| Nature of Operations and Liquidity | Note
1 - Nature of Operations and Liquidity Organization Sibling Group Holdings, Inc., d/b/a Global
Personalized Academics (the Company), 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. The Company 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
July 20, 2015, the Company issued a press release announcing its intent to do business under the name of Global Personalized Academics
(GPA). The Company intends to formally change its name to GPA, and has taken steps towards this achieving
this objective. BlendedSchools.Net As
of May 30, 2014, the Company completed the acquisition of the assets of BlendedSchools.Net (Blended Schools) for
a purchase price of $550,000, which included the assumption of $446,187 of Blended Schools debt and cash payments totaling
$103,813. In addition, the Company agreed to pay certain other debts of Blended Schools as provided for in the asset purchase
agreement. Blended
Schools provides online curriculum with approximately 200 master courses for the K-12 marketplace, all Common Core compatible;
a complete hosted course authoring and learning management system environment featuring both Blackboard and Canvas; and the new
Language Institute, with online courses in Arabic, Chinese, Spanish, French, Japanese, Latin, Russian, German and Hindi, all oriented
to meet todays ESL requirements. Urban
Planet Media & Entertainment, Corp. On January 28, 2015, the Company entered into a share exchange agreement
(the Share Exchange Agreement) with Urban Planet Media & Entertainment, Corp. (Urban Planet) and
its shareholders pursuant to which the Company issued 10,500,000 shares of its common stock, $0.0001 par value, and 500,000 shares
of its Series A Convertible Preferred Stock (Series A Preferred) to the shareholders of Urban Planet in exchange
for all of the issued and outstanding shares of Urban Planet. In addition, we agreed to issue an additional 2,000,000
shares of common stock to key current and past employees and consultants. These shares were issued in May 2015, and expensed in
the amount of $192,400, at the then fair value. Each share of Series A Preferred issued to the
former Urban Planet shareholders is convertible by the holder (1) at any time after 24 months after the original issue date or
(2) at any time after delivery of notice by the Company of the occurrence of certain conversion events set forth in the certificate
of designation establishing the Series A Preferred into that number of shares of common stock determined by dividing the stated
value of such shares of Series A Preferred stock, which is $10.00 per shares of Series A Preferred, by the conversion price. The
conversion price of the Series A Preferred is $0.50, subject to adjustment as stated in the certificate of designation. Urban
Planet is a mobile media company providing content and solutions in the education, healthcare and literary markets. On
June 16, 2015, the Company concluded that it was necessary to write down the value of the investment in Urban Planet, based on
industry information from an independent third party, to two times the revenue reported by Urban Planet for the calendar year
2014, which totaled $249,692. As a result, the Company incurred a non-cash impairment charge in the amount of $1,722,408. The
Companys determination to recognize the impairment charge was based on the expiration of a grant and service agreement
that previously contributed to Urban Planet revenues and the Companys decision to suspend the development of a proposed
Urban Planet product. The Company does not expect to incur any material future cash expenditures in connection with the write-down
of Urban Planet. Shenzhen
City Qianhai Xinshi Education Management Co., Ltd. During
the year ended June 30, 2015, the Company received a strategic investment from Shenzhen City Qianhai Xinshi Education Management
Co., Ltd., a company based and operating in the Peoples Republic of China (Shenzhen). The strategic investment
was provided to accelerate the Companys growth and expansion into critical strategic markets around the world, including
China. Effective
on February 27, 2015, the Company entered into a Securities Purchase Agreement (the Securities Purchase Agreement)
with Shenzhen and certain accredited and institutional investors (together with Shenzhen, the Investors). Pursuant
to the Securities Purchase Agreement, the Investors purchased an aggregate of 53,571,429 Units (each, a Unit) for
an aggregate cash raise of $3,250,000. Costs directly attributed to this equity raise aggregated $157,000. Included in the aforementioned
were 7,142,857 Units issued in lieu of a $500,000 payment for fees attributed to this equity raise. An additional 4,457,143 shares
were issued as payment of fees for this equity raise as well, which were fair valued at $312,000. Each Unit consists of:
(1) a share of the Companys common stock; (2) a warrant giving each of the Investors the right to purchase one additional
share of common stock for each share owned at any time and from time to time for a period of five years at an exercise price of
$0.07 per share (each, an A Warrant); (3) a warrant giving each of the Investors the right to purchase one additional
share of common stock for each share owned at any time and from time to time for a period of one year following the effectiveness
of a registration statement covering the resale of the total number of shares of common stock acquired by the Investors in the
transaction at an exercise price equal to the five-day volume weighted average price immediately preceding the exercise date (each,
a B Warrant); and (4) only as part of and in connection with the purchase of the shares underlying the B Warrants
(the B Warrant Shares), a warrant giving each of the Investors the right to purchase 0.50 shares of common stock
for each B Warrant Share purchased by such Investors at any time and from time to time for a period of five years at an exercise
price equal to the purchase price of the B Warrant Shares (each, an Additional Warrant and together with the A Warrants
and the B Warrants, the Warrants). The exercise prices of the Warrants may be reduced if the Company issues additional
shares of common stock or securities convertible into common stock at a price lower than the Warrant exercise prices for so long
as the Warrants remain outstanding. If all shares underlying all Warrants are ultimately issued, the Company will issue an aggregate
of 187,500,001 shares of common stock pursuant to the Securities Purchase Agreement for additional proceeds. On
April 6, 2015, Shenzhen exercised the A Warrants in full and a portion of the B Warrants resulting in an additional 72,857,143
shares of common stock being issued to Shenzhen in exchange for an aggregate purchase price of $5,526,966. Pursuant to the terms
of the Securities Purchase Agreement, 42,857,143 of the shares received upon issuance of the A Warrants were issued at a price
per share of $0.07. The remaining 30,000,000 shares received upon the partial exercise of the B Warrants were issued at a price
per share of $0.0842322, which is equivalent to the volume weighted average price for the Companys common stock for the
five trading days preceding April 6, 2015, the date of exercise. Cash costs attributed to this portion of the equity raise was
$644,057 and an additional 6,061,707 shares, which were fair valued at $460,084 were issued in lieu of cash fees for this warrant
exercise equity raise. As
a result of the exercise of the B Warrants and pursuant to the terms of the B Warrants, the Company issued Shenzhen Additional
Warrants to purchase an aggregate of 15,000,000 shares of the Companys common stock at any time and from time to time for
a period of five years from the date of the Additional Warrants at an exercise price per share equal to $0.0842322, the purchase
price of the shares issued pursuant to the B Warrants. Following
the exercise of the Warrants, Shenzhen holds 115,714,286 shares of the Companys common stock, or 57.14% of the Companys
total issued and outstanding shares of common stock as of December 31, 2015. Pursuant
to the terms of the remaining Warrants, Shenzhen has the potential to purchase up to an additional 34,285,714 shares of the Companys
common stock. If all shares underlying all Warrants held by Shenzhen are ultimately issued to Shenzhen, Shenzhen will hold an
aggregate of 150,000,000 shares of the Companys common stock. Of Shenzhens remaining Warrants, 15,000,000 are exercisable
at $0.0842322 per share, which would result in an additional $1,263,483 in proceeds to the Company. Because the purchase price
of the remaining 19,285,714 shares that Shenzhen has the right to acquire pursuant to its Warrants is dependent on the price of
the Companys common stock if and when such Warrants are exercised, the Company is unable to calculate the gross proceeds
that would be received upon exercise of such Warrants. Liquidity and Managements Plan Historically, our principal sources of cash have included
revenue from operating activities, proceeds from the issuance of common and preferred stock, and proceeds from the issuance of
short-term debt. Our principal uses of cash have included cash used in operations, payments relating to purchases of property and
equipment and repayments of borrowings. We expect that our principal uses of cash in the future will be for product development,
further development of intellectual property, as well as general working capital and capital expenditure requirements. We had working capital of $284,725 and $1,009,792 in cash
as of December 31, 2015, compared to working capital of $2,896,154 and $5,415,744 in cash as of June 30, 2015. Management
believes that the Companys current cash and cash equivalents will not be sufficient to meet working capital and capital
expenditure requirements for the next 12 months. As a result, the ability of the Company to continue as a going concern is
dependent on generating future profitable operations and raising additional capital needed until the Company generates profits.
Management is therefore seeking to raise additional debt and/or equity capital. There can be no assurance that the Company
will be able to raise the necessary funds when needed to finance its ongoing working capital requirements. While we used a substantial amount of cash since June 30,
2015, management believes the investments made to develop new product offerings internationally, additions to its executive management
and sales team to capitalize on future growth opportunities throughout the U.S. South America, China, among others, and investments
made in infrastructure and curriculum development, will provide the foundation for near-term revenue growth. Until such
time as we are able to generate positive cash flow from operations, management will continue to focus on reducing discretionary
costs and expenses, matching staffing levels with existing and forecasted sales levels, and directing existing cash resources
to activities intended to increase revenue. |
