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Creative Learning Corporation Reports Financial Results for the Second Quarter of Fiscal 2015
Published May 21 2015
5 min read

Creative Learning Corporation Reports Financial Results for the Second Quarter of Fiscal 2015

Creative Learning Corporation (OTC: CLCN), owner and developer of Bricks 4 Kidz®, Challenge Island® and Sew Fun Studios™, the highly-popular children’s education and enrichment programs, today announced financial results for the second quarter of fiscal 2015 ending March 31, 2015.

Brian Pappas, CEO of Creative Learning, commented, “We are pleased to see our high margin, recurring royalties continue to grow rapidly, increasing 68.1% to $0.7 Million versus $0.4 Million for the second quarters of fiscal 2015 and 2014, respectively. We achieved profitability this quarter, while continuing to strengthen our balance sheet with shareholders’ equity increasing to $3.7 million at March 31, 2015, compared to $3.3 million at the end of fiscal 2014. Our total revenues were not as strong in the second quarter of fiscal 2015, compared to the same period last year, due to the fact that we sold an unusually high number of international franchises and master franchises in the first half of fiscal 2014. Master franchise fees are generally in the six-figure range, averaging approximately $160,000 each for the first half of fiscal year 2014, and add significant revenue over the typical franchise fees, ranging from approximately $20,000 to $26,000, depending upon the franchise concept and scope for an initial franchise territory. Nevertheless, we continue to add franchises and now have an impressive 728 franchises to date. In April, we signed two international master franchise agreements for Bricks 4 Kidz®, one in Poland and the other in the remaining available territory in Australia. These two master franchises could bring a total of 137 new individual franchises to the Company over the course of the franchise development schedule included in their master agreements. The growth of Challenge Island® continues to be promising with 48 franchises now operating, including operating franchises in two foreign countries. I am especially pleased to report that just this month we awarded our first five Sew Fun Studios™ franchises. The market has responded extremely well to Sew Fun Studios™ and we see encouraging growth opportunities ahead for Sew Fun Studios™.”

“We are experiencing demand for all three of our franchise concepts and we project continued growth through the end of the fiscal year. Furthermore, our high margin royalty revenue continues to increase each month and we expect this will continue through the end of the fiscal year and beyond. Most importantly, we remain focused on delivering value to our shareholders by continuing to grow the business, strengthen our balance sheet and achieve high returns on capital.”

Revenue for the second quarters ended March 31, 2015 and 2014 was $1.6 million and $2.0 million, respectively. The decrease in revenue was primarily the result of a high number of international franchises and master franchises sold in the first half of fiscal 2014. Operating income for the second quarter of fiscal 2015 was $0.2 Million versus operating income of $0.5 Million for the second quarter of fiscal 2014. Net income for the second quarter of fiscal 2015 was $0.1 Million or $0.01 earnings per share, versus net income of $0.3 Million or $0.03 earnings per share for the second quarter of fiscal 2014.

About Creative Learning Corporation

Creative Learning Corporation, operating under the trade names of Bricks 4 Kidz®, Challenge Island® and Sew Fun Studios® offers educational and enrichment programs to children ages 3-12+. Through a unique franchise business model that includes a proprietary curriculum and marketing strategies, the Company provides a wide variety of programs designed to enhance students’ problem solving and critical thinking skills. Creative Learning Corp is now operating in 38 countries.

SAFE HARBOR STATEMENT: This press release may contain "forward-looking statements" that are made pursuant to the "safe harbor" provisions as defined within the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words including "anticipates," "believes," "intends," "estimates," and similar expressions. These statements are based upon management's current expectations as of the date of this press release. Such forward-looking statements may include statements regarding the Company's future financial performance or results of operations, including expected revenue growth, cash flow growth, future expenses and other future or expected performances. The Company cautions readers there may be events in the future that the Company is not able to accurately predict or control and the information contained in the forward-looking statements is inherently uncertain and subject to a number of risks that could cause actual results to differ materially from those indicated in the forward-looking statements. Further information on these and other potential factors that could affect the Company's financial results is included in the Company's filings with the SEC.

   
CREATIVE LEARNING CORPORATION
Condensed Consolidated Balance Sheets
 
(Unaudited)
March 31, September 30,
2015 2014
Assets
Current Assets:
Cash $ 2,739,673 $ 3,061,458
Restricted cash 225,984 180,009
Accounts receivable, less allowance for doubtful
accounts of approximately $90,000 and $41,000, respectively 363,409 303,122
Prepaid expenses 35,622 7,850
Other receivables - current portion 191,935 126,339
Income Tax receivable 41,825 115,825
Deferred tax asset   48,723     48,723
Total Current Assets 3,647,171 3,843,326
 
Note receivable and accrued interest receivable - related party 72,100 70,000
Other receivables - net of current portion 55,183 67,749
Property and equipment, net of accumulated depreciation
of $120,381 and $98,238, respectively 332,677 322,659
Intangible assets 170,754 125,754
Deposits   10,701     11,425
 
Total Assets $ 4,288,586   $ 4,440,913
 
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable - related party $ 18,006 $ 42,234
Accounts payable - other 194,160 492,698
Accrued stock based compensation — 98,400
Accrued stock payable 10,080 —
Unearned revenue 25,900 —
Accrued marketing fund 225,984 180,009
Customer deposits 67,465 96,737
Deferred tax liability 5,550 5,550
Notes Payable 425 2,225
Legal settlement   25,000     161,250
Total Current Liabilities   572,570     1,079,103
 
Long-term deferred tax liability   22,230     22,230
 
Total Liabilities   594,800     1,101,333
Commitments and Contingencies - Note 13
Stockholders’ Equity:
Creative Learning Corporation 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;
shares issued as of March 31, 2015 and 2014: 11,983,409 and 11,829,409,
respectively and shares outstanding as of March 31, 2015 and 2014:
11,969,809 and 11,829,409, respectively. 1,198 1,183
Additional paid-in capital 2,518,176 2,263,501
Treasury Stock 13,600 shares and -0- shares, respectively (cost method) (16,845 ) —
Retained earnings   1,191,257     1,074,896
—
Total Stockholders’ Equity   3,693,787     3,339,580
 
Total Liabilities and Stockholders’ Equity $ 4,288,586   $ 4,440,913
 
       
CREATIVE LEARNING CORPORATION
Condensed Consolidated Statements of Income
 
(Unaudited) (Unaudited)
For the Three For the Six
Months Ended Months Ended
March 31, March 31, March 31, March 31,
2015 2014 2015 2014
Revenues:
Initial franchise fees $ 872,737 $ 1,510,020 $ 1,540,893 $ 3,068,473
Royalties fees 740,811 440,771 1,295,670 741,423
Corporate Creativity Center Sales   1,001     52,560     1,284     67,200  
  1,614,549     2,003,351     2,837,847     3,877,096  
 
Operating expenses:
Franchise consulting and commissions:
Related parties 122,655 213,942 252,898 470,822
Other 188,732 398,805 445,466 706,160
Franchise training and expenses 95,406 128,136 198,623 225,655
Salaries and payroll taxes 293,886 242,043 612,724 435,426
Advertising 250,067 171,665 495,442 363,607
Professional fees 131,352 80,424 228,291 129,617
Office expense 34,267 91,159 67,505 182,741
Bad debt expense 57,118 — 72,118 —
Depreciation 11,079 9,938 22,143 19,478
Stock-based compensation — 21,537 — 21,537

Other general and administrative expenses

  207,371     129,842     253,678     332,172  
Total operating expenses   1,391,933     1,487,491     2,648,888     2,887,215  
 
Income from operations   222,616     515,860     188,959     989,881  
 
Other income (expense):
Interest Income / (Expense) - net 3,870 (2 ) 4,149 (2 )
Other income (expense)   (2,747 )   41,598     (2,747 )   43,471  
Total other income (expense)   1,123     41,596     1,402     43,469  
 
Income before provision for

income taxes

223,739 557,456 190,361 1,033,350
 
Provision for income taxes   85,500     209,770     74,000     388,849  
 
Net Income $ 138,239   $ 347,686   $ 116,361   $ 644,501  
 
Net income per share
Basic $ 0.01   $ 0.03   $ 0.01   $ 0.05  
Basic weighted average number of common
shares outstanding   11,993,895     11,809,409     11,893,184     11,809,409  
Diluted $ 0.01   $ 0.03   $ 0.01   $ 0.05  
Diluted weighted average number of
common shares outstanding   12,019,850     11,842,711     11,923,157     11,846,994