UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





Amendment No. 1 to



FORM 10-K



| | x | ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ------------------------------------------------------------------------------------



For the fiscal year ended December 31,
2018



or



| |  ̈ | TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ----------------------------------------------------------------------------------



For the transition period from ________
to ________



Commission file number 333-201029



|AMERICAN EDUCATION CENTER INC.                        
|------------------------------------------------------
|(Exact name of registrant as specified in its charter)



|Nevada                                                        |  | 38-3941544                         
|------------------------------------------------------------- |  | -----------------------------------
|(State or other jurisdiction ofIncorporation or organization) |  | (I.R.S. EmployerIdentification No.)



|2 Wall St, Fl. 8 New York, NY            |  | 10004     
|---------------------------------------- |  | ----------
|(Address of principal executive offices) |  | (Zip Code)



Registrant’s telephone number, including
area code: (212) 825-0437



Securities registered under Section 12(b)
of the Exchange Act: None



Securities registered under Section 12(g)
of the Exchange Act: None



Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ̈ Nox



Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes ̈ Nox



Indicate by check mark whether the registrant
(1) 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) has been subject to such filing
requirements for the past 90 days.

Yesx No ̈



Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yesx No ̈



Indicate
by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. ̈



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of
 “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act.



|Large accelerated filer |  ̈ | Accelerated filer         |  ̈
|----------------------- | - | ------------------------- | -
|Non-accelerated filer   | x | Smaller reporting company | x
|                        |   | 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 accounting standard provided pursuant to Section 13(a) of the Exchanger Act. ̈



Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act).

Yes ̈ Nox



The aggregate market value of the voting and non-voting common
stock held by non-affiliates of the Registrant as of June 30, 2018 (the last business day of the Registrant’s most recently
completed fiscal year) was $19,848,000.00.



As of April 15, 2019, the registrant had 56,597,113 shares of
common stock issued and outstanding.




















TABLE OF CONTENTS



|        | PART I                                                                                                       | 1 
|------- | ------------------------------------------------------------------------------------------------------------ | --
|ITEM 1  | Business                                                                                                     | 1 
|ITEM 1A | Risk Factors                                                                                                 | 10
|ITEM 1B | Unresolved Staff Comments                                                                                    | 16
|ITEM 2  | Properties                                                                                                   | 16
|ITEM 3  | Legal Proceedings                                                                                            | 16
|ITEM 4  | Mine Safety Disclosures                                                                                      | 16
|        | PART II                                                                                                      | 17
|ITEM 5  | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 17
|ITEM 6  | Selected Financial Data                                                                                      | 18
|ITEM 7  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        | 18
|ITEM 7A | Quantitative and Qualitative Disclosures about Market Risk                                                   | 23
|ITEM 8  | Financial Statements and Supplementary Data                                                                  | 23
|ITEM 9  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         | 23
|ITEM 9A | Controls and Procedures                                                                                      | 24
|ITEM 9B | Other Information                                                                                            | 24
|        | PART III                                                                                                     | 25
|ITEM 10 | Directors, Executive Officers and Corporate Governance                                                       | 25
|ITEM 11 | Executive Compensation                                                                                       | 26
|ITEM 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               | 26
|ITEM 13 | Certain Relationships and Related Transactions, and Director Independence                                    | 27
|ITEM 14 | Principal Accounting Fees and Services                                                                       | 27
|        | PART IV                                                                                                      | 29
|ITEM 15 | Exhibits, Financial Statement Schedules                                                                      | 29
|ITEM 16 | Form 10-K Summary                                                                                            | 30



EXPLANATORY NOTE



Throughout this Annual Report on Form 10-K,
the “Company”, “we,” “us,” and “our,” refer to (i) American Education Center, Inc.,
a Nevada corporation (“AEC Nevada”); (ii) American Education Center, Inc., a New York corporation (“AEC New York”);
and (iii) AEC Southern Management Co., Ltd, a company formed pursuant to the laws of England and Wales (“AEC Southern UK”)
and the subsidiaries of AEC Southern UK unless otherwise indicated or the context otherwise requires.











FORWARD LOOKING STATEMENTS



This Annual Report on Form 10-K contains
certain forward-looking statements (as such term is defined in Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934). The statements herein which are not historical reflect our current expectations and projections
about the Company’s future results, performance, liquidity, financial condition, prospects and opportunities and are based
upon information currently available to us and our management and our interpretation of what we believe to be significant factors
affecting our business, including many assumptions about future events. Such forward-looking statements include statements regarding,
among other things:



| | · | our ability to deliver, market and generate sales of our advisory services;     
| | - | --------------------------------------------------------------------------------
| | · | our ability to develop and/or introduce new advisory services;                  
| | · | our projected revenues, profitability and other financial metrics;              
| | · | our future financing plans;                                                     
| | · | our anticipated needs for working capital;                                      
| | · | the anticipated trends in our industry;                                         
| | · | our ability to expand our sales and marketing capability;                       
| | · | acquisitions of other companies or assets that we might undertake in the future;
| | · | competition existing today or that will likely arise in the future; and         
| | · | other factors discussed elsewhere herein.                                       



Forward-looking statements, which involve
assumptions and describe our plans, strategies, and expectations, are generally identifiable by use of the words “may,”
 “should,” “will,” “plan,” “could,” “target,” “contemplate,”
 “predict,” “potential,” “continue,” “expect,” “anticipate,” “estimate,”
 “believe,” “intend,” “seek,” or “project” or the negative of these words or other
variations on these or similar words. Actual results, performance, liquidity, financial condition and results of operations, prospects
and opportunities could differ materially from those expressed in, or implied by, these forward-looking statements because of various
risks, uncertainties and other factors, including the ability to raise sufficient capital to continue the Company’s operations.
These statements may be found under Part II, Item 7- “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” as well as elsewhere in this Annual Report on Form 10-K generally. Actual events or results may differ
materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, matters
described in this Annual Report on Form 10-K.



In light of these risks and uncertainties,
there can be no assurance that the forward-looking statements contained in this Annual Report on Form 10-K will in fact occur.



Potential investors should not place undue
reliance on any forward-looking statements. Except as expressly required by the federal securities laws, there is no undertaking
to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances
or any other reason.



The forward-looking statements in this
Annual Report on Form 10-K represent our views as of the date of this Annual Report on Form 10-K. Such statements are presented
only as some guide about future possibilities and do not represent assured events, and we anticipate that subsequent events and
developments will cause our views to change. You should, therefore, not rely on these forward-looking statements as representing
our views as of any date after the date of this Annual Report on Form 10-K.



This Annual Report on Form 10-K also contains
estimates and other statistical data prepared by independent parties and by us relating to market size and growth and other data
about our industry. These estimates and data involve a number of assumptions and limitations, and potential investors are cautioned
not to give undue weight to these estimates and data. We have not independently verified the statistical and other industry data
generated by independent parties and contained in this Annual Report on Form 10-K. In addition, projections, assumptions and estimates
of our future performance and the future performance of the industries in which we operate are necessarily subject to a high degree
of uncertainty and risk.



Potential investors should not make an
investment decision based solely on our projections, estimates or expectations.











PART I.



ITEM 1. Business



Overview



American Education Center Inc. was incorporated
in Nevada (“AEC Nevada”) in May 2014 as a holding company, and operates through its wholly owned subsidiaries, American
Education Center, Inc., incorporated in the State of New York in 1999 (“AEC New York”), AEC Management Ltd., incorporated
in the British Virgin Islands on October 23, 2018 (“AEC BVI”) and AEC Southern Management Co., Ltd., a company formed
pursuant to the laws of England and Wales (“AEC Southern UK”) and the subsidiaries of AEC Southern UK.



AEC New York was approved and licensed
by the Education Department of the State of New York in 1999 to engage in education consulting service between the U.S. and China.
For approximately 20 years, AEC New York has devoted itself to international education exchange between China and the U.S., by
providing education and career enrichment opportunities for students, teachers, and educational institutions from both countries.



AEC Southern UK has historically provided
corporate training and executive services, specifically, targeted and tailored executive training services to industrial clients
in the food-related industries until its corporate training and executive services program operation was temporarily suspended
in late October 2018 following the expiration of its two service contracts with clients in late December 2017 and late October
2018, respectively. AEC Southern UK, through AEC Southern Shenzhen, in fiscal year ended December 31, 2018, delivered customized
high school and college placement and career advisory services to Chinese students wishing to study in the U.S. through referred
by AEC New York.





AEC Nevada acquired AEC Southern UK and
its subsidiaries in 2016 pursuant to the Share Exchange Agreement (as defined below). AEC Southern UK holds 100% of the equity
interests in AEC Southern Management Limited, a Hong Kong company (“AEC Southern HK”) incorporated on December 29,
2015, with a registered capital of HK$10,000. AEC Southern UK owns 100% of the equity interests in Qianhai Meijiao Education Consulting
Management Co., Ltd., a foreign wholly owned subsidiary incorporated pursuant to the People’s Republic of China (the “PRC”)
laws (“AEC Southern Shenzhen”) on March 29, 2016, with a registered capital of RMB5,000,000. AEC Nevada, AEC New York,
AEC Southern UK and its subsidiaries are referred to as the “Company” hereinafter. AEC Southern UK, via its operating
entity in the PRC, AEC Southern Shenzhen, serves as a local platform for expanding the Company’s business in mainland China.
Shenzhen, in the province of Guangdong, is designated by the PRC as a Special Economic Zone (“SEZ”) City. SEZs are
granted a more free-market oriented economic and regulatory environment, with business and tax policies designed to attract foreign
investment and technology.



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, we provide five types of consulting
services:



| | · | Placement Advisory Services;               
| | - | -------------------------------------------
| | · | Career Advisory Services;                  
| | · | Student &
    Family Advisory Services; and
| | · | Other Advisory Services.                   



Services to our clients are provided through
the Company’s principal executive office in New York, NY, and AEC Southern Shenzhen’s office in Shenzhen, China. For
marketing, we engage local agents in Shenzhen in Guangdong province, Nanjing in Jiangsu Province, Chengdu in Sichuan Province,
and Shanghai in China to promote our services to potential clients, and we plan to engage more agents in China in the future.



Leveraging our knowledge of the educational
system and environment in the U.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 the U.S. Our advisory services
are specifically designed to address the educational needs of the rising middle-class families in China. The demand for our advisory
services is primarily the result of China’s decades-long one-child policy, society’s focus and emphasis on children’s
education, and families’ desire to gain access to U.S. colleges and universities as well as work experience in the U.S.





Additionally, recognizing the needs for
enterprise training in China, from October 2016 to late 2018, we have also delivered customized corporate training and advisory
services to customers in China in the food industry to help them meet the related regulatory standards. The demand for such corporate
training and advisory services in China has escalated in recent years and is driven mainly by China’s growing economy and
desire to improve its competitiveness by meeting or setting international standards.





Our total revenues for the fiscal years
ended December 31, 2018 and 2017, were $7,012,439 and $25,798,115, respectively. For the fiscal year ended December 31, 2018, revenues
from student advisory services in the U.S., all delivered by AEC New York, accounted for approximately 98.9% as we had no operating
activities from our AEC Southern UK operation. Our strategy is to continue to strengthen our market position in the U.S. market
by expanding our student advisory services in the U.S., for which we have formulated, and are in the process of implementing and
rolling out, in multi-media marketing strategies and via multi-stage growth plans. For detailed information on marketing strategies
and growth plans targeting to grow our education advisory services in the U.S., refer to “Item 1. Business—Our Marketing
Strategies” and “Item 1. Business—Our Growth Strategies.”



1







Share Exchange with AEC Southern
Management Co. Ltd



On November 8, 2016, AEC Nevada, AEC Southern
UK, Ye Tian (“Tian”), Rongxia Wang (“Wang”) (Tian and Wang, collectively, were the owners of record of
100% equity interest of AEC Southern UK), and Yangying Zou (“Zou”) entered into a share exchange agreement (the “Share
Exchange Agreement”) whereby AEC Nevada acquired AEC Southern UK as a 100% subsidiary, for a consideration of 1,500,000 shares
of its common stock, par value $0.001 per share (“Common Stock”). Additionally, AEC Nevada also agreed to appoint Zou
to serve as the CEO of AEC Southern UK and agreed to issue to Zou an aggregate of 1,500,000 shares of Common Stock at the closing
(the “Share Exchange Closing Date”) of the Share Exchange Agreement. The transaction underlying the Share Exchange
Agreement is referred hereinafter as the “Share Exchange Transaction.” On March 27, 2017, the parties to the Share
Exchange Agreement agreed to amend the Share Exchange Agreement so that the Share Exchange Agreement would take effect on October
31, 2016, and amend the Share Exchange Closing Date to be on October 31, 2016. Pursuant to the Share Exchange Agreement, AEC Southern
Shenzhen became an operating entity in the PRC of the Company.



Share Purchase Agreement with China
Cultural Finance Holdings Company Limited



On October 30, 2017, the Company entered
into a Share Purchase Agreement (the “Share Purchase Agreement”) with China Cultural Finance Holdings Company Limited,
a British Virgin Islands corporation (“CCFH”) pursuant to which the Company issued 500,000 shares (the “Shares”)
of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”),
at price of $4 per Share to CCFH, with the rights, privileges, and preferences set forth in the Certificate of Designation of Series
A Convertible Preferred Stock, for the aggregate price of $2,000,000 (the “Purchase Price”). The transactions underlying
the Share Purchase Agreement closed on the same day (the “Share Purchase Closing Date”).



Pursuant to the Share Purchase Agreement,
the Company agreed to use its commercially reasonable efforts to apply to be listed on the NASDAQ Capital Market or such other
national securities exchange as is reasonably acceptable to CCFH (the “National Exchanges”), so that the Common Stock
will commence trading on one of the National Exchanges (the “Uplisting”) within 365 days after the Share Purchase Closing
Date (the “Uplisting Deadline”). Pursuant to the Share Purchase Agreement, if the Company did not complete Uplisting
on or before the Uplisting Deadline, CCFH had, within 30 days following the Uplisting Deadline, the right to request the Company
to buy back any number of the Shares (the “Buy Back Shares”), for a payment of the Buy Back Shares times the Purchase
Price Per Share and such interest payment at a rate of 5% per annum accruing from the Share Purchase Closing Date, subject to the
terms and conditions of the Shares Purchase Agreement.



Business Purchase Agreement with
FIFPAC, Inc.



On July 10, 2018 (the “Business Purchase
Effective Date”), the Company entered into a Business Purchase Agreement (the “Business Purchase Agreement”)
with FIFPAC Inc. (“FIFPAC”), a New Jersey corporation, the 100% owner of American Institute of Financial Intelligence
LLC, a New Jersey limited liability company (“AIFI”).



Pursuant to the Business Purchase Agreement,
the Company issued 100,000 shares of Common Stock to FIFPAC on July 10, 2018 (the “Issuance Date”), in exchange for
a 51% equity ownership in AIFI.



Certificate of Amendment to Increase
Authorized Stock



On November 6, 2018, the board of directors
of the Company, with the written consent of the holders of a majority of the shares of the Company’s Common Stock issued
and outstanding and the Company’s preferred stock issued and outstanding, voting together as a single class, authorized the
Company to (i) increase the number of authorized shares of Common Stock from 180,000,000 to 450,000,000 and the number of authorized
shares of preferred stock from 20,000,000 to 50,000,000 (the “Authorized Stock Increase”), and (ii) file a Certificate
of Amendment with the Secretary of State of the State of Nevada to effect the Authorized Stock Increase.



On November 8, 2018, the Company filed
a Certificate of Amendment with the Secretary of State of the State of Nevada to effect the Authorized Stock Increase, which became
effective upon filing.



Designation of Series B Convertible
Preferred Stock



On November 13, 2018, the Company filed
with the Secretary of State of the State of Nevada the Certificate of Designation of Series B Convertible Preferred Stock (the
 “Certificate of Designation”), which became effective upon filing. The Certificate of Designation established and designated
the Series B Convertible Preferred Stock (“Series B Preferred Stock”) and the rights, preferences, privileges, and
limitations thereof, summarized in the following:



The Company designated 25,000,000 shares
as Series B Preferred Stock out of the 50,000,000 unissued shares of preferred stock of the Company, par value $0.001 per share,
with an original issue price of $0.1 per share. Series B Preferred Stock is senior in rights of payment, including dividend rights
and liquidation preference, to the Company’s common stock but junior to Series A Preferred Stock with respect to liquidation
preference.



Holders of shares of Series B Preferred
Stock are entitled to vote with shareholders of the Company’s common stock, voting together as a single class, except on
matters that require a separate vote of the holders of Series B Preferred Stock. In any such vote, each share of Series B Preferred
Stock are entitled to 20 votes per share.



Each share of Series B Preferred Stock
shall, upon the approval of the board of directors of the Company and without the payment of additional consideration by such holder
thereof, be convertible into one fully paid and non-assessable share of the Company’s common stock at a conversion price
of $1 per share.



Share Issuance Agreement and Exchange
Agreement with China Cultural Finance Holdings Company Limited



On November 26, 2018, the Company entered
into a Share Issuance Agreement (the “Share Issuance Agreement”) with CCFH, whereby the Company agreed to issue a certain
number of shares Common Stock to CCFH in exchange for an RMB5,000,000 investment in the Company’s subsidiary, AEC Shenzhen,
a foreign wholly owned subsidiary incorporated pursuant to PRC laws. The transactions underlying the Share Issuance Agreement closed
on the same day and 7,199,113 shares of Common Stock were issued to CCFH.



2







On November 26, 2018, the Company entered
into an Exchange Agreement (the “CCFH Exchange Agreement”) with CCFH, whereby the Company agreed to issue 12,500,000
shares of Series B Preferred Stock, and 7,500,000 shares of Common Stock to CCFH in exchange for the 500,000 shares of Series A
Preferred Stock already held by CCFH. The transactions underlying the CCFH Exchange Agreement closed on the same day and 12,500,000
shares of Series B Preferred Stock and 7,500,000 shares of Common Stock were issued to CCFH.



As a result of the Share Issuance Agreement
and the CCFH Exchange Agreement, no shares of Series A Preferred were issued and outstanding as of November 26, 2018.



Manager Share Issuance Agreement
with Max P. Chen



On November 26, 2018, the Company entered
into a Manager Share Issuance Agreement (the “Manager Share Issuance Agreement”) with Mr. Max P. Chen, the Chief Executive
Officer, President, and Chairman of the Board of the Company, whereby the Company agreed to reward Mr. Chen for his dedicated services
to the Company by issuing 12,500,000 shares of Series B Preferred Stock to him. The 12,500,000 shares of Series B Preferred Stock
were issued to Mr. Chen on November 26, 2018.



Corporate Structure



The corporate structure of the Company
as of April 16, 2019 is illustrated as follows:







The address of our principal executive
offices and corporate offices is 2 Wall Street, Fl. 8, New York, NY 10005. Our telephone number is (212) 825-0437.



Other Developments



On May 5, 2018, the Company entered into
a non-binding letter of intent with AmeriChina Group (“AmeriChina”), a public relations and business consulting firm
which assists American and Chinese businesses in establishing and expanding their brands for business development, to discuss the
how AmeriChina would develop the Company’s brand awareness in both the U.S. and China.



On May 9, 2018, the Company entered into
a letter of intent with Shanghai Education Service Park, a specialized education service park in Shanghai under the Shanghai Yangpu
District Government and the Shanghai Municipal Education Commission, to implement the seven international certificate projects
in China.



On July 2018, the Company entered in to
a non-binding letter of intent with Shanghai Open University, a leading education group in China, for the implementation of four
international certificate projects in China.



Our Business



Headquartered in New York with operations
in the PRC, the Company, during fiscal year ended December 31, 2018 operated, and currently operates in two market segments:



| | (1) | AEC
New York capitalizes on the rising demand from the middle-class families in China for quality education in the U.S. It delivers
customized high school and college placement and career advisory services to Chinese students wishing to study in the U.S. Its
advisory services include language training, college admission advisory, on-campus advisory, internship and start-up advisory
as well as student and family services.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | AEC Southern Shenzhen delivers customized high school and
college placement and career advisory services to Chinese students wishing to study in the U.S., through business referred by
AEC New York.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





3







Our Key Revenue Drivers



We have expanded our service platform to
include advisory services for our student customers wishing to study and gain post-graduate work experiences in the U.S. Currently,
our main advisory services include:



| | · | Placement Advisory Services;           
| | - | ---------------------------------------
| | · | Career Advisory Services;              
| | · | Student & Family Advisory Services; and
| | · | Other Advisory Services.               



Placement Advisory Services, Career Advisory
Services, Student & Family Advisory Services and Other Advisory Services are provided by our subsidiary AEC New York and 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 service encompasses ESL training
and assistance throughout the high school, 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 in the second half of 2019.



Targeting the needs of Chinese families
in obtaining admission to Ivy League and other prestigious universities in the U.S., our Elite College Advisory service is designed
to assist qualified Chinese students in applying to prestigious colleges and universities in the U.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
top U.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 Southern Shenzhen. AEC New York refers businesses 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 student’s 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 students and/or their families who want to start or make an investment in a business in the U.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.



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 the U.S., so they can effectively
focus on their studies.



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 the U.S. We also advise corporate clients whose executives are moving to the U.S. for work. The scope of our services includes
assistance with business consulting, relocation and other aspects of family support services.



Other Advisory Services



Through our Foreign Student Recruitment
services, we assist universities in China to recruit students from the U.S. We customize this service based on our strategic relationship
with college and universities in the U.S. and the specific recruitment goals of these universities in China. The demand for our
recruitment services is driven mainly by the lack of an established channel to attract students from the U.S. and the needs by
the Chinese universities to expand and diversify their student body.



4







Our Foreign Educator Placement services
are designed to meet the increasing demand for experienced educators and teachers from the U.S. to teach in China. Such demand
covers the need to recruit qualified US educators from Pre K-12 to teach in China.



Our Competitive Advantage



Our strength comes mainly from our understanding
of the Chinese education and education-related service markets and our ability in not only anticipating areas with great market
demand but also delivering quality, customized services on a consistent basis. We have a scalable business platform that is conducive
to growth in earnings and profitability; and have a business model that we believe adapts well to changing market conditions. We
believe that the following competitive strengths enhance our position in the markets that we are currently competing in:



| | · | Experienced
Management. Our management team is comprised of industry experts with extensive experience in the education service industry,
knowledge of the education system in the U.S. and a deep understanding of the Chinese market as well as finance executives who
specializes in mergers and acquisitions, business reorganization, internal controls and risk management. We have established a
corporate culture that is based on integrity, built compliance into risk management, integrated structure and discipline into
our operating management and financial reporting processes, and made it a priority to deliver quality, customized services without
compromising our ability to generate sustainable operating profits.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Proven
Business Model.Our business model is to target those service areas that are driven by significant market demand and have
potential for sustainable growth in the long run. We take a measured approach in growing our business and have been effective
in anticipating market needs as we expand our customer base from students to corporate clients that need corporate training. As
a total solutions education advisory services provider, we have been successful in meeting the market demand for quality education
and career development in the U.S.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Scalable
Business Platform. As an emerging business in the education service business, we believe we have the structure and discipline
to control our operating expenses and overhead as we grow our business and strive to improve our operating profits. By keeping
a relatively low headcount and optimizing the use of outsourced industry experts, we believe we have been effective in delivering
quality services while maintaining healthy operating margins.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Customized
Service Approach.Our success is built on our reputation in delivering consistent, reliable, quality, and customized advisory
services. Our approach is result oriented and we customize our service based on the specific needs of our student and corporate
customers. Without compromising our objective of delivering consistent growth in earnings and profitability, we take pride in
the delivery of tailored advisory services to our student customers as well as customized corporate training for our customer’s
corporate clients in China.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our Growth Strategy



Our goal is to become a leading total solutions
educational services provider for Chinese students wishing to study and gain work experiences in the U.S. Our business development
plan includes, among other things, the following strategic initiatives:



| | · | Expand
organically within existing markets and into new markets. To carry out our vision of strengthening our market position
in the U.S., we are implementing a combination of on- and off-line marketing approaches to expand our student-customer base in
markets we currently serve. Such approaches include the recently launched Membership Program that is designed to maximize the
power of personal and commission-based referral of our services to other potential customers; and the AEC Help mobile application,
a social network platform that is intended to bring students together under one roof, offering them alternative solutions to issues
frequently encountered by foreign students in the U.S.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Our
Membership Program allows third-party agents and education service providers, either individuals or entities, to sign up as members.
Benefits to becoming our members include access to all programs pursuant to our student advisory services currently provided by
AEC New York. Our members typically have access to clients with needs that can be met by programs provided by AEC New York. After
paying a one-time, non-refundable fee of $50,000 to become a member, members can seamlessly integrate our services with their
service offerings by outsourcing the specific services to us. We believe the Membership Program will allow us to broaden the reach
of our brand and services without establishing additional offices in China and in the U.S.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Our
AEC Help mobile application was developed in-house and is operated by AEC New York. It is an iOS app that users can download for
free from the Apple AppStore. Users are international students who are in the U.S. or seek to study in the U.S. The app provides
various academic and non-academic resources compiled by us to assist users for studying and living in the U.S. Resources available
through the AEC Help app include academic resources where users can filter and search for universities based on the user’s
own test scores and preferences, and non-academic resources such as unit conversions, maps, real-time exchange rates, student
events, etc. Where the online resources cannot provide sufficient assistance to our users, they are able to reach a member of
our staff who will connect the user with a third-party service provide directly. We believe this social media network, AEC Help,
will allow us to broaden our reach to potential student customers.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



To grow organically, we plan to expand
our service offerings to existing student customers, as well as deepening our strategic relationships with top universities, top
companies, and top recruitment agencies, to aggregate our resources to collectively deliver customized career advisory services.
We intend to launch the Other Recruitment & Placement Services in 2019 which include our Foreign Student Recruitment services
and Foreign Educator Placement services.



5







| | · | Through
our Foreign Student Recruitment services, we will assist universities in China to recruit foreign students from the U.S. and other
countries. We customize this service based on our relationship with universities in China and their specific recruitment goals.
We believe the demand for our recruitment services is driven mainly by the lack of an established channel to attract students
from the U.S. and the needs to expand and diversify the university’s student body.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Our
Foreign Educator Placement services are designed to meet the increasing demand for experienced educators from the U.S. to teach
in China. Based on our understanding of the market demand, we believe there is a significant service opportunity for us to recruit
qualified U.S. educators from PreK-12 to college to teach in China.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Technology
Platforms. We believe that our future success also depends, in part, on our ability to vertically integrate training courses
and content delivery, specifically, complementing and integrating off-line, in person delivery with off-the-shelf, online delivery
of training modules, which will increase the scalability of our operation. We are in the process of completing the development
of an online ESL/language training platform for our student customers as well as an online training platform for our customer’s
corporate clients in China which, when completed and launched, will allow participants to access our training courses on demand
and on a 24/7 basis. Leveraging these two newly developed online training platforms, we believe we could realize significant growth
in our revenues from language training as well as corporate training.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Mergers
and Acquisitions. We plan to grow our training and advisory business through acquisitions and intend to replicate our
success by identifying potential merger and acquisition targets, especially training institutions that are successful in their
respective fields or industries, to efficiently and rapidly broaden our service offering. In addition, we are performing market
research to identify suitable new markets and suitable targets in the education and training industry that are potentially profitable
such as trade skills training, and personal development.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our Management Team



We believe we have a strong and experienced
management team including our founder, chief executive officer, interim chief financial officer, and chairman, Mr. Max P. Chen,
a pioneer and leader in the education service industry; Mr. Qi Wu, Chairman and CEO of AEC Southern UK, a recognized expert with
extensive business relationship in the PRC food industry; Ms. Congying Fang, the director, president, and chief executive officer
of AEC BVI; and Ms. Weihua Zhu, the chief operating officer of AEC New York with over a decade of experience in education advisory
services. Our team as a whole has many years of public and private company experience, industry and professional experience and
a significant network of business contacts in the industry, and extensive experience in SEC reporting, compliance and risk management,
business reorganization, and mergers and acquisitions.



Our Industry and Market Opportunities



The demand for global education is growing
rapidly in China, and the U.S. remains the top choice for Chinese students wishing to study abroad. According to one article published
by the PRC’s Ministry of Education in March 2018, approximately 5.19 million Chinese students had studied in foreign countries
in the past 40 years since 1978.







Source: Open Doors, IIE. Leading Places
of Origin: Previous Years. Retrieved from https://www.iie.org/Research-and-Insights/Open-Doors/Data/International-Students/Places-of-Origin/Leading-Places-of-Origin



The number of Chinese students entering
the U.S. to study grew sharply in 2006, when Congress loosened restrictions on student visas from China for the first time since
2001. Accordingly, there is a large and growing number of Chinese students in the U.S. seeking a broad range of acclimation support
and services, including education consulting services. We strive to become a bridge for these students with our service offerings.



According to Project Atlas, a collaborative
global research initiative led by the Institute of International Education, in the academic year 2017/2018, the total number international
students studying in the U.S. (in both public and private institutions) was 1,134,739, of which 374,464, or 33%, were Chinese nationals.
For the academic year 2016/2017, the comparable figures were 1,078,822 international students in the U.S., of whom 32.5% or 350,755
were Chinese.This growth trend has been in place for several years. However, with the current political environment
in Washington, DC regarding visas, it is not known whether it will continue in the future.



6







Our Competition



The education service and consulting business
targeting both PRC citizens abroad and PRC residents is rapidly evolving, highly fragmented and competitive, and we expect competition
in this sector to persist and intensify. For services provided by AEC New York, we primarily serve Chinese student customers and
their families in the U.S. For services provided by AEC Southern UK, our corporate clients are primarily located in China.



Our advisory services for student customers
face competition from New Oriental Education & Technology Group Inc., a market leader in the market of advisory services for
student customers that we operate in.



Our Marketing Strategies



We believe prospective
student customers are attracted to our advisory services due to our excellent brand name, personalized service model, and the quality
of our services. Historically, as a small business, we rely extensively on our strategic partners and word-of-mouth referrals in
growing our student customers, and employ the following marketing and recruiting methods to attract new student customers:



Commission-based
referrals. To enhance the effectiveness of the referral process, we pay a commission that ranges from 10% to 20% for successful
referrals. Our placement advisory and career advisory services have benefited from, and are expected to continue to benefit from,
commission-based referrals by our current and former student customers.



Sponsorships.
We are a proud sponsor of several Chinese Student Associations in various higher education institutions in the Greater New York
Area. We regularly promote our services to members and students of the various Chinese Student Associations and are regularly present
at events held by such Associations.



Marketing
materials. We plan to publish a “Chinese Visitors Guide Book.” It is planned to be a travel book with plug-in advertisements
for the Company, which will assist Chinese visitors to the U.S. and simultaneously promote our services. We will also advertise
in e-magazines, prepare and distribute brochures and present at exhibitions as part of our marketing strategy.



Social
media marketing. We maintain our own WeChat official account that offers information on education and life abroad. In addition,
we work with other WeChat official accounts with significant followings to publish information on AEC services. After every offline
event, our employees will create chat groups with all event attendants to facilitate direct communication and follow up.



Most recently,
we launched our in-house developed mobile application—AEC Help. It is an iOS app that users can download for free
from the Apple AppStore. Users are international students who are in the U.S. or seek to study in the U.S. The app provides various
academic and non-academic resources compiled by us to assist users for studying and living in the U.S. Resources available through
AEC Help Application include academic resources where users can filter and search for universities based on the user’s own
test scores and preferences, and non-academic resources such as unit conversions, maps, real-time exchange rates, student events,
etc. Where the online resources cannot provide sufficient assistance to our users, they are able to reach a member of our staff
who will connect the user with a third-party service provide directly. We believe this social media network, AEC Help, will allow
us to broaden our reach to potential student customers.



Our Customers





We currently provide services to Chinese
students wishing to study and/or gain work experience in the U.S. Some of these Chinese students are our direct customers, and
the others are ultimate users of our services through corporate customers we serve.



Our target corporate customers include
staffing agencies and student placement agencies. Our target student customers include high school students who want to apply for
U.S. colleges, college students who need academic counseling and future career consulting, and graduates who need professional
development, as well as students’ families. The cost of studying abroad is high, therefore international students usually
come from middle class or high-net-worth families.



For the year ended December 31, 2018,
our two largest customers, Oxbridge International Group Inc. and Skybound Consulting Inc. accounted for 33.1% and 20.3% of our
revenues, respectively.



New Acquisition



AIFI was incorporated in 2016. We intend
to provide, through AIFI, financial education and services through its training and certification programs with the goal in building
a financial education information ecosystem to cultivate people’s sound financial judgement and decision-making abilities.
The AIFI programs are intended to provide extensive and important financial literacy knowledge and relevant services to the financial
services industry, non-profit organizations and schools. Specific target audiences include but are not limited to industry professionals,
financial literacy educators, lending industry customers, college students, and K-12 students. In the fiscal year ended December
31, 2018, we did not generate any revenue from AIFI.



Our Regulatory Environment



Regulation of the Education Industry in the U.S.



Government authorities in the U.S., at
the Federal, state and local level, extensively regulate education and exchange student programs. Such regulations include, among
other things, the regulations, and policies of the United States Department of Education. Unlike the systems of most other countries,
however, the education system in the U.S. is highly decentralized, and the Federal government and Department of Education are not
heavily involved in determining curricula or educational standards. The establishment and grading of such standards have been left
to state and local school districts.



7







The Education Department of the State of
New York in 1999 consented for AEC New York to incorporate pursuant to §216 of New York Education Law Relating to Education
Corporations, and Section 104 of the New York Business Corporation Law, and consented in 2003 for AEC New York to amend its certificate
of incorporation to include education consulting service as its business purpose, pursuant to §216 of New York Education Law
Relating to Education Corporations, and Section 104(e) of the New York Business Corporation Law.



A more formalized regulation is the requirement
that a citizen of a foreign country who wishes to enter the U.S. must first obtain a visa, either a nonimmigrant visa for temporary
stay, or an immigrant visa for permanent residence. Foreign students must have a student visa to study in the U.S. Visas generally
require an application and an interview.



In addition to the regulatory approval
requirements described above, we are or will be, directly or indirectly, subject to extensive regulation of the educational industry
by the Federal and state governments and the governments’ of foreign countries in which our services are provided.



Regulation of the Education Industry in China



The principal laws and regulations governing
private education in China consist of the Education Law of the PRC, the Law for Promoting Private Education (2003),
the Implementation Rules for the Law for Promoting Private Education (2004), and Law for Promoting Private Education
(2016).



Under these regulations, “private
schools” are defined as schools established by non-governmental organizations or individuals using non-government funds.
Private schools providing academic qualifications education, kindergarten education, education for self-study examination, and
other education shall be subject to approval by the education authorities at or above the county level, while private schools engaging
in occupational qualification training and occupational skill training shall be subject to approvals from the authorities in charge
of labor and social welfare at or above the county level.



Since our operations in the PRC are either
delivered through our AEC New York office for education consulting services, placement services, and family support services, or
through our AEC Southern UK operation for corporate training, we believe we are not involved in providing services relating to
the fundamental education systems of the PRC, which include a school system of pre-school education, primary education, secondary
education, and higher education, a system of nine-year compulsory education and a system of education certificates. Therefore,
we believe our operations in the PRC are not subject to the PRC Private Education Laws. If our operations are found to be subject
to, and/or in violation of any of these laws, regulations, rules, or policies or any other law or governmental regulation to which
we or our customers are or will be subject, or if interpretations of the foregoing changes, we and our PRC subsidiaries may be
subject to civil and criminal penalties, damages, fines, and the curtailment or restructuring of our operations. Similarly, if
our customers are found non-compliant with applicable laws, they may be subject to sanctions.



Foreign Investment in Educational
Service Industry



The Ministry of Commerce of the PRC, or
MOFCOM, and the National Development and Reform Commission, or NDRC, promulgated the Catalogue of Industries for Guiding Foreign
Investment, or the “Catalogue,” as amended on March 10, 2015, which came into effect on April 10, 2015, and as
further amended on June 28, 2017, and came into effect on July 28, 2017 (the “2017 Catalogue”). On June 28, 2018, the
MOFCOM and NDRC promulgated the Special Measures for Foreign Investment Access (2018 version), or the “2018 Negative
List,” terminating the 2017 Catalogue. According to the 2018 Negative List, any foreign investment in preschool education,
senior high school education, and higher education has to take the form of a cooperative joint venture. Foreign investment is banned
from compulsory education, which means grades one to nine. Foreign investment is allowed in after-school tutoring services and
training services that do not grant certificates or diplomas. We do not believe we are subject to the aforementioned bans on foreign
investment in educational service industries.



Employment Laws



We are subject to laws and regulations
governing our relationship with our employees, including wage and hour requirements, working and safety conditions, social insurance,
housing funds, and other welfare. These include local labor laws and regulations, which may require substantial resources for compliance.



China’s National Labor Law, which
became effective on January 1, 1995, and China’s National Labor Contract Law, which became effective on January 1, 2008,
permit workers in both state and private enterprises in China to bargain collectively. The National Labor Law and the National
Labor Contract Law provide for collective contracts to be developed through collaboration between the labor union (or worker representatives
in the absence of a union) and management that specify such matters as working conditions, wage scales, and hours of work. The
laws also permit workers and employers in all types of enterprises to sign individual contracts, which are to be drawn up in accordance
with the collective contract. The National Labor Contract Law has enhanced rights for the nation’s workers, including permitting
open-ended labor contracts and severance payments. The legislation requires employers to provide written contracts to their workers,
restricts the use of temporary labor, and makes it harder for employers to lay off employees. It also requires that employees with
fixed-term contracts be entitled to an indefinite-term contract after a fixed-term contract is renewed once or the employee has
worked for the employer for a consecutive 10-year period.



As required under the Regulation of Insurance
for Labor Injury implemented on January 1, 2004, and amended in 2010, the Provisional Measures for Maternity Insurance of Employees
of Corporations implemented on January 1, 1995, the Decisions on the Establishment of a Unified Program for Old-Aged Pension Insurance
of the State Council issued on July 16, 1997, the Decisions on the Establishment of the Medical Insurance Program for Urban Workers
of the State Council promulgated on December 14, 1998, the Unemployment Insurance Measures promulgated on January 22, 1999, and
the Social Insurance Law of the PRC implemented on July 1, 2011, employers are required to provide their employees in the PRC with
welfare benefits covering pension insurance, unemployment insurance, maternity insurance, labor injury insurance and medical insurance.
In accordance with the Regulations on the Management of Housing Fund which was promulgated by the State Council in 1999 and amended
in 2002, employers must register at the designated administrative centers and open bank accounts for depositing employees’
housing funds. Employer and employee are also required to pay and deposit housing funds, with an amount no less than 5% of the
monthly average salary of the employee in the preceding year in full and on time. Except for housing funds, we are in compliance
with payment of all other employment related insurance on behalf of our employees.



8







Taxation in the U.S.



We are subject to income taxes in the U.S.,
and our domestic tax liabilities will be subject to the allocation of expenses in differing jurisdictions. Our future effective
tax rates could be subject to volatility or adversely affected by a number of factors, including:



| | · | changes in the valuation of our deferred tax assets and liabilities;                                                                                                                                  
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | expected timing and amount of the release of any tax valuation allowances;                                                                                                                            
| | · | tax effects of stock-based compensation;                                                                                                                                                              
| | · | costs related to intercompany restructurings;                                                                                                                                                         
| | · | changes in tax laws, regulations or interpretations thereof; and                                                                                                                                      
| | · | lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates.



In addition, we may be subject to audits
of our income and sales and other transaction taxes by U.S. federal and state authorities.



Taxation in the PRC



Pursuant to the Provisional Regulations
on Value-Added Tax (“VAT”) of the PRC, or the “VAT Regulations,” which were promulgated by the State Council
on December 13, 1993, and took effect on January 1, 1994, and were amended on November 10, 2008, February 6, 2016, and November
19, 2017, respectively, and the Rules for the Implementation of the Provisional Regulations on Value Added Tax of the PRC, which
were promulgated by the Ministry of Finance of the PRC, on December 25, 1993, and were amended on December 15, 2008, and October
28, 2011, respectively, entities and individuals that sell goods or labor services of processing, repair or replacement, sell services,
intangible assets, or immovables, or import goods within the territory of the PRC are taxpayers of value-added tax. The VAT rate
is 16% for taxpayers selling goods, labor services, or tangible movable property leasing services or importing goods, except otherwise
specified; 10% for taxpayers selling goods, labor services, or tangible movable property leasing services or importing goods, except
otherwise specified; 6% for taxpayers selling services or intangible assets.



Regulations on Dividend Distribution in the U.S.



Our Board of Directors’ ability to
declare a dividend is subject to restrictions imposed by Nevada corporate law. Nevada corporate law provides that no distribution
(including dividends on, or redemption or repurchases of, shares of capital stock) may be made if, after giving effect to such
distribution, (i) the corporation would not be able to pay its debts as they become due in the usual course of business, or, (ii)
except as otherwise specifically permitted by the articles of incorporation, the corporation’s total assets would be less
than the sum of its total liabilities plus the amount that would be needed at the time of a dissolution to satisfy the preferential
rights of preferred stockholders. Directors may consider financial statements prepared on the basis of accounting practices that
are reasonable in the circumstances, a fair valuation, including but not limited to unrealized appreciation and depreciation, and
any other method that is reasonable in the circumstances.



Regulations on Dividend Distribution in the PRC





The principal regulations governing dividend
distributions by wholly foreign owned enterprises and Sino-foreign equity joint ventures include:



| | · | The Wholly Foreign Owned Enterprise Law (1986), as amended;
| | - | -----------------------------------------------------------



| | · | The Wholly Foreign Owned Enterprise Law Implementing Rules (1990), as amended;
| | - | ------------------------------------------------------------------------------



| | · | the Sino-foreign Equity Joint Venture Enterprise Law (1979), as amended; and
| | - | ----------------------------------------------------------------------------



| | · | the Sino-foreign Equity Joint Venture Enterprise Law Implementing Rules (1983), as amended.
| | - | -------------------------------------------------------------------------------------------



Under these regulations, wholly foreign
owned enterprises and Sino-foreign equity joint ventures in China may pay dividends only out of their retained earnings, if any,
determined in accordance with PRC accounting standards and regulations. Additionally, a wholly foreign-owned enterprise is required,
as other enterprises subject to PRC laws, to set aside at least 10% of its after-tax profits each year, if any, to fund statutory
reserve funds until the cumulative amount of such funds reaches 50% of its registered capital. For our PRC subsidiary that has
achieved profit under the PRC accounting standards, it has set aside at least 10% of its after-tax profits to meet the statutory
reserve requirements. A wholly foreign-owned enterprise may, at its discretion, allocate a portion of its after-tax profits calculated
based on the PRC accounting standards to staff welfare and bonus funds. Our subsidiary has not set aside its after-tax profits,
if any, to fund these discretionary staff welfare and bonus funds. We have not implemented any policy or plan for our PRC subsidiaries
to maintain discretionary staff welfare and bonus funds. These reserve funds and staff welfare and bonus funds are not distributable
as cash dividends except in the event of liquidation and cannot be used for working capital purposes. These requirements apply
to AEC Southern Shenzhen.



M&A Rules and Overseas Listings



On August 8, 2006, six PRC regulatory agencies,
namely, the MOFCOM, the State Assets Supervision and Administration Commission, the State Administration of Taxation, State Administration
for Industry & Commerce, or SAIC, China Securities Regulatory Commission, or CSRC, and the State Administration of Foreign
Exchange, jointly adopted the Provisions Regarding Mergers and Acquisitions of Domestic Projects by Foreign Investors, or
the M&A Rules, which became effective on September 8, 2006. This M&A Rules purport to require, among other things, offshore
special purpose vehicles formed for the purpose of acquiring PRC domestic companies and controlled by PRC companies or individuals,
to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange. While the application
of the M&A Rules remains unclear, we believe, based on the advice of our PRC counsel, that CSRC approval was not required in
the context of our initial public offering as we are not a special purpose vehicle formed for the purpose of acquiring domestic
companies that are controlled by our PRC individual shareholders, as we acquired contractual control rather than equity interests
in our domestic affiliated entities. However, we cannot assure you that the relevant PRC government agency, including the CSRC,
would reach the same conclusion as our PRC counsel. If the CSRC or other PRC regulatory agency subsequently determines that we
needed to obtain the CSRC’s approval for our initial public offering or if CSRC, we may face sanctions by the CSRC or other
PRC regulatory agencies. In such event, these regulatory agencies may impose fines and penalties on our operations in the PRC,
limit our operating privileges in the PRC, delay or restrict the repatriation of the proceeds from our initial public offering
into the PRC, or take other actions that could have a material adverse effect on our business, financial condition, results of
operations, and prospects, as well as the trading price of our Common Stock.



9







Properties/Facilities



Our principal executive office is located
at 2 Wall Street, Floor 8, New York, NY 10005. Pursuant to the current lease agreement, the Company pays a monthly rent of $34,056;
the lease expires on July 31, 2025



AEC Southern Shenzhen leases office space
from an unrelated third party on a month to month basis with a monthly rental cost of RMB2,000 (approximately US$300). We are in
the process of securing new locations. We do not anticipate the landlord to refuse extending our month-to-month lease.



We believe our facilities are sufficient
for our business operations.



Employees



As of the filing date hereof, the Company
has 27 full and part-time employees inclusive of outsourced consultants. None of our employees are represented by a labor union.
We have not experienced any work stoppages, and we consider our relations with our employees to be good.



Off-Balance Sheet Arrangements



We did not have, during the periods presented,
and we are currently not a party to, any off-balance sheet arrangements.



Seasonality



AEC New York typically experiences seasonal
fluctuations in its revenues and results of operations, primarily due to quarterly changes in student enrollments resulting from
admission seasons. AEC Southern UK does not experience substantial seasonality in its revenues.



Intellectual Property







We regard our trademarks, domain names,
know-how, proprietary technologies and similar intellectual property as critical to our success, and we rely on trademark and
trade secret law and confidentiality and invention assignment with our employees and others to protect our proprietary rights.
Our intellectual property includes two domain names, https://americaneducationcenter.org/and https://aec100.com.



Despite our efforts to protect our proprietary
rights, unauthorized parties may attempt to copy or otherwise obtain and use our technology. Monitoring unauthorized use of our
technology is difficult and costly, and we cannot be certain that the steps we have taken will prevent misappropriation of our
technology. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result
in substantial costs and diversion of our resources.



In addition, third parties may initiate
litigation against us alleging infringement of their proprietary rights or declaring their non-infringement of our intellectual
property rights. In the event of a successful claim of infringement and our failure or inability to develop non-infringing technology
or license the infringed or similar technology on a timely basis, our business could be harmed. Moreover, even if we are able to
license the infringed or similar technology, license fees could be substantial and may adversely affect our results of operations.



ITEM 1A. RISK FACTORS



Risks Related to Our Business



If we are not able to continue to
attract students to enroll in our courses without a significant decrease in course fees, our revenues may decline, and we may not
be able to maintain profitability.



The success of our business depends primarily
on the number of students enrolled in our courses and the amount of course fees that our students are willing to pay. Therefore,
our ability to continue to attract students to enroll in our courses without a significant decrease in course fees is critical
to the continued success and growth of our business. This in turn will depend on several factors, including our ability to develop
new programs and enhance existing programs to respond to changes in market trends and student demand, expand our geographic reach,
manage our growth while maintaining the consistency of our service quality, effectively market our programs to a broader base of
prospective students, develop and license additional high-quality educational content and respond to competitive pressures, as
well as the ability of our partner colleges and institutions to maintain their faculties’ teaching quality. If we are unable
to continue to attract students to enroll in our courses without a significant decrease in course fees, our revenues may decline
and we may not be able to operate profitability.







Our business depends on our brand
name “American Education Center.” Because we do not currently have any copyright or trademark protection for our company
name or brand name, there is no guarantee that someone else will not encroach upon our intellectual property rights, which could
negatively affect our business and results of operations.







We believe that market recognition of our
name “American Education Center” has contributed significantly to the success of our business. We also believe that
maintaining and enhancing the “American Education Center” brand is critical to maintaining our competitive advantage.
We offer a diverse set of programs, services, and products to primary and middle school students, college students, and other adults
throughout many provinces and cities in China. As we continue to grow in size, expand our programs, services, and product offerings,
and extend our geographic reach, our ability to maintain and improve the quality and consistency of our services, products, and
offerings may be more difficult to achieve. We currently have no copyright or trademark for our company name or brand name. We
may seek such protection in the future; however, we currently have no plans to do so. Since we have no copyright protection, unauthorized
persons may attempt to copy aspects of our business, including our web site design or functionality, products, or marketing materials.
Any encroachment upon our corporate information, including the unauthorized use of our brand name, the use of a similar name by
a competing company or a lawsuit initiated against us for infringement upon another company's proprietary information or improper
use of their copyright, may affect our ability to create brand name recognition, cause customer confusion and/or have a detrimental
effect on our business. Litigation or proceedings may be necessary in the future to enforce our intellectual property rights, to
protect our trade secrets and domain name and/or to determine the validity and scope of the proprietary rights of others. Any such
infringement, litigation or adverse proceeding could result in substantial costs and diversion of resources and could harm our
business and results of operations.







10







A severe or prolonged slowdown in
the global or Chinese economy could materially and adversely affect our business and our financial condition.



The rapid growth of the Chinese economy
has slowed down since 2012 and such slowdown may continue. There is considerable uncertainty over the long-term effects of the
expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading
economies, including the United States and China. There have been concerns over unrest and terrorist threats in the Middle East,
Europe and Africa, which have resulted in volatility in oil and other markets. There have also been concerns on the relationship
among China and other Asian countries, which may result in or intensify potential conflicts in relation to territorial disputes.
Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political
policies and the expected or perceived overall economic growth rate in China. Any severe or prolonged slowdown in the global or
Chinese economy may materially and adversely affect our business, results of operations and financial condition. In addition, continued
turbulence in the international markets may adversely affect our ability to access capital markets to meet liquidity needs.



If we fail to successfully execute
our growth strategies, our business and prospects may be materially and adversely affected.



Our growth strategies include but are not
limited to expanding our service offerings to satisfy the needs of our student customers. Our ability in executing our growth strategies
depends largely on our capability in developing and delivering quality, customized services on a consistent basis and in a cost-effective
and timely manner, as well as maintaining and continuing to establish strategic relationships with other businesses and education
institutions. If we fail to successfully execute our growth strategies, we may be unable to maintain and grow our business operation,
and our profitability may be materially and adversely affected.



We face competition in the student advisory services markets,
and if we fail to compete effectively, our profitability may be adversely affected.



The markets for language training, college
placement, and career advisory are rather fragmented. With relatively low entry barriers, we face competition that focuses generally
on price. The number of our student customers may decrease due to price competition. Some of our competitors have greater resources
than we do. These competitors may be able to devote greater resources than us to the development, promotion, and marketing of their
programs and services, and respond more quickly to changes in student needs, admissions standards, or new technologies. We cannot
assure you that we will be able to compete successfully against current or future competitors. If we are unable to maintain our
competitive position or otherwise respond to evolving competition effectively, our profitability may be adversely affected.



We may need additional capital for
growth purposes. The availability of capital and the terms on which it will be available are uncertain.



We may need to raise funds to take advantage
of growth or acquisition opportunities in the future. We currently have no arrangements or commitments for additional financings.
If we cannot expand our operation or make acquisitions that we believe are necessary to maintain our competitive position, we may
not be able to maintain a reasonable growth rate. If we raise additional capital by selling equity or equity-linked securities,
these securities would dilute the ownership percentage of our existing stockholders. Also, these securities could also have rights,
preferences, or privileges senior to those of our Common Stock. Similarly, if we raise additional capital by issuing debt securities,
those securities may contain covenants that restrict us in terms of how we operate our business, which could also affect the value
of our Common Stock. We may not be able to raise capital on reasonable terms or at all.



Our strategic relationships are usually
non-exclusive arrangements and our strategic partners may provide the same or similar services to our competitors, which could
significantly dilute any competitive advantage we get from these relationships.



We rely on our strategic partners to provide
us with access to potential student customers and corporate customers with clients that need compliance training and advisory services.
Our strategic partners may enter identical or similar relationships with our competitors, which could diminish the value of our
service offerings. Our strategic partners could terminate their relationship with us at any time. We may not be able to maintain
our existing relationships or enter new strategic relationships.



Because we rely on a limited number
of customers for a large portion of our revenue, the loss of one or more of these customers could materially harm our business.



We receive a significant portion of our
revenue in each fiscal period from a relatively limited number of customers, and that trend is likely to continue. Sales to our
major customers (that individually accounted for more than 10% of our gross revenues) accounted for approximately 53.3% and 79.9%
of our total revenue for the year ended December 31, 2018 and 2017. The loss of one or more of these major customers, a significant
decrease in orders from one of these customers, or the inability of one or more customers to make payments to us when they are
due could materially affect our revenue, business, and reputation. While none of our major customers have failed to make payments
to us when they are due, we cannot guarantee that we would not experience this in the future.



We may be unable to protect our intellectual
property adequately or cost-effectively, which may cause us to lose market share or reduce our prices.



Our success depends in part on
our brand identity and our ability to protect and preserve our proprietary rights. We cannot assure you that we will be able
to prevent third parties from using our intellectual property rights and technology without our authorization. We own the
intellectual property of our products, including our mobile app, the AEC Help and our online training platform, and protect
our intellectual property, we rely on trade secrets, common law trademark rights, trademark registrations, copyright notices,
copyright registrations, as well as confidentiality and work for hire, development, assignment and license agreements with
our employees, consultants, third party developers, licensees, and customers. However, these measures afford only limited
protection and may be flawed or inadequate. In addition, enforcing our intellectual property rights could be costly and
time-consuming and could distract management’s attention from operating business matters.



11







The uncertainty involving the immigration
policies of the current administration of the U.S. could have significant adverse effects on the demand for our business, and may
negatively impact our results of operation.



The current U.S. administration has evoked
uncertainty among international students and overseas business owners who wish to travel to the U.S. for education opportunities
and business opportunities, respectively. Our business model and revenue from advisory services to student customers depends on
the demand of international students and overseas business owners, and as such, could have a negative impact in our results of
operation.



New services and programs that we
develop may compete with our current offerings.



We are constantly developing new programs
and services to meet changes in student demand and respond to changes to admissions standards, market needs and trends and technological
changes. While some of the programs and services that we develop will expand our current offerings and increase student customers,
others may compete with or make irrelevant our existing offerings without increasing our total revenues from advisory services
provided to student customers. For example, our online training courses may take away students from our existing in-person courses.
If we are unable to expand our program and service offerings while increasing our total student customer base and profitability,
our business and growth may be adversely affected.



Our business is subject to fluctuations
caused by seasonality or other factors beyond our control, which may cause our operating results to fluctuate from quarter to quarter.



For our AEC New York operations, we have
experienced, and expect to continue to experience, seasonal fluctuations in our revenues and results of operations, primarily due
to quarterly changes in student customers resulting from admission seasons. Historically, we receive deposits for our services
during the second and third quarters of our fiscal year that usually lead to increased revenues during the subsequent quarters.
However, deposits are refundable and thus, if the student customer is not accepted to the college or university of his/her choice
(normally in the third and fourth quarters of our fiscal year), our revenues during these quarters may be lower than those in previous
quarters. In addition, because these deposits are refundable, revenue cannot be recognized until we successfully complete our services
and our student customers receive admission letters. These fluctuations could result in volatility and adversely affect our operations
from one quarter to the next. As our revenues grow, these seasonal fluctuations from AEC New York’s business operations may
become more pronounced.



Our historical financial and operating
results are not indicative of our future performance, and our financial and operating results are difficult to forecast.



Our financial and operating results to
date are not necessarily indicative of future operating results. In addition to the fluctuations described above, our revenues,
expenses, and operating results may vary from quarter to quarter and from year to year in response to a variety of other factors
beyond our control, including, but not limited to:



| | · | general economic conditions;                                                                                                   
| | - | -------------------------------------------------------------------------------------------------------------------------------
| | · | perception of value and future opportunities for an international education as perceived by our Chinese customers;             
| | · | changes in corporate training needs in China;                                                                                  
| | · | regulations or actions pertaining to the provision of corporate training and advisory services in China;                       
| | · | detrimental negative publicity about us, our competitors, or our industry;                                                     
| | · | changes in consumers’ demand for our services and programs; and                                                                
| | · | non-recurring charges incurred in connection with acquisitions or other extraordinary transactions or unexpected circumstances.



Due to these and other factors, we believe
that quarter-to-quarter comparisons of our operating results may not be indicative of our future performance, and therefore you
should not rely on them to predict the future performance of our Company. In addition to the above factors, our past results may
not be indicative of future performance because of new businesses developed or acquired by us.



Our business is difficult to evaluate
in part because we have limited experience with respect to some of our newer services, programs, and offerings.





Historically, our core business has been
the delivery of advisory services to Chinese student customers wishing to study in the U.S. in the areas of college admission,
internship, and career development. In the fourth quarter of 2016, we expanded our business to include corporate training and advisory
services with the acquisition of AEC Southern UK. We continue to develop ideas for new services to expand our business and client
base and we launch new projects on a regular basis and are in the process of rolling out our online training services. Some of
these new service offerings have not generated significant revenues to date, and we have, necessarily, less experience responding
quickly to changes, competing successfully, and maintaining and expanding our brand in such new project areas. Consequently, there
is limited operating history on which you can base your evaluation of the business and prospects of these relatively newer operations.





The continuing efforts of our senior
management team and other key personnel are important to our success, and our business may be harmed if we lose their services.



The continuing services of our senior management
team is very important to us. We particularly value the service of Mr. Max P. Chen—our founder, CEO, interim CFO, and Chairman—who
has been with AEC New York since its inception in 1999. If one or more of our senior executives or other key personnel are unable
or unwilling to continue in their present positions, we may not be able to replace them easily, and our business may be disrupted
or suffer from their departure. Competition for experienced management personnel in the private education sector is intense, the
pool of qualified candidates is limited, and we may not be able to retain the services of our senior executives or key personnel,
or attract and retain high-quality senior executives or key personnel in the future. In addition, if any member of our senior management
team or any of our other key personnel joins a competitor or forms a competing company, we may lose teachers, students, key professionals,
and staff members.



12







We are an “emerging growth
company,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make
our Common Stock less attractive to investors.



We are an “emerging growth company,”
as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. For as long as we continue to be an emerging growth company,
we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are
not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404(b)
of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our annual reports and proxy statements
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of
any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, although we
could lose that status sooner if our revenues exceed $1.07 billion, if we issue more than $1,000,000,000 in non-convertible debt
in a three year period, or if the market value of our Common Stock held by non-affiliates exceeds $700,000,000 as of any April
30 before that time, in which case we would no longer be an emerging growth company as of the following April 30. We cannot predict
if investors will find our Common Stock less attractive because we may rely on these exemptions. If some investors find our Common
Stock less attractive as a result, there may be a less active trading market for our Common Stock and our stock price may be more
volatile.



We have elected to use the extended transition
period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows us to delay
the adoption of new or revised accounting standards that have different effective dates for public and private companies until
those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies
that comply with the public company effective dates.



Risks Related To Doing Business in China



The PRC laws and regulations governing
the Company’s business operations are sometimes vague and uncertain. Any changes in such PRC laws and regulations as well
as in the PRC economic, political, and social conditions may have a material and adverse effect on the PRC economy and the education
service industry in particular, and in turn the Company’s business.



There are substantial uncertainties regarding
the interpretation and application of the PRC laws and regulations, including but not limited to the laws and regulations governing
the Company’s business, or the enforcement and performance of the Company’s arrangements with customers in the event
of the imposition of statutory liens, death, bankruptcy, and criminal proceedings. The Company and any future subsidiaries are
considered foreign persons or foreign funded enterprises under the PRC laws, and as a result, the Company is required to comply
with the PRC laws and regulations. These laws and regulations are sometimes vague and may be subject to future changes, and their
official interpretation and enforcement may involve substantial uncertainty.



The effectiveness of newly enacted laws,
regulations, or amendments may be delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that
affect existing and proposed future businesses may also be applied retroactively. The Company cannot predict what effect the interpretation
of existing or new PRC laws or regulations may have on the Company’s businesses.



Doing business in the PRC is subject to
many uncertainties and changes in the political, economic, or social direction of the PRC could have an adverse effort on the Company’s
operations.



While the PRC economy has experienced significant
growth in the past two to three decades, growth has been uneven, both geographically and among various sectors of the economy.
Demand for our educational services depends, in large part, on economic conditions in China. Any significant slowdown in China’s
economic growth may cause our potential students to delay or cancel their plans to enroll in our schools, which in turn could reduce
our revenue.



The Company’s operations may be adversely
affected by significant political, economic, and social uncertainties in the PRC. The differing cultures, business preferences,
corruption, uncertain government regulations, tax systems, and currency regulations are risks that can impact the Company’s
operations. Although the PRC government has been pursuing economic reform policies, no assurance can be given that the PRC government
will continue to pursue such policies or that such policies may not be significantly attend, especially in the event of a change
in leadership, social or political description or unforeseen circumstance, there is also no guarantee that the PRC government’s
pursuit of economic reforms will be consistent, effective or continue.



Regarding intermediate and consulting business
activities relating to self-funded overseas studying, the Ministry of Education, or MOE, the Ministry of Public Security, and the
SAIC jointly issued the Administrative Regulations on Intermediate Services for Overseas Studies with Private Funds and their Implementing
Rules in 1999 and the Education Commission of Beijing and Beijing Administration for Industry and Commerce jointly issued the Beijing
Measures of Supervisions and Recognition of Intermediate Services for Self-Funded Overseas Studies (Trial) in September 2015, which
require that any intermediate service organization engaged in such services procure from the MOE the Recognition on the Intermediate
Service Organization for Self-funded Overseas Studies. On January 12, 2017, the State Council promulgated the Decision of the State
Council on the Third Installment of the Cancellation of the Administrative Licensing Matters Delegated to Local Governments, which,
among other things, cancelled the Recognition on the Intermediate Service Organization for Self-funded Overseas Studies, which
means that the requirement for intermediate service organizations to obtain Recognition on the Intermediate Service Organization
for Self-funded Overseas Studies from the provincial government for their engaging in intermediate and consulting business activities
relating to self-funded overseas studies is cancelled. This Decision provided that after the cancellation of such requirements,
the MOE and the SAIC shall study and develop contract template for reference and strengthen their guidance, regulating and service
to intermediate service organizations and that the relevant industrial association shall play their role in self-discipline.



We believe that we are not required to
obtain the aforementioned license for our student advisory services because the services are primarily delivered in the U.S. For
our corporate training and advisory services provided through AEC Southern UK to corporate customers with corporate clients located
in the PRC, we believe they are not subject to the aforementioned regulations.



13







Certain PRC regulations, including
the M&A Rules and national security regulations, may require a complicated review and approval process, which could make it
more difficult for us to pursue growth through acquisitions in China.



The M&A Rules established additional
procedures and requirements that could make merger and acquisition activities in China by foreign investors more time-consuming
and complex. For example, the MOFCOM must be notified in the event a foreign investor takes control of a PRC domestic enterprise.
In addition, certain acquisitions of domestic companies by offshore companies that are related to or affiliated with the same entities
or individuals of the domestic companies, are subject to approval by the MOFCOM. In addition, the Implementing Rules Concerning
Security Review on Mergers and Acquisitions by Foreign Investors of Domestic Enterprises, issued by the MOFCOM in August 2011,
require that mergers and acquisitions by foreign investors in “any industry with national security concerns” be subject
to national security review by the MOFCOM. In addition, any activities attempting to circumvent such review process, including
structuring the transaction through a proxy or contractual control arrangement, are strictly prohibited.



There is significant uncertainty regarding
the interpretation and implementation of these regulations relating to merger and acquisition activities in China. In addition,
complying with these requirements could be time-consuming, and the required notification, review, or approval process may materially
delay or affect our ability to complete merger and acquisition transactions in China. As a result, our ability to seek growth through
acquisitions may be materially and adversely affected.



We may be exposed to liabilities
under the Foreign Corrupt Practices Act, and any determination that we violated the Foreign Corrupt Practices Act could harm our
business.



We are subject to the United States Foreign
Corrupt Practices Act, or “FCPA,” and other laws that prohibit U.S. companies from engaging in bribery or other prohibited
payments to foreign officials for the purpose of obtaining or retaining business. Our activities in China create the risk of unauthorized
payments or offers of payments by one of the employees, consultants, sales agents, or distributors of our Company, even though
these parties are not always subject to our control. It is our policy to implement safeguards to discourage these practices by
our employees. However, our existing safeguards and any future improvements may prove ineffective, and the employees, consultants,
sales agents, or distributors of our Company may engage in conduct for which we might be held responsible. Violations of the FCPA
may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could adversely impact our
business, operating results and financial condition.



Risks Related to the Shares of our Common Stock



The ownership of our Common Stock
is concentrated among a small number of shareholders, and if our principal shareholders, director, and officers choose to act together,
they may be able to significantly influence management and operations, which may prevent us from taking actions that may be favorable
to you.



Our ownership is concentrated among a small
number of shareholders, including our founder, director, officers, and entities related to these persons. Accordingly, these shareholders,
acting together, will have the ability to exert substantial influence over all matters requiring approval by our shareholders,
including the election and removal of directors and any proposed merger, consolidation or sale of all or substantially all of our
assets. This concentration of ownership could have the effect of delaying, deferring or preventing a change in control of the Company
or impeding a merger or consolidation, takeover or other business combination that could be favorable to you.



The requirements of being a public
company may strain our resources and divert management’s attention.



Compliance with the Exchange Act and the
Sarbanes-Oxley Act and other applicable securities rules and regulations will increase our legal and financial compliance costs,
make some activities more difficult, time-consuming, or costly, and increase demand on our systems and resources. As a result,
management’s attention may be diverted from other business concerns, which could harm our business and operating results.
In addition, complying with public company disclosure rules makes our business more visible, which we believe may result in threatened
or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating
results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the
time and resources necessary to resolve them, could divert the resources of our management and harm our business and operating
results.



Our Common Stock is considered a
 “penny stock” which is subject to restrictions on marketability, so you may not be able to sell your shares.



The U.S. Securities and Exchange Commission,
or SEC, has adopted regulations which generally define “penny stock” to be an equity security that has a market price
of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to specific exemptions. The market price
of our common stock is currently less than $5.00 per share and therefore is designated as a “penny stock” according
to SEC rules. This designation requires any broker or dealer selling these securities to disclose some information concerning the
transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase
the securities. These rules may restrict the ability of brokers or dealers to sell the common stock and may affect the ability
of investors to sell their shares. These regulations may likely have the effect of limiting the trading activity of the Company’s
common stock and reducing the liquidity of an investment in its common stock. In addition, investors may find it difficult to obtain
accurate quotations of the common stock and may experience a lack of buyers to purchase our Company’s stock or a lack of
market makers to support the stock price.



We will be subject to the penny stock rules
adopted by the SEC that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks.
These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would
make it difficult for our shareholders to sell their shares.



14







Because we are not subject to compliance
with rules requiring the adoption of certain corporate governance measures, our shareholders have limited protections against interested
director transactions, conflicts of interest, and similar matters.



The Sarbanes-Oxley Act of 2002, as well
as rule changes proposed and enacted by the SEC, the New York and NYSE AMEX Equities exchanges and the Nasdaq Stock Market, as
a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are
designed to enhance the integrity of corporate management and the securities markets and apply to securities which are listed on
those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance
provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner
than necessary, we have not yet adopted these measures.



We do not currently have independent audit
or compensation committees. As a result, our sloe director has the ability, among other things, to determine his own level of compensation.
Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such
standards of corporate governance may leave our shareholders without protections against interested director transactions, conflicts
of interest and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.



There may not be an active, liquid trading market for
our equity securities.



Our common stock trades exclusively on
the OTCQB Marketplace since September 2016. Trading volumes on the OTCQB Marketplace can fluctuate significantly, which could make
it difficult for investors to execute transactions in our securities and could cause declines or volatility in the prices of our
common stock.



If the price of our common stock
is volatile when we are trading, purchasers of our shares of common stock could incur substantial losses.



When and if an active market develops for
our securities, the market price of our Common Stock could fluctuate significantly for many reasons, including reasons unrelated
to our specific performance, such as reports by industry analysts, investor perceptions, or announcements by our competitors regarding
their own performance, as well as general economic and industry conditions. For example, to the extent that other large companies
within our industry experience declines in their share price, our share price may decline as well. Fluctuations in operating results
or the failure of operating results to meet the expectations of public market analysts and investors may negatively impact the
price of our securities. Quarterly operating results may fluctuate in the future due to a variety of factors that could negatively
affect revenues or expenses in any particular quarter, including vulnerability of our business to a general economic downturn;
changes in the laws that affect our products or operations; competition; compensation related expenses; application of accounting
standards; and our ability to obtain and maintain all necessary regulatory and industry certifications and/or approvals to conduct
our business. In addition, when the market price of a company’s shares drops significantly, shareholders could institute
securities class action lawsuits against the company. A lawsuit against us could cause us to incur substantial costs and could
divert the time and attention of our management and other resources.



Moreover, we cannot assure you that any
securities analysts will initiate or maintain research coverage of our company and our shares of common stock. We do not control
analysts or the content and opinions included in their reports. The price of our shares of common stock could decline if one or
more equity research analysts downgrade our shares of common stock or if analysts issue other unfavorable commentary or cease publishing
reports about us or our business.



If we fail to maintain effective
internal controls over financial reporting, the price of our Common Stock may be adversely affected.



We are required to establish and maintain
appropriate internal controls over financial reporting. Failure to establish those controls, or any failure of those controls once
established, could adversely impact our public disclosures regarding our business, financial condition or results of operations.
Any failure of these controls could also prevent us from maintaining accurate accounting records and discovering accounting errors
and financial frauds. Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require annual assessment
of our internal control over financial reporting. The standards that must be met for management to assess the internal control
over financial reporting as effective complex, and require significant documentation, testing and possible remediation to meet
the detailed standards. We may encounter problems or delays in completing activities necessary to make an assessment of our internal
control over financial reporting. If we cannot assess our internal control over financial reporting as effective, investor confidence
and share value may be negatively impacted.



In addition, management’s assessment
of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal
controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and
conditions that need to be addressed in our internal control over financial reporting or disclosure of management’s assessment
of our internal controls over financial reporting may have an adverse impact on the price of our Common Stock.



Compliance with changing regulations
of corporate governance and public disclosure will result in additional expenses.



Changing laws, regulations, and standards
relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and related SEC regulations, have
created uncertainty for public companies and significantly increased the costs and risks associated with accessing the public markets
and public reporting. Our management has invested significant management time and financial resources to comply with existing standards
for public companies, any changes in these standard could which could lead to increased general and administrative expenses and
a diversion of management time and attention from revenue generating activities to compliance activities.



We do not intend to pay cash dividends
on our shares of Common Stock in the foreseeable future.



We do not anticipate paying any cash dividends
in the foreseeable future. We currently intend to retain our future earnings, if any, to fund the development and growth of our
business. In addition, the right of holders of our shares of Common Stock to receive dividends declared by our board of directors
may be restricted to the extent we issue preferred shares with dividend rights superior to those of our shares of Common Stock.



15







Shares of our Common Stock represent
equity interests and are subordinate to existing and future indebtedness.



Shares of our Common Stock represent equity
interests in our Company and, as such, rank junior to any indebtedness of our Company now existing or created in the future, as
well as to the rights of any preferred shares that may be issued in the future. In the future, we may incur substantial amounts
of debt and other obligations that will rank senior to our Common Stock or to which our Common Stock will be structurally subordinated.



Provisions in our charter documents
and Nevada law could discourage or prevent a takeover, even if an acquisition would be beneficial to our shareholders.



Provisions of our articles of incorporation
and bylaws, as well as provisions of Nevada law, could make it more difficult for a third party to acquire us, even if beneficial
to our shareholders. Provisions include (i) authorizing the issuance of “blank check” preferred shares that could be
issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt; (ii) prohibiting cumulative
voting in the election of directors, which would otherwise allow less than a majority of our shareholders to elect director candidates;
and (iii) advance notice provisions in connection with shareholder proposals that may prevent or hinder any attempt by our shareholders
to bring business to be considered by shareholders at a meeting or replace our Company’s board of directors.



ITEM 1B. UNRESOLVED STAFF COMMENTS



Not applicable to smaller reporting companies.



ITEM 2. PROPERTIES



Our principal executive office is located
at 2 Wall Street, Floor 8, New York, NY 10005. Pursuant to the current lease agreement, the Company pays a monthly rent of $34,056;
the lease expires on July 31, 2025.







AEC Southern Shenzhen leases office space
from an unrelated third party on a month to month basis with a monthly rental cost of RMB2,000 (approximately US$300). We are in
the process of securing new locations. We do not anticipate the landlord to refuse extending our month-to-month lease.





We believe our facilities are sufficient
for our business operations.



ITEM 3. LEGAL PROCEEDINGS



From time to time, we may become involved
in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent
uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business. We are currently
not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on
our business, financial condition or operating results.



ITEM 4. MINE SAFETY DISCLOSURE.



Not applicable.



16







PART II



ITEM 5. MARKET FOR REGISTRANT’S
COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.



Market Information



Our Common Stock is quoted on the OTCQB
under the symbol “AMCT” and has very limited trading. The closing price for our Common Stock on the OTCQB on April
15, 2019, was $0.40 per share.



The market for our stock is highly volatile.
We cannot assure you that there will be a market in the future for our common stock.



The following table shows the high and
low bid prices of our common shares on the OTQB for each quarter within the two most recent fiscal years. The following quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions:



|                    |  | Low Price |      |  | High Price |  
|------------------- |  | --------- | ---- |  | ---------- | -
|First Quarter 2019  |  | $         | 0.31 |  |            | $
|Fourth Quarter 2018 |  | $         | 0.30 |  |            | $
|Third Quarter 2018  |  | $         | 0.30 |  |            | $
|Second Quarter 2018 |  | $         | 0.48 |  |            | $
|First Quarter 2018  |  | $         | 0.50 |  |            | $
|Fourth Quarter 2017 |  | $         | 0.11 |  |            | $
|Third Quarter 2017  |  | $         | 0.25 |  |            | $
|Second Quarter 2017 |  | $         | 0.16 |  |            | $
|First Quarter 2017  |  | $         | 0.10 |  |            | $



There is no “public market”
for shares of common stock of the Company. Although the Company’s shares are quoted on the OTCQB marketplace, there has been
almost no transaction taken place in the previous years. In any event, no assurance can be given that any market for the Company’s
common stock will develop or be maintained.



Stockholders of Record



As of April 15, 2019, we have 105 record
holders of our Common Stock. This number excludes any estimate by us of the number of beneficial owners of shares held in street
name, the accuracy of which cannot be guaranteed.



As of April 15, 2019, we have 2 record
holders of our Series B Convertible Preferred Stock and  no record holder of our Series A Preferred Stock.



VStock Transfer, LLC, at 18 Lafayette Pl,
Woodmere, NY 11598, is the transfer agent for our Common Stock.



Effective August 11, 1993, the SEC adopted
Rule 15g-9, which established the definition of a “penny stock,” for purposes relevant to the Company, as any equity
security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to
certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer
approve a person’s account for transactions in penny stocks; and (ii) that the broker or dealer receive from the investor
a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to
approve a person’s account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and
investment experience and objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating
the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, (i) sets forth the basis
on which the broker or dealer made the suitability determination; and (ii) states that the broker or dealer received a signed,
written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny
stock in both public offerings and in secondary trading, and about commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in
penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held
in the account and information on the limited market in penny stocks.



Options, Warrants, Convertible Securities



Currently, we do not have any warrants,
options or convertible securities outstanding other than those already disclosed in the quarterly reports on Form 10-Q in the fiscal
year 2018 and current reports on Form 8-K.



Dividends



We have not declared any cash dividends
on our Common Stock since our inception and do not anticipate paying such dividends in the foreseeable future. We plan to retain
any future earnings for use in our business. Any decisions as to future payments of dividends will depend on our earnings and financial
position and such other facts, as the board of directors deems relevant.



Securities Authorized for Issuance under
Equity Compensation Agreements



We have a 2015 Equity Compensation Plan
in place with 10,000,000 shares reserved for issuance. Our Board of Directors may adopt one or more equity compensation plans in
the future.



Recent Sales of Unregistered Securities



During the fiscal year ended December 31,
2018, we did not have sales of unregistered securities other than those already disclosed in the quarterly reports on Form 10-Q
in the fiscal year 2018 and current affair reports on Form 8-K, and the following:



17







In August and September 2018, the Company
issued an aggregate of 448,000 shares of common stock for a number of employees, and consultants and service providers.



Recent Purchases of Equity Securities
by us and our Affiliated Purchasers



None.



Where You Can Find Additional Information



We are a reporting company and file annual,
quarterly and current reports, proxy statements and other information with the SEC. For further information with respect to the
Company, you may read and copy its reports, proxy statements and other information, at the SEC public reference rooms at 100 F.
Street, N.E., Washington, D.C. 20549. You can request copies of these documents by writing to the SEC and paying a fee for the
copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference rooms. The
Company’s SEC filings are also available at the SEC’s web site at http://www.sec.gov.



ITEM 6. SELECTED FINANCIAL DATA



Not applicable to smaller reporting companies.



ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS



The following discussion and analysis
of financial condition and results of operations relates to the operations and financial condition reported in the consolidated
financial statements of the Company thereto, which appear elsewhere in this Annual Report on Form 10-K, and should be read in conjunction
with such financial statements and related notes included in this report. Except for the historical information contained herein,
the following discussion, as well as other information in this report, contain “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 are subject to the “safe harbor” created by those sections. Actual results and the timing of the events
may differ materially from those contained in these forward looking statements due to many factors, including those discussed in
the “Forward-Looking Statements” set forth elsewhere in this Annual Report on Form 10-K.



Overview





Leveraging our knowledge of the educational
system and environment in the U.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 the U.S. Our advisory services
are specifically designed to address the educational needs of the rising middle-class families in China. The demand for our advisory
services is primarily the result of China’s decades-long one-child policy, society’s focus and emphasis on children’s
education, and families’ desire to gain access to U.S. colleges and universities as well as work experience in the U.S.







Having delivered customized ESL training,
college and business consulting, and career advisory services to Chinese students and families since 1999, we are one of the most
experienced and recognizable holistic solutions providers of education advisory services in the U.S. Additionally, recognizing
the needs for enterprise training in China, since October 2016, we have also delivered customized corporate training and advisory
services to customers in China in the food industry, via AEC Southern UK, from October 2016 until the suspension of its operation
in November 2018, to help them meet the related regulatory standards. The demand for such corporate training and advisory services
in China has escalated in recent years and is driven mainly by China’s growing economy and desire to improve its competitiveness
by meeting or setting international standards. AEC Southern UK’s corporate training and executive services program operation
was temporarily suspended in late October 2018 following the expiration of its two service contracts with clients in late December
2017 and late October 2018, respectively. AEC Southern UK, through AEC Southern Shenzhen, in fiscal year ended December 31, 2018,
delivered customized high school and college placement and career advisory services to Chinese students wishing to study in the
U.S. through referred by AEC New York.







Headquartered in New York with operations
in the PRC, our key advisory services currently include:





| | · | Placement Advisory Services;  
| | - | ------------------------------
| | · | Career Advisory Services;     
| | · | Student & Family Services; and
| | · | Other Advisory Services.      



Placement Advisory Services





Our Placement Advisory Services include
Language Training and 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 service encompasses ESL training
and assistance throughout the high school/college application and admission process.





Targeting the needs of Chinese families
in obtaining admission to Ivy League and other prestigious universities in the U.S., our Elite College Advisory service is designed
to assist qualified Chinese students in applying to prestigious colleges and universities in the U.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.





18







Career Advisory Services





Our Internship Advisory program focuses
on student’s 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 students and/or their families who want to
start or make an investment in a business in the U.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.



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 the U.S., so they can effectively
focus on their studies.



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 the U.S. We also advise corporate clients whose executives are moving to the U.S. for work. The scope of our services includes
assistance with business consulting, relocation and other aspects of family support services.



Other Advisory Services





Through our Foreign Student Recruitment
services, we assist universities in China to recruit students from the U.S. We customize this service based on our strategic relationship
with college and universities in the U.S. and the specific recruitment goals of these universities in China. The demand for our
recruitment services is driven mainly by the lack of an established channel to attract students from the U.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 the U.S. to teach in China. Such demand
covers the need to recruit qualified US educators from Pre K-12 to teach in China.



Pursuant to Accounting Standard Codification
280 “Segment Reporting” (“ASC 280”), we have identified two reporting segments: AEC New York and AEC Southern
UK. These two segments engage two sets of customers and vendors to generate revenue and incur expenses; they generate separate
financial information; and based on their financial reports and other segment specific information, our chief operating decision
maker determines the resources to be allocated and evaluates the performance, of each segment.



| | · | AEC
New York capitalizes on the rising demand from the middle-class families in China for quality education and working experience
in the U.S. It delivers customized high school and college placement and career advisory services to Chinese students wishing
to study in the U.S. Its advisory services include language training, admission advisory, on-campus advisory, internship and start-up
advisory as well as student and family services.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | AEC
Southern Shenzhen delivers customized high school and college placement and career advisory services to Chinese students wishing
to study in the U.S.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



Significant Accounting Policies





The discussion and analysis of our consolidated
financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the 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 Southern UK. All significant
intercompany accounts and transactions have been eliminated in consolidation.





19







As part of the process of preparing our
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 of December 31, 2018, 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 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. Advisory services fees paid
in advance will be reflected as deferred revenue, and they are recognized proportionally as services are completed. Fees related
to compliance training and advisory services are recognized upon completion of such services.





Recent Accounting Pronouncements



In August 2014, the FASB issued accounting
standard update which requires management to assess whether there are conditions or events, considered in the aggregate, that raise
substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements
are issued. If substantial doubt exists, additional disclosures are required. This update was effective for the Company's annual
period ended January 28, 2017. The adoption of the new standard did not have a material impact on the Company’s consolidated
financial position, results of operations, cash flows or disclosures.



In February 2016, the FASB issued ASU 2016-02,
 “Leases.” The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a
ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified
as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new
standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into
after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients
available. The Company is currently evaluating the impact of pending adoption of the new standard on its consolidated financial
statements.



In January 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 after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing
dates after January 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.



In May 2017, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Scope of Modification Accounting,
which amends the scope of modification accounting for share-based payment arrangements and provides guidance on the types of changes
to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting
under ASC 718. For all entities, this ASU is effective for annual reporting periods, including interim periods within those annual
reporting periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The
adoption of this ASU is not expected to have a material effect on the Company’s consolidated financial statements.



20







In February 2018, the FASB issue ASU 2018-02,
Income Statement – Reporting Comprehensive Income (Topic 220). The amendments in this update affect any entity that is required
to apply the provisions of Topic 220, Income Statement—Reporting Comprehensive Income, and has items of other comprehensive
income for which the related tax effects are presented in other comprehensive income as required by GAAP. The amendments in this
Update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal
years.



In March 2018, the FASB issue ASU 2018-05:
Income Taxes (Topic 740) that addresses the recognition of provisional amounts in the event that the accounting is not complete
and a reasonable estimate can be made. The guidance allows for a measurement period of up to one year from the enactment date to
finalize the accounting related to the TCJA.



The FASB has issued ASU No. 2014-09, Revenue
from Contracts with Customers. This ASU supersedes the revenue recognition requirements in Accounting Standards Codification 606
- Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes
revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which
the company expects to be entitled in exchange for those goods or services. This ASU is effective for annual reporting periods
beginning after December 15, 2016, including interim periods within the reporting period and should be applied retrospectively
to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized
at the date of initial application. The Company has adopted ASU 2014-09 under the modified retrospective method in the first quarter
of 2018. The Company has substantially completed a review of the new standard to its existing customer contracts. The Company does
not believe the adoption of ASU 2014-09 would have an effect on the Company’s consolidated financial statements.



The Company has assessed all newly issued
accounting pronouncements released during the year ended December 31, 2018 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 Annual Report on
Form 10-K. For additional information on the potential risks associated with these initiatives and our operations, please
refer to the Risk Factors sections starting on page 10 of
this Annual Report on Form 10-K.



Year Ended December 31, 2018, as Compared to Year Ended
December 31, 2017



|                                       |  | For year ended December 31, |          
|-------------------------------------- |  | --------------------------- | ---------
|                                       |  | 2018                        |          
|Key revenue streams:                   |  |                             |          
|                                       |  |                             |          
|Corporate Training & Advisory Services |  | $                           | -        
|Placement Advisory Services            |  |                             | 704,164  
|Career Advisory Services               |  |                             | 2,084,055
|Student & Family Advisory Services     |  |                             | 4,224,220
|Other Advisory Services                |  |                             | -        
|Total revenues                         |  | $                           | 7,012,439
|Gross Profit                           |  | $                           | 2,514,168
|Gross Margin                           |  |                             | 36       



Revenues



| | · | Total
revenues for the year ended December 31, 2018, were $7,012,439, representing a decrease of $18,684,942, or 72% from $25,798,115
for the year ended December 31, 2017. The decrease was attributed mainly to the decrease in revenues from our corporate training
and advisory services delivered by AEC Southern UK. Majority of total revenues for the year ended December 31, 2018 were generated
by the operations of AEC New York.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The
decline in revenues from our corporate training & advisory services was primarily due to the restrictions over inbound and
outbound capital flow into and out of the PRC, and the rising costs of doing business in the PRC. Additionally, the agreements
with the two clients of AEC Southern UK expired, resulting in less revenue. As a result, AEC Southern UK has experienced higher
operating expense and higher cost of providing training services payable to third parties, non-collectable accounts receivable
and high net loss. Currently, AEC Southern UK is still seeking solutions, such as adapting its corporate training services to
be delivered via an online platform and planning to expand its corporate training offerings from the food industry to general
management advisory services that may appeal to a wider range of businesses. AEC Southern UK is also open to restructuring its
business model if needed and accelerating mergers and acquisitions.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Our
revenues from placement advisory services typically fluctuate as a result of seasonal or other factors related to the high school/college
admission process. Revenues for the year ended December 31, 2018 from our placement advisory services decreased by $53,476, or
approximately 7% from $757,640 for the same period in 2017. The decrease in our placement advisory services was due to the decreased
request from students while the allocation of our resources to elite college advisory services brought higher income per student.
Revenues for our career advisory services decreased by $2,272,405, or 52% from $4,356,460 for the same period in 2017, primarily
due to decreased services requests from students recently graduated and in the graduating class, who intend to return to the PRC
instead of staying in the U.S. due to the benefits policy for talents in China. Revenues from student & family advisory services
increased by $302,100 from $3,922,120 for the same period in 2017, mainly due to timing of services being requested. The revenues
from other advisory services was $100,734 for the period ended December 31,2017 due to the request to hold the exhibition for
student activities request. For the period ended December 31, 2018, we didn’t receive similar request and we’re seeking
opportunities to attract potential clients through event-holding for students’ activities.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



21







| | · | The
recent sharp decrease in the value of China’s currency and the relatively restrictive U.S. policy on international students
is increasingly driving Chinese students to choose to apply to universities and colleges in other countries or choose to return
home after graduation, rather than staying in the U.S. Hence, we are expanding our current local services, concentrating on new
services promotion and accelerating mergers and acquisitions.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Gross Profit & Gross Margin



| | · | Our
gross profit decreased by $5,417,804, or 68% from $7,931,972 for the year ended December 31, 2017. The decrease was attributed
mainly to the temporary suspension of the delivery of corporate training and advisory services by AEC Southern UK, due to the
restricted flow of foreign exchange, the ongoing optimization of the training model to enhance our business, as well as the expiration
of the service agreements with the two clients of AEC Southern UK.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Our
gross margin was approximately 36% in 2018, as compared to approximately 31% in 2017.
| | - | -----------------------------------------------------------------------------------------



Operating Expenses



| | · | Total
operating expenses increased by $2,982,441 or 41% as compared to the year ended December 31, 2017. The increase was attributed
to higher general and administrative (G&A) expenses from uncollectible accounts receivable, payroll expense, and rent expense,
as well as compensation expense.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Income Tax Benefit



| | · | Income
tax benefits of $1,097,022 for the year ended December 31, 2018 represents the net effect of tax payable reversal and net loss
for the period.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------



Net Loss



| | · | The
net loss of $6,691,392 for the year ended December 31, 2018 as compared to the net profit for same period of 2017 was due mainly
to the decrease in revenue due to AEC Southern’s suspension of operation and increased operating expenses from AEC New York,
and high expenses of AEC Southern from uncollectible accounts receivable.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Liquidity and Capital Resources



Cash Flows and Working Capital



As of December 31, 2018, we had cash of
$1,985,524, a decrease of $735,461 from $2,720,985 as of December 31, 2017. We have financed our operations primarily through
cash flow from operating and financing activities. We require cash for working capital, payment of accounts payables and accrued
expenses, salaries, commissions and related benefits, and other operating expenses and income taxes. The following table sets forth
a summary of our cash flows for the periods indicated.





|                                          |  | Year ended December 31, |         
|----------------------------------------- |  | ----------------------- | --------
|                                          |  | 2018                    |         
|                                          |  |                         |         
|Net cash (used in) operating activities   |  | $                       | (714,843
|Net cash used in by investing activities  |  |                         | -       
|Net cash provided by financing activities |  |                         | -       
|Effect of exchange rates changes on cash  |  |                         | (20,618 
|Net change in cash                        |  |                         | (735,461





Cash Flow from Operating Activities



| | · | Net cash used in operating activities for the year ended December 31, 2018, was $714,843, compared to
net cash used in operating activities of $1,312,291 for the year ended December 31, 2017.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | These
changes are primarily attributable to the combination of the following: seasonality, where a significant portion of our clients
engage our services in the fourth quarter of the fiscal year; we now pay our service providers faster; increased advanced payments
for the services provided for our current clients.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Cash Flow from Investing Activities



| | · | We had no cash flow from investing activities during the year ended December 31, 2017 and 2018 respectively.
| | - | ------------------------------------------------------------------------------------------------------------



Cash Flow in Financing Activities



| | · | We had no cash flow from financing activities during the year ended December 31, 2017 and 2018 respectively.
| | - | ------------------------------------------------------------------------------------------------------------





22







Working Capital



The following table sets forth our working
capital.



|                          |  | Year ended December 31, |          
|------------------------- |  | ----------------------- | ---------
|                          |  | 2018                    |          
|                          |  |                         |          
|Total current assets      |  | $                       | 5,192,470
|Total current liabilities |  |                         | 5,107,188
|Working capital           |  | $                       | 85,282   
|Current ratio             |  |                         | 1.02     



| | · | As of December 31, 2018,
we had working capital surplus of $85,282, a decrease of $ 4,544,414 from a working capital surplus of $4,629,696 as of December
31, 2017. The decrease in working capital surplus was attributable mainly to uncollectible accounts receivable from AEC Southern
UK and AEC New York while we’re expecting portion of the accounts receivable from AEC New York collected in the second quarter
in 2019.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| | · | We
believe that our working capital will be sufficient to enable us to meet our cash requirements for the next 12 months. However,
we may incur additional expenses as we seek to expand our operations by establishing additional representative offices in our
major market, the PRC, increasing our marketing efforts and hiring more personnel to support our growing operations. We believe
we have adequate working capital to fund future growth activities.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Off-Balance Sheet Arrangements



We did not have, during the periods presented,
and we are currently not party to, any off-balance sheet arrangements.



Seasonality



| | · | We
experience seasonality in business with students as customers, specifically our placement advisory, career advisory and student
and family services, all related to 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



The Company’s management has performed
subsequent events procedures through the date the financial statements were available to be issued. There were no subsequent events
requiring adjustment to or disclosure in the consolidated financial statements.



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.



Not applicable to smaller reporting companies.



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA



The
audited financial statements of the Company for the fiscal year ended December 31, 2018, and the notes thereto are set forth
on page F-1 through F-28 of this Annual
Report.



ITEM 9. CHANGES IN REGISTRANT’S
CERTIFYING ACCOUNTANT



The Company dismissed Wei & Wei as
the Company’s independent registered public accounting firm, effective as of February 22, 2018. The Board approved of the
dismissal of Wei & Wei as of February 22, 2018. Wei & Wei’s audit reports on the Company’s consolidated financial
statements as of and for the fiscal years ended December 31, 2016 and 2017, did not contain an adverse opinion or a disclaimer
of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.



During the fiscal years ended December
31, 2017 and 2016, and the subsequent interim period through February 22, 2018, there were (i) no “disagreements” (as
that term is described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and Wei &
Wei on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which,
if not resolved to Wei & Wei’s satisfaction, would have caused Wei & Wei to make reference thereto in their reports,
and (ii) no “reportable events” (as that term is described in Item 304(a)(1)(v) of Regulation S-K).



Effective February 22, 2018, the Company
appointed GC & Associates CPAs PLLC (“GC & Associates”) as the Company’s independent registered public
accounting firm for the Company’s fiscal years ended December 31, 2017 and ending December 31, 2018. The Board approved of
the appointment of GC & Associates as of February 22, 2018. During the fiscal year ended December 31, 2017, and the subsequent
interim period through February 22, 2018, neither the Company nor anyone on its behalf consulted with GC &Associates regarding
(i) the application of accounting principles to a specified transaction, (ii) the type of audit opinion that might be rendered
on the Company’s financial statements by GC & Associates, in either case where written or oral advice provided by GC
 & Associates would be an important factor considered by the Company in reaching a decision as to any accounting, auditing or
financial reporting issues or (iii) any other matter that was the subject of a disagreement between us and our former auditor,
Wei & Wei or was a reportable event (as described in Items 304(a)(1)(iv) or Item 304(a)(1)(v) of Regulation S-K, respectively).



23







ITEM 9A. CONTROLS AND PROCEDURES



Evaluation of Disclosure Control and Procedures.



Disclosure controls are procedures that
are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act,
such as this Annual Report on Form 10-K, is recorded, processed, summarized, and reported within the time periods specified in
the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is
accumulated and communicated to our management, including the Chief Executive Officer (CEO), as appropriate to allow timely decisions
regarding required disclosure.



During the year ended December 31, 2018,
procedures have been established to ensure that all significant, non-routine events and pending transactions must be evaluated
by our CEO for disclosures in our consolidated financial statements and public filings.



We performed an evaluation, under the supervision
and with the participation of our management, including our CEO, of the effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the period covered by this annual Report on Form 10-K. Based on this evaluation, our CEO
has concluded that, as of December 31, 2018, our disclosure controls and procedures were not effective to ensure that information
required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported properly within
the time periods specified by the SEC, and did not provide reasonable assurance that information required to be disclosed by the
Company in such reports would be accumulated and communicated to the Company’s management, including its CEO, as appropriate,
to allow timely decisions regarding required disclosure. Such conclusion was based solely on the fact that the Company identified
deficiencies in its internal control over financial reporting as of December 31, 2018. Although we have determined that the existing
controls and procedures are not effective, the deficiencies identified have not been deemed material to our reporting disclosures.



Management’s Report on Internal
Control over Financial Reporting



Our management is responsible for establishing
and maintaining adequate internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and
15d-15(f)). Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer
and Interim Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of our financial statements for external purposes in accordance with U.S. GAAP.



Management, under the supervision and with
the participation of our Chief Executive Officer and Interim Chief Financial Officer, evaluated the effectiveness of our internal
control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in 2013 Internal Control-Integrated Framework.



Based on this evaluation, our CEO has concluded
that as of December 31, 2018, our disclosure controls and procedures were not effective to ensure that material information is
recorded, processed, summarized and reported by our management on a timely basis in order to comply with our disclosure obligations
under the Exchange Act and the rules and regulations promulgated thereunder. We have identified the following deficiencies, we
have limited administrative and accounting resources, outdated accounting software and generally weak accounting processes and
internal control procedures. Additionally, we have inadequate segregation of duties in certain accounting processes, including
the payroll, cash receipts and disbursements processes in our accounting system, partly as a result of our limited size and accounting
staff. We have taken steps to remediate these issues and expect to have improved controls and documentation in place by December
31,2019.



Our management is also responsible for
establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial
reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles.



Our internal control over financial reporting
includes those policies and procedures that:



| | · | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and
| | · | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.                                                                                                                             



Changes in internal control over financial
reporting



Our Chief Financial Officer resigned for
personal reasons effective February 5, 2018. Our CEO, Max P. Chen, has acted as the interim CFO since February 5, 2018, while the
Company is currently seeking a CFO with significant experience in public reporting company.



There were no changes in the Company’s
internal control over financial reporting that occurred during the period covered by this report that have materially affected,
or are reasonably likely to materially affect, the Company’s internal control over financial reporting.



ITEM 9B. OTHER INFORMATION.



None.



24







PART III



ITEM 10. DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE



The following table presents information
with respect to our officers and directors:



|Name        |  | Age |  | Position(s)                                                                                   |  | Position Since
|----------- |  | --- |  | --------------------------------------------------------------------------------------------- |  | --------------
|Max P. Chen |  | 63  |  | President, Chief Executive Officer, interim Chief Financial Officer, Secretary, Sole Director |  | May 2014      



Max P. Chen has over 30 years of
experience in international education. He has served as the Sole Director, Chairman of the Board, President, Chief Executive Officer,
Chief Financial Officer and Secretary of the Company first since May 2014. He had previously served as the President, and sole
Director of American Education Center, Inc., a New York corporation and now a wholly owned subsidiary of the Company, since its
inception in 1999 to May 2014. From 1978 to 1982, Mr. Chen enrolled in Sichuan Normal University Department of Foreign Language.
He was originally a professor with China Peasant University, and operated Correspondence Sichuan University with more than 70,000
students registered in the 1980s. Mr. Chen relocated to the U.S. and has developed schools and educational centers that coordinate
cooperative educational programs between the U.S. and China. He holds an M&R Management Certificate from Harvard Business School.
Mr. Chen is also the executive director of the U.S.-China Higher Education Alliance.



Departure and Appointment of Certain Officers



On February 5, 2018, Mr. Anthony S. Chan
notified the Company of his resignation from the Company as Chief Financial Officer, effective immediately. The Board of Director
of the Company (the “Board”) accepted Mr. Chan’s resignation. Following Mr. Chan’s departure, the Board
appointed Mr. Max P. Chen, Chief Executive Officer, President, and Chairman of the Board, as interim Chief Financial Officer effective
February 5, 2018, until such time that the Company secures the employment of a new Chief Financial Officer. The Company and Mr.
Chen will not enter into an additional employment agreement regarding his interim position as Chief Financial Officer.



Committees of the Board of Directors



Our board of directors has not established
any committees, including an audit committee, a compensation committee, a nominating committee or any committee performing a similar
function. The functions of those committees are being undertaken by our sole Board member. Because we have only one director and
do not have any independent directors, the establishment of committees of the Board of Directors would not provide any benefits
to our company and could be considered more form than substance.



Code of Ethics



We have adopted a code of business conduct
and ethics that applies to our director, officers, and all employees.



Family Relationships



There are no family relationships among
the directors and executive officers of the Company.



Directors’ Compensation



We have not paid any cash compensation
to our sole member of our Board of Directors for his service as our director.



The Company will reimburse its director
for reasonable expenses in connection with attendance at board and committee meetings. Director will also be eligible to receive
stock options offered by our company from time to time. No options have been granted to our sole director.



Involvement in Certain Legal Proceedings



To the best of our knowledge, our sole
director or any executive officers have not, during the past ten years:



| | · | been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | · | been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;                                                                                                                                                                                                                                                                                                       
| | · | been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | · | been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
| | · | been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.                                                                                                                                                                                                                                                                                                                       



25







Corporate Governance



The business and affairs of the Company
are managed under our sole board member. In addition to the contact information in this annual report, each stockholder will be
given specific information on how he/she can direct communications to the officers and directors of the Company at our annual stockholders
meetings. All communications from stockholders are relayed to the board of member.



Role in Risk Oversight



Our sole director is primarily responsible
for overseeing our risk management processes. The sole director receives and reviews periodic reports from management, auditors,
legal counsel, and others, as considered appropriate regarding our company’s assessment of risks. The sole director focuses
on the most significant risks facing our company and our company’s general risk management strategy, and also ensures that
risks undertaken by our company are consistent with the board’s appetite for risk. While the sole director oversees our company’s
risk management, management is responsible for day-to-day risk management processes.



Compliance with Section 16(a) of the
Securities Exchange Act of 1934



We believe that our executive officers
and directors and persons who own more than 10% of a registered class of our equity securities are not subject to reporting requirements
under Section 16(a) of the Securities Exchange Act.



ITEM 11. EXECUTIVE COMPENSATION.



The table below summarizes all compensation
awarded to, earned by, or paid to our Principal Executive Officer, our two most highly compensated executive officer who occupied
such position at the end of our latest fiscal year.



|                                                |  |      |      |  |        |   |         |       |  | StockOption |  | Stock  |  |  | All Other    |  |       |    
|----------------------------------------------- |  | ---- | ---- |  | ------ | - | ------- | ----- |  | ----------- |  | ------ |  |  | ------------ |  | ----- | ---
|Name and                                        |  |      |      |  | Salary |   |         | Bonus |  | Awards      |  | Awards |  |  | Compensation |  | Total |    
|Principal Position                              |  | Year |      |  | ($)    |   |         | ($)   |  | ($)         |  | (#)    |  |  | ($)          |  | ($)   |    
|Max P. Chen, President, CEO and interim CFO (1) |  |      | 2018 |  |        | $ | 180,000 |       |  | N/A         |  | N/A    |  |  | 12,500,000   |  |       | N/A
|                                                |  |      | 2017 |  |        | $ | 72,000  |       |  | N/A         |  | N/A    |  |  | N/A          |  |       | N/A
|Anthony S. Chan, CFO (2)                        |  |      | 2018 |  |        | $ | 14,732  |       |  | N/A         |  | N/A    |  |  | N/A          |  |       | N/A
|                                                |  |      | 2017 |  |        | $ | 37,500  |       |  | N/A         |  | N/A    |  |  | N/A          |  |       | N/A



(1) Mr. Chen received employment compensation
pursuant to an Employment Agreement entered into with the Company dated August 28, 2017 as the Company’s CEO. Mr. Chen did
not separately receive any other compensation for acting as the Company’s interim CFO. Mr. Chen also received stock awards
for 12,500,000 shares of Series B Preferred Stock, pursuant to a Manager Share Issuance Agreement with the Company dated November
26, 2018.



(2) Anthony S. Chan served as Chief Financial
Officer of the Company from September 28, 2017 to February 5, 2018.





Option Grants in Last Fiscal Year



The company did not grant any options in
the fiscal year ended December 31, 2018.



Pension, Retirement or Similar Benefit
Plans



There are no arrangements or plans in which
we provide pension, retirement, or similar benefits for directors or executive officers. We have no material bonus or profit sharing
plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock
options may be granted at the discretion of the Board of Directors or a committee thereof.



Employment Agreements





The Company has not entered into employment
agreements with officers and other key employees except as disclosed in this Item 11.



Equity Compensation Plan



We have a 2015 Equity Compensation Plan
in place with 10,000,000 shares reserved for issuance. Our Board of Directors may adopt one or more equity compensation plans in
the future.



Directors’ and Officers’
Liability Insurance



The Company currently does not have insurance
for directors and officers against liability; however, the Company is in the process of investigating the availability of such
insurance.



Change of Control Compensatory Plans



As of December 31, 2018, we had no pension
plans or compensatory plans or other arrangements which provide compensation in the event of termination of employment or change
in control of us.



ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS



The following table sets forth certain
information regarding the ownership of our capital stock, as of April 15, 2019, by: (i) each person known by us to be the beneficial
owner of 5% or more of the outstanding Common Stock, Series A Preferred Stock, or Series B Preferred Stock, (ii) each executive
officer and director of the Company, and (iii) all of our executive officers and directors as a group. As of April 15, 2019, the
Company has 56,597,113 shares of Common Stock outstanding, 0 shares of Series A Preferred Stock outstanding, and 25,000,000 shares
of Series B Preferred Stock outstanding.



26







Beneficial ownership is determined in accordance
with SEC rules and generally includes voting or investment power with respect to securities. For purposes of this table, a person
or group of persons is deemed to have “beneficial ownership” of any shares of Common Stock or Series B Preferred Stock
that such person has the right to acquire within 60 days of April 15, 2019. For purposes of computing the percentage of outstanding
shares of our Common Stock or Series B Preferred Stock held by each person or group of persons named below, any shares that such
person or persons has the right to acquire within 60 days of April 15, 2019 is deemed to be outstanding for such person, but is
not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of
any shares listed as beneficially owned does not constitute an admission of beneficial ownership.



Unless otherwise specified, the address
of each of the persons set forth below is in care of the Company, 2 Wall St., FL. 8, New York, NY, 10004.





|Name and Address of Beneficial Owner                                                            |  | Amount and Nature of Beneficial Ownership (Common Stock) |            |  | % of  Class |  |        | Amount and  Nature  of Beneficial Ownership (Series B  Preferred  Stock) |  |  | % of  Class |  |  | % Total Voting Power (1) |      
|----------------------------------------------------------------------------------------------- |  | -------------------------------------------------------- | ---------- |  | ----------- |  | ------ | ------------------------------------------------------------------------ |  |  | ----------- |  |  | ------------------------ | -----
|Director and Officers                                                                           |  |                                                          |            |  |             |  |        |                                                                          |  |  |             |  |  |                          |      
|                                                                                                |  |                                                          |            |  |             |  |        |                                                                          |  |  |             |  |  |                          |      
|Max P. Chen, President, Chief Executive Officer, interim Chief Financial Officer, Sole Director |  |                                                          | 10,563,000 |  |             |  | 18.663 | %                                                                        |  |  | 12,500,000  |  |  |                          | 50.00
|All officers and directors as a group (one person)                                              |  |                                                          | 10,563,000 |  |             |  | 18.663 | %                                                                        |  |  | 12,500,000  |  |  |                          | 50.00
|                                                                                                |  |                                                          |            |  |             |  |        |                                                                          |  |  |             |  |  |                          |      
|5% Shareholders                                                                                 |  |                                                          |            |  |             |  |        |                                                                          |  |  |             |  |  |                          |      
|China Cultural Finance Holdings Company Limited                                                 |  |                                                          | 14,699,113 |  |             |  | 25.971 | %                                                                        |  |  | 12,500,000  |  |  |                          | 50.00









| | (1) | Percentage total voting power represents voting power with respect to all shares of our Common
Stock, Series B Preferred Stock, voting together as a single class (0 shares of Series A Preferred Stock is issued and outstanding
as of April 15, 2019). Each holder of Series B Preferred Stock is entitled to twenty (20) votes per share of Common Stock on all
matters submitted to our stockholders for a vote. The Common Stock and Series B Preferred Stock vote together as a single class
on all matters submitted to a vote of our stockholders, except as may otherwise be required by law. The Series B Preferred Stock
is convertible at any time by the holder into shares of Common Stock on a share-for-share basis upon approval by the Company’s
board of directors.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------









ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE



Other than compensation agreements and
other arrangements described in “Management,” and our transactions described below, since our inception there has not
been, nor is there currently proposed, any transaction or series of similar transactions to which we were or will be a party:



| | · | in which the amount involved exceeded or will exceed $120,000; and
| | - | ------------------------------------------------------------------



| | · | in which any current director, executive officer, holder of 5% or more of our shares of Common Stock on an as-converted basis or any member of their immediate family had or will have a direct or indirect material interest.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Company’s CEO has a 34% interest
in Columbia International College, Inc. (“CIC”). The Company prepaid CIC $48,000 for 2019 student consulting services
expected to be fully delivered and accounted for in 2019.



The Company’s CEO has a 40% interest
in Wall Street Innovation Center, Inc. (“WSIC”), a corporation incorporated in the state of New York that focuses on
career and business development activities. AEC New York’s Chief Operating Officer currently serves as the President and
CEO of WSIC. In the course of delivering career advisory services, the Company has engaged WSIC to assist in certain career development
activities. Included in accounts payable is an amount due to WSIC of $0 and $372 as of December 31, 2018 and 2017. The Company
prepaid WSIC $50,000 for business consulting services to be delivered in 2019, which is expected to be completed in 2019.



On November 26, 2018, the Company entered
into a Manager Share Issuance Agreement (the “Manager Share Issuance Agreement”) with Mr. Max P. Chen, the Chief Executive
Officer, President, and Chairman of the Board of the Company, whereby the Company agreed to reward Mr. Chen for his dedicated services
to the Company by issuing 12,500,000 shares of Series B Preferred Stock to him. The 12,500,000 shares of Series B Preferred Stock
were issued to Mr. Chen on November 26, 2018.



ITEM 14. PRINCIPAL ACCOUNTING FEES AND
SERVICES



Audit Fees



For the Company’s fiscal years ended
December 31, 2018 and 2017, we were billed approximately $125,139 and $92,920 for professional services rendered for the audit
and review of our financial statements.



Audit Related Fees



There were no fees for audit related services
for the years ended December 31, 2018 and 2017.



Tax Fees





For the Company’s fiscal years ended
December 31, 2018 and 2017, we engaged Wei & Wei, and were billed approximately $0 and $2,200, respectively, for professional
services rendered for tax compliance, tax advice, and tax planning.



27







All Other Fees



The Company did not incur any other fees
related to services rendered by our principal accountant for the fiscal years ended December 31, 2018 and 2017.



Effective May 6, 2003, the SEC adopted
rules that require that before our independent registered public accounting firm is engaged by us to render any auditing or permitted
non-audit related service, the engagement be:



| | · | approved by our audit committee; or
| | - | -----------------------------------



| | · | entered into pursuant to preapproval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee’s responsibilities to management.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We do not have an audit committee. Our
sole director preapproves all services provided by our independent registered public accounting firm. However, all of the above
services and fees were reviewed and approved by the sole board member for the respective services were rendered.



28







PART IV



ITEM 15. EXHIBITS



(a) The following documents are filed as
part of this report:



(1) Financial Statements and Report of
Independent Registered Public Accounting Firm, which are set forth in the index to Consolidated Financial Statements on pages F-1
through F-28 of this report.



|Report of Independent Registered Public Accounting Firm        | F-1
|-------------------------------------------------------------- | ---
|Consolidated Balance Sheets                                    | F-2
|Consolidated Statements of Operations and Comprehensive Income | F-3
|Consolidated Statements of Shareholders’ Equity                | F-4
|Consolidated Statements of Cash Flows                          | F-5
|Notes to Consolidated Financial Statements                     | F-6



(2) Financial Statement Schedule: None.



(3) Exhibits



|ExhibitNo. |  | Description                                                                                                                                                                                                                                                                                                                                           
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1        |  | Certificate
                                    of Amendment filed with the Secretary of State of the State of Nevada dated November 8, 2018
                                    (incorporated by reference to our Form 8-K, Exhibit 3.1, filed with the Securities and Exchange
                                    Commission on November 19, 2018)*
|3.2        |  | Bylaws
    (incorporated by reference to our Form S-1 Registration Statement, Exhibit 3.2, filed with the Securities and Exchange Commission
    on December 18, 2014)*                                                                                                                                                                               
|3.3        |  | Certificate
    of Designation of Series A Convertible Preferred Stock (incorporated by reference to our Form 8-K, Exhibit 3.1, filed with
    the Securities and Exchange Commission on November 3, 2017)*                                                                                                                                           
|3.4        |  | Certificate
    of Designation of Series B Convertible Preferred Stock (incorporated by reference to our Form 8-K, Exhibit 3.2, filed with
    the Securities and Exchange Commission on November 19, 2018)*                                                                                                                                          
|4.1        |  | Specimen
    stock certificate (incorporated by reference to our Form S-1 Registration Statement, Exhibit 4.1, filed with the Securities
    and Exchange Commission on December 18, 2014)*                                                                                                                                                           
|10.1       |  | Loan Agreement by
    and between American Education Center, Inc. and Hilary Merchant Inc. (incorporated by reference to Form 10-Q, Exhibit 10.1,
    filed with the Securities and Exchange Commission on June 29, 2015)*                                                                                                                            
|10.2       |  | Agreement of Lease
    by and between American Education Center, Inc. and Fieldstone Capital Inc. (incorporated by reference to our Form 10-Q, Exhibit
    10.2, filed with the Securities and Exchange Commission on June 29, 2015)*                                                                                                                 
|10.3       |  | Service
    Agreement by and between American Education Center, Inc. and AEC Southern (Shenzhen) Management Co., Ltd. (incorporated by
    reference to Form 8-K, Exhibit 10.1, filed with the Securities and Exchange Commission on January 6, 2017)*                                                                                                
|10.4       |  | Employment
    Agreement by and between American Education Center, Inc. and Max Pu Chen (incorporated by reference to Form 8-K, Exhibit 10.1,
    filed with the Securities and Exchange Commission on August 30, 2017)*                                                                                                                              
|10.5       |  | Employment
    Agreement by and between American Education Center, Inc. and Anthony S. Chan (incorporated by reference to Form 8-K, Exhibit
    10.1, filed with the Securities and Exchange Commission on October 2, 2017)*                                                                                                                          
|10.6       |  | License
    Agreement by and between American Education Center, Inc. and Max P. Chen (incorporated by reference to Form 8-K, Exhibit 10.1,
    filed with the Securities and Exchange Commission on October 23, 2017)*                                                                                                                                
|10.7       |  | Strategic
    Partnership Agreement by and between American Education Center, Inc. and Oxbridge International Education Group (incorporated
    by reference to Form 8-K, Exhibit 99.2, filed with the Securities and Exchange Commission on December 5, 2017)*                                                                                       
|10.8       |  | Business
    Purchase Agreement by and between American Education Center, Inc. and FIFPAC, Inc. (incorporate by reference to our Form 8-K
    (filed No. 333-201029) filed with the Securities and Exchange Commission on July 12, 2018)*                                                                                                             
|10.9       |  | Share
    Issuance Agreement by and between American Education Center, Inc. and China Cultural Finance Holdings Company Limited (incorporated
    by reference to our Form 8-K (filed No. 333-201029), Exhibit 10.1, filed with the Securities and Exchange Commission on November
    26, 2018*)                                                     
|10.10      |  | Exchange
    Agreement by and between American Education Center, Inc. and China Cultural Finance Holdings Company Limited (incorporated
    by reference to our Form 8-K (filed No. 333-201029), Exhibit 10.2, filed with the Securities and Exchange Commission on November
    26, 2018)*                                                           
|10.11      |  | Manager
    Share Issuance Agreement by and between American Education Center, Inc. and Max P. Chen (incorporated by reference to our
    Form 8-K (filed No. 333-201029), Exhibit 10.3, filed with the Securities and Exchange Commission on November 26, 2018)*                                                                                     
|21.1       |  | Subsidiaries *                                                                                                                                                                                                                                                                                                                                        
|31.1       |  | Certification
    of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002 **                                                                                                                                                                                     
|31.2       |  | Certification
    of Interim Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002 **                                                                                                                                                                             
|32.1       |  | Certification
    of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002 ***                                                                                                                                                                                         
|32.2       |  | Certification
    of Interim Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002 ***                                                                                                                                                                                 
|99.1       |  | Non-binding
    Letter of Intent by and between American Education Center, Inc. and AmeriChina Group (incorporated by reference to our Form
    8-K (file No. 333-201029) filed with the Securities and Exchange Commission on May 9, 2018)*                                                                                                          
|99.2       |  | Letter
    of Intent by and between American Education Center, Inc. and Shanghai Education Service Park (incorporated by reference to
    our Form 8-K (file No. 333-201029) filed with the Securities and Exchange Commission on May 15, 2018)*                                                                                                      
|99.3       |  | Non-binding
    Letter of Intent by and between American Education Center, Inc. and Shanghai Open University (incorporated by reference to
    our Form 8-K (file No. 333-201029) filed with the Securities and Exchange Commission on July 27, 2018)*                                                                                                
|101.INS    |  | XBRL Instance Document *                                                                                                                                                                                                                                                                                                                              





29







|101.SCH |  | XBRL Taxonomy Extension Schema Document *               
|------- |  | --------------------------------------------------------
|101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document * 
|101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document *  
|101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document *       
|101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document *



|*   | Previously filed.                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|**  | Filed herewith.                                                                                                                                                                                                                                                                                                                                                                                                 
|*** | In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 herewith are deemed to accompany this Form 10-K and will not be deemed filed for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act.



Item 16. FORM 10–K SUMMARY



None.



30







SIGNATURES



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



|November 1, 2019 |                                |                                                   
|---------------- | ------------------------------ | --------------------------------------------------
|                 |                                |                                                   
|                 | AMERICAN EDUCATION CENTER INC.
|                 |                                |                                                   
|                 | By:                            | /s/ Max P. Chen                                   
|                 |                                | Max P. Chen                                       
|                 |                                | President, Sole Director, Chief Executive Officer,
|                 |                                | Interim Chief Financial Officer and Secretary     
|                 |                                | (Principal Executive Officer, Principal Financial 
|                 |                                | Officer and Principal Accounting Officer)         











REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM







To the Board of Directors and Stockholders of

American Education Center, Inc. and Subsidiaries



Opinion on the Financial Statements



We have audited the accompanying consolidated balance sheets
of American Education Center, Inc. and Subsidiaries (the “Company”), as of December 31, 2018 and 2017, and the related
consolidated statements of income, stockholders’ equity, and cash flows for each of the years in the two-year period ended
December 31, 2018. In our opinion, the financial statements present fairly, in all material respects, the financial position of
the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the
two-year period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.



The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 19 to the financial statements, the Company had incurred
substantial losses during the year, which raises substantial doubt about its ability to continue as a going concern. Management’s
plan in regards to these matters are described in Note 19. These financial statements do not include any adjustments that might
result from the outcome of this uncertainty.



Basis for Opinion



These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are
a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.



We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required
to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.



Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis
for our opinion.





/s/ G.C. & Associates CPAs, PLLC



G.C. & Associates CPAs, PLLC

Flushing, NY

April 16, 2019



We have served as the Company’s auditor since February
2018.







F-1









|AMERICAN EDUCATION CENTER, INC. AND SUBSIDIARIES
|------------------------------------------------
|                                                
|CONSOLIDATED BALANCE SHEETS                     





|                                                                                                                                                                                 |  | December 31, |           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------
|                                                                                                                                                                                 |  | 2018         |           
|                                                                                                                                                                                 |  |              |           
|ASSETS                                                                                                                                                                           |  |              |           
|                                                                                                                                                                                 |  |              |           
|Current assets:                                                                                                                                                                  |  |              |           
|Cash                                                                                                                                                                             |  | $            | 1,985,524 
|Accounts receivable, net of allowance for doubtful accounts of $5,784,970 and $249,527 at December 31, 2018 and 2017, respectively                                               |  |              | 2,906,231 
|Prepaid expenses                                                                                                                                                                 |  |              | 300,715   
|                                                                                                                                                                                 |  |              |           
|Total current assets                                                                                                                                                             |  |              | 5,192,470 
|                                                                                                                                                                                 |  |              |           
|Noncurrent assets:                                                                                                                                                               |  |              |           
|Deferred compensation                                                                                                                                                            |  |              | 916,668   
|Deferred tax assets                                                                                                                                                              |  |              | 428,206   
|Intangible asset, net                                                                                                                                                            |  |              | 420,407   
|Security deposits                                                                                                                                                                |  |              | 266,021   
|                                                                                                                                                                                 |  |              |           
|Total noncurrent assets                                                                                                                                                          |  |              | 2,031,302 
|                                                                                                                                                                                 |  |              |           
|TOTAL ASSETS                                                                                                                                                                     |  | $            | 7,223,772 
|                                                                                                                                                                                 |  |              |           
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                             |  |              |           
|                                                                                                                                                                                 |  |              |           
|Current liabilities:                                                                                                                                                             |  |              |           
|Accounts payable and accrued expenses                                                                                                                                            |  | $            | 4,673,792 
|Taxes payable                                                                                                                                                                    |  |              | -         
|Deferred revenue                                                                                                                                                                 |  |              | 252,925   
|Advances from clients                                                                                                                                                            |  |              | 34,892    
|Long-term loan due within a year                                                                                                                                                 |  |              | 145,579   
|                                                                                                                                                                                 |  |              |           
|Total current liabilities                                                                                                                                                        |  |              | 5,107,188 
|                                                                                                                                                                                 |  |              |           
|Noncurrent liabilities:                                                                                                                                                          |  |              |           
|Deferred rent                                                                                                                                                                    |  |              | 221,461   
|Long-term loan                                                                                                                                                                   |  |              | -         
|                                                                                                                                                                                 |  |              |           
|Total liabilities                                                                                                                                                                |  |              | 5,328,649 
|                                                                                                                                                                                 |  |              |           
|Stockholders’ equity:                                                                                                                                                            |  |              |           
|Series A Convertible Preferred stock, $0.001 par value;  20,000,000 shares authorized; 0 and 500,000 shares issued and outstanding at December 31, 2018 and 2017, respectively   |  |              | -         
|Series B Convertible Preferred stock, $0.001 par value; 25,000,000 shares authorized; 25,000,000 and 0 shares issued and outstanding at December 31, 2018 and 2017, respectively |  |              | 25,000    
|Common stock, $0.001 par value; 450,000,000 shares authorized; 56,597,113 shares and 41,883,000 shares issued and outstanding at December 31, 2018 and 2017 respectively         |  |              | 56,597    
|Additional paid-in capital                                                                                                                                                       |  |              | 8,206,130 
|Subscription receivables                                                                                                                                                         |  |              | (719,911  
|Retained earnings                                                                                                                                                                |  |              | (5,714,688
|Accumulated other comprehensive income                                                                                                                                           |  |              | (13,865   
|Total controlling interest                                                                                                                                                       |  |              | 1,839,263 
|Noncontrolling Interest                                                                                                                                                          |  |              | 55,860    
|                                                                                                                                                                                 |  |              |           
|Total stockholders' equity                                                                                                                                                       |  |              | 1,895,123 
|                                                                                                                                                                                 |  |              |           
|TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                       |  | $            | 7,223,772 



See accompanying notes to consolidated financial statements.



F-2







|AMERICAN EDUCATION CENTER, INC. AND SUBSIDIARIES              
|--------------------------------------------------------------
|                                                              
|CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME





|                                                                          |  | Year Ended December 31, |           
|------------------------------------------------------------------------- |  | ----------------------- | ----------
|                                                                          |  | 2018                    |           
|                                                                          |  |                         |           
|Revenues                                                                  |  | $                       | 7,012,439 
|Cost of revenues                                                          |  |                         | 4,498,271 
|Gross profit                                                              |  |                         | 2,514,168 
|                                                                          |  |                         |           
|Operating expenses:                                                       |  |                         |           
|Selling and marketing                                                     |  |                         | 485,495   
|General and administrative                                                |  |                         | 9,831,114 
|Total operating expenses                                                  |  |                         | 10,316,609
|                                                                          |  |                         |           
|(Loss) income from operations                                             |  |                         | (7,802,441
|Other income                                                              |  |                         | 14,027    
|                                                                          |  |                         |           
|Income (loss) before provision for income taxes                           |  |                         | (7,788,414
|(Benefit) provision for income taxes                                      |  |                         | (1,097,022
|                                                                          |  |                         |           
|Net (loss) income including noncontrolling interest                       |  | $                       | (6,691,392
|                                                                          |  |                         |           
|Less: Net (loss) income attributable to noncontrolling interest           |  |                         | (2,940    
|                                                                          |  |                         |           
|Net (loss) income attributable to American Education Center               |  | $                       | (6,688,452
|                                                                          |  |                         |           
|Net (loss) income including noncontrolling interest                       |  | $                       | (6,691,392
|Other comprehensive income                                                |  |                         |           
|Foreign currency translation (loss) gain                                  |  |                         | (20,618   
|Comprehensive (loss) income including noncontrolling interest             |  | $                       | (6,712,010
|Less: Comprehensive (loss) income attributable to noncontrolling interest |  |                         | (2,940    
|Comprehensive (loss) income attributable to American Education Center     |  | $                       | (6,709,070
|                                                                          |  |                         |           
|(Loss) earnings per share - basic and diluted                             |  | $                       | (0.16     
|                                                                          |  |                         |           
|Weighted average shares outstanding, basic and diluted                    |  |                         | 43,062,256



See accompanying notes to consolidated financial statements.



F-3







|AMERICAN EDUCATION CENTER, INC. AND SUBSIDIARIES
|------------------------------------------------
|                                                
|CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 
|FOR THE YEAR ENDED DECEMBER 31, 2018            



|                                                                                                   |  |                  |            |  |                              |   |        |                              |  |  |            |  |  |              |        |  |          |  |          |               |  |   |                |   |  |          |           |   | Accumulated |   |          |          |  |   |            |  
|-------------------------------------------------------------------------------------------------- |  | ---------------- | ---------- |  | ---------------------------- | - | ------ | ---------------------------- |  |  | ---------- |  |  | ------------ | ------ |  | -------- |  | -------- | ------------- |  | - | -------------- | - |  | -------- | --------- | - | ----------- | - | -------- | -------- |  | - | ---------- | -
|                                                                                                   |  |                  |            |  |                              |   |        |                              |  |  |            |  |  |              |        |  |          |  |          | Additional    |  |   |                |   |  |          |           |   | other       |   |          |          |  |   |            |  
|                                                                                                   |  | Common
    stock |            |  | Series
    B Preferred Stock |   |        | Series
    A Preferred Stock |  |  | paid-in    |  |  | Subscription |        |  | Retained |  |          | comprehensive |  |   | Noncontrolling |   |  |          |          
|                                                                                                   |  | Shares           |            |  | Amount                       |   |        | Shares                       |  |  | Amount     |  |  | Shares       |        |  | Amount   |  |          | capital       |  |   | Receivables    |   |  | earnings |           |   | income      |   |          | Interest |  |   | Total      |  
|Balance as of December
    31, 2016                                                                |  |                  | 41,350,000 |  |                              |   | 41,350 |                              |  |  | -          |  |  |              | -      |  |          |  | -        |               |  |   | -              |   |  |          | 4,021,626 |   |             |   |          |          |  |   | 728,707    |  
|Net income                                                                                         |  |                  | -          |  |                              |   | -      |                              |  |  | -          |  |  |              | -      |  |          |  | -        |               |  |   | -              |   |  |          | -         |   |             |   |          |          |  |   | 245,057    |  
|Sale of preferred stock, at $0.001 per share                                                       |  |                  | -          |  |                              |   | -      |                              |  |  |            |  |  |              |        |  |          |  | 500,000  |               |  |   | 500            |   |  |          | 1,999,500 |   |             |   |          |          |  |   | -          |  
|Foreign currency translation gain                                                                  |  |                  | -          |  |                              |   | -      |                              |  |  |            |  |  |              |        |  |          |  |          |               |  |   |                |   |  |          | -         |   |             |   |          |          |  |   | -          |  
|                                                                                                   |  |                  |            |  |                              |   |        |                              |  |  |            |  |  |              |        |  |          |  |          |               |  |   |                |   |  |          |           |   |             |   |          |          |  |   |            |  
|Balance as of December 31, 2017                                                                    |  |                  | 41,350,000 |  |                              | $ | 41,350 |                              |  |  |            |  |  | $            |        |  |          |  | 500,000  |               |  | $ | 500            |   |  | $        | 6,021,126 |   |             |   | -        |          |  | $ | 973,764    |  
|Net loss                                                                                           |  |                  |            |  |                              |   |        |                              |  |  |            |  |  |              |        |  |          |  |          |               |  |   |                |   |  |          |           |   |             |   |          |          |  |   | (6,688,452 | )
|Issuance of common
    stock for acquisition of business                                           |  |                  | 100,000    |  |                              |   | 100    |                              |  |  |            |  |  |              |        |  |          |  |          |               |  |   |                |   |  |          | 47,900    |   |             |   |          |          |  |   |            |  
|Issuance of common stock and Series B preferred stock for service
    and to employee compensation |  |                  | 448,000    |  |                              |   | 448    |                              |  |  | 12,500,000 |  |  |              | 12,500 |  |          |  |          |               |  |   |                |   |  |          | 1,443,892 |   |             |   |          |          |  |   |            |  
|Issuance of common stock and series B preferred stock in exchange
    for series A preferred stock |  |                  | 7,500,000  |  |                              |   | 7,500  |                              |  |  | 12,500,000 |  |  |              | 12,500 |  |          |  | (500,000 | )             |  |   | (500           | ) |  |          | (19,500   | ) |             |   |          |          |  |   |            |  
|Issuance of common stock for cash                                                                  |  |                  | 7,199,113  |  |                              |   | 7,199  |                              |  |  |            |  |  |              |        |  |          |  |          |               |  |   |                |   |  |          | 712,712   |   |             |   | (719,911 | )        |  |   |            |  
|Foreign currency translation loss                                                                  |  |                  |            |  |                              |   |        |                              |  |  |            |  |  |              |        |  |          |  |          |               |  |   |                |   |  |          |           |   |             |   |          |          |  |   |            |  
|                                                                                                   |  |                  |            |  |                              |   |        |                              |  |  |            |  |  |              |        |  |          |  |          |               |  |   |                |   |  |          |           |   |             |   |          |          |  |   |            |  
|Balance as of December 31, 2018                                                                    |  |                  | 56,597,113 |  |                              | $ | 56,597 |                              |  |  | 25,000,000 |  |  | $            | 25,000 |  |          |  | -        |               |  | $ | -              |   |  | $        | 8,206,130 |   |             | $ | (719,911 | )        |  | $ | (5,714,688 | )



See accompanying notes to consolidated financial statements.





F-4







|AMERICAN EDUCATION CENTER, INC. AND SUBSIDIARIES
|------------------------------------------------
|                                                
|CONSOLIDATED STATEMENTS OF CASH FLOWS           



|                                                                                                           |  | Year Ended December 31, |           
|---------------------------------------------------------------------------------------------------------- |  | ----------------------- | ----------
|                                                                                                           |  | 2018                    |           
|                                                                                                           |  |                         |           
|Cash flows from operating activities:                                                                      |  |                         |           
|Net (loss) income                                                                                          |  | $                       | (6,691,392
|Adjustments to reconcile net income including noncontrolling interest to net cash                          |  |                         |           
|(Used in) operating activities:                                                                            |  |                         |           
|Deferred tax (benefit) provision                                                                           |  |                         | (402,565  
|Deferred rent expense                                                                                      |  |                         | 29,919    
|Deferred compensation                                                                                      |  |                         | 1,100,000 
|Gain from bargain purchase                                                                                 |  |                         | (13,200   
|Stock-based compensation expense                                                                           |  |                         | 1,456,840 
|Provision for doubtful accounts                                                                            |  |                         | 5,535,443 
|Amortization expense for learning platform                                                                 |  |                         | 6,000     
|Amortization expense                                                                                       |  |                         | 136,181   
|Change in operating assets and liabilities:                                                                |  |                         |           
|(Increase) in accounts receivable                                                                          |  |                         | (1,959,385
|Decrease (Increase) in prepaid expenses                                                                    |  |                         | 6,299     
|Increase in accounts payable and accrued expenses                                                          |  |                         | 603,791   
|(Decrease) increase in taxes payable                                                                       |  |                         | (775,220  
|Increase (decrease) in deferred revenue                                                                    |  |                         | 232,925   
|Increase in advances from clients                                                                          |  |                         | 19,521    
|                                                                                                           |  |                         |           
|Net cash (used in) operating activities                                                                    |  |                         | (714,843  
|                                                                                                           |  |                         |           
|Cash flows from financing activities:                                                                      |  |                         |           
|(Repayment) of loan from stockholder                                                                       |  |                         | -         
|(Repayment) of long-term loan                                                                              |  |                         | -         
|Proceeds from issuance of common stock for purchase of business                                            |  |                         | -         
|                                                                                                           |  |                         |           
|Net cash provided by financing activities                                                                  |  |                         | -         
|                                                                                                           |  |                         |           
|Effect of exchange rates changes on cash                                                                   |  |                         | (20,618   
|                                                                                                           |  |                         |           
|Net change in cash                                                                                         |  |                         | (735,461  
|Cash at beginning of period                                                                                |  |                         | 2,720,985 
|                                                                                                           |  |                         |           
|Cash at end of period                                                                                      |  | $                       | 1,985,524 
|                                                                                                           |  |                         |           
|Supplemental disclosure of cash flow information                                                           |  |                         |           
|                                                                                                           |  |                         |           
|Cash paid for income taxes                                                                                 |  | $                       | 80,764    
|                                                                                                           |  |                         |           
|Cash paid for interest                                                                                     |  | $                       | 10,918    
|                                                                                                           |  |                         |           
|Non-Cash investing and financing activities                                                                |  |                         |           
|Purchase of business by issuing 100,000 shares of common stock                                             |  | $                       | 48,000    
|                                                                                                           |  |                         |           
|Issuance of common stock and Series B preferred stock in exchange for Series B Preferred A stock cancelled |  | $                       | 2,000,000 
|                                                                                                           |  |                         |           
|Issuance of 7,199,113 shares of common stock for subscription receivable                                   |  | $                       | 719,911   



See accompanying notes to consolidated financial statements.



F-5







AMERICAN EDUCATION CENTER,
Inc. AND SUBSIDIARies



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 1. | ORGANIZATION AND BUSINESS
| | -- | -------------------------



American Education Center, Inc. (“AEC
New York”) is a New York Corporation organized on November 8, 1999 and is licensed by the Education Department of the State
of New York to engage in education related consulting services.



On May 7, 2014, the President and then sole
shareholder of AEC New York formed a new company (“AEC Nevada”) in the State of Nevada with the same name. On May 31,
2014, the President and the sole shareholder of AEC New York exchanged his 200 shares for 10,563,000 shares of AEC Nevada. The
share exchange resulted in AEC New York becoming a wholly owned subsidiary of AEC Nevada (hereinafter the “Company”).



On October 31, 2016, the Company completed
an acquisition transaction through a share exchange with two then stockholders, Rongxia Wang and Ye Tian, of AEC Southern Management
Co., Ltd. (“AEC Southern UK”), a company incorporated in December 2015 with a registered capital of 10,000 British
Pounds pursuant to the laws of England and Wales. The Company acquired 100% of the outstanding shares of AEC Southern UK in exchange
for 1,500,000 shares of its common stock valued at $210,000 (the “AEC Southern UK Share Exchange”). As a result of
the AEC Southern UK Share Exchange, AEC Southern UK became a wholly owned subsidiary of the Company.



AEC Southern UK holds 100% equity interest
in AEC Southern Management Limited, a Hong Kong company (“AEC Southern HK”) incorporated on December 29, 2015, with
a registered capital of HK$10,000. AEC Southern UK owns 100% equity interest in Qianhai Meijiao Education Consulting Management
Co., Ltd., a foreign wholly owned subsidiary incorporated pursuant to PRC laws (“AEC Southern Shenzhen”) on March 29,
2016, with a registered capital of RMB 5,000,000.



On July 13, 2018, pursuant to a Business Purchase
Agreement (the “Purchase Agreement”), the Company acquired 51% issued and outstanding equity interest of American Institute
of Financial Intelligence LLC (“AIFI”), a New Jersey corporation incorporated on May 10, 2017, in exchange of 100,000
shares of the Company common stock issued to the then sole shareholder of AIFI. As a result, AIFI became a 51% majority owned subsidiary
of the Company.



On October 23, 2018, AEC Nevada incorporated a subsidiary, AEC
Management Ltd. (“AEC BVI”) in the British Virgin Islands, pursuant to the laws of British Virgin Islands. AEC BVI
is a wholly owned subsidiary of AEC Nevada, and as of the date of this report, does not have significant business activities.



F-6







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARies



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 1. | ORGANIZATION AND BUSINESS (continued)
| | -- | -------------------------------------



The Company’s corporate structure
is as follows:







Headquartered in New York with operations
in PRC (People’s Republic of China), the Company covers two market segments through two subsidiaries:



| | (1) | AEC New York capitalizes on the rising demand of middle-class families in China for quality education and work experiences
in the United States (“US”) and delivers customized high school and college placement and career advisory services
to Chinese students wishing to study in the US. Its advisory services include language training, college admission advisory, on-campus
advisory, internship and start-up advisory as well as student and family services.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | AEC Southern Shenzhen delivers customized high school and college placement and career advisory services
to Chinese students wishing to study in the U.S.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------





F-7







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARies



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
| | -- | ------------------------------------------



Basis of Consolidation and Presentation



The accompanying consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).
These consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments considered necessary
to give a fair presentation have been included. Interim results are not necessarily indicative of full-year results. Certain prior
year balances have been reclassified to conform to the current year’s presentation; none of these reclassifications had an
impact on reported financial position or cash flows for any of the periods presented. The information in this Form 10-K should
be read in conjunction with information included in the Company’s annual report on Form 10-K for the fiscal year ended December
31, 2017 filed with the SEC on April 17, 2018.



Cash



Cash consists of all cash balances
and liquid investments with an original maturity of three months or less are considered as cash equivalents.



Accounts Receivable



Accounts receivable are carried
at net realizable value. The Company maintains an allowance for doubtful accounts, periodically evaluates its accounts receivable
balances and makes general and/or specific allowances when there is doubt as to their collectability. In evaluating the collectability
of individual receivable balances, the Company considers many factors, including the age of the balances, customers’ historical
payment history, their current credit-worthiness and current economic trends. Accounts receivable are written off against the allowance
only after exhaustive collection efforts. As of December 31, 2018 and 2017, the allowance for doubtful accounts was $5,784,970
and $249,527, respectively.



F-8







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
| | -- | ------------------------------------------------------



Foreign Currency Translation



The Company’s functional currency
is US dollars. The company has one bank account located in the PRC. Translation adjustments arising from the use of different exchange
rates from period to period are included as a separate component of accumulated other comprehensive income included in statements
of changes in stockholders’ equity. Gain and losses from foreign currency transactions are included in the consolidated statements
of operations and comprehensive income.



Revenue Recognition



Revenues are recognized when
the following four criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the service has been rendered, (iii)
the fees are fixed or determinable, and (iv) collectability is reasonably assured. Revenue is stated net of discounts and sales
related tax.



AEC New York delivers customized
high school and college placement, career advisory as well as student and family services. Fees related to such advisory services
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.



AEC Southern
UK delivers customized corporate training and advisory services. It receives monthly non-refundable retainer payments and recognizes
revenue when services are rendered.



Intangible Asset



The Company’s finite-lived
intangible asset consists of a customized online campus system that was acquired from a third party. The system is used to provide
online training for career advisory services and corporate training and advisory services. The asset was recorded at cost on the
acquisition date and is amortized on a straight-line basis over its economic useful life.



The Company reviews its finite-lived
intangible asset for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of the asset to be held and used is measured by a comparison of the carrying amount of an asset
to its undiscounted future net cash flows expected to be generated by the asset. If such asset is not recoverable, a potential
impairment loss is recognized to the extent the carrying amount of the asset exceeds its fair value. Fair value is generally determined
using a discounted cash flow approach.



F-9







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
| | -- | ------------------------------------------------------



Stock-Based Compensation



The Company uses the fair value-based
method for stock issued for services rendered and therefore all awards to employees and non-employees will be recorded at the market
price on the date of the grant and expensed over the required period of services to be rendered.



The fair value of stock options
issued to third party consultants and to employees, officers and directors are recorded in accordance with the measurement and
recognition criteria of FASB ASC 505-50, “Equity-Based Payments to Non-Employees” and FASB ASC 718, “Compensation
 – Stock Based Compensation,” respectively.



The options are valued using the
Black-Scholes valuation model. This model is affected by the Company’s stock price as well as assumptions regarding a number
of subjective variables. These subjective variables include but are not limited to the Company’s expected stock price volatility
over the expected term of the awards, and actual and projected stock option and warrant exercise behaviors and forfeitures.



Income Taxes



The Company accounts for income
taxes in accordance with FASB ASC 740, “Income Taxes,” which requires the recognition of deferred income taxes for
differences between the basis of assets and liabilities for financial statement and income tax purposes. Deferred tax assets and
liabilities represent the future tax consequences for those differences, which will either be taxable or deductible when the assets
and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset
future taxable income. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected
to be realized.



F-10







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
| | -- | ------------------------------------------------------



Income Taxes (continued)



ASC 740 also addresses the determination
of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under
ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is “more likely than not”
that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
The tax benefits recognized in the financial statements from such a position would be measured based on the largest benefit that
has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on derecognition of
income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for
interest and penalties associated with tax positions. At December 31, 2018 and December 31, 2017, the Company does not have a liability
for any unrecognized tax benefits.



The income tax laws of various jurisdictions
in which the Company and its subsidiaries operate are summarized as follows:



United States (“US”)



On December 22, 2017, the U.S. Tax
Cuts and Jobs Act (TCJA) was signed into law. The TCJA results in significant revisions to the U.S. corporate income tax system,
including a reduction in the U.S. corporate income tax rate, implementation of a territorial system and a one-time deemed repatriation
tax on untaxed foreign earnings. Generally, the impacts of the new legislation would be required to be recorded in the period of
enactment.



The Company is subject to corporate
income tax in the US at 34% and 21%, respectively, for the year 2017 and 2018. Provisions for income taxes in the United States
have been made for taxable income the Company had in the US for the year ended December 31, 2017 and 2018.



United Kingdom (“UK”)



According to current England and
Wales income tax law, resident companies are taxable in the United Kingdom on their worldwide profits and subject to an opt-out
for non-UK permanent establishments (PEs), while non-resident companies are subject to UK corporation tax only on the trading profits
attributable to a UK PE, or the trading profits attributable to a trading of dealing in or developing UK land, plus UK income tax
on any other UK source income.



AEC Southern UK was incorporated
in the United Kingdom and is governed by the income tax laws of England and Wales.



Since AEC Southern UK had no PE
in UK as December 31, 2018 and had no UK-Source income during 2018, the Company is not subject to tax on non-UK source income.
The Company took full allowance of deferred tax assets which the Company does not expect to utilize in the near future.



British Virgin Island (“BVI”)



According to BVI corporate taxation,
for basis companies, there is a zero-rated income tax regime for all BVI-domiciled corporate entities, and there is no concept
of residence applicable to BVI corporate taxation.



AEC BVI was incorporated in the
BVI and is governed by the taxation of BVI.



Hong Kong



AEC Southern HK was formed in Hong
Kong. Pursuant to the income tax laws of Hong Kong, the Company is not subject to tax on non-Hong Kong source income.



The People's Republic of China
(“PRC”)



AEC Southern Shenzhen was incorporated
in the PRC. Pursuant to the income tax laws of China, the Company is not subject to tax on non-China source income.



F-11







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
| | -- | ------------------------------------------------------



The provisions of ASC 740-10-25,
 “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial
statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This ASC also provides
guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and
liabilities, accounting for interest and penalties associated with tax positions, and related disclosures.



Fair Value Measurements



FASB ASC 820, “Fair Value
Measurement,” specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect
assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). In
accordance with ASC 820, the following summarizes the fair value hierarchy:



Level 1 Inputs –           Unadjusted
quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access.



Level 2 Inputs –           Inputs
other than the quoted prices in active markets that are observable either directly or indirectly.



Level 3 Inputs –         Inputs
based on prices or valuation techniques that are both unobservable and significant to the overall fair value measurements.



FASB ASC 820 requires the use of
observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different
levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that
is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize
the use of unobservable inputs.



The Company did not identify any
assets or liabilities that are required to be presented at fair value on a recurring basis. Non-derivative financial instruments
include cash, accounts receivable, prepaid expenses, accounts payable and accrued expenses, taxes payable, and loan from stockholders.
As of December 31, 2018 and December 31, 2017, the carrying values of these financial instruments approximated their fair values
due to their short-term nature.



Use of Estimates



The preparation of the consolidated
financial statements in accordance with GAAP requires management to make estimates and assumptions that affect certain reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.



F-12







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
| | -- | ------------------------------------------------------



Earnings (Loss) per Share



Earnings (loss) per share is calculated
in accordance with FASB ASC 260, “Earnings Per Share.” Basic earnings (loss) per share is based upon the weighted
average number of common shares outstanding during the period. Diluted earnings per share is based on the assumption that all dilutive
convertible shares and stock options are converted or exercised. Dilution is computed by applying the treasury stock method. Under
this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later),
and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Options and
warrants are only dilutive when the average market price of the underlying common stock exceeds the exercise price of the options
or warrants because it is unlikely they would be exercised if the exercise price were higher than the market price.



Noncontrolling interest



According to Financial Accounting
Standards Board (FASB) Statement No. 160, the noncontrolling interest shall be reported in the consolidated statement of financial
position within equity, separately from the parent’s equity. That amount shall be clearly identified and labeled, for example,
as noncontrolling interest in subsidiaries. An entity with noncontrolling interests in more than one subsidiary may present those
interests in aggregate in the consolidated financial statements。



Bargain Purchase



According to Financial Accounting
Standards Board (FASB) Statement No. 141 (revised 2007), a barging purchase is defined as a business combination in which the total
acquisition-date fair value of the identifiable net assets acquired exceeds the fair value of the consideration transferred plus
any noncontrolling interest in the acquiree, and it requires the acquirer to recognize that excess in earnings as a gain attributable
to the acquire.



Contingent Consideration



The Company recognizes the fair
value of any contingent consideration that is transferred to the seller in a business combination on the date at which control
of the acquiree is obtained. This value is generally determined through a probability-weighted analysis of the expected cash flows.



Contingent consideration is classified
as a liability or as equity on the basis of the definitions of an equity instrument and a financial liability. The contingent consideration
is payable in cash and, accordingly, the Company classified its contingent consideration as a liability. It is not remeasured,
and any gain or loss on settlement at an amount different from its carrying value will be recognized in net income in the period
during which it is settled.



F-13







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 3. | RECENTLY ISSUED ACCOUNTING STANDARDS
| | -- | ------------------------------------



In August 2014, the FASB issued
accounting standard update which requires management to assess whether there are conditions or events, considered in the aggregate,
that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial
statements are issued. If substantial doubt exists, additional disclosures are required. This update was effective for the Company's
annual period ended January 28, 2017. The adoption of the new standard did not have a material impact on the Company’s consolidated
financial position, results of operations, cash flows or disclosures.



In February 2016, the FASB issued
ASU 2016-02, “Leases.” The new standard establishes a right-of-use (“ROU”) model that requires a lessee
to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be
classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.
The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal
years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered
into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients
available. The Company is currently evaluating the impact of pending adoption of the new standard on its consolidated financial
statements.



In January 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 after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment
tests performed on testing dates after January 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.



In May 2017, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Scope of Modification
Accounting, which amends the scope of modification accounting for share-based payment arrangements and provides guidance on the
types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification
accounting under ASC 718. For all entities, this ASU is effective for annual reporting periods, including interim periods within
those annual reporting periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim
period. The adoption of this ASU is not expected to have a material effect on the Company’s consolidated financial statements.



In February 2018, the FASB issue
ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220). The amendments in this update affect any entity
that is required to apply the provisions of Topic 220, Income Statement—Reporting Comprehensive Income, and has items of
other comprehensive income for which the related tax effects are presented in other comprehensive income as required by GAAP. The
amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods
within those fiscal years.



In March 2018, the FASB issue ASU
2018-05: Income Taxes (Topic 740) that addresses the recognition of provisional amounts in the event that the accounting is not
complete and a reasonable estimate can be made. The guidance allows for a measurement period of up to one year from the enactment
date to finalize the accounting related to the TCJA.



The FASB has issued ASU No.
2014-09, Revenue from Contracts with Customers. This ASU supersedes the revenue recognition requirements in Accounting Standards
Codification 606 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that
an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the company expects to be entitled in exchange for those goods or services. This ASU is effective for annual reporting
periods beginning after December 15, 2016, including interim periods within the reporting period and should be applied retrospectively
to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized
at the date of initial application. The Company has adopted ASU 2014-09 under the modified retrospective method in the first quarter
of 2018. The Company has substantially completed a review of the new standard to its existing customer contracts. The Company does
not believe the adoption of ASU 2014-09 would have an effect on the Company’s consolidated financial statements.



F-14







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 4. | CONCENTRATION OF CREDIT AND BUSINESS RISK
| | -- | -----------------------------------------



The Company maintains its cash accounts
at two commercial banks in the US and two commercial banks in the PRC. The Federal Deposit Insurance Corporation covers funds held
in US banks and insures $250,000 per depositor, per insured bank, for each account ownership category. Funds held in the PRC banks
are covered by Deposit Insurance Ordinance (index: 000014349/2015-00031) that insures RMB500,000 for the total of all depository
accounts. As of December 31, 2018, the Company’s US bank accounts had cash balances in excess of federally insured limits
of approximately $1,444,154. The Company performs ongoing evaluation of its financial institutions to limit its concentration of
risk exposure. Management believes this risk is not significant due to the financial strength of the financial institutions utilized
by the Company.



The following table represents major
customers that individually accounted for more than 10% of the Company’s gross revenue for the year ended December 31, 2018:



|           |  | 2018                                                                                          |          
|---------- |  | --------------------------------------------------------------------------------------------- | ---------
|           |  | Gross
                                                                                Revenue |          
|           |  |                                                                                               |          
|Customer 1 |  | $                                                                                             | 2,317,940
|Customer 2 |  |                                                                                               | 1,416,500
|Customer 3 |  | $                                                                                             | 655,500  



|           |  | 2017           |           
|---------- |  | -------------- | ----------
|           |  | Gross 
Revenue |           
|           |  |                |           
|Customer 1 |  | $              | 13,679,638
|Customer 2 |  |                | 3,942,625 
|Customer 3 |  |                | 2,981,523 



F-15







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 5. | SEGMENT REPORTING
| | -- | -----------------



Operating segments have been determined
on the basis of reports reviewed by Chief Executive Officer (CEO) who is the chief operating decision maker of the Company. The
CEO evaluates the business from a geographic perspective, assesses performance and allocates resources on this basis. The reportable
segments are as follows:



The Company has two operating segments:
AEC New York and AEC Southern UK.



| | · | AEC
New York delivers placement, career and other advisory services Its advisory services include language training, admission advisory,
on-campus advisory, internship and start-up advisory as well as other advisory services.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | AEC Southern UK delivers customized corporate training and advisory services to corporate clients in China in the food industry to help them comply with local food safety regulations and standards.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



For the fiscal year ended December
31, 2018, AIFI had no operating activities and had intangible asset, net of $114,000.



Revenues from external customers, gross profit, segment assets and liabilities for each business are as follows:



|                          |  | For the year ended December 31, 2018 |          
|------------------------- |  | ------------------------------------ | ---------
|                          |  | AEC New York                         |          
|Segment revenue:          |  |                                      |          
|Placement advisory        |  | $                                    | 627,700  
|Career advisory           |  |                                      | 2,084,055
|Student & Family advisory |  |                                      | 4,224,220
|Total revenue             |  | $                                    | 6,935,975
|Gross profit              |  | $                                    | 2,442,778



|                              |  | For the year ended December 31, 2017 |          
|----------------------------- |  | ------------------------------------ | ---------
|                              |  | AEC New York                         |          
|Segment revenue:              |  |                                      |          
|Corporate training & advisory |  | $                                    | -        
|Placement advisory            |  |                                      | 757,640  
|Career advisory               |  |                                      | 4,356,460
|Student & Family advisory     |  |                                      | 3,922,120
|Other advisory                |  |                                      | 100,734  
|Total revenue                 |  | $                                    | 9,137,954
|Gross profit                  |  | $                                    | 2,551,904



F-16







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 5. | SEGMENT REPORTING (continued)
| | -- | -----------------------------



|                                |  | December 31, 2018 |          
|------------------------------- |  | ----------------- | ---------
|                                |  | AEC New York      |          
|Segment assets and liabilities: |  |                   |          
|Segment assets                  |  | $                 | 6,206,780
|Segment liabilities             |  | $                 | 3,394,637



|                                |  | December 31, 2017 |          
|------------------------------- |  | ----------------- | ---------
|                                |  | AEC New York      |          
|Segment assets and liabilities: |  |                   |          
|Segment assets                  |  | $                 | 5,008,678
|Segment liabilities             |  | $                 | 2,483,435



F-17







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 6. | DEFERRED COMPENSATION
| | -- | ---------------------



On October 31, 2016 (the “Grant
Date”), 1,500,000 common stock of the Company were granted to AEC Southern UK’s CEO that are expected to vest over
a three-year period commencing November 1, 2016. The shares were valued using the market price of the Company’s common stock
on the grant date of $0.14 per share. On the Grant Date, $210,000 was recognized as deferred compensation, which will be expensed
over the three-year vesting period using the straight-line method. On December 31, 2017, the remaining deferred compensation was
expensed due to the resignation of AEC Southern UK’s CEO.



On December 31, 2016, 6,000,000
stock of the Company were granted to the AEC Southern UK’s Chairman and are expected to vest over a three-year period commencing
November 1, 2016. The shares were valued using the market price of the Company’s common stock on the grant date of $0.55
per share. On December 31, 2016, $3,300,000 was recognized as deferred compensation, which will be expensed over the remaining
two year and ten months using the straight-line method. As of December 31, 2018, the remaining deferred compensation was $916,668.



Future amortization of the deferred
compensation is as follows:



|Year Ending December 31, |  |   |        
|------------------------ |  | - | -------
|                         |  |   |        
|2019                     |  |   | 916,668
|                         |  |   |        
|Total                    |  | $ | 916,668



Stock compensation expense was $1,100,000,
and $1,330,331 for the year ended December 31, 2018 and 2017, respectively.



| | 7. | SECURITY DEPOSITS
| | -- | -----------------



The Company has security deposits
with the landlord for its New York office of $266,021 as of December 31, 2018 and 2017.



F-18







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 8. | INTANGIBLE ASSET, NET
| | -- | ---------------------



The Company’s customized online
campus system is being amortized on a straight-line basis over four and a half years. The gross carrying amount and accumulated
amortization of this asset as of December 31, 2018 and 2017 are as follows:



|                                       |  | December 31, |         
|-------------------------------------- |  | ------------ | --------
|                                       |  | 2018         |         
|                                       |  |              |         
|Intangible asset: online campus system |  | $            | 612,814 
|Intangible asset: learning platform    |  |              | 120,000 
|Less: accumulated amortization         |  |              | (312,407
|                                       |  |              |         
|Intangible asset - net                 |  | $            | 420,407 



For the year ended December 31,
2018 and 2017, amortization expense was $142,181 and $136,181, respectively.



The following table is the future
amortization expense to be recognized:



|Year Ending December 31, |  |   |        
|------------------------ |  | - | -------
|                         |  |   |        
|2019                     |  |   | 148,181
|2020                     |  |   | 148,181
|2021                     |  |   | 46,045 
|2022                     |  |   | 12,000 
|2022                     |  |   | 66,000 
|                         |  |   |        
|Total                    |  | $ | 420,407



F-19







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 9. | DEFERRED REVENUE
| | -- | ----------------



The
Company receives advance payments for services to be performed and recognizes revenue when services have been rendered. The deferred
revenues as of December 31, 2018 and 2017 were $252,925 and $20,000, respectively.



| | 10. | RELATED-PARTY TRANSACTIONS
| | --- | --------------------------





The
Company’s CEO has a 34% interest in Columbia International College, Inc. (“CIC”). The Company prepaid CIC $48,000
for 2019 student consulting services expected to be fully delivered and accounted for in 2019.



The
Company’s CEO has a 40% interest in Wall Street Innovation Center, Inc. (“WSIC”), a corporation incorporated
in the state of New York that focuses on career and business development activities. AEC New York’s Chief Operating Officer
currently serves as the President and CEO of WSIC. In the course of delivering career advisory services, the Company has engaged
WSIC to assist in certain career development activities. Included in accounts payable is an amount due to WSIC of $0 and $372 as
of December 31, 2018 and 2017. The Company prepaid WSIC $50,000 for business consulting services to be delivered in 2019, which
is expected to be completed in 2019.



The
Company’s CEO received 12,500,000 shares of Series B Convertible Preferred Stock of the Company (“Series B Preferred
Stock”), par value $0.001 per share for reward of his dedicated services to the Corporation on November 26, 2018.



F-20







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARIES



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 11. | LONG-TERM LOAN
| | --- | --------------



On December 1, 2014, an unrelated
party loaned the Company $295,579, with interest at 10%. The Company repaid $150,000 on November 10, 2017. The remaining is to
be repaid on December 13, 2019. Interests are expected to be paid on the last day of each quarter from 2015 to 2019, except for
the last payment which shall be made on December 12, 2019.



Interest expenses for the years
ended December 31, 2018 and 2017 were $14,558 and $27,493, respectively.



| | 12. | LEASE COMMITMENTS
| | --- | -----------------



In December 2014, the Company entered
into a lease for office space with an unrelated party, expiring on July 31, 2025. The lease commenced on March 1, 2015 and the
Company received two months of free rent. Due to free rent and escalating monthly rental payments, utilities, real estate taxes,
insurance and other operating expenses, the lease is being recognized on a straight-line basis of $34,065 per month for financial
statement purposes which creates deferred rent as shown on the balance sheets. In February 2016, the Company entered into a sublease
agreement to lease space to WSIC, a related party of the Company (see Note 10), for an annual rental of $250,000. The sublease
income was netted against the Company’s rent expense. The sublease commenced on March 1, 2016 and terminated on June 30,
2017.



Rent expense was approximately $408,781,
and $283,781 for the year ended December 31, 2018 and 2017, respectively.



Future minimum lease commitments
are as follows:



|Year Ending December 31, |  | Gross Lease Payment |          
|------------------------ |  | ------------------- | ---------
|                         |  |                     |          
|2019                     |  |                     | 388,333  
|2020                     |  |                     | 418,604  
|2021                     |  |                     | 439,350  
|2022 and thereafter      |  |                     | 1,666,383
|                         |  |                     |          
|Total                    |  | $                   | 2,912,670



F-21







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 13. | Income taxes
| | --- | ------------



The component of deferred tax assets
at December 31, 2018 and December 31, 2017 is as follows:



|                                 |  | December 31,
        2018 |         |  | December
        31,
        2017 |  
|-------------------------------- |  | ------------------------- | ------- |  | --------------------------------- | -
|                                 |  |                           |         |  |                                   |  
|Net operating loss carryforwards |  |                           | 321,803 |  |                                   |  
|Allowance for bad debt           |  |                           | 97,942  |  |                                   |  
|Accelerated Depreciation         |  |                           | 8,461   |  |                                   |  
|Foreign                          |  |                           | -       |  |                                   |  
|Deferred tax asset, net          |  | $                         | 428,206 |  |                                   | $



The provision for income taxes for
the year ended December 31, 2018 and 2017 are as follows:



|               |  | For the year ended December 31, |           
|-------------- |  | ------------------------------- | ----------
|               |  | 2018                            |           
|               |  |                                 |           
|Current:       |  |                                 |           
|Federal        |  | $                               | (418,966  
|State          |  |                                 | (345,869  
|Foreign        |  |                                 | 70,378    
|Total current  |  |                                 | (694,457  
|               |  |                                 |           
|Deferred:      |  |                                 |           
|Federal        |  |                                 | 64,738    
|State          |  |                                 | 47,321    
|Foreign        |  |                                 | (514,624  
|               |  |                                 |           
|Total deferred |  |                                 | (402,565  
|Total          |  | $                               | (1,097,022



The Company conducts business globally
and, as a result, files income tax returns in the US federal jurisdiction, state and city, and foreign jurisdictions. In the normal
course of business, the Company is subject to examination by taxing authorities throughout the world, including jurisdictions in
the US and UK. The Company is subject to income tax examinations of US federal, state, and city for 2017, 2016 and 2015 tax years
and in the UK for 2017. The Company is not currently under examination nor has it been notified by the authorities.



F-22







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 13. | Income taxes
(continued)
| | --- | ------------------------



A reconciliation of the provision
for income taxes, with the amount computed by applying the statutory federal income tax rate for the year ended December 31, 2018
and 2017 is as follows:





|                                              |  | For
    the year ended December 31, |     
|--------------------------------------------- |  | ----------------------------------- | ----
|                                              |  | 2018                                |     
|                                              |  |                                     |     
|Tax at federal statutory rate                 |  |                                     | 21.0
|State and local taxes, net of federal benefit |  |                                     | 15.4
|Tax impact of foreign operations              |  |                                     | -   
|Non-deductible/ non-taxable items             |  |                                     | -   
|Net operating loss carryforwards              |  |                                     | -   
|Changes in tax reserves                       |  |                                     | -   
|                                              |  |                                     |     
|Total                                         |  |                                     | 36.4





F-23







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARies



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 14. | STOCK OPTIONS
| | --- | -------------



The Company did not grant any stock options during the
fiscal year ended December 31, 2018.



The following is a summary of stock option activities:



|                                                 |  | Shares |           |  | Weighted Average Exercise Price |   |      | Weighted- Average Remaining Contractual Life |  |  | Aggregate Intrinsic Value | 
|------------------------------------------------ |  | ------ | --------- |  | ------------------------------- | - | ---- | -------------------------------------------- |  |  | ------------------------- | 
|                                                 |  |        |           |  |                                 |   |      |                                              |  |  |                           | 
|Outstanding at December 31, 2017                 |  |        | 3,200,000 |  |                                 | $ | 2.45 |                                              |  |  | 6.87 years                | 
|Granted                                          |  |        | -         |  |                                 |   | -    |                                              |  |  | -                         | 
|Exercised                                        |  |        | -         |  |                                 |   | -    |                                              |  |  | -                         | 
|Cancelled and expired                            |  |        | -         |  |                                 |   | -    |                                              |  |  | -                         | 
|Forfeited                                        |  |        | -         |  |                                 |   | -    |                                              |  |  | -                         | 
|                                                 |  |        |           |  |                                 |   |      |                                              |  |  |                           | 
|Outstanding at December 31, 2018                 |  |        | 3,200,000 |  |                                 | $ | 2.45 |                                              |  |  | 4.87 years                | 
|                                                 |  |        |           |  |                                 |   |      |                                              |  |  |                           | 
|Vested and expected to vest at December 31, 2018 |  |        | 2,266,666 |  |                                 | $ | 1.57 |                                              |  |  | 3.36 years                | 
|                                                 |  |        |           |  |                                 |   |      |                                              |  |  |                           | 
|Exercisable at December 31, 2018                 |  |        | 2,266,666 |  |                                 | $ | 1.57 |                                              |  |  | 3.36 years                | 



The aggregate intrinsic value is
calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common
stock. There were no options exercised during the fiscal years ended December 31, 2018 and 2017.



There was no compensation expense
related to any of the options above because the value ascribed to these options was not material.



F-24







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARies



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 15. | COMMON STOCK
| | --- | ------------



Certificate of Amendment
to Increase Authorized Stock



On November 6, 2018, the board
of directors of the Company, with the written consent of the holders of a majority of the shares of the Company’s Common
Stock issued and outstanding and the Company’s preferred stock issued and outstanding, voting together as a single class,
authorized the Company to (i) increase the number of authorized shares of Common Stock from 180,000,000 to 450,000,000 and the
number of authorized shares of preferred stock from 20,000,000 to 50,000,000 (the “Authorized Stock Increase”), and
(ii) file a Certificate of Amendment with the Secretary of State of the State of Nevada to effect the Authorized Stock Increase.



On November 8, 2018, the Company
filed a Certificate of Amendment with the Secretary of State of the State of Nevada to effect the Authorized Stock Increase, which
became effective upon filing.



Stocks issued for business acquisition



On July 10, 2018, the Company issued
100,000 shares of the Company’s common stock (the “Consideration Shares”) to FIFPAC, Inc., the 100% equity owner
of AIFI (the “Seller”), at a purchase price of $0.48 per share, in exchange for 51% equity ownership of the AIFI pursuant
to the Purchase Agreement. Refer to Footnote 16 Business Acquisition.



Stocks issued to employees and
for services





In July and August 2018, the
Company entered into agreements that issued an aggregate of 448,000 shares of the Company’s common stock to 18 individuals
who are either employees of the Company or have been service providers to the Company, for employment-based compensation or services
provided, respectively. Subsequently, pursuant to such agreements, the Company issued an aggregate of 433,000 shares of the Company’s
common stock to 10 out of the 18 individuals in the amount of $199,840 and 15,000 shares of the Company’s common stock to
exchange the service in the amount of $7,000 prior to December 31, 2018.



Stocks issued for cash investment



On November 26, 2018, the Company,
entered into a Share Issuance Agreement (the “Share Issuance Agreement”) with China Cultural Finance Holdings Company
Limited, a British Virgin Islands company and a shareholder of the Company (the “Holder”), whereby the Company agreed
to issue 7,199,113 of shares of the Company’s common stock at $0.10 per share, to the Holder in exchange for an RMB5,000,000
investment (the “CCFH Investment”) in the Company’s subsidiary, AEC Southern Shenzhen. The transactions underlying
the Share Issuance Agreement were closed on the same day and the shares of common stock were issued to the Holder (the “CCFH
Share Issuance”). The CCFH Investment has not been received as of December 31, 2018.



F-25







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARies



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 16. | SERIES B PREFERRED STOCK
| | --- | ------------------------





Designation of Series
B Convertible Preferred Stock





On November 13, 2018, the Company
filed with the Secretary of State of the State of Nevada the Certificate of Designation of Series B Convertible Preferred Stock
(the “Certificate of Designation”), which became effective upon filing. The Certificate of Designation established
and designated the Series B Convertible Preferred Stock (“Series B Preferred Stock”) and the rights, preferences, privileges,
and limitations thereof, summarized in the following:



The Company designated 25,000,000
shares as Series B Preferred Stock out of the 50,000,000 unissued shares of preferred stock of the Company, par value $0.001 per
share, with an original issue price of $0.10 per share. Series B Preferred Stock is senior in rights of payment, including dividend
rights and liquidation preference, to the Company’s common stock but junior to Series A Preferred Stock with respect to liquidation
preference.



Holders of shares of Series
B Preferred Stock are entitled to vote with shareholders of the Company’s common stock, voting together as a single class,
except on matters that require a separate vote of the holders of Series B Preferred Stock. In any such vote, each share of Series
B Preferred Stock is entitled to 20 votes per share.



Each share of Series B Preferred
Stock shall, upon the approval of the board of directors of the Company and without the payment of additional consideration by
such holder thereof, be convertible into one fully paid and non-assessable share of the Company’s common stock at a conversion
price of $1 per share.



Manager Share Issuance



On November 26, 2018, the Company
entered into a Manager Share Issuance Agreement (the “Manager Share Issuance Agreement”) with Mr. Max P. Chen, the
Chief Executive Officer, President, and Chairman of the Board of the Company (“Mr. Chen”), whereby the Company agreed
to reward Mr. Chen for his dedicated services to the Company by issuing 12,500,000 shares of Series B Preferred Stock to him with
restrictions and pursuant Rule 144. The transactions underlying the Manager Share Issuance Agreement were closed on the same day
and 12,500,000 shares of Series B Preferred Stock were issued to Mr. Chen. The Company recognized stock compensation expense of
$1,250,000 for the year ended December 31, 2018.



Stocks issued for exchange
agreement



On November 26, 2018, the Company
entered into an Exchange Agreement (the “Exchange Agreement”) with the Holder, whereby the Company agreed to issue
12,500,000 shares of Series B Convertible Preferred Stock of the Company (“Series B Preferred Stock”), par value $0.001
per share, and 7,500,000 shares of common stock with restrictions and pursuant Rule 144 to the Holder in exchange for 500,000 shares
of Series A Convertible Preferred Stock of the Company, par value $0.001 per share (the “Series A Preferred Stock”),
held by the Holder. The transactions underlying the Exchange Agreement were closed on the same day and 12,500,000 shares of Series
B Preferred Stock and 7,500,000 shares of Common Stock were issued to the Holder. The Series A Preferred Stock were returned to
the Company and cancelled of registration.







F-26







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARies



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
YEAR ENDED DECEMBER 31, 2018 AND 2017



| | 17. | BUSINESS ACQUISITION
| | --- | --------------------



On July 10, 2018, the Company entered
into the Purchase Agreement with the Seller, the 100% owner of AIFI which closed on the same date.



Pursuant to the Purchase Agreement,
on July 10, 2018, the Company issued the Consideration Shares to the Seller, for a purchase price of $0.48 per share, in exchange
for 51% equity ownership of AIFI. Pursuant to ASC 805, the Company recognized a gain of $13,200 on the effective date of July 10,
2018.



According to the Purchase Agreement,
the contingent consideration consisted of compensatory arrangement for services to be performed by the owner of the acquiree, and
such amounts are to be determined in the future by both parties; therefore, the fair value cannot be determined at the acquisition
date. The Company as an acquirer did not recognize a liability at the acquisition date.



The following table summarizes the
consideration paid and the amounts of net assets acquired as of the date of acquisition:



|Fair value of net asset acquired (AIFI’s net identified assets)           |  | $ | 120,000  |  
|------------------------------------------------------------------------- |  | - | -------- | -
|Less:                                                                     |  |   |          |  
|Fair value of consideration transferred (FMV of AEC’s 100k shares issued) |  |   | (48,000  | )
|Fair value of noncontrolling interest (120k x 49%)                        |  |   | (58,800  | )
|                                                                          |  | $ | (106,800 | )
|                                                                          |  |   |          |  
|Gain on barging purchase                                                  |  | $ | 13,200   |  



F-27







AMERICAN
EDUCATION CENTER, Inc. AND SUBSIDIARies



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



FOR
THE YEAR ENDED December 31, 2018 AND 2017





| | 18. | COMMITMENTS & CONTINGENCY
| | --- | -------------------------



A contingency should be recognized
at its acquisition date fair value if that value can be determined. (The guidance in Topic 820 is used to determine fair value).
If the acquisition-date fair value of contingency cannot be determined, then an asset or liability is recognized for the contingency
if it’s probable at the acquisition date that such asset or liability exists and if its amount is reasonable estimable.



A contingency is not recognized
for a contingency in the accounting for a business combination if: a) its fair value cannot be determined and b) the probable and
reasonably estimate criteria are not met. Instead, the contingency is disclosed and accounted for subsequent to the acquisition
date in accordance with Topic 450.



Pursuant to the Purchase Agreement,
the contingent consideration consisted of compensatory arrangement for services to be performed by the officers of the acquiree,
and such amounts are to be determined in the future by both parties; therefore the fair value cannot be determined at the acquisition
date. The Company as an acquirer did not recognize a liability at the acquisition date.



| | 19. | GOING CONCERN
| | --- | -------------



Substantial doubt about the Company’s
ability to continue as a going concern exists when conditions and events, considered in the aggregate, indicate that it is probable
that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements
are issued. Our current operating results indicate that substantial doubt exists related to the Company's ability to continue as
a going concern. We believe that the new education platforms acquired may mitigate the substantial doubt raised by our current
operating results and satisfying our estimated liquidity needs 12 months from the date of the financial statements. However, we
cannot predict, with certainty, the outcome of our actions to generate liquidity, including the availability of additional debt
financing, or whether such actions would generate the expected liquidity as currently planned.



| | 20. | SUBSEQUENT EVENT
| | --- | ----------------



The Company’s management
has performed subsequent events procedures through the date the financial statements were available to be issued. There were no
subsequent events requiring adjustment to or disclosure in the consolidated financial statements.







F-28