CREATIVE LEARNING CORPORATION |
(Exact name of registrant as specified in its charter) |
Delaware | 20-4456503 | |
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer | o | Accelerated filer | o |
Non-accelerated filer | o | Smaller reporting company | x |
Page | ||||
CONSOLIDATED FINANCIAL STATEMENTS
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||||
Consolidated balance sheets
|
4 | |||
Consolidated statements of operation
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5 | |||
Consolidated statements of cash flows
|
6 | |||
Notes to consolidated financial statements
|
7 |
(Unaudited)
|
||||||||
March 31,
|
September 30,
|
|||||||
2014
|
2013
|
|||||||
Assets
|
||||||||
Current Assets:
|
||||||||
Cash
|
$ | 3,286,727 | 2,004,947 | |||||
Accounts receivable, less allowance for doubtful accounts of $9,402 and $10,000, respectively
|
335,908 | 310,150 | ||||||
Prepaid expenses
|
45,111 | 826 | ||||||
Other receivables - current portion
|
91,605 | 94,301 | ||||||
Deferred tax asset
|
1,058 | 1,058 | ||||||
Total Current Assets
|
3,760,409 | 2,411,282 | ||||||
Note receivable from related party
|
70,000 | 70,000 | ||||||
Other receivables - net of current portion
|
84,017 | 37,491 | ||||||
Property and equipment, net of accumulated depreciation of $77,802 and $60,073, respectively
|
311,230 | 294,863 | ||||||
Intangible assets
|
125,754 | 95,270 | ||||||
Deposits
|
11,187 | 15,000 | ||||||
Total Assets
|
$ | 4,362,597 | 2,923,906 | |||||
Liabilities and Stockholders’ Equity
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable:
|
||||||||
Related parties
|
$ | 33,665 | 5,690 | |||||
Other
|
275,025 | 171,889 | ||||||
Payroll accruals
|
26,298 | 13,105 | ||||||
Unearned revenue
|
204,000 | 35,900 | ||||||
Accrued marketing fund
|
133,159 | 100,754 | ||||||
Customer deposits
|
82,925 | 120,001 | ||||||
Income tax payable
|
400,230 | 13,131 | ||||||
Notes payable:
|
||||||||
Related parties
|
20,000 | 20,000 | ||||||
Other
|
71,679 | 3,560 | ||||||
Total Current Liabilities
|
1,246,981 | 484,030 | ||||||
Other payables - net of current portion
|
15,000 | 5,297 | ||||||
Total Liabilities
|
1,261,981 | 489,327 | ||||||
Stockholders’ Equity:
|
||||||||
Preferred stock, $.0001 par value; 10,000,000 shares authorized;
|
||||||||
-0- and -0- shares issued and outstanding, respectively
|
— | — | ||||||
Common stock, $.0001 par value; 50,000,000 shares authorized;
|
||||||||
11,809,409 and 11,809,409 shares issued and outstanding, respectively
|
1,181 | 1,181 | ||||||
Additional paid-in capital
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2,179,210 | 2,157,673 | ||||||
Retained earnings
|
920,225 | 275,725 | ||||||
Total Stockholders’ Equity
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3,100,616 | 2,434,579 | ||||||
Total Liabilities and Stockholders’ Equity
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$ | 4,362,597 | 2,923,906 |
(Unaudited)
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(Unaudited)
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|||||||||||||||
For The Three
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For The Six
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|||||||||||||||
Months Ended
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Months Ended
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|||||||||||||||
March 31,
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March 31,
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March 31,
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March 31,
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|||||||||||||
2014
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2013
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2014
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2013
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|||||||||||||
Revenues:
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||||||||||||||||
Initial franchise fees
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$ | 1,510,020 | $ | 817,332 | $ | 3,068,473 | $ | 1,450,600 | ||||||||
Royalty fees
|
440,771 | 229,743 | 741,423 | 379,277 | ||||||||||||
Corporate Creativity Center sales
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52,560 | 30,352 | 67,200 | 60,553 | ||||||||||||
2,003,351 | 1,077,427 | 3,877,096 | 1,890,430 | |||||||||||||
Operating expenses:
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||||||||||||||||
Franchise consulting and commissions:
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||||||||||||||||
Related parties
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182,608 | 109,007 | 431,452 | 245,272 | ||||||||||||
Other
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430,139 | 335,323 | 745,530 | 531,492 | ||||||||||||
Franchise training and expenses
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128,136 | 61,237 | 225,655 | 119,805 | ||||||||||||
Salaries and payroll taxes
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242,043 | 141,110 | 435,426 | 268,471 | ||||||||||||
Advertising
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171,665 | 134,175 | 363,607 | 194,625 | ||||||||||||
Professional fees
|
80,424 | 37,576 | 129,617 | 65,314 | ||||||||||||
Office expense
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91,159 | 48,068 | 182,741 | 87,691 | ||||||||||||
Depreciation
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9,938 | 6,535 | 19,478 | 13,259 | ||||||||||||
Stock based compensation
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21,537 | — | 21,537 | — | ||||||||||||
Other general and administrative expenses
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129,842 | 94,480 | 332,172 | 255,987 | ||||||||||||
Total operating expenses
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1,487,491 | 967,511 | 2,887,215 | 1,781,916 | ||||||||||||
Income (loss) from operations
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515,860 | 109,916 | 989,881 | 108,514 | ||||||||||||
Other income (expense):
|
||||||||||||||||
Interest (expense)
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(2 | ) | (1,861 | ) | (2 | ) | (1,995 | ) | ||||||||
Other income (expense)
|
41,598 | (20,613 | ) | 43,471 | (20,613 | ) | ||||||||||
Total other income (expense)
|
41,596 | (22,474 | ) | 43,469 | (22,608 | ) | ||||||||||
Income (loss) before provision for income taxes
|
557,456 | 87,442 | 1,033,350 | 85,906 | ||||||||||||
Provision for income taxes (Note 1)
|
209,770 | — | 388,849 | — | ||||||||||||
Net Income (loss)
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$ | 347,686 | $ | 87,442 | $ | 644,501 | $ | 85,906 | ||||||||
Net Income (loss) per share
|
||||||||||||||||
Basic
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$ | 0.03 | $ | 0.01 | $ | 0.05 | $ | 0.01 | ||||||||
Basic Weighted average number of common shares outstanding
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11,809,409 | 11,574,825 | 11,809,409 | 11,574,825 | ||||||||||||
Diluted
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$ | 0.03 | $ | 0.01 | $ | 0.05 | $ | 0.01 | ||||||||
Diluted Weighted average number of common shares outstanding
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11,842,711 | 11,574,825 | 11,846,994 | 11,574,825 |
(Unaudited)
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||||||||
For the Six Months Ended
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||||||||
March 31,
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March 31,
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|||||||
2014
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2013
|
|||||||
Cash flows from operating activities:
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||||||||
Net income
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$ | 644,501 | $ | 85,906 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation
|
19,478 | 13,259 | ||||||
Loss on disposal of assets
|
1,475 | — | ||||||
Gain on sale of assets
|
(18,335 | ) | — | |||||
Materials purchased with notes payables
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26,300 | — | ||||||
Compensatory equity issuances
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21,537 | 47,800 | ||||||
Changes in operating assets and liabilities:
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||||||||
Accounts receivable
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(25,758 | ) | (70,806 | ) | ||||
Accounts payable
|
131,110 | (25,514 | ) | |||||
Accrued liabilities
|
13,193 | 866 | ||||||
Accrued marketing funds
|
32,405 | 54,801 | ||||||
Customer deposits
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(37,076 | ) | 19,979 | |||||
Deposits
|
3,813 | 19,082 | ||||||
Income tax payable
|
387,099 | — | ||||||
Other receivables
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(43,830 | ) | 51,999 | |||||
Prepaid expenses
|
(44,284 | ) | — | |||||
Unearned revenue
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168,100 | 4,779 | ||||||
Net cash provided by operating activites
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1,279,728 | 202,151 | ||||||
Cash flows from investing activities:
|
||||||||
Property and equipment purchases
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(31,321 | ) | (17,928 | ) | ||||
Intangible asset purchases
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(10,000 | ) | (27,800 | ) | ||||
Intangible asset sale
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65,325 | — | ||||||
Net cash provided (used) by investing activities
|
24,004 | (45,728 | ) | |||||
Cash flows from financing activities:
|
||||||||
Notes payable
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(21,952 | ) | (23,500 | ) | ||||
Net cash (used) by financing activities
|
(21,952 | ) | (23,500 | ) | ||||
Net change in cash
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1,281,780 | 132,923 | ||||||
Cash, beginning of period
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2,004,947 | 1,041,786 | ||||||
Cash, end of period
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$ | 3,286,727 | $ | 1,174,709 | ||||
Supplemental disclosure of cash flow information:
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||||||||
Cash paid during the period for:
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Income taxes
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$ | 1,750 | $ | — | ||||
Interest
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$ | — | $ | 1,995 | ||||
Supplemental non-cash investing and financing activities:
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Intangible assets acquired with notes payables
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$ | 66,774 | $ | — | ||||
Intangible assets sold with notes receivables
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$ | 39,425 | $ | |||||
Equipment acquired with notes payables
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$ | 6,000 | $ | — |
Level 1:
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Quoted prices in active markets for identical assets or liabilities.
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Level 2:
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Inputs other than quoted prices that are observable for an asset or liability. These include: quoted prices for similar assets or liabilities in active market; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs).
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Level 3:
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Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
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Item
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Increase (I) or
Decrease (D)
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Reason
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Revenues
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I
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Sale of more franchises and increase in royalties paid by established franchises.
|
||
Franchise consulting and commissions
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I
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Increased sales of franchises.
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Franchise training and expenses
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I
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Increase in size of training classes.
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Salaries and payroll taxes
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I
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Increase in staff to support the growth of the business.
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Advertising
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I
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Increased expenditures to grow the business.
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Professional fees
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I
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Increase in international franchise and trademarking legal fees
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Office expense
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I
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Increased printing, office supplies, lego supplies and office expenses to support the growth of the Company.
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||
Other general and administrative expenses
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I
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Overhead and administrative increases to support the growth of the Company.
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Provision for income taxes
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I
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Income tax liabilities due to profits depleting prior net operating loss carryovers.
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Six months ended
March 31,
|
||||||||
2014
|
2013
|
|||||||
Cash provided by operations
|
1,279,728 | 202,151 | ||||||
Purchase of property and equipment
|
(31,321 | ) | (17,928 | ) | ||||
Purchase of intangible assets
|
(10,000 | ) | (27,800 | ) | ||||
Sale of intangible assets
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65,325 | -- | ||||||
Loans (repayment of loans)
|
(21,952 | ) | (23,500 | ) |
Franchise consulting, commissions, training and related expenses
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$ | 2,475,000 | ||
Salaries and payroll taxes
|
$ | 1,135,000 | ||
Advertising
|
$ | 785,000 | ||
Other operating expenses
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$ | 1,350,000 |
2014
|
2015
|
2016
|
2017
|
Total
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Lease of office space
|
$
|
5,400
|
$
|
10,800
|
$
|
10,800
|
$
|
0
|
$
|
27,000
|
||||||||||
Notes Payable
|
56,679
|
35,000
|
15,000
|
0
|
$
|
106,679
|
31.1
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Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2
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Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32
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Certification pursuant to Section 906 of the Sarbanes-Oxley Act.
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101.INS **
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XBRL Instance Document
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101.SCH **
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XBRL Taxonomy Extension Schema Document
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101.CAL **
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF **
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB **
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE **
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XBRL Taxonomy Extension Presentation Linkbase Document
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CREATIVE LEARNING CORPORATION | |||
May 19, 2014
|
By:
|
/s/ Brian Pappas | |
Brian Pappas, Principal Executive, Financial and Accounting Officer |
1.
|
I have reviewed this quarterly report on Form 10-Q of Creative Learning Corporation;
|
2.
|
Based on my knowledge, this report, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
May 19, 2014
|
By:
|
/s/ Brian Pappas | |
Brian Pappas, | |||
Principal Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Creative Learning Corporation;
|
2.
|
Based on my knowledge, this report, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
May 19, 2014
|
By:
|
/s/ Brian Pappas | |
Brian Pappas, | |||
Principal Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects the financial condition and results of the Company.
|
May 19, 2014
|
By:
|
/s/ Brian Pappas | |
Brian Pappas, | |||
Principal Executive and Financial Officer |
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