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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


(Mark One)

 

þ

Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2013.


¨

Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from              to              .


Commission file number:  0-28311


SIBLING GROUP HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


TEXAS

76-0270334

(State or other jurisdiction of
incorporation or organization)

(IRS Employer
Identification Number)


1355 Peachtree Street, Suite 1150, Atlanta, GA 30309

(Address of Principal Executive Office)   (Postal Code)


(404) 551-5274

(Registrant’s telephone number, including area code)


_______________________________________________________

(Former name, former address, and former fiscal year if changed since last report)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  þ Yes  ¨ No


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  þ Yes  ¨ No


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


Large accelerated filer

¨

 

 

Accelerated filer

¨

 

Non-accelerated filer

¨

 

 

Smaller reporting company

þ

 


Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ¨ Yes  þ No


There are 40,239,792 shares of common stock issued and outstanding as of March 25, 2014.

 

 






TABLE OF CONTENTS


 

 

Page

                  

 

                  

 

PART I.  FINANCIAL INFORMATION

 

 

 

 

ITEM 1.

FINANCIAL STATEMENTS

1

 

Condensed Consolidated Balance Sheets as of September 30, 2013 (unaudited) and December 31, 2012

1

 

Condensed Consolidated Statements of Operations for the three months and nine months ended September 30, 2013 and 2012 (unaudited), and the period from June 10, 2010 (inception) to September 30, 2013 (unaudited)

2

 

Condensed Consolidated Statements of Stockholder’s Equity (Deficit) for the period June 10, 2010 (inception) to September 30, 2013 (unaudited)

3

 

Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012 (unaudited), and the period from June 10, 2010 (inception) to September 30,2013 (unaudited)

6

 

Notes to Unaudited Consolidated Financial Statements

7

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

17

ITEM 4.

CONTROLS AND PROCEDURES

19

 

 

 

 

PART II.  OTHER INFORMATION

 

 

 

 

ITEM 1.

LEGAL PROCEEDINGSS

20

ITEM 1A.

RISK FACTORS

20

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

20

ITEM 6.

EXHIBITS

21

 

SIGNATURES

22

 

 

 



i




PART I.  FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

As used herein the terms “Company,” “we,” “our”, and “us” refer to Sibling Group Holdings, Inc., formerly, Sibling Entertainment Group Holdings, Inc., a Texas corporation, unless otherwise indicated.  In the opinion of management, the accompanying unaudited financial statements included in this Form 10-Q reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods presented.  The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.


SIBLING GROUP HOLDINGS, INC.

(A Development Stage Company)

Condensed Consolidated Balance Sheets


 

 

September 30,

2013

 

 

December 31,

2012

 

 

 

(Unaudited)

 

 

 

 

ASSETS

  

                          

  

  

                          

  

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash

 

$

-

 

 

$

-

 

Total current assets

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Intangible assets

 

 

82,000

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

82,000

 

 

$

-

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Cash overdraft

 

$

-

 

 

$

1,197

 

Accounts payable

 

 

611,011

 

 

 

498,641

 

Accrued liabilities

 

 

43,158

 

 

 

43,965

 

Amounts due to related parties

 

 

-

 

 

 

50,159

 

Short-term notes payable

 

 

67,500

 

 

 

78,500

 

Total current liabilities

 

 

721,669

 

 

 

672,462

 

 

 

 

 

 

 

 

 

 

Stockholders' deficit

 

 

 

 

 

 

 

 

Preferred stock, no par value; 10,000,000 shares authorized; none issued or outstanding

 

 

-

 

 

 

-

 

Convertible series common stock, $0.0001 par value; 10,000,000 shares authorized; none issued or outstanding

 

 

-

 

 

 

-

 

Common stock, $0.0001 par value; 500,000,000 shares authorized; 21,108,110 and 18,701,070 issued and outstanding at September 30, 2013 and December 31, 2012

 

 

2,112

 

 

 

1,871

 

Additional paid-in capital

 

 

6,435,249

 

 

 

5,758,101

 

Deficit accumulated during the development stage

 

 

(7,077,030

)

 

 

(6,432,434

)

Total stockholders' deficit

 

 

(639,669

)

 

 

(672,462

)

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' deficit

 

$

82,000

 

 

$

-

 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.




1



SIBLING GROUP HOLDINGS, INC.

(A Development Stage Company)

Condensed Consolidated Statements of Operations

(Unaudited)


 

 

Three months ended

September 30,

 

 

Nine months ended

September 30,

 

 

Cumulative

from

June 10,

2010

(Inception) to

September 30,

 

 

 

2013

 

 

2012

 

 

2013

 

 

2012

 

 

2013

 

Operating expenses

  

 

 

 

 

 

 

 

 

 

 

 

 

 

  

General and administrative

 

$

4,603

 

 

$

(77,997

)

 

$

4,786

 

 

$

2,227,493

 

 

$

5,908,338

 

Professional fees

 

 

247,643

 

 

 

57,555

 

 

 

642,714

 

 

 

84,066

 

 

 

987,405

 

Total operating expenses

 

 

252,246

 

 

 

(20,442

)

 

 

647,500

 

 

 

2,311,559

 

 

 

6,895,743

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

(252,246

)

 

 

20,442

 

 

 

(647,500

)

 

 

(2,311,559

)

 

 

(6,895,743

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

-

 

 

 

-

 

 

 

1,197

 

 

 

-

 

 

 

1,197

 

Interest income (expense)

 

 

(700

)

 

 

(4,577

)

 

 

1,707

 

 

 

(7,971

)

 

 

(26,622

)

Loss on extinguishment of debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(108,050

)

Total other income (expense)

 

 

(700

)

 

 

(4,577

)

 

 

2,904

 

 

 

(7,971

)

 

 

(133,475

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(252,946

)

 

$

15,865

 

 

$

(644,596

)

 

$

(2,319,530

)

 

$

(7,029,218

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share

 

$

(0.01

)

 

$

0.00

 

 

$

(0.03

)

 

$

(0.79

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, basic and diluted

 

 

19,653,025

 

 

 

7,280,442

 

 

 

19,132,695

 

 

 

2,931,688

 

 

 

 

 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.




2



SIBLING GROUP HOLDINGS, INC.

(A Development Stage Company)

Condensed Consolidated Statements of Stockholders’ Deficit

For the Periods Ended June 10, 2010 (Inception) to September 30, 2013

(Unaudited)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Convertible Series

 

 

 

 

 

 

 

 

 

 

Additional

 

 

During the

 

 

 

 

 

 

 

 

 

Common

 

 

Common

 

 

Paid-In

 

 

Development

 

 

Treasury

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stage

 

 

Stock

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 10, 2010 (Date of Inception)

 

 

-

 

 

$

-

 

 

 

-

 

 

$

-

 

 

$

100

 

 

$

-

 

 

$

-

 

 

$

100

 

Reverse merger recapitalization

 

 

9,879,854

 

 

 

988

 

 

 

466,358

 

 

 

47

 

 

 

4,517

 

 

 

(47,812

)

 

 

-

 

 

 

(42,260

)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(334,430

)

 

 

-

 

 

 

(334,430

)

Balance at December 31, 2010

 

 

9,879,854

 

 

 

988

 

 

 

466,358

 

 

 

47

 

 

 

4,617

 

 

 

(382,242

)

 

 

-

 

 

 

(376,590

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares issued for cash at $2.00 per share

 

 

-

 

 

 

-

 

 

 

5,714

 

 

 

1

 

 

 

9,999

 

 

 

-

 

 

 

-

 

 

 

10,000

 

Common shares issued for fees accrued during merger

 

 

-

 

 

 

-

 

 

 

20,000

 

 

 

2

 

 

 

39,998

 

 

 

-

 

 

 

-

 

 

 

40,000

 

Common shares issued for prepaid expenses at $9.00 per share

 

 

-

 

 

 

-

 

 

 

25,000

 

 

 

3

 

 

 

224,997

 

 

 

-

 

 

 

-

 

 

 

225,000

 

Common shares issued for liabilities to be settled in stock at $2.00 per share, and $5.00 per share

 

 

-

 

 

 

-

 

 

 

83,465

 

 

 

8

 

 

 

190,922

 

 

 

-

 

 

 

-

 

 

 

190,930

 

Common shares issued for settlement of accrued expenses at $5.00 per share (loss on extinguishment of $16,666)

 

 

-

 

 

 

-

 

 

 

8,333

 

 

 

1

 

 

 

41,665

 

 

 

-

 

 

 

-

 

 

 

41,666

 

Common shares issued to settle amounts due to related parties at $5.00 per share, and $20.00 per share (loss on extinguishment of $62,779)

 

 

-

 

 

 

-

 

 

 

47,969

 

 

 

5

 

 

 

488,527

 

 

 

-

 

 

 

-

 

 

 

488,532

 

Common shares issued for consulting fees at $20.00 per share

 

 

-

 

 

 

-

 

 

 

20,000

 

 

 

2

 

 

 

399,998

 

 

 

-

 

 

 

-

 

 

 

400,000

 

Common shares issued for settlement of accounts payable at $13.00 per share

 

 

-

 

 

 

-

 

 

 

3,600

 

 

 

-

 

 

 

72,000

 

 

 

-

 

 

 

-

 

 

 

72,000

 

Common shares issued for Director's fees at $13.00 per share

 

 

-

 

 

 

-

 

 

 

34,000

 

 

 

3

 

 

 

469,997

 

 

 

-

 

 

 

-

 

 

 

470,000

 

Common shares issued for services at $20.00 per share

 

 

-

 

 

 

-

 

 

 

1,500

 

 

 

 

 

 

 

30,000

 

 

 

-

 

 

 

-

 

 

 

30,000

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,363,353

)

 

 

-

 

 

 

(2,363,353

)

Balance at December 31, 2011

 

 

9,879,854

 

 

 

988

 

 

 

715,939

 

 

 

72

 

 

 

1,972,720

 

 

 

(2,745,595

)

 

 

-

 

 

 

(771,815

)




3



SIBLING GROUP HOLDINGS, INC.

(A Development Stage Company)

Condensed Consolidated Statements of Stockholders’ Deficit (Continued)

For the Periods Ended June 10, 2010 (Inception) to September 30, 2013

(Unaudited)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Convertible Series

 

 

 

 

 

 

 

 

 

 

Additional

 

 

During the

 

 

 

 

 

 

 

 

 

Common

 

 

Common

 

 

Paid-In

 

 

Development

 

 

Treasury

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stage

 

 

Stock

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2011

 

 

9,879,854

 

 

$

988

 

 

 

715,939

 

 

$

72

 

 

$

1,972,720

 

 

$

(2,745,595

)

 

$

-

 

 

$

(771,815

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

 

 

Common stock issued for settlement of notes payable to related party at $4.00 per share

 

 

-

 

 

 

-

 

 

 

5,576

 

 

 

1

 

 

 

22,304

 

 

 

-

 

 

 

-

 

 

 

22,305

 

Common stock issued for liabilities to be settled in stock at $4.00 per share

 

 

-

 

 

 

-

 

 

 

5,328

 

 

 

-

 

 

 

21,307

 

 

 

-

 

 

 

-

 

 

 

21,307

 

Common stock issued for consulting fees at $3.00 per share

 

 

-

 

 

 

-

 

 

 

10,000

 

 

 

1

 

 

 

29,999

 

 

 

-

 

 

 

-

 

 

 

30,000

 

Series common stock reacquired at $4.13 per share

 

 

(430,000

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,828,007

 

 

 

-

 

 

 

(1,828,007

)

 

 

-

 

Series common stock issued in consideration of compensation at $4.13 per share

 

 

430,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,828,007

 

 

 

1,828,007

 

Series common stock reacquired at $0.012 per share

 

 

(80,010

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

145,000

 

 

 

-

 

 

 

(145,000

)

 

 

-

 

Series common stock issued in consideration of compensation at $1.81 per share

 

 

80,010

 

 

 

1

 

 

 

-

 

 

 

-

 

 

 

(1

)

 

 

-

 

 

 

145,000

 

 

 

145,000

 

Common stock issued for settlement of accounts payable at $0.60 per share

 

 

-

 

 

 

-

 

 

 

50,000

 

 

 

5

 

 

 

29,995

 

 

 

-

 

 

 

-

 

 

 

30,000

 

Fractional shares and rounding

 

 

-

 

 

 

-

 

 

 

66

 

 

 

-

 

 

 

3

 

 

 

(1

)

 

 

-

 

 

 

2

 

Conversion of series common to common

 

 

(9,879,854

)

 

 

(989

)

 

 

14,947,216

 

 

 

1,495

 

 

 

(506

)

 

 

-

 

 

 

-

 

 

 

-

 

Cancellation of series common issued for compensation

 

 

-

 

 

 

-

 

 

 

(120,055

)

 

 

(12

)

 

 

(144,988

)

 

 

-

 

 

 

-

 

 

 

(145,000

)

Common stock issued for settlement of accounts payable at $2.00 per share

 

 

-

 

 

 

-

 

 

 

257,000

 

 

 

26

 

 

 

513,344

 

 

 

-

 

 

 

-

 

 

 

513,370

 

Common stock issued for consulting fees at $0.05 per share

 

 

-

 

 

 

-

 

 

 

500,000

 

 

 

50

 

 

 

24,950

 

 

 

-

 

 

 

-

 

 

 

25,000

 

Common stock issued for consulting fees at $1.25 per share

 

 

-

 

 

 

-

 

 

 

500,000

 

 

 

50

 

 

 

624,950

 

 

 

-

 

 

 

-

 

 

 

625,000

 

Common stock issued for consulting fees at $0.64 per share

 

 

-

 

 

 

-

 

 

 

280,000

 

 

 

28

 

 

 

179,172

 

 

 

-

 

 

 

-

 

 

 

179,200

 

Common stock issued for Director’s fees at $0.64 per share

 

 

-

 

 

 

-

 

 

 

1,550,000

 

 

 

155

 

 

 

511,845

 

 

 

-

 

 

 

-

 

 

 

512,000

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,686,838

)

 

 

-

 

 

 

(3,686,838

)

Balance at December 31, 2012

 

 

-

 

 

 

-

 

 

 

18,701,070

 

 

 

1,871

 

 

 

5,758,101

 

 

 

(6,432,434

)

 

 

-

 

 

 

(672,462

)



4



SIBLING GROUP HOLDINGS, INC.

(A Development Stage Company)

Condensed Consolidated Statements of Stockholders’ Deficit (Continued)

For the Periods Ended June 10, 2010 (Inception) to September 30, 2013

(Unaudited)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Convertible Series

 

 

 

 

 

 

 

 

 

 

Additional

 

 

During the

 

 

 

 

 

 

 

 

 

Common

 

 

Common

 

 

Paid-In

 

 

Development

 

 

Treasury

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stage

 

 

Stock

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2012

 

 

-

 

 

$

-

 

 

 

18,701,070

 

 

$

1,871

 

 

$

5,758,101

 

 

$

(6,432,434

)

 

$

-

 

 

$

(672,462

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for Director’s fees

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

360,000

 

 

 

-

 

 

 

-

 

 

 

360,000

 

Common stock issued for services at $0.23 per share

 

 

-

 

 

 

-

 

 

 

27,754

 

 

 

3

 

 

 

6,497

 

 

 

-

 

 

 

-

 

 

 

6,500

 

Common stock issued for services at $0.20 per share

 

 

-

 

 

 

-

 

 

 

50,497

 

 

 

5

 

 

 

9,995

 

 

 

-

 

 

 

-

 

 

 

10,000

 

Common stock issued for services at $0.17 per share

 

 

-

 

 

 

-

 

 

 

60,606

 

 

 

6

 

 

 

9,994

 

 

 

-

 

 

 

-

 

 

 

10,000

 

Common stock issued for services at $0.24 per share

 

 

-

 

 

 

-

 

 

 

55,786

 

 

 

6

 

 

 

13,495

 

 

 

-

 

 

 

-

 

 

 

13,501

 

Common stock issued for services at $0.10 per share

 

 

-

 

 

 

-

 

 

 

136,365

 

 

 

14

 

 

 

13,486

 

 

 

-

 

 

 

-

 

 

 

13,500

 

Common stock issued for services at $0.05 per share

 

 

-

 

 

 

-

 

 

 

702,087

 

 

 

70

 

 

 

35,034

 

 

 

-

 

 

 

-

 

 

 

35,104

 

Common stock issued for settlement of account payable at $0.23 per share

 

 

-

 

 

 

-

 

 

 

257,040

 

 

 

26

 

 

 

59,350

 

 

 

-

 

 

 

-

 

 

 

59,376

 

Common stock issued for settlement of account payable at $0.05 per share

 

 

-

 

 

 

-

 

 

 

50,000

 

 

 

5

 

 

 

2,495

 

 

 

-

 

 

 

-

 

 

 

2,500

 

Common stock issued for settlement of related party payable at $0.05 per share

 

 

-

 

 

 

-

 

 

 

450,000

 

 

 

45

 

 

 

84,863

 

 

 

-

 

 

 

-

 

 

 

84,908

 

Common stock issued for purchase of intangible asset at $0.18 per share

 

 

-

 

 

 

-

 

 

 

316,905

 

 

 

31

 

 

 

57,969

 

 

 

-

 

 

 

-

 

 

 

58,000

 

Common stock issued for purchase of intangible asset at $0.24 per share

 

 

-

 

 

 

-

 

 

 

300,000

 

 

 

30

 

 

 

23,970

 

 

 

-

 

 

 

-

 

 

 

24,000

 

Net loss, nine months ended September 30, 2013

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(644,596

)

 

 

-

 

 

 

(644,596

)

Balance at September 30, 2013

 

 

-

 

 

$

-

 

 

 

21,108,110

 

 

$

2,112

 

 

$

6,435,249

 

 

$

(7,077,030

)

 

$

-

 

 

$

(639,669

)


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.



5



SIBLING GROUP HOLDINGS, INC.

(A Development Stage Company)

Condensed Consolidated Statements of Cash Flows

(Unaudited)


 

 

Nine months ended

September 30,

 

 

Cumulative

from

June 10,

2010

(Inception) to

September 30,

 

 

 

2013

 

 

2012

 

 

2013

 

Cash flows from operating activities

  

                          

  

  

                          

  

  

                          

  

Net loss

 

$

(644,596

)

 

 

(2,319,530

)

 

 

(7,029,218

)

Adjustments to reconcile net less to net cash provided by (used in) operating activities

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for consulting fees

 

 

-

 

 

 

1,858,007

 

 

 

3,146,192

 

Common stock issued for directors fees

 

 

360,000

 

 

 

-

 

 

 

1,342,000

 

Common stock issued for services

 

 

88,605

 

 

 

-

 

 

 

686,605

 

Loss on extinguishment of debt

 

 

-

 

 

 

-

 

 

 

108,050

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

163,246

 

 

 

476,318

 

 

 

650,469

 

Accrued liabilities

 

 

(807

)

 

 

5,282

 

 

 

155,123

 

Liabilities settled in stock

 

 

-

 

 

 

-

 

 

 

(5,965

)

Derivative liability

 

 

-

 

 

 

-

 

 

 

314,704

 

Prepaid expenses

 

 

-

 

 

 

-

 

 

 

548,691

 

Due to related parties

 

 

34,749

 

 

 

(31,138

)

 

 

34,749

 

Net cash provided by (used in) operating activities

 

 

1,197

 

 

 

(11,061

)

 

 

(48,600

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

 

 

 

Repayment of cash overdraft

 

 

(1,197

)

 

 

-

 

 

 

-

 

Common stock issued for cash

 

 

-

 

 

 

-

 

 

 

10,000

 

Proceeds from short-term notes payable

 

 

-

 

 

 

11,000

 

 

 

13,500

 

Proceeds from notes payable

 

 

-

 

 

 

-

 

 

 

30,000

 

Repayments of related party notes payable

 

 

-

 

 

 

-

 

 

 

(5,000

)

Capital contribution

 

 

-

 

 

 

-

 

 

 

100

 

Net cash provided by (used in ) financing activities

 

 

(1,197

)

 

 

11,000

 

 

 

48,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in cash

 

$

-

 

 

$

(61

)

 

$

-

 

Cash, beginning of period

 

 

-

 

 

 

63

 

 

 

-

 

Cash, end of period

 

$

-

 

 

$

2

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

-

 

 

$

-

 

 

$

-

 

Cash paid for income taxes

 

$

-

 

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash operating and financing activities

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification of short term note payable to accounts payable

 

$

11,000

 

 

$

-

 

 

$

11,000

 

Common stock issued for settlement of account payable

 

$

61,876

 

 

$

564,677

 

 

$

61,876

 

Common stock issued for settlement of related party payable

 

$

84,908

 

 

$

22,305

 

 

$

84,908

 

Common stock issued for purchase of intangible asset

 

$

82,000

 

 

$

-

 

 

$

130,000

 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.




6



SIBLING GROUP HOLDINGS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013 and 2012


Note 1 - Nature of Operations and Basis of Presentation


(a) Organization


Sibling Group Holdings, Inc., referenced as the “SIBE,” “Company,” “we,” “our,” and “us” was incorporated under the laws of the State of Texas on December 28, 1988, as “Houston Produce Corporation”. On June 24, 1997, the Company changed its name to “Net Masters Consultants, Inc.” On November 27, 2002, the Company changed its name to “Sona Development Corporation” in an effort to restructure the business image to attract prospective business opportunities. Our name changed on May 14, 2007 to “Sibling Entertainment Group Holdings, Inc.” and on August 15, 2012 the Company name was changed to “Sibling Group Holdings, Inc.” Prior to December 30, 2010, our business plan called for focusing on large group sales of tickets to New York based entertainment shows.


On December 30, 2010, SIBE entered into a Securities Exchange Agreement with NEWCO4EDUCATION, LLC (“N4E”), a newly formed entity on June 10, 2010, and the members of N4E. Pursuant to the Securities Exchange Agreement, SIBE has acquired N4E in exchange for 8,839,869 shares of SIBE’s newly authorized convertible series common stock. For accounting purposes, the acquisition was treated as an acquisition of SIBE by N4E and as a recapitalization of N4E’s equity. N4E is the surviving and continuing entity and the historical financials following the reverse merger transaction are those of N4E. As part of the recapitalization of N4E, the equity transactions since its inception have been retroactively restated to include the equivalent shares of the Company’s common stock received in the merger. Accordingly, the statement of changes in shareholders’ deficit reflects the restatement of these transactions. The consolidated financial statements are based on the historical consolidated financial statements of N4E after giving effect to the reverse merger. In conjunction with the acquisition of N4E, the company issued 1,039,985 shares of our series common stock pursuant to debt conversion agreements with the holders of the Company's Series AA Debentures and related warrants.


The Company focuses on providing services and technology aimed at increasing the performance in educational settings and operates through two (2) divisions, its Educational Management Organization (EMO) and its Technology and Services Group (TSG). The EMO intends to provide school management services, primarily within the charter school arena. The TSG division is focused on the development and deployment of software, systems and procedures to enhance the rate of learning in both primary and secondary education. It is based in Atlanta, Georgia. The Company is considered a development stage company in accordance with ASC 915, “Development Stage Entities”.


(b) Basis of Presentation


The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiary, N4E, All significant intercompany transactions and balances have been eliminated.


(c) Going Concern

 

The financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated any revenues or completed development of any commercially acceptable products or services to date, and has incurred losses of $7,077,030 since inception, and further significant losses are expected to be incurred during the Company’s development stage. The Company will depend almost exclusively on outside capital through the issuance of common shares, debentures, and other loans, and advances from related parties to finance ongoing operating losses.


The ability of the Company to continue as a going concern is dependent on raising additional capital and ultimately on generating future profitable operations. There can be no assurance that the Company will be able to raise the necessary funds when needed to finance its ongoing costs. The accompanying financial statements do not include any adjustments relative to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.



7



SIBLING GROUP HOLDINGS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013 and 2012


Note 2 - Summary of Significant Accounting Policies


(a) Use of Estimates


The preparation of financial statements in conformity with United States Generally Accepted Accounting Principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.


(b) Income Taxes


The Company utilizes Financial Accounting Standards Board Codification (‘ASC”), ASC 740, “Accounting for Income Taxes”, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the estimated tax consequences in future years of differences between the tax bases of assets and liabilities, and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the period in which the differences are expected to affect taxable income.


(c) Financial Instruments


In accordance with the requirements of ASC 820, “Financial Instruments, Disclosures about Fair Value of Financial Instruments,” the Company has determined the estimated fair value of financial instruments using available market information and appropriate valuation methodologies. The carrying values of cash, accounts payable, and amounts due to related parties approximate fair values due to the short-term maturity of the instruments.


Certain assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2013 are measured in accordance with FASB ASC Topic 820-10-05, Fair Value Measurements. FASB ASC Topic 820-10-05 defines fair value, establishes a framework for measuring fair value and expands the disclosure requirements regarding fair value measurements for financial assets and liabilities as well as for non-financial assets and liabilities that are recognized or disclosed at fair value on a recurring basis in the financial statements.


The statement requires fair value measurement be classified and disclosed in one of the following three categories:


Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;


Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and


Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).


(d) Stock-Based Compensation


The Company accounts for stock-based compensation in accordance ASC 718, “Compensation – Stock Compensation”. Under the provisions of ASC 718, stock-based compensation cost is estimated at the grant date based on the award’s fair value as calculated by the Black-Scholes-Merton (BSM) option-pricing model and/or market price of conversion shares, and is recognized as expense over the requisite service period. The BSM model requires various highly judgmental assumptions including volatility and expected option life. If any of the assumptions used in the BSM model change significantly, stock-based compensation expense may differ materially in the future from that recorded in the current period. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. The Company estimates the forfeiture rate based on historical experience. Further, if the extent of the Company’s actual forfeiture rate is different from the estimate, then the stock-based compensation expense is adjusted accordingly.




8



SIBLING GROUP HOLDINGS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013 and 2012

Note 2 - Summary of Significant Accounting Policies (continued)

 

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with ASC 505-50 “Equity Based Payments to Non-Employees. Costs are measured at the estimated fair market value of the consideration received, or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by ASC 505-50.


(e) Loss per Share


The Company computes loss per share in accordance with ASC 260, “Earnings Per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. This guidance requires companies that have multiple classes of equity securities to use the “two-class” of “if converted method” in computing earnings per share. We compute loss per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Under the two-class method, earnings per common share are computed by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and participating securities based on the weighted average shares outstanding during the period. The Company has excluded all common equivalent shares outstanding for warrants to purchase common stock from the calculation of diluted net loss per share because all such securities are anti-dilutive for the periods presented.


(f) Recent Accounting Pronouncements


All new accounting pronouncements issued but not yet effective or adopted have been deemed to be not relevant to the Company and, accordingly, are not expected to have a material impact once adopted.


Note 3 – Acquisition Activity


We completed the acquisition of two internet properties, ClassChatter.com and ClassChatterLive.com. Both had been developed by an individual with a background in STEM and Blended Learning educational technology. The sites are being revised as to their appearance to be more intuitive as to their purpose. They 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 given was the issuance of 319,000 shares of restricted 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, whose business is focused on special education training and certification, primarily for education professionals in the K-12 area. The web site and underlying course library is being converted to a more conventional format. The total consideration given in the transaction was 300,000 shares of restricted stock, which has been fair valued at $24,000. We have retained one of their founders under a consulting agreement, and increased the scope of responsibility to include a) an expanded special education course library, and b) a similar library addressing the training needs of teaching professionals in other specialized curriculum.


Once these intangibles have been placed in service we will commence amortizing them over a three year period.




9



Note 4 - Due to Related Parties


On November 14, 2012 the Board of Directors of Sibling appointed Neal Sessions as CEO and CFO of the Company with a term of office that commenced December 1, 2012. The Company and Mr. Sessions parted ways on September 30, 2013 and settled the total amount owed in exchange for 450,000 shares of common stock. There was $90,000 of compensation accrued for Mr. Sessions during the nine months ended September 30, 2013 with $0 payable at September 30, 2013.


Note 5 - Short-Term Notes Payable


Short term notes payable consists of the following:


 

 

September 30,

2013

 

 

December 31,

2012

 

Short Term Note

 

$

37,500

 

 

$

48,500

 

Outstanding Debenture

 

 

30,000

 

 

 

30,000

 

Total Short Term Notes

 

$

67,500

 

 

$

78,500

 


At September 30, 2013 and December 31, 2012 the Company had a note payable balance of $37,500 and $48,500 respectively. This represents short term notes with annual interest rates ranging from 10% to 12%. At September 30, 2013 and December 31, 2012 these notes had accrued interest in the amount of $12,858 and $10,692, respectively.


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 SIBE 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 one-hundred percent (100%) of the membership interests of a new, wholly-owned subsidiary of SIBE, Debt Resolution, LLC (DR 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 $19,200 as of September 30, 2013, which is in default.


Note 6 – Reverse Merger with NEWCO4EDUCATION, LLC


On December 30, 2010, the Company, pursuant to a Securities Exchange Agreement, acquired all of the outstanding membership interests of NEWCO4EDUCATION, LLC by issuance of 8,839,869 shares of convertible series common stock. Each share of series common stock will entitle the holder thereof to a number of votes equal to the series conversion ratio determined as of the record date on all matters submitted to a vote of the stockholders of the Corporation. The holders of Series Common Stock shall be entitled to receive dividends when, as, and if declared by the Board of Directors out of funds legally available for that purpose. The Exchange Agreement was contingent on the consummation of two other transactions, which were completed as follows:


On December 29, 2010, the Company entered into a Loan Assignment Agreement with Sibling Theatricals, Inc. ("STI") and Debt Resolution, LLC ("DR LLC"), a newly formed subsidiary of the Company. Pursuant to the Loan Assignment Agreement, the Company assigned the Loan Receivable with STI and the related accrued interest receivable and certain related liabilities underlying these theatrical assets for 1 million membership interests in DR LLC. The Company's ownership interest in DR LLC was transferred to the Series AA debenture holders the next day as part of the settlement of those debt obligations (see below). The Company effectively exited the theatricals business as a result of these transactions.


On December 30, 2010, the Company entered into Conversion Agreements with all but one of the holders of the Series AA convertible debentures 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 one-hundred percent (100%) of the membership interests of DR 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.




10



SIBLING GROUP HOLDINGS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013 and 2012


Note 7 - Capital Stock


On December 30, 2010, the Board of Directors approved a new series of common stock to effect a debt settlement.  As a result, the 100,000,000 authorized shares of common stock on that date were divided into 10,000,000 shares of series common stock (“Series Common Stock”) and 90,000,000 shares of common stock (“Common Stock”).


Series Common Stock


Series Common Stock automatically converted into Common Stock upon a two-thirds vote by the holders of the Series Common Stock.  The holders of Series Common Stock enjoyed certain anti-dilution rights whereby the holders of the Series Common Stock will always enjoy a 95% ownership of the Common Stock outstanding as if the holders of the Series Common Stock had converted their shares.


On December 30, 2010, the Company issued 8,839,869 shares of its Series Common Stock pursuant to a Securities Exchange Agreement by and among the Company, N4E, and the N4E Members.  Six individual holders of the Series Common Stock entered into stock restriction agreements whereby these six individuals agreed to continue to render services to the Company for up to two years, through December 30, 2012.  If an individual did not fulfill the two year term under the Stock Restriction Agreement, the Company had the right to purchase a pro-rata portion of the Series Common Stock held by that individual for $1.00.  If the individual terminated his employment before December 30, 2011, then the Company had the right to repurchase, or cancel, 67% of the Series Common Stock holdings subject to the Stock Restriction Agreement.  If the individual terminated his employment between December 30, 2011 and December 31, 2012, then the Company had the right to repurchase, or cancel, 33.34% of his Series Common Stock holdings.  These individuals were founders of the Company and were paid separately for current services.  Any changes as a result of these claw back provisions are considered to be capital and have no effect on the operations of the Company.


In connection with the acquisition of N4E, the Company issued 1,039,985 shares of its Series Common Stock pursuant to debt conversion agreements with the holders of the Company’s Series AA Debentures and related warrants.


Reacquisition and Reissuance of Series Common Stock


During the three months ended March 31, 2012 the Company negotiated the return of 430,010 shares of Series Common Stock.  The acquired Series Common Stock do not trade, therefore the Company valued such Series Common Stock using its comparable common stock equivalent.  The trading price of the Common Stock on the date of reacquisition of the Series Common Stock was $0.03 per share.  As a result, the Company recorded the fair value of the Series Common Stock to treasury stock in the approximate amount of $1,828,000.


During the three month period ended March 31, 2012, the Company issued 350,000 shares and 80,010 shares of Series Common Stock to two consultants, respectively, and recorded compensation expense of approximately $1,828,000. The compensation expense was calculated by multiplying the aggregate 430,010 Series Common Stock shares, on an as converted basis, by the March 30, 2012 trading price of $0.03 per share.  The compensation expense is reported as general and administrative expense in the statement of operations for the year ended December 31, 2012.


On May 24, 2012, the Company reacquired 80,100 shares of the Series Common Stock previously issued to a consultant during March 30, 2012.  The trading price of the Common Stock on the date of reacquisition of the Series Common Stock was approximately $0.012 per share.  As a result, the Company recorded the fair value of the Series Common Stock to treasury stock in the approximate amount of $145,000.


On May 28, 2012, the Company issued 80,100 shares of the previously reacquired Series Common Stock to an employee for an aggregate purchase price of $1.00.  The trading price on the date of reissuance of the Company’s common stock was approximately $0.012.  As a result, the Company eliminated the cost of $145,000 from treasury stock and recorded the difference between the purchase price and previous acquisition cost of $145,000 as compensation expense.




11



SIBLING GROUP HOLDINGS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013 and 2012


Note 7 - Capital Stock (continued)


On August 21, 2012, the effective date of the Series Common conversion to shares of common stock, as part of the conversion, the Company cancelled the common shares issued in conversion for the Series Common shares attributable to the May 28, 2012 transaction.  As a result, the Company reversed the compensation expense in the amount of $145,000 previously recorded.


Conversion of Series Common Stock and 100:1 Reverse Split


In connection with actions taken at the Annual Shareholders Meeting on August 9, 2012, all Series Common Stock shares were converted into common stock at a ratio of 1.51 per share, when taking into effect a reverse split at a 100:1 ratio which was also approved at the meeting.  All share amounts reflect the effect of the reverse split shares including those applicable to periods prior to the reverse stock split.


Common Stock


During the first quarter, 2011, the Company took steps to significantly reduce outstanding debts associated with the acquisition of N4E by issuance of the Company’s common stock as follows:


On January 14, 2011, the Company entered into an agreement with Mr. Richard Smyth, pursuant to which the Company issued 24,715 shares of common stock valued at $49,430, in payment of consulting services rendered to N4E in connection with the formation and development of the strategy and business plans of N4E.


On January 14, 2011, the Company entered into an agreement with Meshugeneh LLC, pursuant to which the Company issued 42,500 shares of common stock valued at $85,000 in payment of consulting services rendered to N4E in connection with the formation and development of the strategy and business plans of N4E.  


On January 14, 2011, the Company entered into an agreement with Betsey V. Peterzell, pursuant to which the Company issued 10,750 shares of common stock valued at $51,500 in payment of legal services rendered to N4E.  


On January 14, 2011, the Company entered into an agreement with Michael Baybak, pursuant to which the Company issued 20,000 shares of common stock valued at $40,000 for services rendered to the Company in connection with the acquisition of N4E.  


On March 1, 2011, as amended June 1, 2011, the Company entered into an agreement with Viraxid Corporation, pursuant to which the Company issued 8,333 shares of common stock valued at $41,666 for accounting and bookkeeping services rendered to N4E.  


On March 1, 2011, the Company entered into an agreement with Gerald F. Sullivan, former Chairman, pursuant to which the Company issued 17,000 shares of common stock valued at $85,000 for services rendered to the Company in connection with the formation and development of strategy and business plans of N4E.  These were issued on March 31, 2011.


On October 24, 2011, the Company entered into an agreement with Gerald F. Sullivan, former Chairman, pursuant to which the Company issued 2,000 shares of common stock valued at $40,000, as an incentive bonus.  These were issued on October 24, 2011.  


On March 1, 2011, the Company entered into an agreement with Stephen C. Carlson, former CEO, pursuant to which the Company issued 9,666 shares of common stock valued $48,334, for consulting services rendered to N4E in connection with the development of strategy and business plans of N4E and for services rendered to the Company as CEO during the first quarter of 2011.  These were issued on March 31, 2011.  


On October 1, 2011, the Company entered into an agreement with Stephen C. Carlson, former CEO, pursuant to which the Company issued 5,967 shares of common stock valued $119,349 to convert debt for services as CEO for the period April 1, 2011 to September 30, 2011.  These were issued on October 3, 2011.  



12



SIBLING GROUP HOLDINGS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013 and 2012


Note 7 - Capital Stock (continued)


On October 24, 2011, the Company entered into an agreement Stephen C. Carlson, former CEO, pursuant to which the Company issued 2,000 shares of common stock valued at $40,000, as an incentive bonus.  These were issued on October 24, 2011.


On March 1, 2011, the Company entered into an agreement with Oswald A. Gayle, former CFO, pursuant to which the Company issued 4,722 shares of common stock valued at $23,614 for services rendered to the Company as CFO during the first quarter of 2011.


On October 1, 2011, the Company entered into an agreement with Oswald A. Gayle, former CFO, pursuant to which the Company issued 6,611 shares of common stock valued at $132,235 to convert debt for services as CFO for the period April 1, 2011 to September 30, 2011.  


On October 24, 2011, the Company entered into an agreement Oswald A. Gayle, former CFO, pursuant to which the Company issued 2,000 shares of common stock valued at $40,000, as an incentive bonus.  These were issued on October 24, 2011.


On October 24, 2011, the Company entered into an agreement with Dr. Amy Savage-Austin, a director, pursuant to which the Company issued 2,000 shares of common stock valued at $40,000 as an incentive bonus.  These were issued on October 24, 2011.


On October 24, 2011, the Company entered into an agreement with Dr. Gerry L. Bedore, Jr., a key advisor, pursuant to which the Company issued 10,000 shares of common stock valued at $200,000 as an incentive bonus.  These were issued on October 24, 2011.


On October 24, 2011, the Company entered into an agreement with Dr. Timothy G. Drake, a key advisor, pursuant to which the Company issued 10,000 shares of common stock valued at $200,000 as an incentive bonus.  These were issued on October 24, 2011.


On November 18, 2011, the Company entered into an agreement with Robert Copenhaver, a director, pursuant to which the Company issued 10,000 shares of common stock valued at $130,000 as an incentive bonus.  These were issued on November 18, 2011.


On November 18, 2011, the Company entered into an agreement with Michael Hanlon, a director, pursuant to which the Company issued 10,000 shares of common stock valued at $130,000 as an incentive bonus.  These were issued on November 18, 2011.


On November 18, 2011, the Company entered into an agreement with William W. Hanby, a key advisor, pursuant to which the Company issued 10,000 shares of common stock valued at $130,000 as an incentive bonus.  These were issued on November 18, 2011.


For the period January 1, 2011 through December 31, 2011, the Company sold 5,714 shares at a price of $0.0175 per share or $10,000 in the aggregate to one accredited investor.


During the year ended December 31, 2012, the Company issued the following shares of Common Stock:


In January, 2012, the Company issued 5,328 shares of common stock valued at approximately $21,000, or $4.00 per share, to Oswald Gayle, the former CFO, in full satisfaction of all amounts owed to him for his services.  As a part of his resignation he tendered 200,000 shares of series common stock which he had acquired as a result of his position as a founding member of NEWCO4EDUCATION, LLC.


In January, 2012, the Company issued 5,576 shares of common stock valued at approximately $22,000, or $4.00 per share, to Steve Carlson, the former CEO, in partial satisfaction of amounts owed to him for his services.



13



SIBLING GROUP HOLDINGS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013 and 2012


Note 7 - Capital Stock (continued)


In February 2012, the Company issues 10,000 shares of common stock values at $30,000, or $3.00 per share, to The Partnership of Atlanta Incorporated for consulting services.


In June 2012, the Company issued 50,000 shares of restricted common stock valued at $30,000, or $0.60 per share, to five individuals in partial satisfaction of certain amounts owed to Meshugeneh LLC for consulting services.  An additional 500,000 shares were issued in connection with this transaction in September 2012.


In August 2012, 14,947,216 shares of common stock were issued in connection with the conversion of the series common into common stock.


In September 2012, the Company rescinded the series common issued and converted into 120,055 shares of common stock to an individual in connection with compensation for services valued at $145,000.


On September 30, 2012, the Company issued 257,000 shares of common stock valued at $513,370 or $2.00 per share to Richard Smyth and Meshugeneh, LLC in satisfaction of accounts payable balances owed for services and expense advances made on behalf of the Company.


On October 3, 2012, the Company issued 500,000 shares of its common stock at a value of $0.05 per share, for a total value of $25,000, to Steeltown Consulting Group, LLC in connection with consulting services.


On October 30, 2012, the Company issued 500,000 shares of its common stock at a value of $1.25 per share for a total value of $625,000, to Ahmad Arfaania in connection with consulting services.


In December 2012, the Company issued 800,000 shares of common stock valued at $512,000 or $0.64 per share to various Board of Directors members for services.  In addition the Company issued 750,000 shares of common stock valued at $480,000 or $0.64 per share to various members of the Board of Directors for services to be rendered in 2013.  The value of these shares will be expensed ratably in 2013.


In December 2012, the Company issued 200,000 shares of common stock to its Chief Executive Officer valued at $128,000 or $0.64 per share for past and future services.


In December 2012, the Company issued 80,000shares of common stock to two consultants valued at $51,200 or $0.64 per share for consulting services.


Effective August 9, 2012, the Company’s stockholders approved an increase in authorized capital stock to 500 million shares.


Through 2013 year-to- date, the Company issued the following shares of Common Stock:


On April 25, 2013, the Company issued 257,040 shares of common stock valued at $59,376 or $0.23 per share for the settlement of accounts payable.


On May 1, 2013, the Company issued 27,754 shares of common stock valued at $6,500 or $0.23 per share for consulting services.


On May 30, 2013, the Company issued 316,905 shares of common stock valued at $58,000 or $0.18 per share for the purchase of intangible assets.


On June 1, 2013, the Company issued 50,497 shares of common stock valued at $10,000 or $0.20 per share for consulting services.


On July 1, 2013, the Company issued 39,394 shares of common stock valued at $6,500 or $0.165 per share for consulting services pursuant to a Consulting Agreement.



14



SIBLING GROUP HOLDINGS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013 and 2012


Note 7 - Capital Stock (continued)


On July 1, 2013, the Company issued 21,212 shares of common stock valued at $3,500 or $.165 per share for consulting services pursuant to a Consulting Agreement.


On August 1, 2013, the Company issued 26,860 shares of common stock valued at $6,500 or $0.2420 per share for consulting services pursuant to a Consulting Agreement.


On August 1, 2013, the Company issued 14,463 shares of common stock valued at $3,500 or $.2420 per share for consulting services pursuant to a Consulting Agreement.


On August 16, 2013, the Company issued 300,000 shares of common stock valued at $24,000 for the purchase of intangible assets pursuant to an Asset Purchase Agreement between the Company and the principals of PLC Consultants, LLC.


On August 17, 2013, the Company issued 14,463 shares of common stock valued at $3,500 or $.2420 per shares for consulting services pursuant to a Consulting Agreement.


On September 1, 2013, the Company issued 65,657 shares of common stock valued at $6,500 or $.099 per share for consulting services pursuant to a Consulting Agreement.


On September 1, 2013, the Company issued 35,354 shares of common stock valued at $3,500 or $.099 per share for consulting services pursuant to a Consulting Agreement.


On September 1, 2013, the Company issued 35,354 shares of common stock valued at $3,500 or $.099 per shares for consulting services pursuant to a Consulting Agreement.

 

On September 30, 2013 the Company issued 450,000 shares of common stock to Neal Sessions, valued at $.05 per share in conversion of all outstanding expenses, at an expense of $22,500 to the Company, in conjunction with his resignation from all positions with the Company.


On September 30, 2013 the Company issued 94,392 shares of common stock valued at $4,720 or $.05 as a one time bonus for work performed under a Consulting Agreement.


On September 30, 2013 the Company issued 300,183 shares of common stock valued at $15,009 or $.05 as a one time bonus for work performed under a Consulting Agreement.


On September 30, 2013 the Company issued 307,512 shares of common stock valued at $15,376 or $.05 as a one time bonus for work performed under a Consulting Agreement.


On September 30, 2013 the Company issued 50,000 shares of common stock valued at $2,500 or $.05 for the conversion of an outstanding debt.


Preferred Stock


Effective August 9, 2012, the Company’s stockholders approved an amendment to Article IV of the Certificate of Formation to authorize a class of preferred stock. The total number of preferred shares that the Company is authorized to issue is 10 million. The stockholders have empowered the Board of Directors to set and determine the designations, preferences, limitations and relative rights of the shares. None of the authorized preferred shares have been issued to date.


Note 8- Commitments and Contingencies


On May 1, 2013, June 1, 2013 and August 1, 2013, the Company entered into three consulting agreements where the consultants will be paid $6,500, $3,500 and $5,000 per month respectively.  All fees will be paid in common stock on the first day of each month valued at 110% of the closing share price during the final ten trading days of the previous month.



15



SIBLING GROUP HOLDINGS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013 and 2012


Note 9- Legal Proceedings


The Company is not involved in any legal proceeding as of the date of these financial statements. The Company may become involved in litigation in the future in the normal course of business.


Note 10 –Subsequent Events


During the three months ended December 31, 2013, the Company issued 7,754,769 shares of common stock pursuant to Consulting Agreements. The stock issued was fair valued at prices ranging from $0.04 to $0.12 per share for a total fair value of $370,486.


During the three months ended December 31, 2013, the Company issued 1,450,000 shares of common stock in accordance with the Company’s Board of Directors’ compensation policy. The shares issued were fair valued at prices ranging from $0.04 to $0.09 for a total fair value of $92,700.


During the three months ended December 31, 2013, the Company issued 1,445,652 shares of common stock in conversion of outstanding debts. The stock issued was fair valued at $0.09 per share for a total fair value of $111,000.


During the period of January 1 through March 6, 2014, the Company issued 2,732,779 shares of common stock pursuant to Consulting Agreements. The stock issued was fair valued at prices ranging from $0.05 to $0.09 per share for a total fair value of $207,500.


During the period of January 1 through March 6, 2014, the Company issued 1,450,000 shares of common stock in accordance with the Company’s Board of Directors’ compensation policy. The shares issued were fair valued at prices ranging from $0.08 to $0.10 for a total fair value of $126,000.


During the period of January 1 through March 6, 2014, the Company issued 501,386 of common stock in conversion of outstanding debts. The stock issued was fair valued at prices ranging from $0.05 to $0.10 per share for a total fair value of $43,333.


During the period of January 1 through March 6, 2014, the Company issued 800,000 shares of common stock fair valued at $0.10 per share or $80,000 pursuant to an Asset Purchase Agreement.


During the period of January 1 through March 6, 2014, the Company issued 1,000,000 shares of common stock fair valued at $0.08 or $80,000 as part of an employment package with the Company’s new Chief Financial Officer.


During the period of January 1 through March 6, 2014, the Company sold 625,000 shares of common stock at $0.08 for a total fair value of $50,000. There were no stipulations, conditions or requirements under the sale.




16



ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our mission is to utilize advanced technology and education management techniques to enhance and accelerate the delivery of 21st century learning using multiple teaching and learning modalities on a global basis.  We intend to accomplish this mission by accessing funds from the public capital markets and melding them into a unified strategy that will help to accelerate the improvement of education across the globe.  Our desired result will be better educated children, a sustainable and cost effective teaching model for education, at all age levels, including career education, and reduced dependence on governmental funding.

Critical Accounting Policies

Our critical accounting policies are summarized in Note 2 to our consolidated financial statements included in Item 8 of our annual report on Form 10-K for the fiscal year ended December 31, 2012.  However, certain of our accounting policies require the application of significant judgment by our management, and such judgments are reflected in the amounts reported in our financial statements.  In applying these policies, our management uses its judgment to determine the appropriate assumptions to be used in the determination of estimates.  Those estimates are based on our historical experience, terms of existing contracts, our observance of market trends, information provided by our strategic partners and information available from other outside sources, as appropriate.  Actual results may differ significantly from the estimates contained in our unaudited consolidated financial statements.  There have been no changes to our critical accounting policies during the fiscal quarter ended September 30, 2013.

Results of Operations

For the nine months ended September 30, 2013, our operations included satisfying continuous public disclosure requirements and the continued focus on the development and deployment of software, systems, and procedures to enhance the rate of learning in both primary and secondary education.  We took steps to create specifications for our initial internet-based offerings, to seek qualified vendors to supply software and systems, and we have begun the process of developing a marketing plan for its deployment.  We have engaged a digital advertising and marketing agency to support our needs in an outsourcing arrangement, and have rolled out new product identifications.  We continue to seek qualified executives in support of our plans for growth, and we expect to expand both the management team and our Board of Directors during the near term.

During the period ending June 30, 2013 we completed the acquisition of two internet properties, ClassChatter.com and ClassChatterLive.com.  Both had been developed by an individual with a background in STEM and Blended Learning educational technology. The sites are being revised as to their appearance to be more intuitive as to their purpose and will roll out in mid 2013.  They 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 given was the issuance of 319,000 shares of restricted common stock.  The author 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, whose business is focused on special education training and certification, primarily for education professionals in the K-12 area. The web site and underlying course library is being converted to a more conventional format, and we expect it to be online and generating revenues in FY2014. The total consideration given in the transaction was 300,000 shares of restricted stock. We have retained one of their founders under a consulting agreement, and increased the scope of responsibility to include a) an expanded special education course library, and b) a similar library addressing the training needs of teaching professionals in other specialized curriculum.

We have expanded our pool of acquisition targets and expect increased activity in the last quarter of 2013.

We have not generated revenues since our inception and we cannot determine when we will generate revenue from operations.  We expect to continue to operate at a loss for the foreseeable future.  In order to act upon our operating plan as discussed herein, we must be able to raise sufficient funds from debt financing and/or new investment from private investors.  Although we continue our efforts to attract the necessary capital to act upon our operating plan, there can be no assurance that we will be able to raise sufficient funds, if at all.

For the nine month periods ended September 30, 2013, we recorded a net loss of $644,596 and the aggregate net loss from inception to date is $7,029,218; these losses are primarily attributable to general and administrative expenses.   A large portion of the cumulative general and administrative expenses as of September 30, 2013 were related to consultants engaged in certain activities, including but not limited to, consultation with respect to management, marketing, strategic planning, corporate organization and structure, financial matters in connection with the operation of our business, expansion of services, evaluation of acquisition and business opportunities and review and advice regarding our overall progress, needs and condition.



17



Liquidity and Capital Resources

We are in the development stage and, since inception, have experienced significant changes in liquidity, capital resources and shareholders’ equity.  For the periods ending September 30, 2013 and December 31, 2012, the Company had total assets of $82,000 and -0-; current liabilities of $721,669 and $672,462 and stockholders’ deficits of $639,669 and $672,462, respectively.

We have had no capital expenditures from June 10, 2010 (inception) to September 30, 2013, and have no plans for the purchase of any plant or equipment in the foreseeable future.

We will depend almost exclusively on outside capital through the issuance of common shares and advances from related and other parties to finance ongoing operating losses.  Our ability to continue as a going concern is dependent on raising additional capital and ultimately on generating future profitable operations.  There can be no assurance that we will be able to raise the necessary funds when needed to finance its ongoing costs.  These factors raise substantial doubt about our ability to continue as a going concern.  The accompanying financial statements do not include any adjustments relative to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.

We estimate that we will require at least $1,000,000 in additional funding over the next 12 months to develop our new business.  Presently, we have no liquid assets with which to meet our current expenses.  Current and anticipated capital needs may vary based on our acquisition strategy and opportunities, or technology development activities.  As a result, we may raise capital through the issuance of debt, the sale of equity, or a combination of both.

We do not presently have any firm commitments for additional working capital and there are no assurances that such capital will be available to us when needed or upon terms and conditions which are acceptable to us.  If we are able to secure additional working capital through the sale of equity securities, the ownership interests of our current stockholders will be diluted.  If we raise additional working capital through the issuance of debt or additional dividend paying securities, our future interest and dividend expenses will increase.

If we are unable to secure additional working capital as needed, our ability to develop new business, generate sales, meet our operating and financing obligations as they become due, or continue our business and operations could be in jeopardy.

As of June 30, 2013, corporate offices are located at 1355 Peachtree Street, Suite 1150, Atlanta, GA 30309.  

We currently have no full time employees and there are no immediate plans to add employees.  The individuals working for the benefit of the Company are generally part time, and have been compensated primarily through the issuance of stock, or accrued expenses underlying consulting agreements.

Off-Balance Sheet Arrangements

As of September 30, 2013, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Exemption from Registration

The securities issued during the nine months ended September 30, 2013 were issued without registration with the Securities and Exchange Commission, pursuant to Section 4(2) of the Securities Act of 1933, as amended.  The securities are offered and sold only to accredited investors as defined in Regulation D.  This exemption applies because the Company did not make any public offer to sell any securities, but rather, the Company only offered securities to persons known to the Company to be accredited investors and only sold securities to persons who represented to the Company in writing that they are accredited investors.



18



ITEM 4.

CONTROLS AND PROCEDURES

Management’s Report on Disclosure Controls and Procedures

The Company’s management has previously identified what it believes are deficiencies in the Company’s disclosure controls and procedures.  The deficiencies in our disclosure controls and procedures included (i) lack of segregation of duties and (ii) lack of sufficient resources to ensure that information required to be disclosed by the Company in the reports that the Company files or submits to the SEC are recorded, processed, summarized, and reported, within the time periods specified in the SEC's rules and forms.

The Company intends to take corrective action to ensure that information required to be disclosed by the Company pursuant to the reports that the Company files or submits to the SEC is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.  As a result of the deficiencies in the Company’s disclosure controls and procedures, management has concluded that the Company’s disclosure controls and procedures are not effective.

Changes in Internal Control Over Financial Reporting

During the nine months ended September 30, 2013 there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



19




PART II.  OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS


The Company is not involved in any legal proceeding as of the date of these financial statements. The Company may become involved in litigation in the future in the normal course of business.


ITEM 1A.

RISK FACTORS


There are no material chances from the risk factors previously disclosed in Part 1, Item 1A – “Risk Factors” of our Annual Report on Form 10-k for the year ended December 31, 2012.


ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


On April 25, 2013, the Company issued 257,040 shares of common stock valued at $59,376 or $0.23 per share for the settlement of accounts payable pursuant to Debt Conversion Agreement.


On May 1, 2013, the Company issued 27,754 shares of common stock valued at $6,500 or $0.23 per share for consulting services pursuant to a Consulting Agreement.


On May 30, 2013, the Company issued 316,905 shares of common stock valued at $58,000 or $0.18 per share for the purchase of intangible assets pursuant to an Asset Purchase Agreement.


On June 1, 2013, the Company issued 50,497 shares of common stock valued at $10,000 or $0.20 per share for consulting services pursuant to a Consulting Agreement.


On July 1, 2013, the Company issued 39,394 shares of common stock valued at $6,500 or $0.165 per share for consulting services pursuant to a Consulting Agreement.


On July 1, 2013, the Company issued 21,212 shares of common stock valued at $3,500 or $.165 per share for consulting services pursuant to a Consulting Agreement.


On August 1, 2013, the Company issued 26,860 shares of common stock valued at $6,500 or $0.2420 per share for consulting services pursuant to a Consulting Agreement.


On August 1, 2013, the Company issued 14,463 shares of common stock valued at $3,500 or $.165 per share for consulting services pursuant to a Consulting Agreement.


On August 16, 2013, the Company issued 300,000 shares of common stock valued at $24,000 for the purchase of intangible assets pursuant to an Asset Purchase Agreement between the Company and the principals of PLC Consultants, LLC.


On August 17, 2013, the Company issued 14,463 shares of common stock valued at $3,500 or $.2420 per shares for consulting services pursuant to a Consulting Agreement.


On September 1, 2013, the Company issued 65,657 shares of common stock valued at $6,500 or $.099 per share for consulting services pursuant to a Consulting Agreement.


On September 1, 2013, the Company issued 35,354 shares of common stock valued at $3,500 or $.099 per share for consulting services pursuant to a Consulting Agreement.


On September 1, 2013, the Company issued 35,354 shares of common stock valued at $3,500 or $.099 per shares for consulting services pursuant to a Consulting Agreement.

 



20



On September 30, 2013 the Company issued 450,000 shares of common stock to Neal Sessions, valued at $.05 per share in conversion of all outstanding expenses, at an expense of $22,500 to the Company, in conjunction with his resignation from all positions with the Company.


On September 30, 2013 the Company issued 94,392 shares of common stock valued at $4,720 or $.05 as a one time bonus for work performed under a Consulting Agreement.


On September 30, 2013 the Company issued 300,183 shares of common stock valued at $15,009 or $.05 as a one time bonus for work performed under a Consulting Agreement.


On September 30, 2013 the Company issued 307,512 shares of common stock valued at $15,376 or $.05 as a one time bonus for work performed under a Consulting Agreement.


On September 30, 2013 the Company issued 50,000 shares of common stock valued at $2,500 or $.05 for the conversion of an outstanding debt.


All common stock issued during the second quarter of 2013 was issued without registration with the Commission, pursuant to Section 4(2) of the Securities Act of 1933, as amended.


ITEM 6.

EXHIBITS


Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits and are incorporated herein by this reference.




21




SIGNATURES

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


 

Sibling Group Holdings, Inc.

 

 

 

 

 

 

By:

/s/ Dave Saba

 

 

 

Dave Saba

 

 

 

President

 

 

 

(Principal Executive Officer)

 

 

 

 

 

 

By:

/s/ Maurine Findley

 

 

 

Maurine Findley

 

 

 

Chief Financial Officer

 

 

 

(Principal Accounting Officer)

 

 

 

 

 


Dated:  March 26, 2014






22




INDEX TO EXHIBITS


Exhibit No.

 

Description

10.1*

 

Asset Purchase Agreement between the Company and the principals of PLC Consultants, LLC dated July 5, 2013.

31.1*

 

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, promulgated under the Securities and Exchange Act of 1934, as amended.

31.2

 

Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, promulgated under the Securities and Exchange Act of 1934, as amended.

32.1**

 

Certification of Principal Executive Officer and Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**

 

XBRL Instance Document.

101.SCH**

 

XBRL Taxonomy Extension Schema Document.

101.CAL**

 

XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB**

 

XBRL Taxonomy Extension Label Linkbase Document.

101.PRE**

 

XBRL Taxonomy Extension Presentation Linkbase Document.

101.DEF**

 

XBRL Taxonomy Extension Definition Linkbase Document.

———————

*

Filed with this report.

**

Furnished with this report in accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subjected to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.









23