three key elements to the ACCI growth plan:
1. Raising additional capital through private placements of common
stock. The Company will require additional funds to operate, expand
geographically and to establish credit facilities for anticipated
acquisitions.
2. Expanding the Alpha Education and Training model to a total of
12 cities in the Western U.S. in the next 20 months.
3. Acquiring Information Technology facilities in complementary
locations throughout the U.S.
Liquidity and Capital Resources
Our primary sources of liquidity and capital resources have been private
placements of common stock and borrowings from related and non-related
parties. See Notes 2 and 3 to the Financial Statements (Stockholders'
Deficiency and Subsequent Events, respectively) for further descriptions
of these activities. We will require additional capital financing to
continue the development of our business plan consistent with anticipated
growth in operations, infrastructure and personnel. We anticipate that
the cash on hand coupled with the cash to be raised from additional private
placements and public offerings, assuming they will be successful, should
be sufficient to satisfy our operating expenses and capital until such time
as revenues are sufficient to meet operating requirements.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no matters during this reporting period that require
disclosure under this item.
ITEM 2. CHANGES IN SECURITIES
During the quarter ended March 31, 2000, the Company issued 189,570 shares
of unregistered common stock at prices ranging from $2.50 to $4.00 per share
for a total purchase price of $594,782.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There have been no matters during this reporting period that require
disclosure under this item.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
There have been no matters submitted to a vote of security holders during
this reporting period.
ITEM 5. OTHER INFORMATION
There have been no matters during this reporting period that require
disclosure under this item.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K relating to the quarter ended March 31, 2000.
The Company did not file any reports on Form 8-K during the quarter ended
March 31, 2000.
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 Career Centers, Inc.
/s/ Thomas D. Keene
-------------------
Thomas D. Keene
Principal Financial
and Accounting Officer
Dated: May 15, 2000.
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THIS SCHEDULE CONTAINS QTR. SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE COMPANY'S
BALANCE SHEET AND STATEMENT OF OPERATIONS
FOR PERIOD ENDING MAR 31.2000
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