UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 13, 2015
CREATIVE LEARNING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware |
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000-52883 |
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20-445603 |
(State or other jurisdiction of incorporation or organization) |
|
(Commission File Number) |
|
(IRS Employer Identification No.) |
701 Market, Suite 113, St. Augustine, FL |
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32095 |
(Address of principal executive offices) |
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(Zip Code) |
Registrant's telephone number, including area code: (904) 824-3133
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On March 13, 2015, the Board of Directors of Creative Learning Corporation (the “Company”), based on the recommendation of management, and after discussion with the Company’s independent registered public accounting firm, Hartley Moore Accountancy Corporation (“Hartley Moore”), determined that the Company’s consolidated financial statements for the fiscal year ended September 30, 2014 should no longer be relied upon because of the related party transaction disclosure issue discussed below. Similarly, Hartley Moore’s report on the consolidated financial statements and any stockholder communications describing the Company’s consolidated financial statements for the fiscal year ended September 30, 2014 should no longer be relied upon.
In connection with our internal review of the Company’s internal control over financial reporting and after discussions with the Hartley Moore, management of the Company determined that the Company had not properly identified and presented certain related party transactions in the consolidated financial statements for the fiscal year ended September 30, 2014. In particular, management determined that the following unidentified related party transactions should have been disclosed in the notes to the consolidated financial statements:
Commissions and Consulting | |||||||
Fiscal Years Ending |
|||||||
Related Party |
2014 |
2013 |
|||||
Bottom Line Group(1) |
259,768 |
213,190 |
|||||
Jeffrey Ball(2) |
133,206 |
102,637 |
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_________________ |
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(1) Bottom Line Group is owned by Jeff Pappas, a brother to Brian Pappas, the Company’s Chief Executive Officer (payments include commissions, consulting, and business expense reimbursement). |
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(2) Jeffrey Ball is related to Brian Pappas as son-in-law (payments include commissions, consulting and business expense reimbursement). |
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The effects of the restatement regarding the disclosure of previously unidentified related party transactions on the Company's balance sheet, statement of income and cash flow for the year as of and ended 9/30/14 are as follows:
Balance Sheet as of September 30, 2014 |
||||||||||||
As Previously | Effect of | As | ||||||||||
Reported | Restatement | Restated | ||||||||||
Accounts Payable: Related parties |
$ |
- |
$ |
15,635 |
$ |
15,635 |
||||||
Accounts Payable: Third party |
$ |
534,932 |
$ |
(15,635 |
) |
$ |
519,297 |
Consolidated Statement of Income For the Fiscal Year Ended September 30, 2014 |
||||||||||||
As Previously |
Effect of |
As |
||||||||||
Reported |
Restatement |
Restated |
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Franchise consulting and commissions: Related Parties |
$ |
616,061 |
$ |
392,974 |
$ |
1,009,035 |
||||||
Franchise consulting and commissions: Other |
$ |
1,698,359 |
$ |
(392,974 |
) |
$ |
1,305,385 |
Consolidated Statement of Cash Flows For the Fiscal Year Ended September 30, 2014 |
||||||||||||
As Previously |
Effect of |
As |
||||||||||
Reported |
Restatement |
Restated |
||||||||||
Accounts payable - Related parties |
$ |
(5,690 |
) |
$ |
15,635 |
$ |
9,945 |
|||||
Accounts payable - Third parties |
$ |
358,269 |
$ |
(15,635 |
) |
$ |
342,634 |
Accordingly, the Company will restate its historical financial results to disclose these related party transactions. The restatement has no impact on the Company’s previously issued financial statements other than to add disclosure of the related party transactions and reclassify these related party amounts to the related party financial statement captions.
The Company currently anticipates filing a second amended Form 10-K for the fiscal year ended September 30, 2014 on or before March 23, 2015. As disclosed in the first amendment to the Form 10-K filed on February 2, 2015, the Company’s management has determined that the Company’s internal control over financial reporting and disclosure controls and procedures were not effective as of September 30, 2014.
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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 hereunto duly authorized.
CREATIVE LEARNING CORPORATION | |||
Date: March 19, 2015 | By | /s/ Brian Pappas | |
Brian Pappas, Chief Executive Officer |
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