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American Education Center, Inc. (AMCT) SEC Filing 8-K Material Event for the period ending Tuesday, November 14, 2017

American Education Center, Inc.

CIK: 1626556 Ticker: AMCT

Exhibit 99.1

 

American Education Center Reports Third Quarter 2017 Financial Results

 

NEW YORK, Nov. 14, 2017/ PRNewswire/ — American Education Center, Inc. (“AEC” or the “Company;”) (OTCQB: AMCT), an emerging growth company providing educational and career enrichment opportunities for Chinese students studying in the United States, and compliance training and advisory services to companies in China, today announced its financial results for the three and nine months ended September 30, 2017.

 

Mr. Max P. Chen, Chairman and Chief Executive Officer of AEC, commented, “In conjunction with our plan to grow revenues and improve our overall profitability, our total revenues for the third quarter increased by 437.7% to $5.22 million-- thanks to contribution from the newly acquired compliance training and advisory services business that we acquired in October 2016, as well as growth from our career advisory and placement advisory services. Our margins have improved significantly as gross margin increased by 7.3 percentage points to 25.4% and operating loss margin narrowed to 1.6% for the third quarter.”

 

“With market demand for our advisory services continuing to grow at a healthy rate and improving financial condition following the recent $2 million private placement of our Series A Convertible Preferred Stock, both Anthony (our newly appointed Chief Financial Officer) and I are excited about our revised strategic plan and we believe that AEC is well positioned to execute on our growth strategy and launch our uplisting efforts,” concluded Mr. Chen.

 

Third Quarter 2017 Financial

 

   For the Three Months Ended September 30, 
($'000, except per share data)  2017   2016   % Change 
Revenues  $5,216   $970.0    437.7%
Gross profit  $1,325   $175.7    654.2%
Gross margin   25.4%   18.1%   7.3 pp 
Operating loss  $(82)  $(130)   37.2%
Operating loss margin   -1.6%   -13.4%   11.9 pp 
Net loss  $(3)  $(52)   -94.1%
Loss per share  $(0.0001)  $(0.0016)   95.5%

  

Revenues

 

For the third quarter 2017, total revenues increased by $4.25 million, or 437.7%, to $5.22 million from $0.97 million for the same period of last year. The increase in total revenues was primarily due to revenues from compliance training and advisory services delivered by our wholly owned subsidiary, AEC Southern Management Co., Ltd. (“AEC Southern UK”) which we acquired in October 2016 as well as the increase in revenues from career advisory and placement advisory services.

 

   For the Three Months Ended September 30, 
   2017   2016   Y/Y Change 
   Revenue   % of   Revenue   % of   Amount    
  

($'000)

   Total  

($'000)

   Total  

($'000)

   % 
Compliance training & advisory  $3,739    71.7%  $-    0.0%  $3,739    NM 
Placement advisory   141    2.7%   19    2.0%   123    662.4%
Career advisory   841    16.1%   400    41.2%   441    110.3%
Student & family advisory   494    9.5%   551    56.8%   (57)   -10.4%
Total  $5,216    100.0%  $970    100.0%  $4,246    437.7%

 

On a segment basis, revenues from compliance training and advisory services were $3.74 million and accounted for 71.7% of total revenues for the third quarter 2017. Revenues from placement advisory services increased by $0.12 million, or 662.4%, to $0.14 million for the third quarter 2017 from $0.02 million for the same period of last year. Revenues from career advisory services increased by $0.44 million, or 110.3%, to $0.84 million for the third quarter 2017 from $0.40 million for the same period of last year. Revenues from student and family advisory services decreased by $0.06 million, or 10.4%, to $0.49 million for the third quarter 2017 from $0.55 million for the same period of last year. Revenues from placement advisory, career advisory and student and family advisory services were generated by our wholly-owned subsidiary American Education Center, Inc. (“AEC New York”) and accounted for 2.7%, 16.1%, and 9.5%, respectively, of total revenues for the third quarter 2017.

 

 

 

 

Gross Profit

 

Total cost of revenues increased by $3.10 million, or 389.9%, to $3.89 million for the third quarter 2017 from $0.79 million for the same period of last year.

 

Total gross profit increased by $1.15 million, or 654.2%, to $1.32 million for the third quarter 2017 from $0.18 million for the same period of last year. Gross profits for AEC New York and AEC Southern UK were $0.47 million and $0.86 million, respectively, for the third quarter 2017, compared to $0.18 million and $nil, respectively, for the same period of last year.

 

Overall gross margin was 25.4% with gross margins of 31.7% for AEC New York and 22.9% for AEC Southern UK for the third quarter 2017. This compared to gross margin of 18.1% for overall as well as AEC New York for the same period of last year.

 

Operating Loss

 

Selling and marketing expenses were $0.75 million, or 14.4% of total revenues, for the third quarter 2017, compared to $0.05 million, or 5.0% of total revenues, for the same period of last year. General and administrative expenses were $0.66 million, or 12.6% of total revenues, for the third quarter 2017, compared to $0.26 million, or 26.6% of total revenues, for the same period of last year. As a result, total operating expenses were $1.41 million, or 27.0% of total revenues, for the third quarter 2017, compared to $0.31 million, or 31.6% of total revenues, for the same period of last year.

 

Loss from operations was $0.08 million for the third quarter 2017, compared to $0.13 million for the same period of last year. Operating loss margin was 1.6% for the third quarter 2017, compared to 13.4% for the same period of last year.

 

Net Loss

 

For the third quarter 2017, net loss was $3,054, or loss of $0.0001 per basic and diluted share. This compared to net loss of $51,948, or loss of $0.0016 per basic and diluted share, for the same period of last year.

 

Nine Months Ended September 30, 2017 Financial Results

 

   For the Nine Months Ended September 30, 
($'000, except per share data)  2017   2016   % Change 
Revenues  $20,379   $4,881    317.6%
Gross profit  $6,708   $982    583.4%
Gross margin   32.9%   20.1%   12.8 pp 
Operating income (loss)  $1,525   $(184)   926.9%
Operating (loss) margin   7.5%   -3.8%   11.3 pp 
Net income (loss)  $1,138   $(84)   1454.7%
Earnings (loss) per share  $0.0275   $(0.0027)   1102.0%

  

Revenues

 

For the nine months ended September 30, 2017, total revenues increased by $15.50 million, or 317.6%, to $20.38 million from $4.88 million for the same period of last year. The increase in total revenues was primarily due to revenues from compliance training and advisory services delivered by AEC Southern UK, a business we acquired in October 2016, as well as increase in revenues from career advisory services.

 

 

 

 

                         
   For the Nine Months Ended September 30, 
   2017   2016   Y/Y Change 
   Revenue   % of   Revenue   % of   Amount     
   ($'000)   Total   ($'000)   Total   ($'000)   % 
Compliance training & advisory  $15,007    73.6%  $-    0.0%  $15,007    NM 
Placement advisory   678    3.3%   959    19.6%   (281)   -29.3%
Career advisory   2,438    12.0%   1,302    26.7%   1,136    87.2%
Student & family advisory   2,256    11.1%   2,620    53.7%   (364)   -13.9%
Total  $20,379    100.0%  $4,881    100.0%  $15,499    317.6%

 

On a segment basis, revenues from compliance training and advisory services delivered by AEC Southern UK were $15.01 million and accounted for 73.6% of our total revenues for the nine months ended September 30, 2017. Revenues from placement advisory services decreased by $0.28 million, or 29.3%, to $0.68 million for the nine months ended September 30, 2017 from $0.96 million for the same period of last year. Revenues from career advisory services increased by $1.14 million, or 87.2%, to $2.44 million for the nine months ended September 30, 2017 from $1.30 million for the same period of last year. Revenues from student and family advisory services decreased by $0.36 million, or 13.9%, to $2.26 million for the nine months ended September 30, 2017 from $2.62 million for the same period of last year. Revenues from placement advisory services, career advisory services and student & family advisory services were generated by AEC New York and accounted for 3.3%, 12.0%, and 11.1%, respectively, of total revenues for the nine months ended September 30, 2017.

 

Gross Profit

 

Total cost of revenues increased by $9.77 million, or 250.6%, to $13.67 million for the nine months ended September 30, 2017 from $3.90 million for the same period of last year.

 

Total gross profit increased by $5.73 million, or 583.4%, to $6.71 million for the nine months ended September 30, 2017 from $0.98 million for the same period of last year. Gross profits for AEC New York and AEC Southern UK were $1.78 million and $4.93 million, respectively, for the nine months ended September 30, 2017, compared to $0.98 million and $nil, respectively, for the same period of last year.

 

Overall gross margin was 32.9% with gross margins of 33.1% for AEC New York and 32.9% for AEC Southern UK for the nine months ended September 30, 2017. This compared to gross margin of 20.1% for overall as well as AEC New York for the same period of last year.

 

Operating Income (Loss)

 

Selling and marketing expenses were $3.32 million, or 16.3% of total revenues, for the nine months ended September 30, 2017, compared to $0.18 million, or 3.7% of total revenues, for the same period of last year. General and administrative expenses were $1.86 million, or 9.1% of total revenues, for the nine months ended September 30, 2017, compared to $0.99 million, or 20.2% of total revenues, for the same period of last year. As a result, total operating expenses were $5.18 million, or 25.4% of total revenues, for the nine months ended September 30, 2017, compared to $1.17 million, or 23.9% of total revenues, for the same period of last year.

 

Operating income was $1.52 million for the nine months ended September 30, 2017, compared to operating loss of $0.18 million for the same period of last year. Operating margin was 7.5% for the nine months ended September 30, 2017, compared to operating loss margin of 3.8% for the same period of last year.

 

Net Income (Loss)

 

For the nine months ended September 30, 2017, provision for income taxes was $0.39 million, compared to income tax benefit of $0.09 million for the same period of last year.

 

Net income was $1.14 million, or $0.0275 per basic and diluted share, for the nine months ended September 30, 2017. This compared to net loss of $0.08 million, or loss of $0.0027 per basic and diluted share, for the same period of last year.

 

 

 

 

Financial Condition

 

As of September 30, 2017, we had cash, net accounts receivable, and accounts payable and accrued expenses of $1.61 million, $6.60 million and $4.07 million, respectively, compared to $2.29 million, $2.89 million and $3.45 million, respectively, at December 31, 2016. As of September 30, 2017, we had working capital surplus of $3.20 million, an increase of $2.21 million from $0.99 million as of December 31, 2016.

 

Net cash used in operating activities was $0.69 million for the nine months ended September 30, 2017, compared to

$0.81 million for the same period of last year.

 

Company Update

 

On November 3, 2017, the Company announced that it completed a $2.0 million private placement of its Series A Convertible Preferred Stock to China Cultural Finance Holdings Company Limited (“CCF”). Pursuant to a Share Purchase Agreement executed on October 30, 2017, the Company issued 500,000 shares of its Series A Convertible Preferred Stock (the “Shares”) to CCF for an aggregate consideration of $2.0 million, or $4 per share. As a condition of the Offering, the Company agreed to use its commercially reasonable efforts to effect the uplisting of its common shares on the NASDAQ Capital Market or such other national securities exchanges (the “Uplisting”) within 365 days after the Offering (the “Uplisting Deadline”). If and when the Uplisting occurs, the Shares are subject to mandatory conversion into shares of AEC common stock at a conversion price which shall be the lesser of (i) $4.00 or (ii) 90% of the offering price in any qualifying financing concurrent with the Uplisting. In the event that AEC fails to complete the Uplisting on or before the Uplisting Deadline, CCF has the option to redeem the Shares, either partially or in its entirety, at $4 per share plus interest payment at a rate of 5% per annum within 30 days following the Uplisting Deadline.

 

On October 23, 2017, the Company announced that Max Chen, Chairman and CEO of the Company, has granted the Company a five-year exclusive right to use or incorporate a portfolio of English-as-a-second language books and training materials (the “ESL Materials”) that are authored or co-authored by him in AEC’s Language Training services.

 

On October 2, 2017, the Company announced the appointment of Mr. Anthony S. Chan, CPA, by the Board of Directors as its Chief Financial Officer, effective October 1, 2017, replacing Mr. Max P. Chen who will continue to serve as the President, Chairman and sole director of the Board, and Chief Executive Officer of the Company. 

 

On August 30, 2017, the Company announced the appointment of Mr. Max Pu Chen as CEO of the Company, replacing Jonathan McKeage whose employment contract expired on August 28, 2017.

 

On August 23, 2017, the Company announced that AEC Southern Management Co. Ltd. (“AEC Southern UK”), a wholly-owned subsidiary of AEC, signed a non-binding letter of intent on August 22, 2017 to acquire 100% equity interest in Dongmin Education Investment Co. Ltd. (“Dongmin”), an education investment and management company that delivers customized training and consulting services for both students and corporations in China.

 

On August 3, 2017, the Company approved the appointment of Wei, Wei & Co. LLP as the Company's independent registered public accounting firm for the Company's fiscal year ending December 31, 2017, following the dismissal of Marcum Bernstein & Pinchuk LLP on August 1, 2017.

 

About American Education Center, Inc. (OTCQB: AMCT)

 

Based in New York with operations in China, we are one of most experienced and recognizable total solutions education advisory services company in the United States (US). Our customized placement and career advisory services are designed to address the needs of the rising middle-class families in China for quality education and working experience in the US. We also deliver customized compliance training and advisory services to corporate clients in China in the food industry to help them meet the local regulatory and compliance requirements and standards. For more information, please visit: www.aec100.com.

 

 

 

 

Forward Looking Statements

 

This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. All statements other than statements of historical fact in this press release are forward-looking statements and involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These forward-looking statements are based on management’s current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates, but involve a number of unknown risks and uncertainties, Further information regarding these and other risks is included in the Company’s filings with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and actual results may differ materially from the anticipated results. You are urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements. 

 

Contact:

 

American Education Center, Inc.

Nancy Qin

(212) 825-0437

f.qin@aec100.com

 

Investor Relations

Tony Tian, CFA

Weitian Group LLC

(732) 910-9692

tony.tian@weitian-ir.com

 

 

 

 

AMERICAN EDUCATION CENTER, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

 

   Three Months Ended September 30,   Nine Months Ended September 30, 
   2017   2016   2017   2016 
                 
Revenues  $5,215,743   $969,959   $20,379,142   $4,880,614 
Cost of revenues   3,890,800    794,273    13,670,929    3,899,032 
Gross profit   1,324,943    175,686    6,708,213    981,582 
                     
Operating expenses:                    
Selling and marketing   750,565    48,465    3,320,568    180,612 
General and administrative   656,317    257,606    1,862,901    985,373 
Total operating expenses   1,406,882    306,071    5,183,469    1,165,985 
                     
Income (loss) from operations   (81,939)   (130,385)   1,524,744    (184,403)
Other income   82    2,409    84    7,602 
                     
Income (loss) before provision for income taxes   (81,857)   (127,976)   1,524,828    (176,801)
Provision for (benefit from) income taxes   (78,803)   (76,028)   386,455    (92,770)
                     
Net income (loss)  $(3,054)  $(51,948)  $1,138,373   $(84,031)
                     
Other comprehensive income                    
Foreign currency translation gain   4,603    -    4,603    - 
Comprehensive income  $1,549   $(51,948)  $1,142,976    (84,031)
                     
Earnings per share - basic and diluted  $(0.00)  $(0.00)  $0.03   $(0.00)
                     
Weighted average shares                    
   outstanding, basic and diluted   41,350,000    31,558,889    41,350,000    30,584,000 

 

 

 

 

AMERICAN EDUCATION CENTER, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   September 30,   December 31, 
ASSETS  2017   2016 
   (Unaudited)     
         
Current assets:          
Cash    $1,609,945   $2,290,429 
Accounts receivable, net of allowance for doubtful accounts of $108,300 and $63,000   6,604,059    2,887,837 
at September 30, 2017 and December 31, 2016, respectively           
Prepaid expenses   92,787    61,600 
           
Total current assets   8,306,791    5,239,866 
           
Noncurrent assets:          
Deferred compensation   2,437,501    3,315,001 
Deferred income taxes   33,436    97,936 
Intangible asset, net    476,633    578,769 
Security deposits     266,021    266,021 
           
Total noncurrent assets   3,213,591    4,257,727 
           
TOTAL ASSETS  $11,520,382   $9,497,593 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Current liabilities:          
Accounts payable and accrued expenses  $4,067,358   $3,452,231 
Taxes payable   826,370    511,355 
Deferred revenue   100,000    177,132 
Loan from stockholders   113,906    113,906 
           
Total current liabilities   5,107,634    4,254,624 
           
Noncurrent liabilities:          
Deferred rent   182,510    155,707 
Long-term loan   295,579    295,579 
           
Total liabilities   5,585,723    4,705,910 
           
Stockholders’ equity:          
Preferred stock, $0.001 par value;          
20,000,000 shares authorized; none issued   -    - 
Common stock, $0.001 par value;          
180,000,000 shares authorized; 41,350,000 shares issued and outstanding          
at September 30, 2017 and December 31, 2016   41,350    41,350 
Additional paid-in capital   4,021,626    4,021,626 
Retained earnings   1,867,080    728,707 
Accumulated other comprehensive income   4,603    - 
           
Total stockholders' equity   5,934,659    4,791,683 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $11,520,382   $9,497,593 

 

 

 

 

AMERICAN EDUCATION CENTER, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

           

   Nine Months Ended September 30, 
   2017   2016 
         
Cash flows from operating activities:          
Net income (loss)  $1,138,373   $(84,031)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:          
Deferred tax provision (benefit)   64,500    (73,719)
Deferred rent expense   26,803    36,877 
Deferred compensation   877,500    - 
Provision for doubtful accounts   45,300    - 
Stock issued for services   -    95,500 
Amortization expense    102,136    - 
Change in operating assets and liabilities:          
(Increase) decrease in accounts receivable   (3,761,522)   317,242 
(Increase) decrease in prepaid expenses   (31,187)   79,830 
Increase (decrease) in accounts payable and accrued expenses   615,127    (692,502)
Increase (decrease) in taxes payable   315,015    (31,574)
Decrease in deferred revenue   (77,132)   (553,624)
Increase in advances from clients   -    93,790 
           
Net cash used in operating activities   (685,087)   (812,211)
           
Effect of exchange rates changes on cash   4,603    - 
           
Net change in cash   (680,484)   (812,211)
Cash at beginning of period   2,290,429    1,093,755 
           
Cash at end of period  $1,609,945   $281,544 
           
Supplemental disclosure of cash flow information          
           
Cash paid for income taxes  $6,940   $- 
           
Cash paid for interest  $14,778   $22,167 

 

 

 

 

  

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported): November 14, 2017 (November 14, 2017)

 

AMERICAN EDUCATION CENTER, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Nevada   333-201029   38-3941544
(State or other jurisdiction
of incorporation)
  (Commission File Number)   (IRS Employer
Identification No.)

 

2 Wall Street, 8th Fl.

New York, NY, 10005

(Address of Principal Executive Offices)

 

+212-825-0437

(Issuer’s telephone number)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

 

  

Item 2.02Results of Operations and Financial Condition.

 

On November 14, 2017, American Education Center Inc. issued a press release to report its financial results for the third quarter ended September 30, 2017. A copy of the press release is attached as Exhibit 99.1, which is furnished under Item 2.02 of this report and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

 

ITEM 9.01EXHIBITS

 

  (d) Exhibits

 

  Exhibit No.   Description
  99.1   Press Release dated November 14, 2017

 

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  AMERICAN EDUCATION CENTER, INC.
     
Dated: November 14, 2017    
  By: /s/ Max P. Chen
  Name: Max P. Chen
  Title:

Chief Executive Officer, President, Chairman,

Director and Secretary

 

 

 

 

 

 

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American Education Center, Inc. provided additional information to their SEC Filing as exhibits

Ticker: AMCT
CIK: 1626556
Form Type: 8-K Corporate News
Accession Number: 0001144204-17-058600
Submitted to the SEC: Tue Nov 14 2017 8:00:41 AM EST
Accepted by the SEC: Tue Nov 14 2017
Period: Tuesday, November 14, 2017
Industry: Educational Services
Events:
  1. Earnings Release
  2. Financial Exhibit

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