Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2016.þQuarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2015.¨Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to .
TEXAS | 76-0270334 |
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(Address of Principal Executive Office) (Zip Code) |
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(Registrant’s telephone number, including area code) |
(Former name, former address, and former fiscal year if changed since last report) |
Large accelerated filer |
| Accelerated filer |
| o | ||
Non-accelerated filer |
| Smaller reporting company | þ |
15, 2016.
Page | |||
PART I. FINANCIAL INFORMATION | |||
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Condensed Consolidated Statements of Operations |
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| 3 | ||
Condensed Consolidated |
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19 | |||
23 | |||
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PART II. OTHER INFORMATION | |||
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25 | |||
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26 |
i
2016.
ii
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| March 31, 2015 |
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| June 30, 2014 |
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| (Unaudited) |
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ASSETS |
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Current assets |
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Cash |
| $ | 1,948,237 |
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| $ | 27,250 |
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Accounts receivable |
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| 39,742 |
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|
| 77,356 |
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Due from Affiliates |
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| 22,999 |
|
|
| — |
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Prepaid expenses |
|
| 235,295 |
|
|
| 202,363 |
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Total current assets |
|
| 2,246,273 |
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|
| 306,969 |
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Fixed Assets, net |
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| 3,943 |
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|
| — |
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Investment in Measurement Planet |
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| 5,000 |
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|
| — |
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Intangible assets, net |
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| 1,430,242 |
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|
| 1,225,461 |
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|
|
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|
|
|
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Total assets |
| $ | 3,685,458 |
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| $ | 1,532,430 |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current liabilities |
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Accounts payable |
| $ | 1,821,976 |
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| $ | 1,127,649 |
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Accrued liabilities |
|
| 180,789 |
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|
| 231,322 |
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Deferred revenue |
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| 640,264 |
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|
| 634,643 |
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Line of credit |
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| — |
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|
| 100,000 |
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Short-term notes payable |
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| 137,500 |
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| 37,500 |
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Due to related party |
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| 98,135 |
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| — |
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Due to shareholders |
|
| 36,900 |
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|
| — |
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Total current liabilities |
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| 2,915,564 |
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|
| 2,131,114 |
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Commitments and contingencies (Note 9) |
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Stockholders' deficit |
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Preferred stock, $0.0001 par value; 500,000 shares issued and outstanding |
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| 962,000 |
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| — |
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Convertible series common stock, $0.0001 par value; 10,000,000 shares authorized; none issued or outstanding |
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| — |
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| — |
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Common stock, $0.0001 par value; 500,000,000 shares authorized; 121,590,441 and 41,518,251 issued and outstanding at March 31, 2015 and June 30, 2014, respectively |
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| 12,159 |
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| 4,152 |
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Additional paid-in capital |
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| 13,700,566 |
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|
| 8,016,481 |
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Accumulated deficit |
|
| (13,904,831 | ) |
|
| (8,619,317 | ) |
Total stockholders' deficit |
|
| 769,894 |
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|
| (598,684 | ) |
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|
|
|
|
|
|
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Total liabilities and stockholders' deficit |
| $ | 3,685,458 |
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| $ | 1,532,430 |
|
The
March 31, 2016 | June 30, 2015 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 59,360 | $ | 5,415,744 | ||||
Accounts receivable, net | 131,707 | 50,605 | ||||||
Prepaid expenses | 572,439 | 288,075 | ||||||
Total current assets | 763,506 | 5,754,424 | ||||||
Fixed Assets, net | 44,068 | 15,632 | ||||||
Intangible assets, net | 1,484,806 | 1,231,295 | ||||||
1,528,874 | 1,246,927 | |||||||
Total assets | $ | 2,292,380 | $ | 7,001,351 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 683,226 | $ | 1,852,602 | ||||
Accrued liabilities | 11,218 | 165,571 | ||||||
Deferred revenue | 426,647 | 645,830 | ||||||
Short-term notes payable | 100,000 | 130,000 | ||||||
Due to related party | 27,366 | 27,367 | ||||||
Due to shareholders | 36,900 | 36,900 | ||||||
Total current liabilities | 1,285,357 | 2,858,270 | ||||||
Long-term liabilities | ||||||||
Long-term note payable, net of discount of $ 77,947 and $0, respectively | 122,053 | 0 | ||||||
Total liabilities | 1,407,410 | 2,858,270 | ||||||
Commitments and contingencies (Note 9) | ||||||||
Stockholders’ equity | ||||||||
Preferred stock, $0.0001 par value, 500,000 authorized, 500,000 issued and outstanding at March 31, 2016 and June 30, 2015 | 962,000 | 962,000 | ||||||
Common stock, $0.0001 par value; 500,000,000 shares authorized; 211,529,291 and 202,509,291 issued and outstanding at March 31, 2016 and June 30, 2015. | 21,153 | 20,251 | ||||||
Additional paid-in capital | 19,521,222 | 18,800,182 | ||||||
Accumulated deficit | (19,619,405 | ) | (15,639,352 | ) | ||||
Total stockholders' equity | 884,970 | 4,143,081 | ||||||
Total liabilities and stockholders' equity | $ | 2,292,380 | $ | 7,001,351 |
Three months ended March 31, Nine months ended March 31, 2015 2014 2015 2014 Revenues $ 601,363 $ — $ 1,701,497 $ — Cost of goods sold 846,846 — 1,255,950 — Gross profit (loss) (245,483 ) — 445,547 — �� Operating expenses General and administrative 463,991 140,472 2,340,895 145,075 Professional fees 245,889 458,329 1,130,461 1,234,966 Total operating expenses 709,880 598,801 3,471,356 1,380,041 Loss from operations (955,363 ) (598,801 ) (3,025,809 ) (1,380,041 ) Other income (expense) Other income (expense) 60,414 — (199,023 ) — Interest income (expense) (107,029 ) (13,448 ) (202,212 ) (15,848 ) Impairment of Urban Planet assets acquired (1,722,408 ) (1,722,408 ) Gain (loss) on debt settlement 15,109 (136,062 ) — Total other income (expense) (1,753,914 ) (13,448 ) (2,259,705 ) (15,848 ) Net loss $ (2,709,277 ) $ (612,249 ) $ (5,285,514 ) $ (1,395,889 ) Net loss per share $ (0.04 ) $ (0.02 ) $ (0.09 ) $ (0.05 ) Weighted average shares outstanding, basic and diluted 75,180,353 35,369,071 55,714,103 27,410,445 The Three months ended Nine months ended March 31, March 31, 2016 2015 2016 2015 Revenues $ 532,670 $ 601,363 $ 1,541,566 $ 1,701,497 Cost of goods sold 485,573 846,846 1,533,864 1,255,950 Gross profit (loss) 47,097 (245,483 ) 7,702 445,547 Operating expenses General and administrative 1,071,736 463,991 2,967,527 2,340,895 Professional fees 146,790 245,889 723,959 1,130,461 Total operating expenses 1,218,526 709,880 3,691,486 3,471,356 Loss from operations (1,171,429 ) (955,363 ) (3,683,784 ) (3,025,809 ) Other income (expense) Other (expense) - 60,414 - (199,023 ) Interest income (expense) (4,668 ) (107,029 ) (12,842 ) (202,212 ) Financing costs - warrants (412,500 ) - (412,500 ) - Impairment of Urban Planet assets acquired - (1,722,408 ) - (1,722,408 ) Gain on debt settlements - 15,109 129,073 (136,062 ) Total other income (expense) (417,168 ) (1,753,914 ) (296,269 ) (2,259,705 ) Net loss $ (1,588,597 ) $ (2,709,277 ) $ (3,980,053 ) $ (5,285,514 ) Net loss per share $ (0.01 ) $ (0.04 ) $ (0.02 ) $ (0.09 ) Weighted average shares outstanding, basic and diluted 204,689,950 75,180,353 203,230,891 55,714,103 are an integral part of theseto the unaudited condensed consolidated financial statements.
Nine months ended March 31, 2015 2014 Cash flows from operating activities Net loss $ (5,285,514 ) $ (1,395,889 ) Adjustments to reconcile net loss to net cash (used in) operating activities Common stock issued for directors/board committee fees 97,200 458,700 Common stock issued for financing 31,145 — Common stock issued for services 967,087 789,865 Common stock issued for compensation 604,800 — Common stock issued for rent — 15,000 Impairment of Urban Planet intangibles 1,722,408 — Beneficial conversion feature rights 85,259 — Amortization of intangibles and debt discount 397,410 — Changes in operating assets and liabilities Accounts receivable 91,061 — Due from affiliates 1,069 — Accounts payable 434,572 22,253 Accrued liabilities (189,510 ) 37,209 Deferred revenue (25,721 ) — Prepaid expenses (31,070 ) (6,244 ) Net cash (used in) operating activities (1,099,804 ) (79,106 ) Cash flows from investing activities Cash acquired from Urban Planet acquisition 29,756 — Net cash provided by investing activities 29,756 — Cash flows from financing activities Adjustments to reconcile net loss to net cash provided by (used in) financing activities Sale of common stock, net 2,881,000 50,000 Due to related party 98,135 25,633 Due to shareholders 36,900 — Proceeds of notes payable 250,000 — Repayment of convertible note (275,000 ) — Proceeds of short term notes payable 100,000 — Repayment of line of credit (100,000 ) — Net cash provided by financing activities 2,991,035 75,633 Net change in cash $ 1,920,987 $ (3,473 ) Cash, beginning of period 27,250 4,642 Cash, end of period $ 1,948,237 $ 1,169 Nine months ended March 31, 2015 2014 Supplemental disclosure of cash flow information Cash paid for interest $ 98,411 $ — Cash paid for income taxes $ — $ — Supplemental disclosure of non-cash operating and financing activities Common stock issued for settlement of note payable $ — $ 35,000 Common stock issued for settlement of accounts payable $ 15,499 $ 82,587 Common stock issued for settlement of accrued interest payable $ — $ 13,500 Common stock issued for prepaid expenses $ — $ 1,725 Common stock issued for settlement of related party payable $ — $ 84,908 Common stock issued for purchase of intangible asset $ — $ 64,000 The Nine months ended March 31, 2016 2015 Cash flows from operating activities Net loss $ (3,980,053 ) $ (5,285,514 ) Adjustments to reconcile net loss to net cash (used in) operating activities Common stock issued for directors/board committee fees 15,000 97,200 Common stock issued for financing - 31,145 Common stock issued for services - 967,087 Common stock issued for compensation 205,500 604,800 Impairment for Urban Planet intangibles - 1,722,408 Beneficial conversion feature rights 2,751 85,259 Financing costs - warrants 412,500 0 Depreciation 8,421 - Amortization of intangibles and debt discount 279,164 397,410 Changes in operating assets and liabilities Accounts receivable (81,102 ) 91,061 Due from affiliates - 1,069 Accounts payable (1,161,134 ) 434,572 Accrued liabilities (154,353 ) (189,510 ) Deferred revenue (219,182 ) (25,721 ) Prepaid expenses (284,364 ) (31,070 ) Net cash (used in) operating activities (4,956,852 ) (1,099,804 ) Cash flows from investing activities Cash acquired from Urban Planet acquisition - 29,756 Purchase of fixed assets (36,857 ) - Additional investing in intangibles (532,675 ) - Net cash (used in) operating activities (569,532 ) 29,756 Cash flows from financing activities Sale of common stock, net - 2,881,000 Due to related party - 98,135 Due to shareholders - 36,900 Repayment of notes payable (130,000 ) - Proceeds of convertible note 250,000 Repayment of convertible note - (275,000 ) Repayment of line of credit - (100,000 ) Proceeds of short term notes payable 100,000 100,000 Proceeds of long term notes payable 200,000 - Net cash provided by (used in) financing activities 170,000 2,991,035 Net change in cash (5,356,384 ) 1,920,987 Cash, beginning of period 5,415,744 27,250 Cash, end of period $ 59,360 $ 1,948,237 Supplemental disclosure of cash flow information Cash paid for interest $ 4,929 $ 98,411 Cash paid for income taxes $ - $ - Supplemental disclosure of non-cash operating and financing activities Common stock issued for settlement of accounts payable $ 8,245 $ 15,499 Beneficial conversion feature of long-term note payable $ 80,698 $ - Financing costs - warrants $ 412,500 $ - are an integral part of theseto the unaudited condensed consolidated financial statements.Condensed Consolidated Statements of Cash Flows (Continued)(Unaudited)The accompanying notes are an integral part of these unaudited condensed financial statements.
Condensed Consolidated Statement of Stockholders’ Deficit
For the Period July1, 2014 through March 31, 2015
(Unaudited)
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| Series A |
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| Additional |
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| Preferred |
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| Common |
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| Paid-In |
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| Accumulated |
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| |||||||||||||
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| Shares |
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| Amount |
|
| Shares |
|
| Amount |
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| Capital |
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| Deficit |
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| Total |
| |||||||
Balance at June 30, 2014 |
|
|
|
|
|
|
| $ | 41,518,251 |
|
| $ | 4,152 |
|
| $ | 8,016,481 |
|
| $ | (8,619,317 | ) |
| $ | (598,684 | ) | ||
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|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
| ||
Issuance of common stock for services |
|
| — |
|
|
| — |
|
|
| 9,148,531 |
|
|
| 915 |
|
|
| 966,172 |
|
|
| — |
|
|
| 967,087 |
|
Issuance of common stock for Directors'/Board Committee fees |
|
| — |
|
|
| — |
|
|
| 900,000 |
|
|
| 90 |
|
|
| 97,110 |
|
|
| — |
|
|
| 97,200 |
|
Issuances of common stock for compensation |
|
| — |
|
|
| — |
|
|
| 4,200,000 |
|
|
| 420 |
|
|
| 604,380 |
|
|
| — |
|
|
| 604,800 |
|
Issuance of common stock for accounts payable |
|
| — |
|
|
| — |
|
|
| 120,043 |
|
|
| 12 |
|
|
| 15,488 |
|
|
| — |
|
|
| 15,500 |
|
Issuance of common stock for financing and fees |
|
| — |
|
|
| — |
|
|
| 203,616 |
|
|
| 20 |
|
|
| 31,125 |
|
|
| — |
|
|
| 31,145 |
|
Issuances of common stock for cash |
|
| — |
|
|
| — |
|
|
| 1,428,571 |
|
|
| 143 |
|
|
| 99,857 |
|
|
| — |
|
|
| 100,000 |
|
Issuances of common stock for cash |
|
| — |
|
|
| — |
|
|
| 53,571,429 |
|
|
| 5,357 |
|
|
| 2,775,643 |
|
|
| — |
|
|
| 2,781,000 |
|
Issuance of equity for Urban Planet acquisition |
|
| 500,000 |
|
|
| 962,000 |
|
|
| 10,500,000 |
|
|
| 1,050 |
|
|
| 1,009,050 |
|
|
| — |
|
|
| 1,972,100 |
|
Beneficial conversion feature on debt raise |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 85,259 |
|
|
| — |
|
|
| 85,259 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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Net loss, period ended March 31, 2015 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (5,285,514 | ) |
|
| (5,285,514 | ) |
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|
|
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Balance at March 31, 2015 |
|
| 500,000 |
|
| $ | 962,000 |
|
|
| 121,590,441 |
|
| $ | 12,159 |
|
| $ | 13,700,566 |
|
| $ | (13,904,831 | ) |
| $ | 769,894 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
(Unaudited)
2015
Liquidity
On July 20, 2015, the Company issued a press release announcing its intent to do business under the name of Global Personalized Academics (“GPA”). The Company intends to formally change its name to GPA.
In addition, we agreed to issue an additional 2,000,000 shares of common stock to key current and past employees and consultants. These shares were issued in May 2015, and expensed in the amount of $192,400, at the then fair value.
6
SIBLING GROUP HOLDINGS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND JUNE 30, 2014
(Unaudited)
Cash costs attributed to this portion of the equity raise was $644,057 and an additional 6,061,707 shares, which were fair valued at $460,084 were issued in lieu of cash fees for this warrant exercise equity raise.
7
SIBLING GROUP HOLDINGS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
(Unaudited)
Blended Schools and Urban Planet. These condensed consolidated financial statements should be read in conjunction with the more complete information and the Company’s audited consolidated financial statements and related notes thereto included in the Company’s annual report on Form 10-K for the year ended June 30, 2015. The operating results for the three and nine months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending June 30, 2016.
recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.
8
SIBLING GROUP HOLDINGS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND JUNE 30, 2014
(Unaudited)
$0 and $1,722,408, respectively.
2016 and year ended June 30, 2015.
The Company holds a minority interest investment that is accounted for as a cost method investment.
(h) Revenue Recognition
(i)
(j)
9
SIBLING GROUP HOLDINGS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND JUNE 30, 2014
(Unaudited)
Items subject to the Level 3 unobservable inputs is the $5,000 minority investment.
(k)
(l)
10
SIBLING GROUP HOLDINGS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND JUNE 30, 2014
(Unaudited)
(m)
11
SIBLING GROUP HOLDINGS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND JUNE 30, 2014
(Unaudited)
The Company completed the acquisition of two internet properties, ClassChatter.com and ClassChatterLive.com, as of May 31, 2013, (both referred to as “ClassChatter”). Both had been developed by an individual with a background in STEM and Blended Learning educational technology. The websites are expected to become the base modules for a full, end-to-end solution for e-learning through the addition of applications that use the classroom membership such as grade books, behavior monitoring, class interaction and course interaction. The total consideration paid to the seller was the issuance of 319,905 shares of common stock, which has been fair valued at $58,000. The seller has been retained as a consultant and is expected to continue the development on a part-time basis.
During the period ended September 30, 2013, we completed the acquisition of the assets and operations of PLC Consultants, LLC (“PLC Consultants”), a business focused on special education training and certification, primarily for education professionals in the K-12 area. The Company issued 300,000 shares of common stock to the seller as consideration, which has been fair valued at $24,000. The Company has retained one of the founders under a consulting agreement, and increased the scope of responsibility to include (1) an expanded special education course library, and (2) a similar library addressing the training needs of teaching professionals in other specialized curriculum.
On February 1, 2014, the Company completed the purchase of the assets of DWSaba Consulting, LLC (“DWSaba Consulting”) for 800,000 shares of common stock valued at $0.05 per share for total consideration of $40,000. The acquisition gave the Company access to the AcceleratingED.com website, newsletter, extensive contacts in education, as well as access to the education marketing and sales tools developed by DWSaba Consulting.
As of May 30, 2014, the Company completed the acquisition of the assets of Blended Schools for a purchase price of $550,000, which included the assumption of $446,187 of Blended Schools’ debt and cash payments totaling $103,813. In addition, the Company agreed to pay certain other debts of Blended Schools as provided for in the asset purchase agreement. Blended Schools provides online curriculum with 192 master courses for the K-12 marketplace, all Common Core compatible; a complete hosted course authoring and learning management system environment featuring both Blackboard and Canvas; and the new Language Institute, with online courses in Arabic, Chinese, Spanish, French, Japanese, Latin, Russian, German and Hindi, all oriented to meet today’s ESL requirements.
The identified assets and liabilities acquired in the Blended Schools acquisition as of May 30, 2014 are as follows:
Fair Value of Assets Acquired: |
|
|
| |
Accounts Receivable |
| $ | 121,810 |
|
Prepaid Expenses |
|
| 24,946 |
|
Software and content |
|
| 1,187,534 |
|
Liabilities Assumed: |
|
|
|
|
Accounts Payable |
|
| (284,891 | ) |
Bank Line of Credit |
|
| (100,000 | ) |
Deferred Revenue – customer prepayments |
|
| (784,291 | ) |
Other Accrued Liabilities |
|
| (61,295 | ) |
|
|
|
|
|
Cash Paid to Seller – post closing |
| $ | 103,813 |
|
|
|
|
|
|
Cash Paid to Seller – post closing |
| $ | 103,813 |
|
Liabilities Assumed |
|
| 446,187 |
|
|
|
|
|
|
Total Purchase Price |
| $ | 550,000 |
|
12
SIBLING GROUP HOLDINGS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND JUNE 30, 2014
(Unaudited)
An additional 2,000,000 shares of common stock were agreed to be issued to key current and past employees and consultants. These shares were issued in May 2015 and expensed in the amount of $192,400 at the then fair value accordingly.
Fair Value of Assets Acquired: | ||||
Cash | $ | 29,756 | ||
Accounts Receivable | 53,447 | |||
Prepaid Expenses | 1,862 | |||
Other Current Assets | 24,068 | |||
Fixed Assets | 3,967 | |||
Software and content | 577,167 | |||
Other Assets | 5,000 | |||
Liabilities Assumed: | ||||
Accounts Payable | (259,755 | ) | ||
Deferred Revenue | (31,342 | ) | ||
Other Accrued Liabilities | (154,478 | ) | ||
Net Value | $ | 249,692 |
Urban Planet is a mobile media company providing content and solutions in the education, healthcare and literary markets.
The Company implemented certain cost-savings initiatives in an effort to offset10-K for the write-down, including a reduction in personnel and termination of the Company’s office lease in North Carolina, resulting in annualized savings of $329,104.
year ended June 30, 2015.
|
| Nine months Ended March 31, |
| |||||
|
| 2015 |
|
| 2014 |
| ||
Revenues |
| $ | 2,019,676 |
|
| $ | 576,837 |
|
|
|
|
|
|
|
|
|
|
Net Loss |
| $ | (5,666,133 | ) |
| $ | (1,865,200 | ) |
13
Three months ended | Nine months ended | |||||||
March 31, 2015 | March 31, 2015 | |||||||
Revenues | $ | 601,385 | $ | 2,019,676 | ||||
Net Loss | $ | (2,771,118 | ) | $ | (5,666,133 | ) |
SIBLING GROUP HOLDINGS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND JUNE 30, 2014
(Unaudited)
|
| March 31, 2015 |
|
| June 30, 2014 |
| ||
ClassChatter |
| $ | 58,000 |
|
| $ | 58,000 |
|
PLC Consultants |
|
| 24,000 |
|
|
| 24,000 |
|
DWSaba Consulting |
|
| 40,000 |
|
|
| 40,000 |
|
Blended Schools |
|
| 1,187,534 |
|
|
| 1,187,534 |
|
Urban Planet |
|
| 577,167 |
|
|
| 0 |
|
Total |
|
| 1,886,701 |
|
|
| 1,309,534 |
|
Less accumulated amortization |
|
| (456,459 | ) |
|
| (84,073 | ) |
Net |
| $ | 1,430,242 |
|
| $ | 1,225,461 |
|
acquisitions as well as the costs to upgrade the quality of the videos in the course content:
March 31, 2016 | June 30, 2015 | |||||||
ClassChatter | $ | 58,000 | $ | 58,000 | ||||
PLC Consultants | 24,000 | 24,000 | ||||||
DWSaba Consulting | 40,000 | 40,000 | ||||||
Blended Schools | 1,187,534 | 1,187,534 | ||||||
Urban Planet | 368,415 | 605,298 | ||||||
Video Project | 555,000 | 0 | ||||||
Total | 2,232,950 | 1,914,832 | ||||||
Less accumulated amortization | (748,144 | ) | (683,537 | ) | ||||
Net | $ | 1,484,806 | $ | 1,231,295 |
|
| March 31, 2015 |
|
| June 30, 2014 |
| ||
Accrued benefits & payroll taxes |
| $ | 2,577 |
|
| $ | 26,659 |
|
Accrued compensation |
|
| 126,433 |
|
|
| 68,080 |
|
Accrued interest |
|
| 30,679 |
|
|
| 22,641 |
|
Accrued miscellaneous |
|
| 21,100 |
|
|
| 67,581 |
|
Accrued professional fees |
|
| 0 |
|
|
| 38,361 |
|
Liabilities to be settled in stock |
|
| 0 |
|
|
| 8,000 |
|
|
| $ | 180,789 |
|
| $ | 231,322 |
|
March 31, 2016 | June 30, 2015 | |||||||
Accrued compensation | $ | 0 | $ | 82,984 | ||||
Accrued interest | 1,904 | 39,188 | ||||||
Accrued miscellaneous | 9,314 | 43,399 | ||||||
$ | 11,218 | $ | 165,571 |
Short term
|
| March 31, 2015 |
|
| June 30, 2014 |
| ||
Short term note (a) |
| $ | 107,500 |
|
| $ | 7,500 |
|
Due to shareholders and related party (b) |
|
| 135,035 |
|
|
| — |
|
Outstanding debenture in default (c) |
|
| 30,000 |
|
|
| 30,000 |
|
Total short term notes payable due to shareholder and due to related party |
| $ | 272,535 |
|
| $ | 37,500 |
|
———————
(a)
At March 31, 2015 and June 30, 2014
March 31, 2016 | June 30, 2015 | |||||||
Short-term note– related party (a) | $ | 100,000 | $ | 100,000 | ||||
Due to shareholders and related party (b) | 64,266 | 64,267 | ||||||
Outstanding debenture in default (c) | 0 | 30,000 | ||||||
Total short-term notes payable due to shareholder and due to related party | $ | 164,266 | $ | 194,267 |
(a) | On February 17, 2016, the Company entered into a short-term loan in the amount of $100,000 with a related party, bearing an annual interest rate of 5%. At March 31, 2016, accrued interest on this loan was $589. At June 30, 2015, the Company re-financed its line of credit with a note payable balance of $100,000. This represents a short-term note with an annual interest rate of 4.5%. At December 31, 2015 and June 30, 2015, the note had accrued interest in the amount of $0 and $375, respectively. Payment in full was made in November 2015. |
(b) | Advances and loans from shareholders total $36,900 for the Company and $10,009 for Urban Planet. Due to related party consists of amounts due to Measurement Planet, an Urban Planet joint venture, in the amount of $17,358. |
(c) | On December 30, 2010, the Company entered into conversion agreements with all but one of the holders of the Series AA debentures previously issued by the Company and held on that date. Pursuant to the conversion agreements, the holders accepted a total of 1,039,985 shares of convertible series common stock (“Old Common Stock”) and 100% of the membership interests of a new, wholly-owned subsidiary of the Company, Debt Resolution, LLC, in full settlement of their debentures, underlying warrants and accrued interest as of that date. The conversion agreements released all claims that 43 of the holders of the debentures had, have, or might have against the Company. Following this transaction, the Company had a debenture balance of $30,000 and accrued interest of $35,483 as of June 30, 2015, which was in default at June 30, 2015. Payment in full was made on August 3, 2015. |
(b)
On November 26, 2014, the Company issued a promissory note payable tocompensates a related party, Dave Saba,under no formal consulting services contract, a consulting fee plus reimbursement of travel expenses on a month-to-month basis. The amount included in the amount of $10,000. The noteaccounts payable at year-end is payable on June 1, 2015, with an interest rate of 1.25% per month. At March 31, 2015, the note had accrued interest in the amount of $500.
14
SIBLING GROUP HOLDINGS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND JUNE 30, 2014
(Unaudited)
Advances and loans from shareholders total $36,900 for the Company and $57,542 for Urban Planet.
Due to related party consists of amounts due to Measurement Planet, an Urban Planet joint venture, in the amount of $30,593.
(c)
On December 30, 2010, the Company entered into conversion agreements with all but one of the holders of the Series AA debentures previously issued by the Company and held on that date. Pursuant to the conversion agreements, the holders accepted a total of 1,039,985 shares of convertible series common stock and 100% of the membership interests of a new, wholly-owned subsidiary of the Company, Debt Resolution, LLC, in full settlement of their debentures, underlying warrants and accrued interest as of that date. The conversion agreements released all claims that 43 of the holders of the debentures had, have, or might have against SIBE. Following this transaction, the Company now has a debenture balance of $30,000 and accrued interest of $25,500 and $22,125 as of March 31, 2015 and June 30, 2014, respectively, which is in default.
$0.
On December 5, 2014,
end of the quarter.
In 2012, the Company’s shareholders approved the Amended and Restated Certificate of Incorporation authorizing 510,000,000 shares of capital stock, 500,000,000 of which are designated as common stock and 10,000,000 of which are designated as preferred stock. The shareholders also approved the conversionvalue of the series common stock to common stock at a ratio of 151.127 shares of common stock for each share of series common stock and a reverse split ofwarrants as recorded reflects the common stock at a ratio of 100 to 1. As a result of the conversion, all of the Company’s outstanding shares of series common stock were converted into 14,827,161 shares of common stock.
On January 29, 2015, the Board of Directors approved a series of 500,000 shares of Series A convertible preferred stock for issuance in connection with the Urban Planet share exchange, and filed the Certificate of Designation of Powers, Preferences and Rights of Series A Convertible Preferred Stock with the Secretary of State of Texas. Each share of Series A preferred stock shall have a par value of $0.0001 per share and a stated value equal to $10.00.
25,000,000 shares rather than 37,500,000 shares.
common stock:
$799,579.
15
SIBLING GROUP HOLDINGS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND JUNE 30, 2014
(Unaudited)
$648,860.
The Company issued 2,478,333 shares of common stock pursuant to consulting and services agreements. The stock issued was fair valued at prices ranging from $.125 to $.20 per share for a total value of $387,087.
$15,500.
The Company issued 5,057,143 shares of common stock pursuant to consulting and services agreements. The stock issued was fair valued at prices ranging from $.07 to $.096 per share for a total value of $369,600.
The Company sold 53,571,429 units, which consisted of 53,571,429 shares of common stock and 99,000,001 warrants exercisable at varying exercise prices. The stock sold was at $.07 per share for proceeds of $3,250,000. There were no stipulations, conditions or requirements under the sale. Exclusive of shares and warrants issued in lieu of fees, the costs of this equity raise was $469,000.
$12,500.
shares and warrants issued in lieu of fees, the cost of this equity raise was $157,000.
2016, the Company issued no shares of preferred stock. Company’s common stock at $0.04 per share were issued in a financing agreement with the holder of the Convertible Note. These warrants were valued using the Black Scholes pricing method using the following assumptions: stock price - $0.02, strike price - $$0.04, expected volatility 175.19%, interest rate – 1%, dividend rate – 0%, and expected term – three years. The value of 25,000,000 warrants totaling $412,500, was charged as financing expense. The value of the remaining 25,000,000 warrants was recorded as a beneficial conversion feature of the Convertible Note in the amount of $80,698, which will be amortized over the life of the Convertible Note.preferred stockSeries A Preferred pursuant to the Share Exchange Agreement with Urban Planet. Each share of preferred stockSeries A Preferred issued to the former Urban Planet shareholders is convertible by the holder (1) at any time after 24 months after the original issue date, or (2) at any time after delivery of notice by the Company of the occurrence of certain conversion events set forth in the certificate of designation establishing the preferred stockSeries A Preferred into that number of shares of common stock determined by dividing the stated value of such shares of preferred stock,Series A Preferred, which is $10.00 per preferred share,shares of Series A Preferred, by the conversion price. The conversion price of the preferred stockSeries A Preferred is $0.50, subject to adjustment as stated in the certificate of designation. The shares were fair valued at $.0962 per share, calculated at the conversion rate of 20 shares of common stock for each share of preferredSeries A Preferred converted. The total estimated fair value of the preferred stockSeries A Preferred issued was $962,000 based on an as converted basis for the acquisition of Urban Planet.16SIBLING GROUP HOLDINGS, INC.NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSMARCH2015 AND JUNE 30, 2014(Unaudited)The Company’s outstanding warrant schedule consistsfollowing: Shares Warrants outstanding at July 1, 2014 0 $ 0.0 Granted 203,439,983 0.075 Exercised (72,857,143) 0.076 Cancelled/expired 0 — Warrants outstanding at June 30, 2015 130,582,840 $ 0.075 Granted 0 0 Exercised 0 0 Cancelled/expired (85,378,078) — Warrants outstanding at December 31, 2015 45,204,762 $ 0.075 Granted 50,000,000 $ 0.04 Exercised 0 0 Cancelled/expired 0 — Warrants exercisable at March 31, 2016 95,204,762 $ 0.057
Outstanding Warrants
Holder |
| Number of Shares |
| Date Issued |
| Exercise Term |
| Exercise Price per Share |
Holder 1 |
| 1,428,571 |
| 2/27/2015 |
| 5 years |
| $0.10 |
Holder 2 – B Warrant |
| 12,857,143 |
| 2/27/2015 |
| 5 years |
| 5-day volume weighted average price |
Holder 2 – Additional Warrant |
| 21,428,572 |
| 2/27/2015 |
| 5 years |
| 5-day volume weighted average price |
Holder 3 – A Warrant |
| 10,714,286 |
| 2/27/2015 |
| 5 years |
| $0.07 |
Holder 3 – B Warrant |
| 10,714,286 |
| 2/27/2015 |
| 5 years |
| 5-day volume weighted average price |
Holder 3 – Additional Warrant |
| 5,357,143 |
| 2/27/2015 |
| 5 years |
| 5-day volume weighted average price |
Holder 3 - Fee Warrant |
| 31,242,857 |
| 2/27/2015 |
| 5 years |
| $0.07 |
Holder 3 - Fee B Warrant |
| 4,457,143 |
| 2/27/2015 |
| 5 years |
| 5-day volume weighted average price |
Holder 3 - Fee Additional Warrant |
| 2,228,571 |
| 2/27/2015 |
| 5 years |
| 5-day volume weighted average price |
|
|
|
|
|
|
|
|
|
Total Outstanding Warrants |
| 100,428,572 |
|
|
|
|
|
|
On October 17, 2014, the Company entered into a one-year consulting agreement whereby the consultant was paid with 300,000 shares of the Company’s common stock.
On November 1, 2014 the Company entered into an eight-month consulting agreement, ending June 30, 2015, whereby the consultant was paid with 70,000 shares of the Company’s common stock and cash payments aggregating a total of $6,000.
On November 7, 2014, the Company entered into a three-month consulting agreement, ending January 31, 2015, whereby the consultant was paid with 100,000 shares of the Company’s common stock.
On December 10, 2014, the Company entered into a one-year consulting agreement whereby the consultant was paid with 100,000 shares of the Company’s common stock.
On December 17, 2014, the Company entered into a one-year consulting agreement whereby the consultant was paid with 1,250,000 shares of the Company’s common stock.
termination.
$644,000.
the common stock for the 20 trading day period ending April 8, 2016 or (b) $0.05, whichever is greater.
17
SIBLING GROUP HOLDINGS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND JUNE 30, 2014
(Unaudited)
On March 30, 2015,serve to serve until the Company entered into a one-year consulting agreement wherenext annual meeting of the consultant would receive cash payments on an hourly basis, ranging from $14,000 to $15,000 per month. The Company provided a 30-day notice on May 29, 2015 to terminate the contract, which will terminate on June 30, 2015.
The Company rents its office space unit on a month to month basis in Durham, North Carolina. The Company provided a 90-day notice on May 29, 2015 that it would not be renewing the lease. The Company’s obligation will end on August 31, 2015. Rent expense for the nine months ended March 31, 2015stockholders or until his successor is duly elected and June 30, 2014 was $19,056 and $18,000, respectively.
The Company issued a total of 72,857,143 shares of its common stock in exchange for an aggregate purchase price of $5,526,966 after the April 6, 2015 exercise by Shenzhen of certain warrants acquired pursuant
Effective April 6, 2015,quarter ended March 31, 2016, the Company issuedreceived loan proceeds from a totalrelated party of 6,061,707 shares of its common stock pursuant to an advisory fee agreement with V3 Capital Partners, LLC as a direct result of the April equity raise. The price per share ranged from $0.07 to $0.0842322 for a total value of $460,084.
The Company had reserved 2,000,000 shares of its common stock for compensation to Urban Planet employees and vendors pursuant to the Share Exchange Agreement with Urban Planet. These shares were issued on May 26, 2015, at a price per share of $0.0962 for a total value of $192,400.
Effective as of May 12, 2015, Brian OliverSmith was removed from the Board of Directors of the Company. On May 13, 2015, the Company informed Mr. OliverSmith of the intent to terminate his employment as the Company’s Chief Executive Officer to be effective as of July 12, 2015 in accordance with$150,000 under the terms of his employment agreement. On June 18, 2015,a a bridge loan agreement dated April 15, 2016, and $440,000 in proceeds from a $500,000 convertible promissory note issued to a third party investor. Each of the Companyloans accrue interest at the rate of 12% during the first year and Mr. OliverSmith entered into a Severance and Mutual Release Agreement (the “Severance Agreement”) pursuant to which Mr. OliverSmith resigned as Chief Executive Officer effective as of June 22, 2015. The Severance Agreement provides that in connection with Mr. OliverSmith’s resignation, the Company will pay to Mr. OliverSmith a cash payment equal to $225,000, which includes the payment of amounts due to Mr. OliverSmith’s spouse10% for the settlementsecond year through the maturity date of debt and deferred compensation in addition to the severance amount paid to Mr. OliverSmith. The Severance Agreement contains a mutual releaseFebruary 21, 2018.
Our mission
Recent Developments
BlendedSchools.Net
As of May 30, 2014, the Company completed the acquisition of the assets of BlendedSchools.Net (“Blended Schools”) for a purchase price of $550,000, which included the assumption of $446,187 of Blended Schools’ debt and cash payments totaling $103,813. In addition, we agreed to pay certain other debts of Blended Schools as provided for in the asset purchase agreement.
Blended Schools This service provides online curriculum with 192 master courses, for the K-12 marketplace, all Common Core compatible; a complete hosted course authoring and learning management system environment featuring both Blackboard and Canvas; and the new Learning Institute, with online courses in Arabic, Chinese, Spanish, French, Japanese, Latin, Russian, German and Hindi, all oriented to meet today’s ESL requirements. During fiscal year 2015, sales of the Learning Institute have increased 9.5%, which we believe has been driven by growth in demand for online credit recovery programs that enable students to earn credits necessary for graduation.
Urban Planet Media & Entertainment, Corp.
On January 28, 2015, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Urban Planet Media & Entertainment, Corp. (“Urban Planet”) and its shareholders pursuant to which the Company issued 10,500,000 shares of its common stock to the shareholders of Urban Planetteacher in exchange for alltuition on a per student, per semester basis.
Each sharelatest standards of preferred stock issuedpedagogy and content. GPA uses multiple learning management systems and other software systems to effectively deliver the content to the former Urban Planet shareholders is convertible by the holder (1) at any time after 24 months after the original issue date or (2) at any time after delivery of notice by the Company of the occurrence of certain conversion events set forth in the certificate of designation establishing the preferred stock into that number of shares of common stock determined by dividing the stated value of such shares of preferred stock, which is $10.00 per preferred share, by the conversion price. The conversion price of the preferred stock is $0.50, subject to adjustment as stated in the certificate of designation.
individual student.
On June 16, 2015, the Company concluded that it was necessary to write down the value of the investment in Urban Planet, based on industry information from an independent third party, to two times the revenue reported by Urban Planet for the calendar year 2014, which totaled $249,692. As a result, the Company incurred a non-cash impairment charge in the amount of $1,722,408, which is reported as “Impairment of Urban Planet assets acquired” in the Condensed Consolidated Statements of Operations filed as part of this quarterly report on Form 10-Q. The Company’s determination to recognize the impairment charge was based on the expiration of a grant
our revenues.
Capital Investments and Change of Control
Effective on February 27, 2015, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Shenzhen and certain accredited and institutional investors (together with Shenzhen, the “Investors”). Pursuant to the Securities Purchase Agreement, the Investors purchased an aggregate of 53,571,429 Units (each, a “Unit”) for an aggregate purchase price of $3,750,000. Each Unit consists of: (1) a share of the Company’s common stock; (2) a warrant giving each of the Investors the right to purchase one additional share of common stock for each share owned at any time and from time to time for a period of five years at an exercise price of $0.07 per share (each, an “A Warrant”); (3) a warrant giving each of the Investors the right to purchase one additional share of common stock for each share owned at any time and from time to time for a period of one year following the effectiveness of a registration statement covering the resale of the total number of shares of common stock acquired by the Investors in the transaction at an exercise price equal to the five-day volume weighted average price immediately preceding the exercise date (each, a “B Warrant”); and (4) only as part of and in connection with the purchase of the shares underlying the B Warrants (the “B Warrant Shares”), a warrant giving each of the Investors the right to purchase 0.50 shares of common stock for each B Warrant Share purchased by such Investors at any time and from time to time for a period of five years at an exercise price equal to the purchase price of the B Warrant Shares (each, an “Additional Warrant” and together with the A Warrants and the B Warrants, the “Warrants”). The exercise prices of the Warrants may be reduced if the Company issues additional shares of common stock or securities convertible into common stock at a price lower than the Warrant exercise prices for so long as the Warrants remain outstanding. If all shares underlying all Warrants are ultimately issued, the Company will issue an aggregate of 187,500,001 shares of common stock$100,000 pursuant to the Securities Purchaseterms of a Bridge Loan Agreement for additional proceeds.
Effectivewith a related party (the "Bridge Note"). The Bridge Note is due and payable in full, on February 27, 2015,or before June 30, 2016 or no later than 30 days after the Company also entered into an Advisory Fee Agreement (the “Advisory Fee Agreement”) with V3 Capital Partners, LLC and certainreceives financing of its affiliates (the “Advisor”)at least US $1.0 million. In addition, the Company received $200,000 in connection with advisory, due diligence and financing activities performed by the Advisor in connection with the transaction with Shenzhen described herein. Pursuantloan proceeds from a third party investor pursuant to the Advisory Fee Agreement,terms of a Convertible Promissory Note in the principal amount of $500,000 (“Convertible Note”).
The Company also entered into a Securities Purchase Agreement with an accredited investor, effective as of February 27, 2015 (“the Purchase Agreement”). Pursuant to the Purchase Agreement, the investor purchased an aggregate of 1,428,571 shares of the Company’s common stock for aggregate proceeds of $100,000. Additionally, the investor received a warrant giving him the right to purchase up to 1,428,571 shares of common stock at any time and from time to time for a period of five years at an exercise price of $0.10 per share.
On April 6, 2015, Shenzhen exercised the A Warrants in full and a portion of the B Warrants resulting in an additional 72,857,143 shares of common stock being issued to Shenzhen in exchange for an aggregate purchase price of $5,526,966. Pursuant to$150,000 under the terms of the Securities Purchase Agreement, 42,857,143a a bridge loan agreement dated April 15, 2016, and $440,000 in proceeds from a $500,000 convertible promissory note issued to a third party investor. Each of the shares received upon issuanceloans accrue interest at the rate of 12% during the A Warrants were issued at a price per share of $0.07. The remaining 30,000,000 shares received upon the partial exercise of the B Warrants were issued at a price per share of $0.0842322, which is equivalent to the volume weighted average pricefirst year and 10% for the Company’s common stock forsecond year through the five trading days preceding April 6, 2015, thematurity date of exercise.
As a result of the exercise of the B Warrants and pursuant to the terms of the B Warrants, the Company issued Shenzhen Additional Warrants to purchase an aggregate of 15,000,000 shares of the Company’s common stock at any time and from time to time for a period of five years from the date of the Additional Warrants at an exercise price per share equal to $0.0842322, the purchase price of the shares issued pursuant to the B Warrants.
Following the exercise of the Warrants, Shenzhen holds 115,714,286 shares of the Company’s common stock, or 57.14% of the Company’s total issued and outstanding shares of common stock as of June 25, 2015.
Pursuant to the terms of the remaining Warrants, Shenzhen has the potential to purchase up to an additional 34,285,714 shares of the Company’s common stock. If all shares underlying all Warrants held by Shenzhen are ultimately issued to Shenzhen, Shenzhen will hold an aggregate of 150,000,000 shares of the Company’s common stock. Of Shenzhen’s remaining warrants, 15,000,000 are exercisable at $0.0842322 per share, which would result in an additional $1,263,483 in proceeds to the Company. Because the purchase price of the remaining 19,285,714 shares that Shenzhen has the right to acquire pursuant to its Warrants is dependent on the price of the Company’s common stock if and when such Warrants are exercised, the Company is unable to calculate the gross proceeds that would be received upon exercise of such Warrants.
In connection with Shenzhen’s exercise of the Warrants, pursuant to the Advisory Fee Agreement with the Advisor, the Company issued a total of 6,061,708 shares of common stock and warrants to purchase up to an aggregate of 30,154,269 shares of common stock at any time and from time to time for a period of five years at an exercise price of $0.0842322 per share to the Advisor and its affiliates.
Commencement of Marketing and Acquisition Strategy
The Company’s new leadership team has refined the overall Company strategy to concentrate on K-12 online learning tools and created a strategic plan to fully leverage the investment provided by Shenzhen for growth. For the remainder of fiscal 2015 and into fiscal 2016, the Company will focus on developing and enhancing the Blended Schools content to better compete in all markets; refining our sales and marketing to drive an increase in sales; and meeting a growing international demand for U.S. K-12 education tools.
In furtherance of these goals, the Company has engaged a reputable public relations and communications firm to advise on the branding and positioning of the Company in the education marketplace, and has hired a Chief Business Development Officer and new sales team members to improve our sales strategy and efforts. In addition, the Company will continue to form partnerships and develop certain of its products to grow its position in the online education market, including the expanding credit recovery program market. Along these lines, the Company hired a Chief Academic Officer to oversee our academic content development and improvement.
Management Changes
On January 28, 2015, pursuant to the terms of the Share Exchange Agreement with Urban Planet, Maurine Findley resigned as our Chief Executive Officer and was appointed as Chairman of the Board of Directors. In addition, we entered into an employment agreement with Brian A. OliverSmith pursuant to which we appointed him as our Chief Executive Officer, and the Board of Directors appointed him to serve as a member of the Board. On the same date, Amy Lance and Mack Leath resigned from our Board.
Effective March 16, 2015, Andrew Honeycutt resigned from the Company’s Board of Directors. The resignation was not related to any disagreement with the Company or due to any matter relating to the Company’s operations, policies or practices.
On May 3, 2015, Ms. Findley, Chairman of our Board, unexpectedly passed away.
Effective as of May 12, 2015, Brian OliverSmith was removed from the Board of Directors of the Company. On May 13, 2015, the Company informed Mr. OliverSmith of the intent to terminate his employment as the Company’s Chief Executive Officer to be effective as of July 12, 2015 in accordance with the terms of his employment agreement. On June 18, 2015, the Company and Mr. OliverSmith entered into a Severance and Mutual Release Agreement (the “Severance Agreement”) pursuant to which Mr. OliverSmith resigned as Chief Executive Officer effective as of June 22, 2015. The Severance Agreement provides that in connection with Mr. OliverSmith’s resignation, the Company will pay to Mr. OliverSmith a cash payment equal to $225,000, which includes the payment of amounts due to Mr. OliverSmith’s spouse for the settlement of debt and deferred compensation in addition to the severance amount paid to Mr. OliverSmith. The Severance Agreement contains a mutual release of claims by the Company and Mr. OliverSmith and the reaffirmation of Mr. OliverSmith’s non-competition, non-solicitation and non-disparagement obligations included in his employment agreement with the Company. The Severance Agreement supersedes all prior agreements between the Company and Mr. OliverSmith with respect to his compensation upon termination, including Mr. OliverSmith’s employment agreement.
On May 13, 2015, the Board appointed Dave Saba, President of the Company, as the Company’s principal executive officer and appointed Robert Todd Jones to serve as a member of the Company’s Board.
On May 18, 2015, the Company hired Pam Birtolo as Chief Academic Officer to oversee all academic content and instruction. For the past 16 years, Ms. Birtolo has served the K-12 online learning community. She helped start Florida Virtual School and served as its Chief Officer of Education Transformation until July, 2014. She was also the founding principal of Sagemont Virtual School, Florida's first private online high school, which later became University of Miami Online (purchased by Kaplan University). Ms. Birtolo has presented the concepts of distance learning to national audiences and has been published in several educational journals. Her publications includeEnquiring Minds Want to Know: the Evolution of an Online High School andTransforming Education through Online Learning.
On May 18, 2015, the Company hired Cecilia Lopez as Chief Business Development Officer. A graduate of Rutgers University, Ms. Lopez began her career in the banking industry, eventually serving as Vice President, Business Banking Group for First Fidelity Bank. Ms. Lopez moved to the educational publishing field where she worked for Addison Wesley and, later, Glencoe McGraw Hill. Ms. Lopez recently served as the Chief Business Development Officer for the Florida Virtual School. She will oversee all of the Company’s sales effort and is focused on building the sales team.
On May 26, 2015, the Company eliminated the position of Chief Development Officer as part of the Company’s management restructuring. Richard Marshall held the Chief Development Officer position at this time, and his employment with the Company was terminated as a result.
Recent Trends
International demand for U.S. secondary education content has significantly increased as a result of the demand for U.S. college and university degrees. According to the Institute of International Education, the number of students worldwide pursuing higher education degrees from countries outside of their home countries grew from 3.0 million in 2005 to 4.3 million in 2011, and is projected to reach 8.0 million by 2025. As a result, international high schools have implemented dual diploma programs which allows students to receive a diploma from their local high school and from a U.S. based high school.
The Company will leverage local partnerships in countries where there is significant demand for U.S. K-12 content to provide products to the rapidly growing market of international students.
In addition, the growth and quality improvement in online learning and mounting pressure on educators to boost retention and graduation rates have contributed to a substantial growth in online credit recovery programs that allow students to earn credits toward high school graduation. More than half of the school districts in the U.S. offer online courses and services because of their efficiency, low cost and flexibility. We have seen an increase in the sales of our Learning Institute language programs as a result of this growth, and we expect this growth to continue. Furthermore, we intend to develop and improve additional products to expand our presence in this rising market.
Results of Operations
2015
other personnel during the recent period compared to the quarter ended March 31, 2015.
2015, due to the Company's net losses. As of March 31, 2016, the Company has tax net operating loss carry forwards and a related deferred tax asset, offset by a full valuation allowance.
2015
2015, due to the Company's net losses. As of March 31, 2016, the Company has tax net operating loss carry forwards and a related deferred tax asset, offset by a full valuation allowance.
2015. The decrease is principally attributable to the addition of the new management team, payments relating to purchases of equipment and repayments of borrowings.
short-term debt. During the quarter ended March 31, 2015, we2016, the Company received $100,000 pursuant to the terms of a Bridge Loan Agreement with a related party (the "Bridge Note"). The Bridge Note is due and payable in full, on or before June 30, 2016 or no later than 30 days after the Company receives financing of at least US $1.0 million. In addition, the Company received $200,000 in loan proceeds from a third party investor pursuant to the terms of a Convertible Promissory Note in the principal amount of $500,000 (“Convertible Note”). The Company signed a second Convertible Note with a related party investor in the amount of $500,000, with the same terms and conditions as the Convertible Note. No funds have been received currently from this Convertible Note.
We received an additional $5,526,962 infuture will be for product development, further development of intellectual property, as well as general working capital throughand capital expenditure requirements.
directing existing cash resources to activities intended to increase revenue.
2016.
We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us that may materially affect us.
·
On January 8, 2015, the Company issued 111,710 shares of its common stock to a service provider in satisfaction of amounts owed for services totaling $14,500 pursuant to the exemption set forth in Section 4(a)(2) (“Section 4(a)(2)”) of the Securities Act of 1933, as amended; and
·
On January 28, 2015, the Company issued 600,000 shares of its common stock with an aggregate fair value of $57,600 as payment for services rendered by advisors and consultants pursuant to certain consulting and services agreements in reliance on the exemption set forth in Section 4(a)(2).
On June 16, 2015, the Company concluded that it was necessary to write down the value of the investment in Urban Planet, based on industry information from an independent third party, to two times the revenue reported by Urban Planet for the calendar year 2014, which totaled $249,692. As a result, the Company incurred a non-cash impairment charge in the amount of $1,722,408, which is reported as “Impairment of Urban Planet assets acquired” in the Condensed Consolidated Statements of Operations filed as part of this quarterly report on Form 10-Q. The Company’s determination to recognize the impairment charge was based on the expiration of a grant and service agreement that previously contributed to Urban Planet revenues and the Company’s decision to suspend the development of a proposed Urban Planet product. The Company does not expect to incur any material future cash expenditures in connection with the write-down of Urban Planet.
As described in Part II, “Item 2. Unregistered Sales of Equity Securities and Use of Proceeds” of this Quarterly Report on Form 10-Q, the Company issued shares of its common stock in unregistered transactions on January 8, 2015 and January 28, 2015, which description is incorporated herein by reference.
In addition, on May 26, 2015, the Company authorized the issuance of 2,000,000 shares of its common stock to certain employees, shareholders and other service providers to Urban Planet in unregistered transactions in reliance on the exemption set forth in Section 4(a)(2). The shares were issued as compensation for services and in recognition of contributions to Urban Planet and had been reserved by the Company for issuance for these purposes pursuant to the terms of the Share Exchange Agreement.
(b)
There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors since the filing of the Company’s QuarterlyAnnual Report on Form 10-Q10-K for the quarteryear ended December 31, 2014.
Exhibit No. | Description of Exhibit | ||
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4.1* | Form of Warrant issued in connection with the Convertible Promissory Note and | ||
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| Convertible Promissory Note between the Company and Duohui Tu dated as of February 22, 2016. | ||
31.1* | Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
Certification of the Principal Executive Officer | |||
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101.INS* | XBRL Instance Document. | ||
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. |
Sibling Group Holdings, Inc. | ||||
Dated: June | By: | /s/ | ||
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(Principal Executive Officer) | ||||
Dated: June | By: | /s/Angelle Judice | ||
Angelle Judice | ||||
Chief Financial Officer | ||||
(Principal Financial and Accounting Officer) | ||||
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