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Investor Presentation - September 2014 Brian Pappas, CEO OTCQB: CLCN
OTCQB: CLCN
Safe Harbor Statement
This presentation 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 presentation. 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 under the “Risk Factors” sections and elsewhere in those filings.
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OTCQB: CLCN
Company Overview
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OTCQB: CLCN
Investment Highlights
Established track record & rapid expansion – 600+ franchises awarded to-date
Launching new franchise brands following successful model
Underserved target market – educational enrichment
High ROI on advertising / lead generation
Low overhead / scalable business model with minimal capex requirements
Growing recurring revenue and attractive margins
Strong balance sheet and clean capital structure
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OTCQB: CLCN
About Creative Learning Corp.
• Unique franchise business model
• Primary focus on educational and enrichment programs
– Programs targeting children ages 3-16+
– Enhance students’ problem solving and critical thinking skills
• Proprietary curriculum and marketing strategies
– Proprietary “Franchise Marketing Tool”
• Over 600 franchises worldwide
– Operating in 43 states plus the District of Columbia and Puerto Rico
– Franchise locations in over 30 countries and growing
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OTCQB: CLCN
Market Opportunity
• Growing interest in after-school enrichment programs – School budget cutbacks throughout the country; emphasizing
standardized testing over creative problem solving
• Target market for after-school enrichment programs – Approximately 130,000 elementary and middle schools in the U.S.
– Accommodate more than 44 million students
– Nearly 100,000 preschools in the country with over 5 million students
• Related markets – Birthday party market – $10 billion industry
– Summer camp market – a multi-billion dollar industry
– Edutainment Industry – a multi-billion industry
• Minimal national competition for any of the targeted franchises
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OTCQB: CLCN
Bricks 4 Kidz ®
• Programs designed to teach principles of engineering, architecture and physics using LEGO® bricks – Geared to children ages 3-12+
– Fosters creativity and develops problem solving skills
– Projects include designing and building machines, catapults, pyramids, race cars, buildings and more
• In school and after school classes, special events programs and day camps
• Over 581 franchises worldwide (as of 9/1/2014)
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OTCQB: CLCN
Challenge Island
• Unique team-building, challenge-based programs
– Geared towards children ages 3-13+
– Designed to foster creative thinking skills, problem solving, and core Science, Technology, Engineering, and Mathematics skills
• Created by an award-winning educator with over two decades of teaching experience
• Began selling franchises in 2013
• As of September 1, 2014 - sold 33 franchises in the United States and 1 foreign country
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OTCQB: CLCN
Sew Fun Studios
• Introduces the art of sewing to children and adults by utilizing basic and advanced sewing techniques
• Sew Fun Studios® has been operating for over five years in Charlotte, NC under the trade name Sew Fun Parties®
• Officially launched franchise model in July 2014
• Franchises sold under this concept will operate brick and mortar businesses – Features stores/studios located in strip malls
– After-school classes, camps and birthday parties for children ages 8-13+
– Adult classes in fashion design
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OTCQB: CLCN
Business Model
• Provide franchisees a recognized brand, national marketing support and training
• One-time, non-refundable franchise fee of $19,500-$25,900K depending on franchise
• 7% royalty and 2% marketing fee
• High retention rate among franchisees
• Average annual recurring revenue over $50K per franchisee
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OTCQB: CLCN
Benefits to Franchisee
• Proven business model within minimal upfront capital
• Quick ROI (avg. 18-24 months)
• Low overhead
• High profit margins
• Year-round income
• Easy to operate and easy to learn
• Can be operated full-time or part-time
• Classes, camps and parties are affordable for parents
• Provide educational learning environment
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OTCQB: CLCN
Competitive Landscape
• Minimal national competitors to Bricks 4 Kidz®
• Minimal national competitors to Challenge Island®
• No known national competitors for Sew Fun
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OTCQB: CLCN
Industry Recognition
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OTCQB: CLCN
High ROI Advertising / Lead Generation
• ROI on Advertising: 11:1
• Avg. BFK Franchise Sale (per franchisee): $33,000
• Cost to generate a franchise sale: $3,000
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OTCQB: CLCN
Growth Strategy
• Expanding internal sales force and PR initiatives
• Cost-effective deployment of advertising dollars
• Selective use of third-party franchise brokers
• Master franchises in select international markets
• Introduce new franchises that leverage core expertise
• Opportunistic acquisitions
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OTCQB: CLCN
Near Term Goals
Targeting 120-150 new Bricks 4 Kidz franchises in 12 months
– Open Bricks 4 Kidz franchises in at least 5 new countries bringing total to over 35 countries in 5 months.
Goal to open at least 30 Challenge Island franchises within 12 months
– 3 new countries outside of the US for CI by the end of 2014
5-10 Sew Fun Studios franchises within 12 months
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OTCQB: CLCN
$3.4
$4.8
$3.5
$6.0
$0.6 $0.9 $0.7
$1.0
$-
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
FY 2012 FY 2013 9 mo. 2013 9 mo. 2014
Mill
ion
s
Revenue Net Income
Historical Financials
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* Net income for the nine months ended June 30, 2014 included a $588,016 income tax expense, which was not incurred for the same period last year
*
FYE September 30
OTCQB: CLCN
Balance Sheet & Capital Structure
Solid balance sheet with over $3 million cash
Clean capital structure with just 11.8 shares outstanding
No warrants or preferred shares outstanding
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30-Jun-14 30-Sep-13
Cash and cash equivalents 3,418,549$ 2,004,947$
Total current assets 3,965,617 2,411,282
Total assets 4,549,624 2,923,906
Total current liabilities 1,125,934 484,030
Total long-term liabilities 5,000 5,297
Total liabilities 1,130,934 489,327
Total stockholders equity 3,418,690$ 2,434,579$
OTCQB: CLCN
Experienced Management & Board
• Brian Pappas, CEO. Previously owned and operated Together Development Corporation, which sold franchises under the trade name “Together Dating Service.” Grew Together Development Corporation from 12 franchises to over 175 franchises which were located throughout the US, Canada, England, Netherlands and Germany. After Mr. Pappas sold Together Development Corporation in 1998 he opened Skater Paradise, Inc, which operated a chain of indoor skate parks in Massachusetts. After selling Skater Paradise, Inc in 2004 Mr. Pappas, until April, 2009, provided consulting services, and in some instances acted as the franchise development director for Zen Massage Center, Gourmet, Shape up Sisters, Digicom Specialties, The Online Outpost, and Auction-It-Today. Mr. Pappas also co-owned and operated two advertising agencies, Cushing & Pappas and The Thought Process.
• Richard Nickelson, CFO. Recently promoted to CFO after serving as Controller for Creative Learning Corporation
for the past 2.5 years. As Controller he managed all aspects of corporate finance and SEC reporting. Previously Mr. Nickelson held the Controller position for the franchise company, Ellianos Coffee Company. Prior to that Mr. Nickelson served in key accounting positions at several companies including a natural gas supplier and an automated manufacturer of an architectural millwork.
• Daniel O’Donnell, Vice President of Operations. Previously served as Director of Franchise Operations for The
Whole Child Learning Company, a franchisor of children’s educational services, where he was responsible for the oversight of all daily operational activities, franchisee training and ongoing franchisee support. He also developed and launched a computer education program for children called Computer Kids Unlimited in Pittsburgh.
• Michelle Cote, Co Founder. Co-founded BFK in May 2009 and founded Bricks 4 Kidz in June, 2008. Advises BFK in the areas of creative development and new programs. Ms. Cote developed the Bricks 4 Kidz concept and since early 2008 has been operating after-school classes, camps and birthday parties using LEGO® bricks. Between 2005 and 2008 Ms. Cote was a free lance architectural draftsman. Prior to that time Ms. Cote worked for an architectural firm in St. Augustine, FL.
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OTCQB: CLCN
Key Statistics
Ticker: CLCN
Exchange: OTCQB
Share price (as of 9/15/2014): $2.16
Common shares outstanding: 11.8 M
Market Capitalization: $25.5 M
TTM Revenue (6/30/2014): $7.3 M
TTM Net Income (6/30/2014): $1.3 M
Cash $3.4 M
Total shareholder’s equity (6/30/2014): $3.4 M
Fiscal year-end: September 30
Insider ownership: 32.4%
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Thank you.
Company: Investor Relations: Brian Pappas David Waldman / Natalya Rudman Creative Learning Corp. Crescendo Communications, LLC [email protected] [email protected] (904) 825-0873 (212) 671-1020