UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14C INFORMATION
Information Required in Information Statement
Information Statement Pursuant to Section
14(c) of the Securities Exchange Act of 1934
Filed by the Registrant
x
Filed by a Party other than the Registrant
¨
Check the appropriate box:
|
¨
|
Preliminary Information Statement
|
|
¨
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|
|
x
|
Definitive Information Statement
|
Creative Learning Corporation
|
(Name of Registrant as Specified in Its Charter)
|
Payment of Filing Fee (Check the appropriate box):
|
¨
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
|
|
(1)
|
Title of each class of securities to which transaction applies:
|
|
(2)
|
Aggregate number of securities to which transaction applies:
|
|
(3)
|
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was determined):
|
|
(4)
|
Proposed maximum aggregate value of transaction:
|
|
¨
|
Fee paid previously with preliminary materials:
|
¨
Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of
its filing.
|
(1)
|
Amount previously paid:
|
|
(2)
|
Form, Schedule or Registration Statement No.:
|
NOTICE OF ACTION BY WRITTEN CONSENT
OF HOLDERS OF A MAJORITY OF
THE OUTSTANDING VOTING STOCK OF
CREATIVE LEARNING CORPORATION
To the Stockholders of Creative Learning Corporation:
The accompanying Notice and Information
Statement are furnished by Creative Learning Corporation, a Delaware corporation (“we,” “us,” “our,”
“CLC” or the “Company”) to the holders of record of the Company’s common stock, par value $0.0001
per share (“Common Stock”), at the close of business on July 28, 2017 (the “Record Date”), pursuant to
Rule 14c-2 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Regulation 14C and
Schedule 14C thereunder, and Section 228 of the Delaware General Corporation Law (the “DGCL”) in connection with
certain corporate actions taken by written consent of the holders of a majority of the issued and outstanding shares of Common
Stock. The enclosed Information Statement shall be considered the notice required under Section 228 of the DGCL.
The purpose of this
Notice and Information Statement is to notify our stockholders that, on July 6, 2017, we received written consent from the stockholders,
representing approximately 51.7% of the then total issued and outstanding Common Stock, to take the following actions: (i) amend
the bylaws of the Company (the “Bylaws”) to permit stockholders to fix the size of the board of directors (the “Board”);
(ii) fix the size of the Board at five (5); (iii) remove Charles Grant and Michael Gorin from the Board and from any committees
of the Board of the Company that Messrs. Grant and Gorin may hold with the Company; and (iv) elect
Blake
Furlow, Gary Herman and Bart Mitchell
to the Board
to replace
Messrs. Grant
and Gorin,
and to fill the newly created seat on the Board
.
Pursuant to Rule 14c-2 promulgated under
the Exchange Act, the actions taken pursuant to the written consent executed by stockholders holders of the will be effective twenty
(20) calendar days after the date on which this Information Statement is being sent to our stockholders.
WE ARE NOT ASKING YOU
FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY.
We appreciate your continued support and
confidence in the Company.
|
Very truly yours,
|
|
|
|
/s/ Christian Miller
|
|
Name:
|
Christian Miller
|
|
Title:
|
Chief Financial Officer
|
August 18, 2017
Table of Contents
Creative Learning Corp.
701 Market Street,
Suite 113
St. Augustine, FL
INFORMATION STATEMENT
August 18, 2017
This Information Statement
is first being furnished on or about August 18, 2017, to the holders of record of the common stock, par value $0.0001 per share
(“Common Stock”) of Creative Learning Corporation, a Delaware corporation (“we,” “us,” “our,”
“CLC” or the “Company”) at the close of business on July 28, 2017 (the “Record Date”), in connection
with the action by written consent of the holders of a majority of the Company’s issued and outstanding shares of Common
Stock taken without a meeting to approve the actions described in this Information Statement. No action is requested or required
on your part.
On July 6, 2017, the
stockholders of the Company, representing approximately 51.7% of the issued and outstanding shares of Common Stock consented in
writing to the actions described below. Such approval and consent constitute the approval and consent of a majority of the total
number of shares of the Company’s outstanding Common Stock and is sufficient under Section 228 of the Delaware General Corporation
Law (the “DGCL”) and Article I, Section 1.08 of the Company’s bylaws (the “Bylaws”) to approve such
actions. Accordingly, the actions will not be submitted to the other stockholders of the Company for a vote, and this Information
Statement is being furnished to such other stockholders to provide them with certain information concerning the actions in accordance
with the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the regulations
promulgated under the Exchange Act, including Regulation 14C.
Pursuant to Rule 14c-2
promulgated by the Securities and Exchange Commission (the “SEC”) under the Exchange Act, the actions described herein
will become effective twenty (20) calendar days following the date on which this Information Statement is first mailed to our stockholders.
The Company’s
principal executive offices are located at 701 Market Street, Suite 113, St. Augustine, FL, and the Company’s telephone number
is 904-824-3133.
NO VOTE OR OTHER ACTION OF THE COMPANY’S
STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION
STATEMENT.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
SUMMARY OF THE CORPORATE ACTIONS
On May 10, 2017,
Blake
Furlow, the beneficial owner of 1,030,129 shares of Common Stock representing approximately 8.6% of the issued shares of Common
Stock, as disclosed in his Amendment No. 1 to the Schedule 13D, filed with the SEC on May 11, 2017, delivered written consent
proposing to take the following corporate actions (the “Proposed Actions”):
|
·
|
amend the Bylaws to permit stockholders to fix the size of the board of directors (the
“Board”);
|
|
·
|
to fix the size of the Board at five (5) directors;
|
|
·
|
to remove
Charles Grant and Michael Gorin
from the Board
and from any committees of the Board of the Company that Messrs. Grant and Gorin may hold with the Company
;
and
|
|
·
|
to elect three (3) directors, Blake Furlow, Gary Herman, and Bart Mitchell to replace
Messrs. Grant and Gorin
and to fill the newly created fifth seat on the Board
.
|
In
Mr. Furlow’s consent he provided notice of his intent to solicit proxies from ten (10) or fewer stockholders in connection
with their written consent in order to obtain the necessary stockholder support to affect the Proposed Actions. The Company fixed
the record date for determining stockholders entitled to give their written consent to the Proposed Actions submitted by Mr. Furlow
as May 10, 2017.
On
July 6, 2017, the Company received the written consent of the stockholders of the Company, representing approximately 51.7% of
the issued and outstanding shares of Common Stock (the “Consenting Stockholders”) consenting in writing to the Proposed
Actions. The Consenting Stockholders are Blake Furlow, Michelle Cote, Brian Pappas, Rod Whiton, Capcom LTD, Abacab Fund LP, Craig
Pfeffer, Mark Shaw and Starla Hersey as the beneficial owner of shares held directly by Fishing 4 Funds LLC and Skycor Futures,
LLC. Such approval and consent constitute the approval and consent of a majority of the total number of shares of the Company’s
outstanding Common Stock and is sufficient under Section 228 of the DGCL and Article I, Section 1.08 of the Company’s Bylaws
to approve such actions. Accordingly, the actions will not be submitted to the other stockholders of the Company for a vote.
After
reviewing certain of the Consenting Stockholders’ SEC filings and upon the consideration and examination of the Board meetings
held after the Company received the written consent from the Consenting Stockholders, the Company believes the Consenting Stockholders
acted by written consent for the reasons and purposes described below.
The
Company has received information indicating that certain of the Consenting Stockholders thought the Company may have the potential
to capture additional stockholder value and by taking certain measures, such as focusing on building its core business, the Company
could achieve increased profitability and long-term success, that it was the view of certain of the Consenting Stockholders that
new perspectives on the Board could produce innovative strategies and opportunities for the Company to grow, and that it was in
furtherance of these objectives that certain of the Consenting Stockholders decided to take immediate steps to implement change
through action by written consent.
The
information provided to the Company indicates that certain of the Consenting Stockholders acted to remove Messrs. Grant and Gorin,
amend the Bylaws to allow stockholders to fix the size of the Board and increase the size of the Board from four (4) to five (5)
in an effort to refresh the Board, that certain of the Consenting Stockholders believe that such actions will be effective steps
towards creating new perspectives on the Board, catalyzing growth and optimizing stockholder value, and that certain of the Consenting
Stockholders maintain increasing the size of the Board from four (4) to five (5) will improve the Company’s corporate governance
profile.
In
addition, as understood by the Company, certain of the Consenting Stockholders believe they have identified three highly-qualified,
independent directors with valuable and relevant business and financial experience who they believe may bring a fresh perspective
into the boardroom that could be extremely helpful in evaluating and executing initiatives to unlock value at the Company, that
for the reasons described above, certain of the Consenting Stockholders acted by written consent to amend the Bylaws to allow stockholders
to set the size of the Board and fix it at five (5) and to elect Blake Furlow, Gary Herman, and Bart Mitchell to the Board of the
Company, and that certain Consenting Stockholders believed that in order to ensure the Company had sufficient continuity and due
to the qualifications of JoyAnn Kenny-Charlton and Joseph Marucci, it was in the best interest of the Company that Ms. Kenny-Charlton
and Mr. Marucci continue to serve as directors.
Pursuant to Rule 14c-2
promulgated under the Exchange Act, the actions taken pursuant to the written consent executed by the holders of a majority of
the issued and outstanding Common Stock will be effective twenty (20) calendar days after the date on which this Information Statement
is being sent to our stockholders. Once in effect, the size of the Board will be fixed at five (5) and the directors serving on
the Board will be Joseph Marucci, JoyAnn Kenny-Charlton,
Blake Furlow, Gary Herman, and Bart
Mitchell. Each director will hold office until the next annual meeting of stockholders and until such person’s successor
has been elected or until such person’s death, resignation, retirement or removal. Additionally, the Bylaws will be amended
to reflect stockholders ability to fix the size of the Board, a power which was previously reserved exclusively for the Board.
The amendment to the Bylaws and its full terms can be found in the accompanying Appendix A.
DESCRIPTION OF THE COMPANY’S CAPITAL
STOCK
The Company’s
authorized capital consists of 50,000,000 shares of Common Stock, par value $0.0001 per share, and 10,000,000 shares of preferred
stock, par value $0.0001 per share. As of August 18, 2017, the Company had 12,001,409 shares of Common Stock issued and outstanding
and no shares of preferred stock outstanding.
VOTING AND VOTE REQUIRED
Pursuant to the DGCL
and consistent with Article I, Section 1.08 of the Bylaws, a vote by the holders of at a majority of the Company’s issued
and outstanding Common Stock is sufficient to affect the actions described herein. As of the Record Date, the Company had
12,001,409 shares of Common Stock issued and outstanding. The consenting stockholders hold approximately 51.7% of the then
total issued and outstanding Common Stock. Pursuant to the DGCL, and in accordance with the statements above, the consenting
stockholders voted in favor of the actions described herein in the written consent, dated July 6, 2017. Accordingly, the written
consent executed by the holders of a majority of the issued and outstanding Common Stock is sufficient to approve the actions contemplated
herein and no further stockholder action is required. We are not seeking a vote, authorizations, or proxies from you.
EFFECTIVE DATE
Pursuant to Rule 14c-2 promulgated under
the Exchange Act, the actions taken pursuant to the written consent executed by stockholders holders of the will be effective twenty
(20) calendar days after the date on which this Information Statement is being sent to our stockholders.
NOTICE PURSUANT TO SECTION 228
Pursuant to Section
228, we are required to provide prompt notice of the taking of a corporate action by written consent to our stockholders who have
not consented in writing to such action. This Information Statement serves as the notice required by Section 228.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
Our directors
and executive officers and their ages at
July 13, 2017, are
listed in the following table.
1
Name
|
|
Age
|
|
Title
|
Karla Kretsch
2
|
|
52
|
|
Chief Executive Officer, President & Secretary
|
Christian Miller
|
|
44
|
|
Chief Financial Officer
|
Joseph Marucci
|
|
67
|
|
Director
|
JoyAnn Kenny-Charlton
|
|
39
|
|
Director
|
Blake Furlow
|
|
35
|
|
Chairman of the Board
|
Gary Herman
|
|
52
|
|
Director
|
Bart Mitchell
|
|
44
|
|
Director
|
Karla
Kretsch
has served as the Company’s Chief Operating Officer since January 2017 and President since May 2017. Ms.
Kretsch served as Director of Operations of a Bricks 4 Kidz franchise from 2010 until her appointment with the Company. Ms. Kretsch
also served as a Project Consulting Manager for Vaco, a national consulting and talent solutions firm, from 2014 to April 2016.
From 1990 to 2009 Ms. Kretsch held various positons with Wells Fargo & Company, including operational risk manager and automobile
finance group project management manager. Ms. Kretsch holds a Bachelor of Science from Arizona State University, and is a certified
public accountant in California (inactive).
Christian
Miller
joined CLC in July 2016 as the Chief Financial Officer. Mr. Miller served as President of Miller Home Health Agency,
Inc., a home health agency he co-founded, from May 2013 through July 2016. Prior to that, he served as Corporate Controller at
Pinova Holdings, Inc., a specialty chemical manufacturer, from April 2012 through May 2013, as Controller at Pilot Pen Corporation
of America from September 2008 through April 2012, and in various positions, including Director of Accounting and Reporting, at
Trailer Bridge, Inc. Mr. Miller holds a Masters of Business Administration from Jacksonville University, and an Accounting Degree
from Florida State University.
Joseph Marucci
has served as a director of CLC since April 2015. Mr. Marucci has been an independent consultant to both public and private companies
since 2010 and the managing director of SWFMC LLC, an independent consulting firm, since 2015. Between 1972 and 1985, Mr. Marucci
was employed by PricewaterhouseCoopers (PwC). From 1985 to 2010, Mr. Marucci was a PwC partner serving in a variety of locations
and responsibilities.
JoyAnn Kenny-Charlton
has served as a director of CLC since July 2015. Ms. Kenny-Charlton is an attorney with Marks & Klein LLP and the owner of
Kenny Law LLC. Ms. Kenny-Charlton concentrates her practice in commercial transactions, general corporate, and franchise,
licensing and distribution law. Ms. Kenny-Charlton is a member of the International Franchise Association and was named a
“Legal Eagle” (2013, 2014 and 2015) by the Franchise Times for her work in the field of franchise law. Ms. Kenny-Charlton
is a graduate of Villanova University School of Law and holds a B.A. from Villanova University.
1
Includes directors
elected pursuant to the written consent described herein.
2
On July 26, 2017, Karla Kretsch
informed the Company that she would be resigning from her position as President effective August 7, 2017. She is expected to provide
assistance with transition matters after her departure.
Blake Furlow,
in
February 2015, co-founded Boise Escape LLC (“Boise Escape”). Boise Escape is a private company that offers an escape
the room game, which is a real-life team-based puzzle game. Since founding Boise Escape, Mr. Furlow has served as President. In
addition, Mr. Furlow has invested privately in commercial real estate and development since March 2009. In 2006, Mr. Furlow founded
an internet lending company, Pay Day Loan Rescue, Inc., which offered borrowers relief from short term loans and provided consumer
finance education, where he worked until July 2013. Mr. Furlow’s history of building entrepreneurial initiatives and operating
small businesses successfully with a focus on cash flow and operations will be of immense value to the Company.
Gary Herman
has
many years of investment experience with a focus on undervalued public companies. Since 2002, Mr. Herman has been a managing member
of Galloway Capital Management, LLC, which, through its fund, Strategic Turnaround Equity Partners, LP (Cayman) has focused on
investments primarily in undervalued securities. From January 2011 to August 2013, Mr. Herman was a managing member of Abacoa Capital
Management, LLC, which, through its fund, Abacoa Capital Master Fund, Ltd. focused on a Global-Macro investment strategy. Since
2005, Mr. Herman has been a registered representative with Arcadia Securities LLC, a FINRA-registered broker-dealer based in New
York. From 1997 to 2002, he was an investment banker with Burnham Securities, Inc. From 1993 to 1997, he was a managing partner
of Kingshill Group, Inc., a merchant banking and financial firm with offices in New York and Tokyo. Mr. Herman also has franchising
experience, having served on the boards of several franchised concepts, including Arthur Treacher’s Fish & Chips, Wall
Street Deli Systems, Inc., Shells Seafood Restaurants, Inc., and Miami Subs Corporation where he also served as President from
2007 to 2009. Mr. Herman has a B.S. from the State University of New York at Albany with a major in Political Science and minors
in Business and Music. Mr. Herman has served on the boards of public and private companies for many years, including Tumbleweed
Holdings, Inc., since 2001. His experience has included board membership, corporate officer, advisory, capital raising and restructuring
roles. We believe that these experiences make Mr. Herman well-qualified to serve as a member of the Board.
Bart Mitchell
,
is a founding member and partner of Greenbrier Academy for Girls (“GBA”), a residential therapeutic boarding school.
He served as the Chief Operating Officer and Chief Financial Officer from June 2007 through August 2016, successfully navigating
the company through startup and establishing it as a thought leader and premier academy in its highly competitive niche. Prior
to his time at GBA, Mr. Mitchell
was an officer and managing member of TAS Development,
LLC from 2005 until 2007. From 2002 until 2005, he was department director for the Alldredge Academy. Previously, Mr. Mitchell
served as a manager for Xlear Inc., from 2000 until 2002.
Currently, he is the owner of Escape Game Coeur d’Alene,
which provides live interactive adventure games focused on cooperative teamwork to solve puzzles and accomplish tasks to escape
a themed game space. Mr. Mitchell holds degrees in philosophy from Brigham Young University and English from Dixie State University.
Mr. Mitchell’s
experience with both the financial and operations of GBA, including working with a curriculum team to provide flexible, engaging
academics, give him unique and valuable insights that will prove to be an asset as a board member for the Company.
Board Structure
CLC’s Board has
concluded that each of the following directors, constituting a majority of the Board, is independent, as defined in Section 803
of the listing standards of the NYSE MKT: Joseph Marucci, JoyAnn Kenny-Charlton, Blake Furlow, Gary Herman and Bart Mitchell.
The Executive Committee
will be composed of the following board members: JoyAnn Kenny-Charlton, Blake Furlow and Gary Herman.
The Audit Committee
will be composed of the following board members: Joseph Marucci, Blake Furlow and Bart Mitchell.
The Compensation Committee
will be composed of the following board members: JoyAnn Kenny-Charlton, Joseph Marucci and Gary Herman.
Joseph Marucci is considered
a “financial expert” as that term is defined in the regulations of the Securities and Exchange Commission.
Director Nominees
Our Board is responsible
for overseeing the selection of persons to be nominated to serve on our Board. The Board does not have a formal policy on Board
candidate qualifications. The Board may consider those factors it deems appropriate in evaluating director nominees made either
by the Board or stockholders, including judgment, skill, strength of character, experience with businesses and organizations comparable
in size or scope to the Company, experience and skill relative to other Board members, and specialized knowledge or experience.
Depending upon the current needs of the Board, certain factors may be weighed more or less heavily. In considering candidates for
the Board, the directors evaluate the entirety of each candidate’s credentials and do not have any specific minimum qualifications
that must be met. “Diversity,” as such, is not a criterion that the Board considers. The directors will consider candidates
from any reasonable source, including current Board members, stockholders, professional search firms or other persons. The directors
will not evaluate candidates differently based on who has made the recommendation.
Code of Ethics
The Company has adopted
a Code of Ethics applicable to its principal executive, financial and accounting officers and persons performing similar functions,
as well as all directors and employees of the Company. A copy of the Code of Ethics is filed as an exhibit to the Company’s
Annual Report filed on Form 10-K on December 22, 2016.
Communication with the Board of Directors
Our stockholders and
other interested parties may send written communications directly to the Board or to specified individual directors, including
the Chairman or any other non-management directors, by sending such communications to our corporate headquarters. Such communications
will be reviewed by our outside legal counsel and, depending on the content, will be:
|
·
|
forwarded to the addressees or distributed at the next scheduled board meeting;
|
|
·
|
if they relate to financial or accounting matters, forwarded to the audit committee or distributed at the next scheduled audit
committee meeting;
|
|
·
|
if they relate to executive officer compensation matters, forwarded to the compensation committee or discussed at the next
scheduled compensation committee meeting;
|
|
·
|
if they relate to the recommendation of the nomination of an individual, forwarded to the full Board or discussed at the next
scheduled Board meeting; or
|
|
·
|
if they relate to our operations, forwarded to the appropriate officers of our company, and the response or other handling
of such communications reported to the Board at the next scheduled board meeting.
|
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16 of the Securities
Exchange Act of 1934, as amended, requires our directors and executive officers and persons who own more than 10% of our outstanding
common stock to file reports of ownership and changes in ownership of our common stock. Based solely upon a review of the copies
of such reports furnished to the Company, and on written representations from the reporting persons, the Company believes that
all required reports were filed on time with the SEC during fiscal 2016. However, in November 2016 Rod Whiton, our former interim
Chief Executive Officer, filed a Form 3 that should have been filed within ten days of his becoming an executive officer on July
22, 2015.
EXECUTIVE COMPENSATION
On May 13, 2017, the
Company entered into an employment agreement with Ms. Kretsch (the “Employment Agreement”). The Employment Agreement,
which supersedes the employment agreement previously entered into between the Company and Ms. Kretsch in connection with her appointment
as Chief Operating Officer in January 2017, has an initial term that expires on July 1, 2018. However, due to Ms. Kretsch’s
resignation effective as of August 7, 2017, her employment agreement will terminate at that time. She is expected to provide assistance
with transition matters after her departure.
Pursuant to the Employment
Agreement, Ms. Kretsch received a base salary of $95,000 per year, and was eligible to be considered for a year-end bonus for 2017.
In addition, Ms. Kretsch was scheduled to receive equity grants on the last day of each calendar quarter, as follows (the “Equity
Awards”): (1) stock grants valued at $2,500 for each calendar quarter, and (2) option grants valued at $8,750 for each calendar
quarter, in each case commencing with the quarter ending June 30, 2017 and based on the average closing value of the Company’s
stock over the 30-day period prior to the date of the applicable grant. Ms. Kretsch would be entitled to the acceleration of all
such equity compensation if the Company is taken private during the term of the Employment Agreement.
If Ms. Kretsch’s
employment under the Employment Agreement was terminated by the Company without “Cause” (as such term is defined in
the Employment Agreement), other than under the circumstances described below, Ms. Kretsch would be entitled to receive the Equity
Awards due for the quarter in which termination occurs. If Ms. Kretsch’s employment under the Employment Agreement is terminated
by Ms. Kretsch for “Good Reason” (as such term is defined in the Employment Agreement), or by the Company for Cause
within six months of a change in control of the Company or if the Company is taken private, Ms. Kretsch will be paid an amount
equivalent to her base salary for a period of three months following the date of termination, and will also be entitled to receive
the Equity Awards due for the quarter in which termination occurs and the immediately following quarter.
The Employment Agreement
contained customary confidentiality provisions, which apply both during and after the term of the Employment Agreement, and customary
employee non- solicitation provisions, which apply during the term of employment and for six months thereafter.
The Company does not
provide its officers or employees with pension, stock appreciation rights, long-term incentive or other plans. The Company does
not have a defined benefit, pension, profit sharing plan but does offer a 401(k) plan.
The following identifies
the elements of compensation for fiscal years 2016 and 2015 with respect to our “named executive officers,” which term
is defined by Item 402 of the SEC’s Regulation S-K to include (i) all individuals serving as our principal executive officer
at any time during fiscal year 2016, (ii) our two most highly compensated executive officers other than the principal executive
officer who were serving as executive officers at September 30, 2016 and whose total compensation (excluding nonqualified deferred
compensation earnings) exceeded $100,000, and (iii) up to two additional individuals for whom disclosure would have been provided
pursuant to the foregoing item (ii) but for the fact that the individual was not serving as an executive officer of the Company
at September 30, 2016. Our named executive officers for fiscal year 2016 are Rod Whiton, who served as our Interim Chief Executive
Officer from July 22, 2015 until January 25, 2017, Brian Pappas, who served as our Chief Executive Officer until his removal on
July 22, 2015, Michelle Cote, who has served as our President since July 22, 2015 until May 11, 2017, Dan O’Donnell, who
served as our Chief Operating Officer and Director until his resignation on April 6, 2016, and Christian Miller, who has served
as our Chief Financial Officer since July 5, 2016.
Summary Compensation Table
The following table
shows the compensation paid or accrued to the Company’s named executive officers during the fiscal years ended September
30, 2016 and 2015.
Name and
Principal Position
|
|
Fiscal
Year
|
|
Salary
(1)
|
|
|
All Other
Compensation
(5)
|
|
|
Total
|
|
Rod Whiton
|
|
2016
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interim Chief Executive Officer
|
|
2015
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michelle Cote
|
|
2016
|
|
$
|
88,000
|
|
|
$
|
1,500
|
|
|
$
|
89,500
|
|
President
|
|
2015
|
|
$
|
102,000
|
|
|
$
|
47,840
|
|
|
$
|
149,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christian Miller (2)
|
|
2016
|
|
$
|
24,635
|
|
|
$
|
—
|
|
|
$
|
24,635
|
|
Chief Financial Officer
|
|
2015
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
(1)
|
The dollar value of base salary (cash and non-cash) earned.
|
|
(2)
|
Christian Miller became the CFO in July of 2016.
|
|
(5)
|
All other compensation: In January 2014 the Company established a 401(k) plan and instituted a dollar for dollar Company match
of employee contributions, up to 4% of employee wages. During the fiscal years ended September 30, 2016 and 2015 the Company contributed:
$-0- and $8,166 respectively to the 401(k) account of Ms. Cote In addition, Ms. Cote also received commissions and consulting fees
indirectly through entities controlled by such named executive officers, which entities have been established for tax and liability
purposes. See Item 13, “Certain Relationships and Related Transactions.” Approximately 14% of 2015 compensation for
Ms. Cote represents commissions and consulting fees through entities controlled by such named executive officers, as follows:
|
(a) Michelle Cote for payments made
to MC Logic, LLC (100% owned by Michelle Cote).
Outstanding Equity Awards
The following table
shows information regarding outstanding equity awards (consisting of option awards) held by each of the Company’s named executive
officers as of July 13, 2017.
|
|
Option Awards
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Unexercisable
|
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
Karla Kretsch
|
|
|
28,000
|
|
|
|
|
|
|
$
|
0.25
|
|
|
05/13/22
|
Dan O’Donnell
|
|
|
25,000
|
|
|
|
—
|
|
|
$
|
0.60
|
|
|
12/31/15
|
|
|
|
20,000
|
|
|
|
—
|
|
|
$
|
1.55
|
|
|
12/31/16
|
Director Compensation
The Company does not
compensate its directors that are classified as not independent. The Company has approved a policy of compensating its independent
directors as follows: $1,000 for each in-person Board or committee meeting attended; $500 for each telephonic Board or committee
meeting attended; and, if they are required to travel to attend Board or committee meetings, the Company reimburses their reasonable
travel expenses. The independent directors have not been compensated for their services in the fiscal year ending September 30,
2016. On May 14, 2017, the Company granted options to purchase a total of 1,764,000 shares to the Directors at an exercise price
of $0.30 per share.
Compensation Committee Interlocks and Insider Participation
For a portion of the
fiscal year 2015, the Company did not have a Compensation Committee, and compensation decisions were made by the full Board, including
the Company’s executive officers who serve on the Board (Michelle Cote, who served on the Board until October 18, 2016, Dan
O’Donnell, until his resignation in April 2016, and, until his removal in July 2015, Brian Pappas). Dan O’Donnell served
on the Board of Directors of AudioFlix, Inc., a company managed and controlled by Brian Pappas, from its inception until his resignation
on November 30, 2015 (approximately two years). During that period, Dan O’Donnell was not actively involved in the management
or oversight of AudioFlix, Inc.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table
shows, as of July 13, 2017, information with respect to those persons owning beneficially 5% or more of the Company’s common
stock and the number and percentage of outstanding shares owned by each Director and named executive officer and by all current
executive officers and directors as a group. Unless otherwise indicated, each owner has sole voting and investment powers over
their shares of common stock, and the address of each owner listed is c/o the Company, 701 Market Street, Suite 113, St. Augustine,
Florida 32095.
Name
|
|
Shares
Owned
|
|
|
Percent of
Outstanding
shares.
|
|
Michele Cote
|
|
|
1,401,700
|
1
|
|
|
11.7
|
%
|
Brian Pappas
|
|
|
1,213,429
|
2
|
|
|
10.1
|
%
|
Blake Furlow
|
|
|
1,030,129
|
3
|
|
|
8.6
|
%
|
Rod Whiton
|
|
|
498,501
|
|
|
|
4.2
|
%
|
Joseph Marucci
|
|
|
55,083
|
|
|
|
0.5
|
%
|
JoyAnn Kenny-Charlton
|
|
|
—
|
|
|
|
0.0
|
%
|
Gary Herman
|
|
|
—
|
|
|
|
0.0
|
%
|
Bart Mitchell
|
|
|
—
|
|
|
|
0.0
|
%
|
All officers and directors as a group
*
|
|
|
4,198,842
|
*
|
|
|
35.1
|
%
*
|
*Includes shares owned by directors elected pursuant to the
written consent described herein.
|
(1)
|
Shares are held of record by Cote Trading Company, LLC, a limited liability company controlled by Ms. Cote.
|
|
(2)
|
This information is based solely on the Form 4 filed by Mr. Pappas on May 19, 2017.
|
|
(3)
|
Includes 51,029 shares owned by Mr. Furlow’s wife, which he may be deemed to beneficially own.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
Since the Fiscal Year ending September 30,
2016, there have been no related party transactions. During the years ended September 30, 2016 and 2015, the Company incurred the
following related party consulting fees and commissions:
|
|
Commissions and
Consulting
|
|
|
|
Fiscal Year Ending
September 30
|
|
Related Party
|
|
2016
|
|
|
2015
|
|
FranVentures, LLC (owned by Brian Pappas)(1)
|
|
$
|
—
|
|
|
$
|
142,358
|
|
MC Logic, LLC (owned by Michelle Cote)(2)
|
|
$
|
—
|
|
|
$
|
43,000
|
|
Leap Ahead Learning Company (owned by Dan O'Donnell)(3)
|
|
$
|
2,275
|
|
|
$
|
38,000
|
|
Bottom Line Group (4)
|
|
$
|
—
|
|
|
$
|
156,752
|
|
Jeffery Ball and J. Ball Group LLC (5)
|
|
$
|
—
|
|
|
$
|
86,255
|
|
Jacqueline Pappas-Ball (6)
|
|
$
|
—
|
|
|
$
|
6,072
|
|
|
|
$
|
2,275
|
|
|
$
|
472,437
|
|
|
(1)
|
Brian Pappas, is a former director and former chief executive officer of the Company. Mr. Pappas is the Managing Director and
a minority owner of FranVentures, LLC. FranVentures, LLC received a 5% commission on BFK franchise sales by the Company prior to
April 8, 2015. There was no related party payable at September 30, 2016 and 2015 respectively. Not included above are travel and
expense charges for Mr. Pappas for the twelve months ending September 30, 2016 and 2015, respectively of approximately $-0- and
$35,400. The wife of Mr. Pappas, Chris Pappas, was the human resources and payroll manager for the Company with compensation for
the fiscal periods ended September 30, 2016 and 2015, respectively of approximately $-0- and $48,000. At August 6, 2015, Mrs. Pappas
was no longer employed by the Company and did not receive compensation subsequent to her leaving employment with the Company. Not
included above are expense reimbursements for Mrs. Pappas for the twelve months ended September 30, 2016 and 2015 of approximately
$-0- and $3,000, respectively. Also see note receivable from related party (Note 2).
|
|
|
Payments made to FranVentures, LLC (related party) during fiscal year ended September 30, 2015, were processed as follows:
(1) payments reported through the Company’s accounts payable system, requiring a Form 1099, of approximately $76,000, which
monthly payments were discontinued April 15, 2015 and (2) payments reported through the Companies payroll system and reported on
Form W-2, with all appropriate federal and state deductions, of approximately $66,000.
|
|
(2)
|
MC Logic, LLC (“MC Logic”) is 100% owned by Michelle Cote, who was the Company’s President and
Secretary and a former director and founder of the Company. Not included above are travel and expense reimbursements paid of
approximately $-0- and $4,600, respectively for the twelve month periods ended September 30, 2016 and 2015. There was no
related party payable at September 30, 2016 and 2015 respectively. During the quarter ended December 31, 2013, the Company
made a non-interest bearing loan in the amount of $125,000 to MC Logic. Later in that same quarter, management determined
that the loan could be deemed a violation of Section 13(k) of the Exchange Act and Section 402 of the Sarbanes-Oxley Act and
immediately sought repayment in full of the loan. MC Logic promptly repaid the entire amount of the loan before the end of
the fiscal quarter ended December 31, 2013. Subsequent to the end of fiscal year 2015, the Company has recorded a related
party receivable of $7,500 which resulted from activities that occurred in 2016. The receivable is a net amount due resulting
from pre-approved activities at an MC Logic Sew Fun Franchise location, which involved using the space for initial evaluation
of a potential new franchise concept and for the Company’s use of the location to consider taking the Sew Fun franchise
as a company store. During this time, MC Logic had been reimbursed for expended funds and had tendered to the Company certain
revenues. The Company later changed strategy, resulting in the reversal of reimbursements to MC Logic and the return of
revenues to MC Logic. The net result was $10,217.73 due from MC Logic. MC Logic paid the balance in June of 2016. In
addition, the Company has entered into an arrangement with MC Logic under which MC Logic has agreed to pay the standard Sew
Fun Studios monthly royalty fee due for this territory effective June 1, 2016, and MC Logic is current on those payments as
of September 30, 2016.
|
|
|
Payments made to MC Logic, LLC (related party) during fiscal year ended September 30, 2015, were processed as follows: (1)
payments reported through the Company’s accounts payable system, requiring a Form 1099, of approximately $24,000, which payments
were discontinued April 15, 2015 and (2) payments reported through the Companies payroll system and reported on Form W-2, with
all appropriate federal and state deductions, of approximately $19,000 in 2015 and $1,500 in 2016, which payments were discontinued
effective January 1, 2016.
|
|
(3)
|
Leap Ahead Learning Company is 100% owned by Dan O’Donnell, who was a director and the Chief Operating Officer of the
Company until his resignation on April 6, 2016. Until April 15, 2015, the Company had paid Leap Ahead Learning $5,000 per month
for consulting services provided through Mr. O’Donnell. Not included above are travel and expense reimbursements paid of
approximately $4,000 and $79,000, respectively for the twelve month periods ended September 30, 2016 and 2015. The related party
payable was approximately $2,275 and $-0-, respectively at September 30, 2016 and 2015.
|
|
|
Payments made to Leap Ahead Learning Company (related party) during fiscal year ended September 30, 2015, were processed as
follows: (1) payments reported through the Company’s accounts payable system, requiring a Form 1099, of approximately $38,000,
which monthly payments were discontinued April 15, 2015, and (2) the base pay of Mr. O’Donnell was adjusted to include the
consulting fee and reported on Form W-2, with all appropriate federal and state deductions, of approximately $27,500 in 2015 and
$30,000 in 2016 .
|
|
(4)
|
Bottom Line Group is owned by Jeff Pappas, a brother to Brian Pappas. The Business Consulting and Development Agreement between
Bottom Line Group and the Company was terminated on September 25, 2015. Bottom Line Group served as one of the Company’s
brokers in the sale of franchises. Payments to Bottom Line Group include commissions and consulting fees reflected in the table
above. Not included above are travel and expense reimbursements paid of approximately $-0- and $23,000, respectively for the twelve
months ended September 30, 2016 and 2015. There was no related party payable at September 30, 2016 and 2015 respectively. Not included
in the related party schedule above are payments made to Michael Pappas (son to Jeff Pappas). The Business Consulting and Development
Agreement between Michael Pappas and the Company has been terminated effective September 26, 2015. Payments made to Michael Pappas
in the twelve months ended September 30, 2016 and 2014 were approximately $-0- and $15,700, respectively.
|
|
|
Payments made to Bottom Line Group (related party) during fiscal year ended September 30, 2015, were processed as follows:
(1) consulting payments reported through the Company’s accounts payable system, requiring a Form 1099, of approximately $63,000,
and (2) commission payments reported through the Company’s accounts payable system requiring a Form 1099, of approximately
$93,000. The business consulting and development agreement with Bottom Line Group, LLC was terminated on September 25, 2015.
|
|
(5)
|
J. Ball Group LLC is owned by Jeffery Ball, a son-in-law to Brian Pappas. The Independent Contractor Agreement between Jeffrey
Ball and J Ball Group, LLC and the Company was terminated on September 30, 2015. The J Ball Group LLC served as one of the Company’s
brokers in the sale of franchises. Payments reflected in the table above include commissions and consulting fees. Not included
above are travel and expense reimbursements paid of approximately $-0- and $12,700, respectively for the twelve months ended September
30, 2016 and 2015. There was no related party payable at September 30, 2016 or 2015. In January 2015, Jeffery Ball formed J. Ball
Group LLC, which in these financial statements and disclosures have been presented as one business activity with amounts paid to
either entity combined.
|
|
|
Payments made to Jeffery Ball and J. Ball Group, LLC (related party) during fiscal year ending September 30, 2015, were processed
as follows: (1) consulting payments reported through the Company’s accounts payable system, requiring a Form 1099, of approximately
$31,000, and (2) commission payments reported through the Company’s accounts payable system requiring a Form 1099, of approximately
$55,000. The independent contractor agreement with Jeffery Ball and J Ball Group, LLC was terminated on September 30, 2016.
|
|
(6)
|
Jacqueline Pappas-Ball, is a daughter to Brian Pappas. The consulting relationship between Jacqueline Pappas-Ball and the Company
was ended on September 30, 2015. Ms. Pappas-Ball provided social media marketing and development. She also provided support in
the development of photo and video presentation for the social media environment. Payments reflected in the table above include
consulting fees. Not included above are expense reimbursements paid of approximately $-0- and $500 for the twelve months ended
September 30, 2016 and 2015 respectively.
|
|
|
Payments made to Jacqueline Pappas-Ball (related party) during fiscal year ending September 30, 2015, were processed as consulting
payments reported through the Company’s accounts payable system, requiring a Form 1099, of approximately $6,000. The working
relationship with Ms. Pappas-Ball was ended during the fourth quarter of fiscal year 2015. On January 5, 2016, the Company established
a new policy that no company employee, employee’s friends or employee’s family members will be paid commissions or
consulting fees. Any extenuating or existing circumstances must be approved by Board, Independent Members.
|
In addition, all franchisees
pay fees directly to Leap Ahead for set-up and monthly support of a FMT. The set-up fee is a one-time charge of $250 for domestic
and Canadian franchisees and a range of $250 to $3,000 for international franchisees. The monthly support fee, for all franchisees,
is $75 which amounts reflect support services provided to the franchisees pursuant to the franchise agreements. In addition, all
domestic franchisees that wish to accept credit card payments must be set-up for processing credit cards through a third-party
servicer, authorize.net. Leap Ahead receives a monthly administrative fee of $7.95 for each franchisee using the credit card processing
services of authorize.net. Leap Ahead is the broker and administrator on behalf of authorize.net. Leap Ahead, the developer of
the FMT, is wholly owned by Dan O’Donnell, who was a director and the Chief Operating Officer of the Company until his resignation
on April 6, 2016.
Shortly prior to the
replacement of Brian Pappas as Chief Executive Officer of the Company, Mr. Pappas caused the Company to issue a Sew Fun Studios
local territory to MC Logic (owned by Michelle Cote) to assist in the development and possible improvement of that franchise concept.
MC Logic was granted the territory with no franchise fee, royalty fee obligation, or marketing fee obligation. This territory was
one of the original 12 granted at the start of the business concept. After completing all of the training, development, and signatory
requirements necessary to become operational, the franchise became active on July 10, 2015. The Company has entered into an arrangement
with MC Logic under which MC Logic has agreed to pay the standard Sew Fun Studios monthly royalty fee due for this territory effective
June 1, 2016, and MC Logic is current on those payments.
INTEREST OF CERTAIN PERSONS IN MATTERS
TO BE ACTED UPON
None of our officers,
directors or any of their respective affiliates has any interest in the matter to be acted upon, as set forth in this Information
Statement.
NO DISSENTERS’ RIGHTS
Stockholders of the
Company are not entitled to appraisal rights under the DGCL in connection with the changes in the composition of the Board or the
amendment to the Bylaws.
DELIVERY OF INFORMATION STATEMENT
To reduce the expenses
of delivering duplicate materials to our stockholders, we are taking advantage of householding rules that permit us to deliver
only one Information Statement to stockholders who share the same address unless otherwise requested.
If you share an address with another stockholder
and have received only one Information Statement, you may write or call us to request a separate copy at no cost to you. For future
mailings, you may request separate materials or, if you are receiving multiple copies you may request that we only send one set
of materials, by writing to us at Creative Learning Corporation, Attn: Christian Miller, Chief Financial Officer, 701 Market Street,
Suite 113, St. Augustine, FL.
INFORMATION STATEMENT EXPENSES
The expense of this
Information Statement will be borne by the Company, including expenses in connection with the preparation and mailing of this Information
Statement and all documents that now accompany or may in the future supplement it. Brokerage houses, custodians, nominees and fiduciaries
will be requested to forward the Information Statement to the beneficial owners of the stock held of record by such persons and
the Company will reimburse them for their reasonable expenses incurred in this effort.
WHERE YOU CAN FIND MORE INFORMATION ABOUT
THE COMPANY
The Company files annual,
quarterly and current reports, proxy statements and other information with the SEC. You can read and copy any materials the Company
files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information
about the operation of the SEC’s Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company’s filings
also are available to you free of charge at the SEC’s website at http://www.sec.gov.
FORWARD-LOOKING STATEMENTS AND INFORMATION
This Information Statement
includes forward-looking statements. You can identify the Company’s forward-looking statements by the words “expects,”
“projects,” “believes,” “anticipates,” “intends,” “plans,” “predicts,”
“estimates” and similar expressions.
The forward-looking
statements are based on management’s current expectations, estimates and projections about the Company. The Company cautions
you that these statements are not guarantees of future performance and involve risks, uncertainties and assumptions that the Company
cannot predict. In addition, the Company has based many of these forward-looking statements on assumptions about future events
that may prove to be inaccurate. Accordingly, the Company’s actual outcomes and results may differ materially from what is
expressed or forecast in the forward-looking statements.
You should rely only
on the information provided in this Information Statement. The Company has not authorized any person to provide information other
than that provided here. The Company has not authorized anyone to provide you with different information. You should not assume
that the information in this Information Statement is accurate as of any date other than the date on the front page of this document.
NO VOTE OR OTHER ACTION OF THE COMPANY’S
STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION
STATEMENT.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
APPENDIX A
AMENDMENT
TO
THE AMENDED AND RESTATED BYLAWS
OF
CREATIVE LEARNING CORPORATION
Creative Learning Corporation, a corporation organized and existing
under and by virtue of the Delaware General Corporation Law (the “Corporation”) DOES HEREBY CERTIFY THAT:
FIRST:
This Amendment to the Amended and Restated Bylaws
(the “Bylaws”), of the Corporation has been duly adopted in accordance with the provisions of Section 109 of the General
Corporation Law of the State of Delaware.
SECOND:
Article II, Section 2.02 of the Corporation’s
Bylaws shall be deleted in its entirety and be replaced by a new Article II, Section 2.02 to read as follows:
Section 2.02.
Number and Term of Office
.
Subject to the rights of the holders of any class or series of preferred stock, if any, the number of directors shall be fixed
from time to time pursuant to a resolution adopted by a majority of the entire Board or pursuant to a resolution adopted by the
affirmative vote of a majority of the shares of stock entitled to vote, but the Board shall at no time consist of fewer than three
directors or more than 10 directors. Each director (whenever elected) shall hold office until his or her successor has been duly
elected and qualified, or until his or her earlier death, resignation or removal.