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 December 31, 2014.

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

Commission file number:  000-28311

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)

215 Morris Street, Suite 205, Durham, NC  27701

(Address of Principal Executive Office)   (Postal Code)

(919) 237-2755

(Registrant’s telephone number, including area code)

901 Mopac Expressway South, Barton Oaks Plaza One, Suite 300, Austin, TX  78746

(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

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. 52,554,684 shares of common stock are outstanding as of January 8, 2015.

 

 

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TABLE OF CONTENTS

		Page
	PART I.  FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	1
	Condensed Consolidated Balance Sheets as of December 31, 2014 (unaudited) and June 30, 2014	1
	Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2014 and 2013 (unaudited)	2
	Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2014 and 2013 (unaudited)	3
	Notes to Unaudited Condensed Consolidated Financial Statements	4
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	16
ITEM 4.	CONTROLS AND PROCEDURES	16
	PART II.  OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	17
ITEM 1A.	RISK FACTORS	17
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	17
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	17
ITEM 4.	MINE SAFETY DISCLOSURES	18
ITEM 5.	OTHER INFORMATION	18
ITEM 6.	EXHIBITS	19
	SIGNATURES	20

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INTRODUCTORY NOTES

This Report on Form 10-Q for Sibling Group Holdings, Inc. (“SIBE” or the “Company”) may contain forward-looking statements. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate” and “continue” or similar words. Forward-looking statements include information concerning possible or assumed future business success or financial results. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information. We believe that it is important to communicate future expectations to investors. However, there may be events in the future that we are not able to accurately predict or control. Accordingly, we do not undertake any obligation to update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

The forward-looking statements included herein are based on current expectations that involve a number of risks and uncertainties set forth under “Risk Factors” in our Transition Report on Form 10-K for the six months ended June 30, 2014 and year ended December 31, 2013 and other periodic reports filed with the SEC. Accordingly, to the extent that this Report contains forward-looking statements regarding the financial condition, operating results, business prospects or any other aspect of the Company, please be advised that SIBE’s actual financial condition, operating results and business performance may differ materially from that projected or estimated in such forward-looking statements.

The information contained in this report, except as specifically dated, is as of December 31, 2014.

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PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

SIBLING GROUP HOLDINGS, INC.

Condensed Consolidated Balance Sheets

		December 31, 2014				June 30, 2014
		(Unaudited)
ASSETS
Current assets
Cash		$	2,104			$	27,250
Accounts receivable			96,273				77,356
Prepaid expenses			312,421				202,363
Total current assets			410,798				306,969
Intangible assets, net			966,025				1,225,461
Total assets		$	1,376,823			$	1,532,430
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable		$	1,636,068			$	1,127,649
Accrued liabilities			205,432				231,322
Deferred revenue			872,673				634,643
Line of credit			—				100,000
Short-term notes payable			137,500				37,500
Due to related party			10,000				—
Convertible note payable, net of discount			166,909				—
Derivative liability			151,171				—
Total current liabilities			3,179,753				2,131,114
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; 50,842,973 and 41,518,251 issued and outstanding at December 31, 2014 and June 30, 2014.			5,083				4,152
Additional paid-in capital			9,387,541				8,016,481
Accumulated deficit			(11,195,554	)			(8,619,317	)
Total stockholders' deficit			(1,802,930	)			(598,684	)
Total liabilities and stockholders' deficit		$	1,376,823			$	1,532,430

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

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SIBLING GROUP HOLDINGS, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

		Three months ended December 31,								Six months ended December 31,
		2014				2013				2014				2013
Revenues		$	570,374			$	—			$	1,100,134			$	—
Cost of goods sold			207,556				—				409,104				—
Gross profit			362,818				—				691,030				—
Operating expenses
General and administrative			580,877				—				1,876,904				4,603
Professional fees			513,806				528,994				884,572				776,637
Total operating expenses			1,094,683				528,994				2,761,476				781,240
Loss from operations			(731,865	)			(528,994	)			(2,070,446	)			(781,240	)
Other income (expense)
Other (expense)			(129,719	)			—				(259,437	)			—
Interest (expense)			(78,952	)			(1,700	)			(95,183	)			(2,400	)
Loss on derivative			(151,171	)			—				(151,171	)			—
Total other income (expense)			(359,842	)			(1,700	)			(505,791	)			(2,400	)
Net loss		$	(1,091,707	)		$	(530,694	)		$	(2,576,237	)		$	(783,640	)
Net loss per share		$	(0.02	)		$	(0.03	)		$	(0.06	)		$	(0.04	)
Weighted average shares outstanding, basic and diluted			49,096,886				18,701,070				46,136,364				18,701,070

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

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SIBLING GROUP HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

		Six months ended December 31,
		2014				2013
Cash flows from operating activities
Net loss		$	(2,576,237	)		$	(783,640	)
Adjustments to reconcile net loss to net cash (used in) operating activities
Common stock issued for directors/board committee fees			64,800				332,700
Common stock issued for services			597,487				474,033
Common stock issued for compensation			604,800				—
Amortization of intangibles and debt discount			276,754				—
Changes in operating assets and liabilities
Accounts receivable			(18,917	)			—
Accounts payable			509,419				(55,768	)
Accrued liabilities			(22,395	)			2,400
Deferred revenue			238,030				—
Prepaid expenses			(110,058	)			—
Derivative liability			151,171
Due to related parties			10,000				25,633
Net cash (used in) operating activities			(275,146	)			(4,642	)
Cash flows from investing activities			—				—
Cash flows from financing activities			—				—
Adjustments to reconcile net loss to net cash provided by (used in) financing activities
Repayment of line of credit			(100,000	)			—
Proceeds of short term notes payable			100,000				—
Proceeds of notes payable			250,000				—
Net cash provided by financing activities			250,000				—
Net change in cash		$	(25,146	)		$	(4,642	)
Cash, beginning of period			27,250				4,642
Cash, end of period		$	2,104			$	—
Supplemental disclosure of cash flow information
Cash paid for interest		$	15,774			$	—
Cash paid for income taxes		$	—			$	—
Supplemental disclosure of non-cash operating and financing activities
Common stock issued for settlement of note payable		$	—			$	35,000
Common stock issued for settlement of accounts payable		$	1,000			$	82,587
Common stock issued for settlement of accrued interest payable		$	—			$	13,500
Common stock issued for prepaid expenses		$	—			$	1,725
Common stock issued for settlement of related party payable		$	—			$	84,908
Common stock issued for purchase of intangible asset		$	—			$	24,000

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

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SIBLING GROUP HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND JUNE 30, 2014

(Unaudited)

Note 1 - Nature of Operations and Basis of Presentation

 

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."

On March 30, 2013, SIBE, through its wholly owned subsidiary, BLSCH Acquisition, LLC signed a Closing Terms Addendum (the "Closing Addendum) to the previously disclosed Asset Purchase Agreement between BLSCH Acquisition, LLC and BLENDEDSCHOOLS.NET, an unrelated third party ("Blended Schools") dated November 25, 2013. Under the terms of the Closing Addendum, we closed on the purchase of assets of Blended Schools effective as of May 30, 2014. Blended Schools provides online curriculum with 192 master courses for the K-12 marketplace, all Common Core compatible; a complete hosted course authoring and learning management system (LMS) environment featuring both Blackboard and Canvas; the new Language Institute, with online courses in Arabic, Chinese, Spanish, French, Japanese, Latin, Russian, German and Hindi, all oriented to meet today's ESL requirements. The Blendedschools.net staff provides online, and on-site training for Blended Learning training methods, conversion planning, and implementation.

Under the terms of the Closing Addendum, we agreed to pay the $550,000 purchase price for the assets by assuming $446,187 of Blended Schools' debt, by payment of $53,813 in cash on June 10, 2014, and agreeing to pay an additional $50,000 payment in cash on November 14, 2014 to Blended Schools. In addition, we agreed to pay certain other debts of Blended Schools as provided for in the Asset Purchase Agreement.

 

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 Austin, Texas.

Note 2 - Summary of Significant Accounting Policies

(a)  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 subsidiaries. All significant intercompany transactions and balances have been eliminated. The Company changed its fiscal financial reporting year end from December 31 to be June 30, which represents the operating year ends of its current business.

 

(b)  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 limited revenues, has a working capital deficit of $2,768,955 and incurred a loss of $2,576,237 for the recent six months ended December 31, 2014. These conditions raise substantial doubt about the Company's ability to continue as a going concern. 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.

 

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SIBLING GROUP HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND JUNE 30, 2014

(Unaudited)

 

(c)  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 amounts of assets and liabilities, derivative liabilities, debt discounts, 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.

(d)  Allowance for Doubtful Accounts

Accounts receivables are recorded at their estimated collectible amounts. Management evaluates the collectability of its receivables periodically, largely based on the historical trends with the customer as well as current financial information available. If it is deemed appropriate an allowance is recorded as an expense in the current period. As of December 31, 2014 and June 30, 2014 there is no allowance for doubtful accounts recorded.

(e)  Intangibles

Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

(f)  Revenue Recognition

The Company typically will receive in full or a large prepayment on account for the use of its courses for the successive K-12 school year commencing on July 1. Revenues are amortized ratably over the contract term with the customer, typically over twelve months. Deferred revenues represents customer prepayments on account for the subscribed software and course content.

 

(g)  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.

(h)  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 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.

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SIBLING GROUP HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND JUNE 30, 2014

(Unaudited)

 

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).

 

We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at December 31, 2014:

		Total				(Level 1)				(Level 2)				(Level 3)
Assets
Total assets measured at fair value		$	—			$	—			$	—			$	—
Liabilities
Derivative liability			151,171				—				—				151,171
Total liabilities measured at fair value		$	151,171			$	—			$	—			$	151,171

The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:

 

Beginning balance as of July 1, 2014		$	—
Fair value of derivative liabilities issued			117,398
Conversion of notes payable			—
Loss on change in derivative liability			33,773
Ending balance as of December 31, 2014		$	151,171

The convertible notes issued and described in Note 7 do not have fixed settlement provisions because their conversion prices are not fixed. The conversion features have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

 

For purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used Black Scholes option valuation model. The significant assumptions used in the Black Scholes valuation of the derivative are as follows:

 

Risk free interest rate			0.5%
Stock volatility factor			93%
Weighted average expected option life			5 to 6 months
Expected dividend yield			None

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SIBLING GROUP HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND JUNE 30, 2014

(Unaudited)

 

(i)  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.

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.

 

(j)  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 antidilutive for the periods presented. As of December 31, 2014 and 2013 there are no common stock equivalents outstanding to exclude.

 

(k)  Recent Accounting Pronouncements

In August 2014, the FASB issued Accounting Standards Update "ASU" 2014-15 on "Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern". Currently, there is no guidance in U.S. GAAP about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity's ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management's plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued).

The amendments in this Update are effective for public and nonpublic entities for annual periods ending after December 15, 2016. Early adoption is permitted.

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SIBLING GROUP HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND JUNE 30, 2014

(Unaudited)

 

In June 2014, FASB issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers". The update gives entities a single comprehensive model to use in reporting information about the amount and timing of revenue resulting from contracts to provide goods or services to customers. The proposed ASU, which would apply to any entity that enters into contracts to provide goods or services, would supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. Additionally, the update would supersede some cost guidance included in Subtopic 605-35, Revenue Recognition – Construction-Type and Production-Type Contracts. The update removes inconsistencies and weaknesses in revenue requirements and provides a more robust framework for addressing revenue issues and more useful information to users of financial statements through improved disclosure requirements. In addition, the update improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. The update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

In June 2014, FASB issued Accounting Standards Update ("ASU") No. 2014-12, "Compensation – Stock Compensation (Topic 718); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period". The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. For all entities, the amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The effective date is the same for both public business entities and all other entities.

Entities may apply the amendments in this ASU either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition.

All other 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 319,905 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.

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SIBLING GROUP HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND JUNE 30, 2014

(Unaudited)

 

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.

On February 1, 2014, we completed the purchase of the assets of DWSaba Consulting, LLC for 800,000 shares of restricted common stock valued at $0.05 per share for total consideration of $40,000. This allowed Sibling Group Holdings access to the AcceleratingED.com website, newsletter, extensive contacts in education as well as access to the education marketing and sales tools developed by DWSaba Consulting, LLC.

On May 30, 2014, we closed on the purchase of assets and business of Blended Schools. Blended Schools provides online curriculum with 192 master courses for the K-12 marketplace, all Common Core compatible; a complete hosted course authoring and learning management system (LMS) environment featuring both Blackboard and Canvas; the new Language Institute, with online courses in Arabic, Chinese, Spanish, French, Japanese, Latin, Russian, German and Hindi, all oriented to meet today's ESL requirements. The Blendedschools.net staff provides online, and on-site training for Blended Learning training methods, conversion planning, and implementation. We agreed to pay the $550,000 purchase price for the assets by assuming $446,187 of Blended Schools' debt, exclusive of deferred revenues, by payment of $53,813 in cash on June 10, 2014 and agreeing to pay an additional $50,000 in cash on November 14, 2014 to Blended Schools. In addition, we agreed to pay certain other debts of Blended Schools as provided for in the Asset Purchase Agreement.

The identified assets and liabilities acquired in the Blended Schools acquisition as of May 30, 2014 are as follows:

Fair Value of Assets Acquired:
Accounts Receivable		$	121,810
Prepaid Expenses			24,946
Software and content			1,187,534
Liabilities Assumed:
Accounts Payable			(284,891	)
Bank Line of Credit			(100,000	)
Deferred Revenue – customer prepayments			(784,291	)
Other Accrued Liabilities			(61,295	)
Cash Paid to be paid to Seller – post closing		$	103,813
Cash Paid to Seller – post closing		$	53,813
Contingent Payable to Seller - Accrued			50,000
Liabilities Assumed			446,187
Total Purchase Price		$	550,000

The intangibles are being amortized over a one to three year period, with the exception of PLC Consultants, which has not been placed in service.

The Company has not paid the contingent payable of $50,000 to date, as a result, the Company began accruing interest at $1,000 per day beginning on November 15, 2014 pursuant to the Memorandum of Understanding executed on October 24, 2014.

9

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SIBLING GROUP HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND JUNE 30, 2014

(Unaudited)

 

Note 4 – Intangible Assets

Intangible assets are comprised of software and content from the following acquisitions;

		December 31, 2014				June 30, 2014
ClassChatter		$	58,000			$	58,000
PLC Consultants			24,000				24,000
DWSaba Consulting			40,000				40,000
Blended Schools			1,187,534				1,187,534
Total			1,309,534				1,309,534
Less accumulated amortization			(343,509	)			(84,073	)
Net		$	966,025			$	1,225,461

Note 5 – Accrued Liabilities

Accrued liabilities consist of the following:

		December 31, 2014				June 30, 2014
Accrued benefits & payroll taxes		$	32,682			$	26,659
Accrued compensation			36,590				68,080
Accrued interest			30,560				22,641
Accrued miscellaneous			105,600				67,581
Due to TIU – accounting services			—				38,361
Liabilities to be settled in stock			—				8,000
		$	205,432			$	231,322

Note 6 - Short-Term Notes Payable

 

Short term notes payable consists of the following:

 

		December 31, 2014				June 30, 2014
Short Term Note (a)		$	107,500			$	7,500
Due to Related Party (c)			10,000				—
Outstanding Debenture in default (b)			30,000				30,000
Total Short Term Notes		$	147,500			$	37,500

———————

(a)	At December 31, 2014 and June 30, 2014 the Company had a note payable balance of $107,500 and 7,500 respectively. This represents short term notes with annual interest rates ranging from 4.5% to 12%. At December 31, 2014 and June 30, 2014 these notes had accrued interest in the amount of $1,265 and $516, respectively.
(b)	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 $24,375 and $22,125 as of December 31, 2014 and June 30, 2014, respectively, which is in default.
(c)	On November 26, 2014, the Company had a promissory note payable to a related party, Dave Saba, in the amount of $10,000. The note is payable on June 1, 2015, with an interest rate of 1.25% per month. At December 31, 2014, the note had accrued interest in the amount of $125.

10

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SIBLING GROUP HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND JUNE 30, 2014

(Unaudited)

 

Note 7 – Convertible Notes Payable

Effective on December 5, 2014, Sibling Group Holdings, Inc., completed the closing of a private placement financing transaction with FireRock Capital, Inc. ("FireRock"), an unrelated third party, pursuant to a Securities Purchase Agreement (the "Purchase Agreement"). Pursuant to the Purchase Agreement, FireRock purchased from the Company an 8% Senior Convertible Promissory Note (the "Note" and together with the Purchase Agreement, the "Transaction Documents") in the aggregate principal amount of $275,000.00, and delivered gross proceeds of $250,000, excluding a 10% original issue discount, transaction costs, fees and expenses. The Note may be converted into shares of the Company's common stock (the "Common Stock") by FireRock in whole or in part at any time from time to time after the issuance of the Note, by submitting to the Company a Notice of Conversion. If none of the Principal Amount is paid by June 1, 2015 "the Maturity Date", then an additional $250,000 will be due for the failure to pay the monies due at maturity for a total sum of $525,000.00 (the "Conversion Amount") which shall be paid in the form of conversion into Common Stock plus accrued interest, or if a portion of the Principal Amount and accrued interest is paid in cash by the Maturity Date, the Conversion Amount shall be reduced by the amount that is double the amount paid in cash (not including the amount paid as interest) by the Maturity Date.

An additional 25% of principal is due as a prepayment penalty for monies paid against principal prior to the maturity date. In the event of a default there is an additional 45% of principal is due as a prepayment penalty for monies paid against principal prior to the maturity date. Prepayment of the Note requires notification to FireRock, if such monies are obtained from other financing sources. The interest rate increases to 15% per annum for the failure to make timely payments of principal or interest. There is also a 2% penalty on the converted principal and interest balance into shares for the failure to timely deliver shares issuable upon a conversion within three business days.

FireRock has future participation rights up to 25% of any future offerings at the same terms and conditions being offered to others, as long as the FireRock Note remains outstanding.

The Note is convertible into shares of the Company's common stock at any time at the discretion of FireRock at an initial conversion price per share equal to the lowest of: (a) $0.25 or (b) 70% (or 50% upon a default) multiplied by the volume weighted average price of the Common Stock for the ten (10) trading days immediately prior to the applicable conversion date (the "Conversion Price"). The Conversion Price is subject to adjustment for stock splits, reverse stock splits, stock dividends, issuance and or sale of stock, other similar transactions, inclusive of the issuance of stock options or warrants at a price or conversion price less than $.25 per share while this FireRock Note is outstanding and subject to the terms of the Transaction Documents.

As a result of the derivative nature of the conversion terms of this FireRock Note, the Company has recorded a a fair value derivative liability in the amount of $117,398 at inception, which will be marked to market. In addition the Company issued 125,000 shares of common stock in connection with this FireRock Note, which has an allocated value of $18,644. The beneficial conversion feature of this FireRock Note has been valued at $85,259. As a result there has been a debt discount recorded in the amount of $103,903 to be amortized ratably over six months. The accumulated amortization recorded on this debt discount as of December 31, 2014 was $17,317.

Interest on the principal amount of the Note accrues at the rate of 8% per annum and is payable on the Maturity Date, seven months after the date of the Note. Accrued interest was $1,588.89 at December 31, 2014.

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SIBLING GROUP HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND JUNE 30, 2014

(Unaudited)

 

Note 8 - 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"). Effective August 9, 2012, the Company's stockholders approved an increase in authorized capital stock to 500 million shares.

 

Common Stock

During the six months ended December 31, 2014, the Company issued the following shares of Common Stock:

The Company issued 1,613,056 shares of common stock pursuant to Consulting and Services Agreements. The stock issued was fair valued at prices ranging from $.12 to $.18 per share for a total fair value of $210,400.

The Company issued 900,000 shares of common stock in accordance with the Company's Board of Directors' compensation policy and for the services of a Board appointed committee. The stock issued was fair valued at $.144 per share for a total fair value of $129,600, which will be expensed quarterly during the year ended June 30, 2015.

The Company issued 4,200,000 shares of common stock for compensation to officers and employees. The stock issued was fair valued at $.144 per share for a total fair value of $604,800.

The Company issued 8,333 shares of common stock in conversion of outstanding debts. The stock issued was fair valued at $.12 per share for a total value of $1,000.

The Company issued 2,478,333 shares of common stock pursuant to Consulting and Services Agreements. The stock issued was fair valued at prices ranging from $.125 to $.20 per share for a total fair value of $387,087.

The Company issued 125,000 shares of common stock for the private placement financing entered into with the Company. The stock issued was fair valued at $.159 per share for a total fair value of $19,875.

Note 9 – Commitments and Contingencies

On October 17, 2014, the Company entered into a one year consulting agreement whereby the consultant would be paid with 300,000 shares of the Company's common stock.

On November 1, 2014 the Company entered into an eight month consulting agreement whereby the consultant would be paid with 70,000 shares of the Company's common stock and cash payments aggregating a total of $6,000.

On November 7, 2014, the Company entered into a three month consulting agreement whereby the consultant would be paid with 100,000 shares of the Company's common stock.

 

On December 10, 2014, the Company entered into a one-year consulting agreement where the consultant would be paid with 100,000 shares of the Company's common stock.

On December 17, 2014, the Company entered into a one-year consulting agreement where the consultant would be paid with 1,250,000 shares of the Company's common stock.

The Company rents its office space unit on a month to month basis in Austin, Texas. Rent expense for the six months ended December 31, 2014 and June 30, 2014 was $3,139 and $18,000 respectively.

12

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SIBLING GROUP HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND JUNE 30, 2014

(Unaudited)

 

Note 10 – Subsequent Events

On January 7, 2015, the Company issued 1,600,000 shares of common stock pursuant to a Consulting and Services agreement valued at $224,000.

On January 8, 2015, the Company issued 111,710 shares of common stock to settle an accounts payable.

On January 28, 2015, the Board of Directors granted the authority to create 500,000 shares of Series A Convertible Preferred Stock.

On January 30, 2015, the Company entered into and completed the initial closing pursuant to a share exchange agreement (the "Share Exchange Agreement") with Urban Planet Media & Entertainment, Corp. ("Urban Planet Media") and the Urban Planet Media's shareholders on January 28, 2015. We agreed to issue up to 10,500,000 shares of our unregistered common stock, $0.0001 par value (the "Common Stock") and 500,000 shares of our Series A Convertible Preferred Stock to the shareholders of Urban Planet Media holding 8,954,281 shares of its issued and outstanding common stock (the "Share Exchange"), such shares representing 100% of the issued and outstanding common stock of Urban Planet Media. In addition, we agreed to reserve for issuance within 30 days after the completion of the acquisition of a 100% interest in Urban Planet Media 2,000,000 shares of our Common Stock as designated by Urban Planet Media's Chief Executive Officer to individuals or entities whose past, present and/or potential contributions to Urban Planet Media have been, are or will be important to its success.

We completed an initial closing pursuant to the Share Exchange Agreement whereby we acquired approximately 61.7% of Urban Planet Media's outstanding common stock in exchange for 6,481,360 shares of our Common Stock and 308,635 shares of our Series A Preferred Stock. We plan to complete the acquisition of an additional 3,427,051 shares of Urban Planet Media common stock pursuant to the Share Exchange Agreement by issuing 4,018,640 shares of our common stock and 191,365 shares of our Series A Preferred no later than February 27, 2015. Upon completion of this part of the acquisition, Urban Planet Media will become our wholly owned subsidiary and our pro-forma shares of Common Stock outstanding giving effect to the acquisition of Urban Planet Media is expected to be approximately 61,342,973.

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ITEM 2.

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

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the Company’s financial condition and results of operations. The MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes thereto.

Overview

Our mission is to discover, develop and deliver resources to expand and improve lifelong learning opportunities and achievement. The mission is accomplished by accessing funds from the public capital markets and applying them in a unified strategy of growth and acquisitions to accelerate the improvement of early childhood, K-12, post-secondary and corporate education around the world.

Results of Operations

For the Three Months Ended December 31, 2014 and December 31, 2013.

During the three month period ended December 31, 2014 we recorded revenue of $570,374, as compared to $0 revenue for the three months ended December 31. 2013. Total operating expenses for the three month period ended December 31, 2014 was $1,094,683 consisting of salaries of our management and staff, as well as technology expenses, consulting expenses and professional fees. This is compared to total operating expenses for the three month period ended December 31, 2013 of $528,994, consisting mainly of consulting expenses and professional fees.

 

Interest expense on our existing debt for the three month periods ended December 31, 2014 and December 31, 2013 was $78,952 and $1,700, respectively. Amortization amounted to $129,719 and $0 for the three months ended December 31, 2014 and 2013, respectively.

For the three months ended December 31, 2014, our operations included operating Blended Schools Network, forming strategic partnerships to take products into a national and international market, exploring and evaluating future acquisitions, and engaging investor relation and investment banking firms to raise our visibility and communication in the investment community.

For the Six Months Ended December 31, 2014 and December 31, 2013.

During the six month period ended December 31, 2014 we recorded revenue of $1,100,134, as compared to $0 revenue for the six months ended December 31. 2013. Total operating expenses for the six month period ended December 31, 2014 was $2,761,476 consisting of salaries of our management and staff, as well as technology expenses, consulting expenses and professional fees. This is compared to total operating expenses for the six month period ended December 31, 2013 of $781,240 consisting mainly of consulting expenses and professional fees.

 

Interest expense on our existing debt for the three month periods ended December 31, 2014 and December 31, 2013 was $95,183 and $2,400, respectively. Amortization amounted to $259,436 and $0 for the six months ended December 31, 2014 and 2013, respectively.

For the six months ended December 31, 2014, our operations included expanding the management team of Sibling, focusing on internal controls and filings, operating Blended Schools Network, forming strategic partnerships to take products into a national and international market, exploring and evaluating future acquisitions, and engaging investor relation and investment banking firms to raise our visibility and communication in the investment community.

Liquidity and Capital Resources

Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. We had a working capital deficit of $2,768,955, $2,104 in cash and $966,025 of intangible assets as of December 31, 2014, compared to a working capital deficit of $1,824,145 and $27,250 in cash as of June 30, 2014.

Net cash used by operating activities was $275,146 for the six months ended December 31, 2014, compared to $4,642 for the six months ended December 31, 2013. The increase of $270,504 of cash used by operating activities for the quarter was primarily a result of payments made on obligations versus reduced cash collections of accounts receivable.

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We have had no capital expenditures for the three months ended December 31, 2014, and have no plans for the purchase of any plant or equipment in the foreseeable future.

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 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 December 31, 2014, corporate offices were located at 901 Mopac Expressway, Barton Oaks Plaza One Suite 300, Austin, TX 78746.

As of February 15, 2015, corporate offices are located at 215 Morris Street, Suite 205, Durham, NC 27701.

Critical Accounting Policies

The discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses, and related disclosure on contingent assets and liabilities at the date of the financial statements. Actual results may differ from these estimates under different assumptions and conditions.

 

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and may potentially result in materially different results under different assumptions and conditions. Our critical accounting policies are summarized in Note #2 to our consolidated financial statements in Item #15 of our Transition Report on Form 10-K for the six months ended June 30, 2014. As of December 31, 2014, management believes the critical accounting policies applicable to the Company that are reflective of significant judgments and or uncertainties are limited to equity based transactions or convertible debt instruments.

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.

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.

Derivative Financial Instrument

 We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. Management evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based simple derivative financial instruments, we use the Black-Scholes option pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

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Off Balance Sheet Arrangements

There are no off balance sheet arrangements.

Exemption from Registration

The securities issued during the three months ended December 31, 2014 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.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We did not have any market risk sensitive instruments outstanding during this period.

ITEM 4.

CONTROLS AND PROCEDURES

We strive to maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in the reports filed under the Securities Exchange Act, is recorded processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

Under the supervision of management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission published in 1992 and subsequent guidance prepared by the Commission specifically for smaller public companies. Based on that evaluation, our management concluded that our internal control over financial reporting were not effective as of December 31, 2014. We have identified the following material weaknesses as of December 31, 2014: (i) lack of sufficient resources to ensure compliance with GAAP and the rule and regulations of the SEC, especially with regards to equity based transactions and tax accounting expertise, (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 control deficiencies noted did not result in any audit adjustments to the Company's 2014 transitional financial statements.

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PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

We are not presently a party to any material litigation, and no new litigation commenced since the filing of our Form 10-K that would be required to be disclosed in response to this Item.

ITEM 1A.

RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Transition Report on Form 10-K for the six months ended June 30, 2014 which could materially affect our business, financial condition or future results. There have been no other material changes during the quarter ended December 31, 2014 to the risk factors discussed in the periodic reports noted above that have not already been disclosed in the Company’s most recently filed 10-K.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the six months ended December 31, 2014, the Company issued the following shares of Common Stock:

On August 19 2014, the Company issued 1,613,056 shares of common stock as payment for services rendered pursuant to Consulting and Services Agreements. The shares had an aggregate fair value at issuance of $210,400. These issuances were restricted shares, issued pursuant to the exemption set forth in Section 4(a)(2) of the Securities Act of 1933.

On August 19 2014, the Company issued 8,333 shares of common stock for conversion of outstanding debts totaling $1,000. These issuances were restricted shares, issued pursuant to the exemption set forth in Section 4(a)(2) of the Securities Act of 1933.

On September 10, 2014, the Company issued 900,000 shares of common stock to Directors in accordance with the Company’s Board of Directors’ compensation policy and for the services of a Board appointed committee. The shares had an aggregate fair value at issuance of $129,600. These issuances were restricted shares, issued pursuant to the exemption set forth in Section 4(a)(2) of the Securities Act of 1933.

On September 10, 2014, the Company issued 4,200,000 shares of common stock as compensation to officers and employees. The shares had an aggregate fair value at issuance of $604,800. These issuances were restricted shares, issued pursuant to the exemption set forth in Section 4(a)(2) of the Securities Act of 1933.

On October 20, 2014, the Company issued 300,000 shares of common stock as payment for services rendered pursuant to Consulting and Services Agreements. The shares had an aggregate fair value at issuance of $37,500. These issuances were restricted shares, issued pursuant to the exemption set forth in Section 4(a)(2) of the Securities Act of 1933.

On November 17, 2014, the Company issued 183,333 shares of common stock as payment for services rendered pursuant to Consulting and Services Agreements. The shares had an aggregate fair value at issuance of $36,667. These issuances were restricted shares, issued pursuant to the exemption set forth in Section 4(a)(2) of the Securities Act of 1933.

On November 19, 2014, the Company issued 575,000 shares of common stock as payment for services rendered pursuant to a Consulting and Service Agreement. The shares had an aggregate fair value at issuance of $112,700. These issuances were restricted shares, issued pursuant to the exemption set forth in Section 4(a)(2) of the Securities Act of 1933.

On December 1, 2014, the Company issued 125,000 shares of common stock for $19,875 pursuant to a private placement financing agreement. These issuances were restricted shares, issued pursuant to the exemption set forth in Section 4(a)(2) of the Securities Act of 1933.

On December 16, 2014, the Company issued 1,420,000 shares of common stock as payment for services rendered pursuant to Consulting and Services Agreements. The shares had an aggregate fair value at issuance of $200,220. These issuances were restricted shares, issued pursuant to the exemption set forth in Section 4(a)(2) of the Securities Act of 1933.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

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ITEM 4.

MINE SAFETY DISCLOSURES.

Not Applicable.

ITEM 5.

OTHER INFORMATION.

Entry into a Material Definitive Agreement.

In furtherance of the previously disclosed letter of intent (see our current report on Form 8-K filed with the Securities and Exchange Commission on October 30, 2014), Sibling Group Holdings, Inc. (“we,” “us,” “our,” or the “Company”) entered into and completed the initial closing pursuant to a share exchange agreement (the “Share Exchange Agreement”) with Urban Planet Media & Entertainment, Corp. (“Urban Planet Media”) and the Urban Planet Media’s shareholders on January 28, 2015. We agreed to issue up to 10,500,000 shares of our unregistered common stock, $0.0001 par value (the “Common Stock”) and 500,000 shares of our Series A Convertible Preferred Stock to the shareholders of Urban Planet Media holding 8,954,281 shares of its issued and outstanding common stock (the “Share Exchange”), such shares representing 100% of the issued and outstanding common stock of Urban Planet Media. In addition, we agreed to reserve for issuance within 30 days after the completion of the acquisition of a 100% interest in Urban Planet Media 2,000,000 shares of our Common Stock as designated by Urban Planet Media’s Chief Executive Officer to individuals or entities whose past, present and/or potential contributions to Urban Planet Media have been, are or will be important to its success.

 

We completed an initial closing pursuant to the Share Exchange Agreement whereby we acquired approximately 61.7% of Urban Planet Media’s outstanding common stock in exchange for 6,481,360 shares of our Common Stock and 308,635 shares of our Series A Preferred Stock. We plan to complete the acquisition of an additional 3,427,051 shares of Urban Planet Media common stock pursuant to the Share Exchange Agreement by issuing 4,018,640 shares of our common stock and 191,365 shares of our Series A Preferred no later than February 27, 2015. Upon completion of this part of the acquisition, Urban Planet Media will become our wholly owned subsidiary and our pro-forma shares of Common Stock outstanding giving effect to the acquisition of Urban Planet Media is expected to be approximately 61,342,973.

Pursuant to the terms of the Share Exchange Agreement, we agreed to appoint one person designated by Urban Planet Media to serve on the Company’s board of directors. In addition, we agreed to appoint Brian A. OliverSmith as our Chief Executive Officer.

The Share Exchange Agreement contains customary representations, warranties, covenants and indemnification provisions.

 

Urban Planet Mobile is a mobile media company providing high-value content and solutions in the education, healthcare and literacy markets offering educational products created for mobile, tablet, and computer. The company is a recipient of the GSMA Global Mobile Award for Best Mobile Learning Innovation winner, a 2013 CODiE Award Finalist, a Frost & Sullivan Most Innovative App designee, a Gartner Cool Vendor in Education Technology, and the creator of the USAID funded MobiLiteracy™ program in Uganda. Urban Planet Mobile’s products are available worldwide, with business in 40 countries. With its pioneering audio SMS with IVR delivery, the company’s mobile learning products can be accessed on mobile phones around the world.

Following the closing of the Share Exchange, we intend to continue Urban Planet Media’s historical businesses.

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ITEM 6.

EXHIBITS

Exhibit No.		Description
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.

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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, thereunto duly authorized.

	Sibling Group Holdings, Inc.
Dated: February 17, 2015	By:	/s/ Brian OliverSmith
		Brian OliverSmith
		Chief Executive Officer
		(Principal Executive Officer)
Dated: February 17, 2015	By:	/s/ Angelle Judice
		Angelle Judice
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

20