Overview
American Education Center, Inc. was incorporated inNevada ("AEC Nevada") inMay 2014 as a holding company, and operates through its wholly owned subsidiaries,American Education Center, Inc. , incorporated in theState of New York in 1999 ("AEC New York"),AEC Management Ltd. , incorporated in theBritish Virgin Islands onOctober 23, 2018 ("AEC BVI") and the subsidiaries of AEC BVI.
For approximately 20 years, AEC New York has devoted itself to international
education exchanges between
AECNevada acquiredAEC Southern Management Co., Ltd , a company formed pursuant to the laws ofEngland andWales ("AEC Southern UK") and its subsidiaries in 2016 pursuant to a certain share exchange agreement. AECSouthern UK holds 100% of the equity interests inAEC Southern Management Limited , aHong Kong company ("AEC Southern HK") incorporated onDecember 29, 2015 , with a registered capital ofHK$10,000 . AECSouthern UK owns 100% of the equity interests inQianhai Meijiao Education Consulting Management Co., Ltd. ("AEC Southern Shenzhen"), a foreign wholly owned subsidiary incorporated pursuant to PRC law onMarch 29, 2016 , with a registered capital ofRMB5,000,000 . OnJuly 10, 2018 , AEC New York acquired a 51% equity ownership inAmerican Institute of Financial Intelligence LLC , aNew Jersey limited liability company ("AIFI") fromFIFPAC Inc. ("FIFPAC"), aNew Jersey corporation, the then 100% owner of AIFI, pursuant to a Business Purchase Agreement. AIFI currently does not have any active operating activities. OnApril 22, 2019 , AEC BVI acquired AEC Southern HK and its subsidiary, AECSouthern Shenzhen , pursuant to a share transfer agreement by and among the related parties, AEC BVI and AEC Southern UK, for a nominal consideration (the "AEC Southern HK Transfer"). OnMay 1, 2019 , Pursuant to a certain share exchange agreement datedMay 1, 2019 , AEC Nevada sold 100% of the equity interest in AEC Southern UK to three individuals, Ye Tian, Rongxia Wang andWeishou Li (the "AEC Southern UK Sale"). Accordingly, following the transactions underlying the AEC Southern HK Transfer and the AEC Southern UK Sale, AECSouthern UK is no longer a subsidiary of ours, and we operate AEC Southern HK and AEC Southern Shenzhen through AEC BVI. AEC BVI, via its operating entity in the PRC, AEC Southern Shenzhen, serves as a local platform for expanding the Company's business in mainlandChina . Our PRC operations are based in the city ofShenzhen ,Guangdong province, a city designated by the PRC as aSpecial Economic Zone ("SEZ"). SEZs are granted a more free-market oriented economic and regulatory environment, with business and tax policies designed to attract foreign investment and technology. OnMay 22, 2020 , AEC Southern HK formedYiqilai (Shenzhen) Consulting Management Co., Ltd. ("AEC YQL") inShenzhen, China pursuant to PRC laws. AEC YQL is a wholly owned subsidiary of AEC Southern HK, and as of the date of this Quarterly Report on Form 10-Q, does not have significant business activities. OnAugust 18, 2020 , AEC YQL entered into a series of contractual arrangements, including an Equity Pledge Agreement, Exclusive Management Consulting Agreement, Exclusive Option Agreement, andIrrevocable Power of Attorney (collectively, the "VIE Agreements"), withShenzhen Zhongwei Technology Co., Ltd. ("Zhongwei"), a PRC company, andDing Xiang (Shenzhen) Investment Co., Ltd. , a PRC company ("Pledgor"), the sole shareholder of Zhongwei controlled byDewei Li andBin Liu (the "Zhongwei Ultimate Shareholders"). Pursuant to the VIE Agreements, AEC YQL gained control over Zhongwei. Zhongwei is involved in, among other things, e-commerce, and the Company plans to leverage Zhongwei's current e-commerce platform, and to engage in business such as online education e-commerce. In consideration for entering into the transactions contemplated by the VIE Agreements, onAugust 18, 2020 , the Company entered into a Share Issuance Agreement (the "Share Issuance Agreement") with the Zhongwei Ultimate Shareholders, whereby the Company agreed to issue to the Zhongwei Ultimate Shareholders an aggregate of 2,640,690 shares of the Company's common stock, par value$0.001 . The transactions underlying the Share Issuance Agreement is closed inAugust 2020 . 37
As of the date of this report, the corporate structure of the Company is illustrated as follows:
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Our mission is to become a leading provider for international education services, and providing total solutions for technology in education field, as well as providing corporation advisory management services.
Currently, through AEC New York, AEC Southern Shenzhen and Zhongwei, we provide four types of consulting services:
? Placement Advisory Services; ? Career Advisory Services; ?Student & Family Services ; and ? Other Advisory Services.
Services to our clients are provided through the Company's principal executive
office in
Leveraging our knowledge of the educational system and environment in theU.S. and our understanding of the market demand for education services in the PRC and its changing business economy, we specialize in the delivery of customized high school and college Placement Advisory Services as well as Career Advisory Services to Chinese students wishing to study and gain post-graduate work experience in theU.S. Our advisory services are specifically designed to address the educational needs of the rising middle-class families inChina . The demand for our advisory services is primarily the result ofChina's decades-long one-child policy, society's focus and emphasis on children's education, and families' desire to gain access toU.S. colleges and universities as well as work experience in theU.S. 38
Headquartered in
(1) AEC New York capitalizes on the rising demand from the middle-class families
in
school and college placement and Career Advisory Services to Chinese
students wishing to study in the
training, college admission advisory, on-campus advisory, internship and
start-up advisory as well as student and family services.
(2) AEC BVI, though AEC Southern Shenzhen and Zhongwei, delivers customized high
school and college placement and Career Advisory Services to Chinese
students wishing to study in the
York to AEC Southern Shenzhen. Placement Advisory Services
Our Placement Advisory Services include Language Training, Placement Advisory and Elite College Advisory services.
Since 1999, we have been delivering customized Language Training & Placement Advisory Services to Chinese students. Our one-stop advisory services encompass ESL training and assistance throughout the high school and college application and admission process. Our Language Training service is based on the existing ESL training platform which provides language training for standard test preparation and is designed to help improve student's English listening, speaking, reading, and writing skills. Student customers will be able to take these training courses online when our ESL online training platform goes live, which we expect to take place in the second quarter of 2021. Targeting the needs of Chinese families in obtaining admission toIvy League and other prestigious universities in theU.S. , our Elite College Advisory service is designed to assist qualified Chinese students in applying to prestigious colleges and universities in theU.S. Specifically, we arrange campus tours, assist our student customers with their university applications, provide tailored language training, offer guidance on interview and communication techniques, and follow up on their applications. Once our student customers are admitted into their target universities, our Placement Advisory Services further extend to academic and cultural related experiences including, among other things, providing assistance with applying for a second major or minor, transferring to a different university, housing accommodations, and applying for accelerated degrees. To help students optimize their on-campus experience and train their leadership and social skills, we also organize seminars and social events with our partner scholars and universities, non-profit and for-profit business organizations. Additionally, to help enrich their cultural experiences, we organize extracurricular and artistic activities including dance, music, painting, photography, and other performance events. For college application, we have designed the Key School Admissions Program, giving student customers closely guided application consulting services to gain admission to topU.S. universities.
For on-campus academic counseling, we offer the Elite100 program that focuses on leadership and communication skills development for our student customers.
We provide placement services through both AEC New York and AEC BVI. AECNew York refers business to AEC Southern Shenzhen when clients in the PRC need
local support. Career Advisory Services
Our Career Advisory Services include our Internship Advisory program and our Start-up Advisory program.
Our Internship Advisory program focuses on students' career development by helping them identify and secure suitable internship and part-time or full-time work opportunities that are appropriate for their educational background and experience level. Through this program, we strive to help students map and navigate their career path and counsel them on matters including academic improvement to career assistance. Through this program, our student customers are given opportunities to communicate with professionals in their field of study and to participate in real-world case studies. Our Start-up Advisory program provides advisory services to individual students and/or their familieswho want to start or make an investment in a business in theU.S. Collaborating with our strategic partners, our services include (i) recommending alternative business development opportunities; (ii) assistance with business plan development; (iii) assistance with accounting and financial management, marketing, product and project design; and (iv) assistance in project financing. 39
Student & Family Advisory Services
Our Student & Family Advisory Services are designed to assist our students and/or their families in the process of settling down in theU.S. , so they can effectively focus on their studies. We provide thorough services tailored to the unique needs of each student family encountered in theU.S. Through our business partners, we assist the students' families with purchasing real estate properties, organizing their personal financial management and investment needs, getting insurance and starting businesses. Our American Dream Program helps students' families find investment projects in theU.S. We also advise corporate clients whose executives are moving to theU.S. for work. The scope of our services includes assistance with business consulting, relocation and other aspects of family support services. Services provided under this program are customized and thorough, and tailored towards each family's unique needs in theU.S. Other Advisory Services
Through our Foreign Student Recruitment services, we assist universities inChina to recruit students from theU.S. We customize this service based on our strategic relationship with college and universities in theU.S. and the specific recruitment goals of these universities inChina . The demand for our recruitment services is driven mainly by the lack of an established channel to attract students from theU.S. and the needs by the Chinese universities to expand and diversify their student body. Our Foreign Educator Placement services are designed to meet the increasing demand for experienced educators and teachers from theU.S. to teach inChina . Such demand covers the need to recruit qualified US educators from Pre K-12
to teach inChina .
In order to respond to the adverse impact of the COVID-19 outbreak, we have devoted time and effort to research and develop new services and products. For the period endedMarch 31, 2021 , through AEC Southern HK, we have assisted our existing students, students' families, and corporate clients to obtain Rocitin. OnDecember 31, 2020 , We entered into a Commission Agreement withClark Orient Company Limited ("Clark Orient"), pursuant to which Clark Orient agrees to pay usRMB 10.00 on every bottle of Rocitin we sell. The Commission Agreement remains effective until either party gives written notice of termination. As ofMarch 31, 2021 , revenue from sales of Rocitin by AEC Southern HK was$8,280 , approximately 62% of our total revenue in the period endedMarch 31, 2021 .
Impact of the COVID-19 Pandemic
InDecember 2019 , a novel strain of coronavirus was reported to have surfaced inWuhan, China , which has and is continuing to spread throughoutChina and other parts of the world, includingthe United States . OnJanuary 30, 2020 , theWorld Health Organization declared the outbreak of the coronavirus disease (COVID-19) a "Public Health Emergency of International Concern," and onMarch 11, 2020 , theWorld Health Organization characterized the outbreak as a "pandemic". The pandemic has forced governments around the world to take drastic measures to halt the outbreak, resulting in quarantines, stay-at-home requirements, travel restrictions, temporary change of immigration policies and temporary closure of businesses and facilities inChina , theU.S. , and throughout the world. A substantial part of the Company's revenue and workforce are concentrated inChina and in theU.S. Additionally, all of our four lines of business rely upon the ability to travel and the level of interest of our customers and prospective customers to study, work and reside overseas, which has been significantly affected by the pandemic. Consequently, we saw a significant decrease in requests for our services, which has materially adversely affected the Company's business operations and its financial condition and operating results for the three months endedMarch 31, 2021 , and these negative impacts will likely continue through the rest of the fiscal year 2021.
In order to respond to the COVID-19 outbreak, the Company has taken certain measures to our operations to ensure the safety of our staff, as well as to adjust to the reopening but potential surge of new cases. We have made work-from-home possible for our staff, so as to reduce congregation and possibility of transmission of the disease. We have identified an online platform related to education to diversify our means in generating revenue and are in still the process of negotiating a partnership or acquisition. In addition, we have been devoting time and effort to research and develop new services and products. As a result, we have been developing a new revenue resource by distributing health products through AEC Southern HK.
The COVID-19 pandemic is rapidly evolving. The information in this Quarterly Report on Form 10-Q is based on data currently available to us and will likely change as the pandemic progresses. As of the date of this Quarterly Report on Form 10-Q, some countries have slowly re-opened, but with surges of new cases appearing, while theU.S. continues to see increasing new COVID-19 cases in certain states. As COVID-19 persists throughout areas in which we operate and the rest of the world, we believe the outbreak has the potential to continue to have a material negative impact on our operating results and financial condition going into the rest quarters of 2021. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our employees, suppliers, student customers and other customers, and the impact on the Company's ability to obtain debt and equity financing to fund business activities, all of which are uncertain and cannot be predicted. Given these uncertainties, at present, we cannot reasonably estimate the related impact to our business, operating results and financial condition for the year ending
December 31, 2021 . 40
Significant Accounting Policies
The discussion and analysis of our consolidated financial condition and results of operations is based upon our unaudited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted inthe United States of America ("US GAAP"). The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities. On an on-going basis, we evaluate our estimates including the allowance for doubtful accounts, income taxes and contingencies. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The consolidated financial statements are comprised of AEC Nevada and its wholly owned subsidiaries, AEC New York, and AEC BVI. All significant intercompany accounts and transactions have been eliminated in consolidation. As part of the process of preparing our unaudited consolidated financial statements, we are required to estimate our income taxes. This process involves estimating our current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities. As ofMarch 31, 2021 , the Company does not have a liability for any unrecognized
tax benefits. We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our unaudited consolidated financial statements when we deem it necessary. We have determined significant accounting principles with policies that involve the most complex and subjective decisions or assessments. While our significant accounting policies are more fully described in Note 2 to our financial statements, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this "Management's Discussion and Analysis of Financial Condition and Results of Operations." Both operating groups are reported under the same accounting policies/estimations. Revenue is recognized when the following criteria are met: (1) when persuasive evidence of an arrangement exists; (2) delivery of the services has occurred; (3) the fee is fixed or determinable; and (4) collectability of the resulting receivable is reasonably assured. AECNew York delivers customized high school and college placement, career advisory as well as student and family services. Fees related to such advisory services that are collected from individuals are generally paid to the Company in advance and they are recorded as deferred revenue. Revenues are recognized proportionally as services are rendered or upon completion. Fees related to our advisory services provided by AEC New York to corporate customers (such as staffing agencies and placement agencies) are generally collected after services are provided, and are recorded as accounts receivable. OnJanuary 1, 2019 , the Company adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. We first evaluate our leases to determine whether they are classified as a finance lease or as an operating lease. A lease is a finance lease if any of the following criteria are met: (a) ownership transfers, (b) the lease includes an option to purchase the underlying asset, (c) the lease term is for the major part of the remaining economic life of the underlying asset, (d) the present value of the lease payments equals or exceeds the fair value of the underlying asset, or (e) the underlying asset is of a specialized nature that is expected to have no alternative use to the lessor at the end of the lease term. As such, all of our leases are classified as operating leases. We then determine whether the short-term exemption applies. The short-term exemption applies if the lease term 12 months or less and does not include a purchase option whose exercise is reasonably certain. If the short-term exemption applies then lease payments are recognized as expense and no asset or liability is recorded. If the short-term exemption does not apply, then we record an operating lease right-of-use asset and a corresponding operating lease liability equal to the present value of the lease payments. The ten-year commercial real estate lease we entered into inDecember 2014 did not meet the short-term exemption and, accordingly, we recorded the present value of the lease payments as a right-of-use asset and a lease liability in the unaudited consolidated balance sheet. We recognize expense on a straight-line basis over the life of the lease. 41
Recent Accounting Pronouncements
InJanuary 2017 , the FASB issued accounting standard update which simplifies the test for goodwill impairment. To address concerns over the cost and complexity of the two-step goodwill impairment test, the amendments in this update remove the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. This update is effective for annual or any interim goodwill impairment tests in fiscal years beginning afterDecember 15, 2019 . Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates afterJanuary 1, 2017 . The Company adopted the update in the fourth quarter of 2018. The adoption of the new standard did not have an impact on our consolidated financial statements. InOctober 2018 , the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to the Related Party Guidance for Variable Interest Entities. ASU 2018-17 changes how entities evaluate decision-making fees under the variable interest entity guidance. To determine whether decision-making fees represent a variable interest, an entity considers indirect interests held through related parties under common control on a proportional basis, rather than in their entirety. This guidance will be adopted using a retrospective approach and is effective for the Company onJanuary 1, 2020 . The Company has evaluated the effect of the adoption of this ASU and the standard did not have an impact on its consolidated financial statements and related disclosures from the adoption of the new guidance. InDecember 2019 , the FASB issued ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU provides an exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. This update also (1) requires an entity to recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, (2) requires an entity to evaluate when a step-up in the tax basis of goodwill should be considered part of the business combination in which goodwill was originally recognized for accounting purposes and when it should be considered a separate transaction, and (3) requires that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The Company adopted this ASU onJanuary 1, 2021 . The adoption of the ASU did not have an impact on our consolidated financial statements. The Company has assessed all newly issued accounting pronouncements released during the three months endedMarch 31, 2021 and through the date of this filing and believes none of them will have a material impact on the Company's financial statements when or if adopted. Results of Operations Below we have included a discussion of our operating results and material changes in the periods covered by this Quarterly Report on Form 10-Q. For additional information on the potential risks associated with these initiatives and our operations, please refer to the Risk Factors sections in our annual report on Form 10-K for the year endedDecember 31, 2020 , as filed onApril 15, 2021 . Our financial statements have been prepared assuming that we will continue as a going concern. We expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, additional funding from a shareholder of the Company, and believe that will be sufficient to meet our anticipated needs for working capital and satisfying our estimated liquidity needs 12 months from the date of the financial statements. The Three Months EndedMarch 31, 2021 , as Compared to the Three Months EndedMarch 31, 2020 For the three months ended March 31, 2021 2020 Variance % Key revenue streams: Placement Advisory Services$ 3,639 $ -$ 3,639 100 % Career Advisory Services 1,391 113,691 (112,300 ) (99 )
Student & Family Advisory Services - - -
- Other Advisory Services 8,280 507 7,773 1,533 % Total revenues$ 13,310 $ 114,198 $ (100,888 ) (95 )% Gross Profit$ 10,760 $ 3,861 $ 6,899 179 % Gross Margin 81 % 3 % 42 Revenue
? Total revenues for the three months ended
representing a decrease of
in 2020. The decrease was mainly due to the COVID-19 pandemic, which
negatively impacted our services to current customers
to study or work in the
high school/college admission process. The outbreak of COVID-19 in
students from
the financial performance of the Company.
Total revenues for the three months ended
the operations of AEC BVI, which deliver Placement Advisory Services, Career
Advisory Services and Other Advisory Services to our clients.
? Revenues for the three months ended
Advisory Services were
in 2020. The increase in our Placement Advisory Services was due to the
increase in service requests. For the three months ended
revenues from our Career Advisory Services and Student & Family Advisory
Services were generated, due to the decreased requests resulting from negative
impact of the COVID-19 pandemic. Revenues for the three months ended
2021 from Other Advisory Services were
revenue. To reduce the severe impact of pandemic, we developed a new source of
revenue in the first quarter of 2021 by selling health products on a commission basis. We expect the impact of COVID-19 on our business, especially on school
application and Career Advisory Services, will last until the end of this
year, due to restrictions on domestic and international travels, delay of the
spring semester and cancellation of overseas exams, as well as difficulty to
obtain valid visas. We will continually monitor the development of the
epidemic as well as the impact on our operations and financial performance and
actively adjust our operational strategies and make efforts on cost control
and reducing expenditures. We will also strive to expand our target market and
provide support of online study to our customers.
? In addition, the Chinese government offers incentives and benefits though its
Talents Policy to Chinese students
This Talents Policy has encouraged many of our clients
or are about to graduate to go back to
which resulted in less service requests for our placement advisory and
student & family advisory services. Additionally, the decrease in the value of
students is increasingly driving Chinese students to choose to apply to
universities and colleges in non-
after graduation, rather than staying in the
such recent changes, we are expanding our local services in the PRC,
concentrating on new services promotion and increasing our mergers and
acquisitions efforts by focusing on researching, identifying prospective
targets, negotiating and executing on this strategy. 43 Gross Profit & Gross Margin
? Our gross profit for the three months ended
representing an increase of
decline in service request and decreased cost by reducing outsourcing.
The following table summarizes changes in operating expenses and provision for income taxes for the periods presented:
For the three months ended March 31, 2021 2020 Variance % Operating expenses Selling and marketing $ -$ 13,361 $ (13,361 ) (100 )% Research and development expenses 12,220 - 12,220 100 General and administrative 361,397 647,125 (285,728 ) 44 % Total operating expenses$ 373,617 $ 660,486 $ (286,869 ) 43 % Income tax benefit$ (62,052 ) $ (162,623 ) $ 100,571 NM % Net (loss) from continuing operations including non-controlling interest$ (300,805 ) $ (493,688 ) $ 192,883 NM % Operating Expenses
? Total operating expenses decreased by
months ended
expense and professional expense. Income Tax Benefit ? Income tax benefit of$62,052 for the three months endedMarch 31, 2021 represents the net losses for the periods presented. Net Loss
? Net loss from operations including non-controlling interest was
the three months ended
for the three months ended
of the decreased operation expenses and decreased revenue.
Liquidity and Capital Resources
As of
44 Three Months ended March 31, 2021 2020 Variance % Net cash (used in) operating activities$ (8,044 ) $ (125,154 ) $ 117,110 NM % Net cash (used in) financing activities $ -$ (98,434 ) 98,434 (100 )% Effect of exchange rates changes on cash (1,141 ) (136 ) (1,005 ) NM Net change in cash$ (9,185 ) $ (223,724 ) $ 214,539 NM %
Cash Flow from Operating Activities
? Net cash used in continuing operating activities for the three months ended
months ended
operating expense and down payment to our service providers.
Cash Flow from Investing Activities
? We had no cash flow from investing activities during the three months ended
March 31, 2021 and 2020.
Cash Flow from Financing Activities
? We had no cash flow from investing activities during the three months ended
ended
45 Working Capital The following table sets forth our working capital from continuing operations: March 31, December 31, 2021 2020 Variance % Total current assets from continuing operations$ 1,216,122 $ 1,266,151 $ (50,029 ) (4 )% Total current liabilities from continuing operations 2,936,490 3,579,624 (643,134 ) (18 ) Working capital$ (1,720,368 ) $ (2,313,473 ) $ 593,105 NM % Current ratio 0.41 0.35
? As of
increase of
of uncollected accounts receivable.
? We believe that our working capital will be sufficient to enable us to meet
our cash requirements for the next 12 months. We believe we have adequate
working capital to fund future growth activities. Going Concern The independent auditors' report accompanying ourMarch 31, 2021 financial statements contained an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business. Additionally, we expect that the COVID-19 pandemic will continue to have material and adverse impacts on our cash flow for the three months endingJune 30, 2021 with potential continuing impacts on subsequent periods. As such, we expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, additional funding from a shareholder of the Company, and believe that will be sufficient to meet our anticipated needs for working capital and satisfying our estimated liquidity needs 12 months from the date of the financial statements.
Off-Balance Sheet Arrangements
We did not have, during the period presented, and we are currently not party to, any off-balance sheet arrangements.
46 Seasonality We experience seasonality in business with students as customers, specifically our placement advisory, career advisory and student and family services, all related to the business of AEC New York. The seasonality reflects the general trend of the industry of admissions and education related services, corresponding to the predominantly fall semester start dates of educational institutions admissions. Our services are higher in the fourth and first quarters of our fiscal year than the other two quarters, reflecting the engagement for services of educational institutions admissions predominantly occurring in the fourth quarter and first quarter of a calendar year, and other consulting services corresponding to the beginning of academic year, i.e. the fall semester. Subsequent Events Management has evaluated subsequent events for recognition and disclosure through the date these financial statements were filed with theUnited States Securities and Exchange Commission and concluded that no other subsequent event or transactions have occurred that required recognition or disclosure in our consolidated financial statements except for the following: The Company applied for the PPP Loan Forgiveness and was approved onApril 12, 2021 . The PPP loan of$77,588 with applicable interest was repaid in full by the SBA.
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