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

Royalty Fees Increased 68.1% to $0.7 Million

Shareholder’s Equity Increased by $0.4 Million to $3.7 Million

Profitable for the Second Quarter of Fiscal 2015

ST. AUGUSTINE, Fla. - May 21, 2015 - (BUSINESS WIRE) - Creative Learning Corporation (OTC: CLCN), owner and developer of Bricks 4 Kidz®, Challenge Island® and Sew Fun Studios™, the highly-popular children’s education and enrichment programs, today announced financial results for the second quarter of fiscal 2015 ending March 31, 2015.

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

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

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

About Creative Learning Corporation

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

Safe Harbor State

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

Condensed Consolidated Balance Sheets
    March 31,   September 30,
    2015   2014
Current Assets:        
Cash   $ 2,739,673     $ 3,061,458
Restricted cash     225,984       180,009
Accounts receivable, less allowance for doubtful        
accounts of approximately $90,000 and $41,000, respectively     363,409       303,122
Prepaid expenses     35,622       7,850
Other receivables - current portion     191,935       126,339
Income Tax receivable     41,825       115,825
Deferred tax asset     48,723       48,723
Total Current Assets     3,647,171       3,843,326
Note receivable and accrued interest receivable - related party     72,100       70,000
Other receivables - net of current portion     55,183       67,749
Property and equipment, net of accumulated depreciation        
of $120,381 and $98,238, respectively     332,677       322,659
Intangible assets     170,754       125,754
Deposits     10,701       11,425
Total Assets   $ 4,288,586     $ 4,440,913
Liabilities and Stockholders’ Equity        
Current Liabilities:        
Accounts payable - related party   $ 18,006     $ 42,234
Accounts payable - other     194,160       492,698
Accrued stock based compensation           98,400
Accrued stock payable     10,080      
Unearned revenue     25,900      
Accrued marketing fund     225,984       180,009
Customer deposits     67,465       96,737
Deferred tax liability     5,550       5,550
Notes Payable     425       2,225
Legal settlement     25,000       161,250
Total Current Liabilities     572,570       1,079,103
Long-term deferred tax liability     22,230       22,230
Total Liabilities     594,800       1,101,333
Commitments and Contingencies - Note 13        
Stockholders’ Equity:        
Creative Learning Corporation stockholders' equity:        
Preferred stock, $.0001 par value; 10,000,000 shares authorized;        
-0- and -0- shares issued and outstanding, respectively          
Common stock, $.0001 par value; 50,000,000 shares authorized;        
shares issued as of March 31, 2015 and 2014: 11,983,409 and 11,829,409,              
respectively and shares outstanding as of March 31, 2015 and 2014:              
11,969,809 and 11,829,409, respectively.     1,198       1,183
Additional paid-in capital     2,518,176       2,263,501
Treasury Stock 13,600 shares and -0- shares, respectively (cost method)     (16,845 )    
Retained earnings     1,191,257       1,074,896
Total Stockholders’ Equity     3,693,787       3,339,580
Total Liabilities and Stockholders’ Equity   $ 4,288,586     $ 4,440,913
Condensed Consolidated Statements of Income
    (Unaudited)   (Unaudited)
    For the Three   For the Six
    Months Ended   Months Ended
    March 31,   March 31,   March 31,   March 31,
    2015   2014   2015   2014
Initial franchise fees   $ 872,737     $ 1,510,020     $ 1,540,893     $ 3,068,473  
Royalties fees     740,811       440,771       1,295,670       741,423  
Corporate Creativity Center Sales     1,001       52,560       1,284       67,200  
      1,614,549       2,003,351       2,837,847       3,877,096  
Operating expenses:                
Franchise consulting and commissions:                
Related parties     122,655       213,942       252,898       470,822  
Other     188,732       398,805       445,466       706,160  
Franchise training and expenses     95,406       128,136       198,623       225,655  
Salaries and payroll taxes     293,886       242,043       612,724       435,426  
Advertising     250,067       171,665       495,442       363,607  
Professional fees     131,352       80,424       228,291       129,617  
Office expense     34,267       91,159       67,505       182,741  
Bad debt expense     57,118             72,118        
Depreciation     11,079       9,938       22,143       19,478  
Stock-based compensation           21,537             21,537  

Other general and administrative expenses

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

income taxes

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

SOURCE Creative Learning Corporation


David Waldman | Natalya Rudman
Crescendo Communications, LLC
212-671-1020 x304


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