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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 000-22785
American Career Centers, Inc.
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(Name of registrant in its charter)
Nevada 87-0636498
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(State of incorporation) (I. R. S. Employer Identification No.)
2490 South 300 West
South Salt Lake City, Utah 84115
(801) 485-6200
(Address and telephone number of principal executive offices and
principal place of business)
________________
Securities registered pursuant to Section 12(b) of the Act:
None
________________
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.0001 per share of Common Stock
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 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) and has been subject
to such filing requirements for the past 90 days.
Yes X No
As of June 30, 2000, there were 6,182,070 shares of the issuer's Common
Stock issued and outstanding.
PART I - FINANCIAL INFORMATION
Item I. Financial Statements
The registrant represents that the Consolidated Financial Statements
furnished herein have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with prior years, and
that such Consolidated Financial Statements reflect, in the opinion of the
management of the Company, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the consolidated
financial position of American Career Centers, Inc. (the "Company"), as
of June 30, 2000, and the results of its operations and its cash flows
for the three months then ended.
American Career Centers, Inc. and Subsidiaries
Consolidated Financial Statements
June 30, 2000
AMERICAN CAREER CENTERS, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2000
AMERICAN CAREER CENTERS, INC.
AND SUBSIDIARIES
CONTENTS
PAGE 1 CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2000
(UNAUDITED) AND DECEMBER 31, 1999
PAGE 2 CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX
AND THREE MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED)
PAGE 3 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS
ENDED JUNE 30, 2000 AND 1999 (UNAUDITED)
PAGE 4 NOTE TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1
AMERICAN CAREER CENTERS, INC. AND SUBSIDARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
2
See accompanying notes to consolidated financial statements.
AMERICAN CAREER CENTERS, INC. AND SUBSIDARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
3
See accompanying notes to consolidated financial statements.
AMERICAN CAREER CENTERS, INC. AND SUBSIDARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4
AMERICAN CAREER CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, 2000
ASSETS (Unaudited) December 31, 1999
CURRENT ASSETS
Cash $ 138,255 $ 42,879
Accounts receivable, net 133,194 83,988
Notes receivable 15,000 -
Inventories 11,419 3,447
Prepaid expenses and
other assets 5,712 357
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Total Current Assets 303,580 130,671
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PROPERTY AND EQUIPMENT - NET 179,929 122,538
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OTHER ASSETS
Intangibles, net 68,760 115,106
Deposits 12,889 14,464
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Total Other Assets 81,649 129,570
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TOTAL ASSETS $ 565,158 $ 382,779
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LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
CURRENT LIABILITIES
Accounts payable and
other accrued expenses $ 232,182 $ 256,892
Payroll taxes payable 199,823 238,076
Accrued payroll and
payroll taxes 172,181 317,594
Deferred revenue 503,069 273,736
Notes payable 140,250 162,500
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Total Current Liabilities 1,247,505 1,248,798
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STOCKHOLDERS' DEFICIENCY
Preferred stock, $.0001
par value, 20,000,000
shares authorized, none
issued - -
Common stock, $.0001 par
value, 100,000,000 shares
authorized, 6,182,070 and
5,902,500 shares issued
and outstanding,
respectively 618 590
Additional paid in capital 2,123,715 1,258,962
Accumulated deficit (2,806,680) (2,064,321)
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(682,347) (804,769)
Less subscriptions
receivable - (61,250)
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Total Stockholders'
Deficiency (682,347) (866,019)
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TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIENCY $ 565,158 $ 382,779
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
AMERICAN CAREER CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the three For the three For the six For the six
months ended months ended months ended months ended
June 30, 2000 June 30, 1999 June 30, 2000 June 31, 1999
REVENUES $ 421,418 $ 228,937 $ 848,785 $ 495,804
COST OF SALES 212,588 105,223 374,811 233,879
GROSS PROFIT 208,830 123,714 473,974 261,925
OPERATING EXPENSES
Selling and marketing 300,693 86,944 523,996 204,695
General and administrative 347,076 211,445 633,604 409,021
Total Operating Expenses 647,769 298,389 1,157,600 613,716
LOSS FROM OPERATIONS (438,939) (174,675) (683,626) (351,791)
OTHER INCOME (EXPENSE)
Gain on exchange of
securities - 10,000 - 10,000
Interest expense (7,434) (5,626) (15,827) (11,777)
Interest income - - 204 -
Tax penalties (40,855) (15,513) (42,730) (16,860)
Other expense (80) - (80) (7,700)
Total Other Income (Expense) (48,369) (11,139) (58,433) (26,337)
LOSS BEFORE INCOME TAXES (487,308) (185,814) (742,059) (378,128)
FEDERAL AND STATE INCOME TAX 300 - 300 -
NET LOSS $ (487,608) $ (185,814) $ (742,359) $ (378,128)
Net loss per share -
basic and diluted $ (0.08) (0.07) $ (0.12) (0.13)
Weighted average number of
shares outstanding -
basic and diluted 6,169,070 2,868,000 6,067,386 2,868,000
</TABLE>
See accompanying notes to consolidated financial statements.
AMERICAN CAREER CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASHFLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
For the six For the six
month period month period
June 30, 2000 June 30, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (742,359) $ (378,128)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and Amortization 67,334 43,882
Gain on exchange of securities - (10,000)
(Increase) in accounts receivable (49,206) (13,588)
(Increase) in inventories (7,972) (2,176)
(Increase) Decrease in prepaid
expenses and other assets (5,355) 1,516
Increase (Decrease) in accounts
payable and accrued expenses (24,710) 71,800
Increase (Decrease) in payroll
taxes payable (38,253) 78,979
Increase (Decrease) in accrued
payroll and payroll taxes (55,163) 221,364
Increase in deferred revenue 229,333 (87,139)
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Net Cash Used In Operating Activities (626,351) (73,490)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (78,379) (4,215)
Notes receivable (15,000) -
Deposits 1,575 (2,175)
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Net Cash Used in Investing Activities (91,804) (6,390)
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CASH FLOWS FROM FINANCING ACTIVITIES
Payment on notes payable (47,250) -
Loan proceeds 25,000 75,000
Proceeds from issuance of common stock 835,781 -
Purchase of treasury stock - (11)
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Net Cash Provided By Financing Activities 813,531 74,989
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NET INCREASE (DECREASE) IN CASH 95,376 (4,891)
CASH, BEGINNING OF PERIOD 42,879 11,246
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CASH, END OF PERIOD $ 138,255 $ 6,355
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
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 INVENTORIES
Inventories, consisting of training materials are stated at the lower of
cost or market determined on the first-in, first-out method.
NOTE 3 STOCKHOLDERS' EQUITY
During April 2000, the Company issued 90,000 restricted shares of common
stock for a total of $270,000 or $3.00 per share.
During April 2000, the Company collected the $16,250 Subscription Receivable
outstanding at March 31, 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK
This quarterly report may contain forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements are based largely on the Company's
expectations and are subject to a number of risks and uncertainties,
certain of which are beyond the Company's control. Actual results could
differ materially from these forward-looking statements as a result of
such risks and uncertainties, including, among others, general economic
conditions, governmental regulation and competitive factors, and, more
specifically, interest rate levels availability of financing, consumer
confidence and preferences, the effectiveness of the Company's competitors,
and costs of materials and labor. In light of these risks and uncertainties,
there can be no assurance that the forward-looking information contained in
this quarterly report will in fact occur. Forward-looking statements may be
identified by use of forward-looking terminology such as "believe,'
"intends," "may," "will," "expects," "estimate," "anticipate," "continue,"
or similar terms, variations of those terms or the negative of those terms.
Thirteen Weeks Ended June 30, 2000 and June 30, 1999.
Overview.
American Career Centers Inc. (the "Company" or "ACCI") was formed in June
1999 as a holding company for the acquisition of information technology
career training centers and related businesses. We completed our first
acquisition in June 1999 through the purchase of one hundred percent (100%)
of the capital stock of Alpha Computer Solutions, Inc., a Utah corporation
("Alpha"). Alpha began operations in June 1998 and trained over fourteen
thousand (14,000) students in its first two years of operation. Alpha's
training facility in Salt Lake City, Utah, known as the Alpha Computer
Solutions Career Center, is the largest in the state. Our management
plans to expand the number of Alpha Computer Solutions Career Centers,
potentially opening in twelve or more new cities by the end of 2001.
Effective December 3, 1999, we 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
this acquisition, we became the successor issuer to Tunlaw and we retain
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, "B2B" and other 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
continues to grow 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 our competitors, we target 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
250 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 2,000 major
corporations and organizations train their employees at Alpha, including
(among others) 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 PyramidTM. 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 the "next big breakthrough". Not only have existing
organizations embraced the Internet, but new companies in new industries
have been created from scratch and blossomed in record time, as whole
technologies and industry sub-segments can be developed today at a highly-
accelerated pace, in what has come to be known as "Internet time". The
implications for the computer training industry are fairly clear. There
is a competitive mania to create Internet Web sites, and even to create
whole new delivery systems, such as wireless technologies, which are
anticipated to expand the global base of Internet users significantly.
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 PyramidTM
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; and
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 PyramidTM 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 our overall growth, our management has developed an expansion
plan which calls for us to acquire Information Technology training
facilities in various locations throughout the United States. Our primary
criteria for acquisition will include that our target has proven
profitability, a good local reputation, local market potential, and
similarity of current programs to our Alpha model. In each case, we intend
to conduct a stringent analysis of the target's projected ability to provide
a strong return on our investment. We have ranked expansion cities based
upon 10 factors including population, per capita IT spending, per capita IT
training spending, regional demographics and Internet infrastructure.
Management hopes to open locations in 12 cities by the end of 2001.
Our subsidiary, Alpha Computer Solutions, Inc., began its operations in
June of 1998. Throughout 1998 and 1999, Alpha 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, and
6 perfecting training delivery and management systems
It is management's intention to continue these processes as we acquire
additional computer training organizations and integrate them into our
current model described above.
Results of Operations
For the quarter ended June 30, 2000, the Company had revenues of $421,418,
and a net loss from operations of $487,608.
Quarter Ended June 30, 2000 Versus Quarter Ended June 30, 1999
During 1999, we focused heavily on recruiting, curriculum development and
the design of effective marketing programs. As we moved into the year
2000, revenues began to ramp up fairly significantly as our new marketing
programs drove increased sales of the products we now offer. In addition,
we continued to increase both our fund raising efforts and our acquisition
target search activities.
For the three months ended June 30, 2000, the Company increased
consolidated revenues 84% to $421,418, compared to $228,937 for the same
period in 1999. We experienced a net loss from operations of $438,939 for
the three months ended June 30, 2000, an increase of 151% compared to a net
loss of $174,675 for the same period in 1999. During the second quarter,
2000, we generated a Gross Profit of $208,830, up 69% from the same period
in 1999, and representing 50% of sales, as compared to the second quarter
of 1999, for which Gross Profit equaled $123,714, representing 54% of
sales. General and administrative expenses, at $347,076 for the three
months ended June 30, 2000, increased 64% from the same period in 1999,
in which such expenses were $211,445. Selling and marketing expenses, at
$300,693 for the second quarter of 2000 increased 246% from a year earlier,
when such expenses totaled $86,944.
Management attributes the increase in revenues and Gross Profits during
the three months ended June 30, 2000 to an increase in the sale of computer
classes, primarily in connection with internet related curriculum. At the
same time, we experienced an increase during the same period in marketing
and selling expenses, general and administrative expenses and net losses
from operations, due to additional recruiting, marketing and product
delivery.
Plan of Operations
There are three key components to our plan of growth for the Company,
namely:
1. Raising additional capital through the private placement of common
stock. The Company will require additional funds to operate, to 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 theUnited States.
Liquidity and Capital Resources
Our primary source of liquidity and capital resources has been from
private placements of common stock and borrowings from related and
non-related parties. See Note 3 to the Financial Statements (Stockholders'
Equity) for further descriptions of these activities. The Company's cash
balance at June 30, 2000 increased to $138,255, up 322% from $42,879 at
December 31, 1999. 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 April 2000, the Company issued 90,000 restricted shares of common
stock for a total of $270,000 or $3.00 per share.
Also, in April 2000 we collected the amount of $16,250 to satisfy the
Subscription Receivable which was outstanding at March 31, 2000.
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 during this reporting period that require
disclosure under this item.
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 June 30, 2000.
The Company did not file any reports on Form 8-K during the quarter
ended June 30, 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
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Thomas D. Keene
Principal Financial
and Accounting Officer
Dated: August 18, 2000
