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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Triad Business Bank (PK) | USOTC:TBBC | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.09 | 1.80% | 5.10 | 5.00 | 6.20 | 5.10 | 5.10 | 5.10 | 100 | 21:27:00 |
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended June 30, 2011
|
o
|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from __________________ to __________________________
|
Commission file number: 000-54344
|
THE BRAINY BRANDS COMPANY, INC.
|
(Exact name of registrant as specified in its charter)
|
DELAWARE
|
30-0457914
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
460 Brogdon Road, Suite 400
Suwanee, GA
|
30024
|
|
(Address of principal executive offices)
|
(Zip Code)
|
(678) 762-1100
|
(Registrant's telephone number, including area code)
|
N/A
|
(Former name, former address and former fiscal year, if changed since last report)
|
Large accelerated filer
o
|
Accelerated filer
o
|
|
Non-accelerated filer
o
(Do not check if smaller reporting company)
|
Smaller reporting company
x
|
THE BRAINY BRANDS COMPANY, INC. AND SUBSIDIARY
|
||||||||
Consolidated Balance Sheets
|
||||||||
June 30, 2011
|
December 31, 2010
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Assets:
|
||||||||
Cash
|
$ | 333,997 | $ | 921,711 | ||||
Restricted cash
|
- | 900,000 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $227 and $1,547, respectively
|
121,428 | 83,706 | ||||||
Inventory, net
|
184,081 | 52,184 | ||||||
Prepaid expenses and other
|
194,916 | 86,900 | ||||||
Total Current Assets
|
834,422 | 2,044,501 | ||||||
Debt issuance costs, net
|
93,883 | 87,486 | ||||||
Property and equipment, net
|
102,934 | 90,503 | ||||||
Intangible assets, net
|
588,949 | 613,029 | ||||||
Total Assets
|
$ | 1,620,188 | $ | 2,835,519 | ||||
Liabilities and Shareholders' Deficit
|
||||||||
Liabilities:
|
||||||||
Accounts payable
|
$ | 283,022 | $ | 196,995 | ||||
Accrued expenses
|
544,353 | 74,779 | ||||||
Deferred revenue
|
113,687 | 156,378 | ||||||
Other current liabilities
|
40,374 | 49,609 | ||||||
Total Current Liabilities
|
981,436 | 477,761 | ||||||
Convertible notes payable
|
2,279,134 | 1,934,178 | ||||||
Derivative liabilities
|
16,891,175 | 905,701 | ||||||
Total Long-Term Liabilities
|
19,170,309 | 2,839,879 | ||||||
Total Liabilities
|
20,151,745 | 3,317,640 | ||||||
Shareholders' Deficit
|
||||||||
Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding
|
- | - | ||||||
Common stock, $0.001 par value, 160,000,000 shares authorized, 32,699,986
|
||||||||
shares issued and outstanding
|
32,700 | 32,700 | ||||||
Additional paid-in capital
|
552,587 | 552,587 | ||||||
Accumulated deficit
|
(19,116,844 | ) | (1,067,408 | ) | ||||
Total Shareholders' Deficit
|
(18,531,557 | ) | (482,121 | ) | ||||
Total Liabilities and Shareholders' Deficit
|
$ | 1,620,188 | $ | 2,835,519 |
THE BRAINY BRANDS COMPANY, INC. AND SUBSIDIARY
|
||||||||||||||||||
Consolidated Statements of Operations
|
||||||||||||||||||
(unaudited)
|
For the Three Months Ended
|
For the Six Months Ended
|
|||||||||||||||
June 30, 2011
|
June 30, 2010
|
June 30, 2011
|
June 30, 2010
|
|||||||||||||
Revenues
|
||||||||||||||||
Product sales, net of discounts
|
$
|
168,883
|
$
|
78,326
|
$
|
232,357
|
$
|
154,019
|
||||||||
Licensing income
|
47,441
|
23,260
|
81,011
|
65,018
|
||||||||||||
Total Revenues
|
216,324
|
101,586
|
313,368
|
219,037
|
||||||||||||
Cost of Sales
|
72,627
|
24,664
|
104,762
|
62,024
|
||||||||||||
Gross Profit
|
143,697
|
76,922
|
208,606
|
157,013
|
||||||||||||
Operating Expenses
|
||||||||||||||||
Selling, general and administrative expenses
|
1,870,002
|
202,906
|
3,265,348
|
430,520
|
||||||||||||
Depreciation and amortization
|
6,494
|
20,195
|
38,211
|
40,389
|
||||||||||||
Total Operating Expenses
|
1,876,496
|
223,101
|
3,303,559
|
470,909
|
||||||||||||
Loss from Operations
|
(1,732,799
|
)
|
(146,179
|
)
|
(3,094,953
|
)
|
(313,896
|
)
|
||||||||
Other Income (Expense)
|
||||||||||||||||
Legal settlement income
|
17
|
-
|
60,017
|
-
|
||||||||||||
Change in fair market value of derivative liabilities
|
(1,906,504
|
)
|
-
|
(1,899,119
|
)
|
-
|
||||||||||
Derivative expense
|
(12,586,255
|
) |
-
|
(12,586,255
|
)
|
-
|
||||||||||
Interest income
|
4
|
602
|
311
|
1,704
|
||||||||||||
Interest expense
|
(344,250
|
)
|
(15,552
|
)
|
(529,437
|
)
|
(26,428
|
)
|
||||||||
Total Other Income (Expense)
|
(14,836,988
|
)
|
(14,950
|
)
|
(14,954,483
|
)
|
(24,724
|
)
|
||||||||
Net Loss
|
$
|
(16,569,787
|
)
|
$
|
(161,129
|
)
|
$
|
(18,049,436
|
)
|
$
|
(338,620
|
)
|
||||
Net Loss per Common Share - Basic and Diluted
|
$
|
(0.51
|
)
|
$
|
(0.01
|
)
|
$
|
(0.55
|
)
|
$
|
(0.03
|
)
|
||||
Weighted Average Number of Common Shares Outstanding Basic - Diluted
|
32,699,986
|
11,224,995
|
32,699,986
|
11,224,995
|
THE BRAINY BRANDS COMPANY, INC. AND SUBSIDIARY
|
||||||||
Consolidated Statements of Cash Flows
|
||||||||
(unaudited)
|
For the Six Months Ended
|
||||||||
June 30, 2011
|
June 30, 2010
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net loss
|
$
|
(18,049,436
|
)
|
$
|
(338,620
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
38,211
|
40,389
|
||||||
Amortization of debt issuance costs
|
26,103
|
-
|
||||||
Amortization of debt discount
|
344,956
|
-
|
||||||
Change in fair market value derivative liabilities
|
1,899,119
|
-
|
||||||
Derivative expense
|
12,586,255
|
-
|
||||||
Changes in operating assets and liabilities:
|
||||||||
(Increase) Decrease in:
|
||||||||
Accounts receivable
|
(37,722
|
)
|
(14,489
|
)
|
||||
Inventory
|
(131,897
|
)
|
(9,818
|
)
|
||||
Prepaid expenses and other
|
(108,016
|
)
|
(8,473
|
)
|
||||
Increase (Decrease) in:
|
||||||||
Accounts payable and accrued expenses
|
553,789
|
(117,645
|
)
|
|||||
Deferred revenue
|
(42,691
|
)
|
89,926
|
|||||
Other current liabilities
|
(9,185
|
)
|
-
|
|||||
Net Cash Used in Operating Activities
|
(2,930,514
|
)
|
(358,730
|
)
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase of property and equipment
|
(24,700
|
)
|
-
|
|||||
Net Cash Used in Investing Activities
|
(24,700
|
)
|
-
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Net proceeds from convertible notes
|
1,467,500
|
-
|
||||||
Payments on lines of credit
|
-
|
(40,869
|
)
|
|||||
Proceeds from notes payable
|
-
|
275,222
|
||||||
Proceeds from the release of cash restriction
|
900,000
|
|||||||
Payments received on amounts due from officer
|
-
|
124,454
|
||||||
Net Cash Provided By Financing Activities
|
2,367,500
|
358,807
|
||||||
Net Increase (Decrease) in Cash
|
(587,714
|
)
|
77
|
|||||
Cash - Beginning of Period
|
921,711
|
276
|
||||||
Cash - End of Period
|
$
|
333,997
|
$
|
353
|
||||
SUPPLEMENTARY CASH FLOW INFORMATION:
|
||||||||
Cash Paid During the Period for:
|
||||||||
Income Taxes
|
$
|
-
|
$
|
-
|
||||
Interest
|
$
|
-
|
$
|
-
|
||||
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||
Debt discount on convertible notes
|
$
|
1,500,000
|
$
|
-
|
June 30, 2011
|
December 31, 2010
|
|||||||
Finished goods
|
$ | 256,275 | $ | 148,866 | ||||
Less reserve for obsolescence and slow moving inventory
|
(72,194 | ) | (96,682 | ) | ||||
$ | 184,081 | $ | 52,184 |
Three Months Ended
June 30, 2011
|
Three Months Ended
June 30, 2010
|
Six Months Ended
June 30, 2011
|
Six Months Ended
June 30, 2010
|
|||||||||||
$ | 1,584,445 | $ | 10,000 | $ | 1,879,703 | $ | 31,801 |
2010 Convertible notes – face amount of $2,806,489, conversion price of $0.40
|
7,016,222 | |||
2011 Convertible notes – face amount of $1,500,000, conversion price of $0.40
|
3,750,000 | |||
Common stock warrants, conversion price of $0.60 (Series “A”)
|
12,641,222 | |||
Common stock warrants, conversion price of $1.20 (Series “B”)
|
12,641,222 | |||
Total common stock equivalents
|
36,048,666 |
June 30, 2011
|
December 31, 2010
|
|||||||
Leasehold improvements
|
$
|
103,195
|
$
|
103,195
|
||||
Furniture and equipment
|
280,424
|
253,862
|
||||||
Vehicle
|
5,700
|
5,700
|
||||||
389,320
|
362,757
|
|||||||
Less accumulated depreciation
|
(286,385
|
)
|
(272,254
|
)
|
||||
Property and equipment, net
|
$
|
102,934
|
$
|
90,503
|
Estimated life
|
Gross Amount
|
Accumulated Amortization
|
Net
|
||||||||||
Masters
|
10 years
|
$
|
575,209
|
$
|
436,826
|
$
|
138,383
|
||||||
Trademarks
|
Indefinite
|
450,566
|
-
|
450,566
|
|||||||||
$
|
1,025,775
|
$
|
436,826
|
$
|
588,949
|
Estimated life
|
Gross Amount
|
Accumulated Amortization
|
Net
|
||||||||||
Masters
|
10 years
|
$
|
575,209
|
$
|
412,746
|
$
|
162,463
|
||||||
Trademarks
|
Indefinite
|
450,566
|
-
|
450,566
|
|||||||||
$
|
1,025,755
|
$
|
412,746
|
$
|
613,029
|
(A)
|
2010 Convertible Promissory Notes and Warrants
|
i.
|
Conversion price at issuance: $0.40 per share of common stock
|
ii.
|
Registration rights – the Company is required to file a registration statement within 60 days of a written request of holders of more than 50% of the conversion shares. If the Company fails to file such registration statement, the Company will incur liquidated damages of 2% of the aggregate amount raised in the offering for each 30 days of delinquency. The maximum liquidated damages are capped at 12.0% of the aggregate amount raised in the offering.
|
iii.
|
Warrants - The Company also issued the Note holders one stock purchase warrant with a maturity of 5 years and a $0.60 exercise price for each convertible share (7,016,222 warrants)and one stock purchase warrant with a maturity of 5 years and a $1.20 exercise price for each convertible share (7,016,222 warrants).
|
iv.
|
Full ratchet provision – The Notes contain a provision in which the conversion price will be reduced in any event the Company issues any security or debt instrument with a lower consideration per share in any future offering.
|
v.
|
$900,000 of the cash proceeds was restricted by the investors and must be utilized for investor relation purposes. For purposes of cash flow presentation, the restriction was netted with the gross proceeds raised.
|
(B)
|
2011 Convertible Promissory Notes and Warrants
|
i.
|
Conversion price at issuance: $0.40 per share of common stock
|
ii.
|
Registration rights – the Company is required to file a registration statement within 60 days of a written request of holders of more than 50% of the conversion shares. If the Company fails to file such registration statement, the Company will incur liquidated damages of 2% of the aggregate amount raised in the offering for each 30 days of delinquency. The maximum liquidated damages are capped at 12.0% of the aggregate amount raised in the offering.
|
iii.
|
Warrants - The Company also issued the Note holders one stock purchase warrant with a maturity of 5 years and a $0.60 exercise price for each convertible share (5,625,000 warrants)and one stock purchase warrant with a maturity of 5 years and a $1.20 exercise price for each convertible share (5,625,000 warrants).
|
iv.
|
Full ratchet provision – The Notes contain a provision in which the conversion price will be reduced in any event the Company issues any security or debt instrument with a lower consideration per share in any future offering.
|
v.
|
$500,000 of the cash proceeds was restricted by the investors and must be utilized for investor relation purposes. For purposes of cash flow presentation, the restriction was netted with the gross proceeds raised. The entire $500,000 was released from restriction during the period.
|
Fair value at the issuance dates for conversion feature and warrants issued on the 2010 Convertible Promissory Notes and Warrant Offering
|
$ | 918,885 | ||
Mark to market adjustments for the year ended December 31, 2010:
|
(13,184 | ) | ||
Derivative liabilities balance at December 31, 2010
|
$ | 905,701 | ||
Fair value at the issuance dates for conversion feature and warrants issued on the 2011 Convertible Promissory Notes and Warrant Offering
|
14,086,355 | |||
Mark to market adjustments for the six months ended June 30, 2011:
|
1,899,119 | |||
Derivative liabilities balance at June 30, 2011
|
$ | 16,891,175 |
Exercise price
|
$0.40 - $1.20
|
Expected dividends
|
0%
|
Expected volatility
|
62.5% - 99.7%
|
Expected term: conversion feature
|
2 years
|
Expected term: warrants
|
5 years
|
Suboptimal exercise factor
Risk free interest rate
|
1.25
0.45% - 2.24%
|
(C)
|
Debt Issuance Costs
|
|
●
|
Level 1 inputs utilize unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access;
|
|
●
|
Level 2 inputs utilize other-than-quoted prices that are observable, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs such as interest rates and yield curves that are observable at commonly quoted intervals; and
|
|
●
|
Level 3 inputs are unobservable and are typically based on our own assumptions, including situations where there is little, if any, market activity.
|
Level 1:
Quoted Prices in Active Markets for Identical Liabilities
|
Level 2:
Significant Other Observable Inputs
|
Level 3:
Significant Unobservable Inputs
|
Total at June 30, 2011
|
|||||||||||||
Derivative Liabilities
|
$ | - | $ | 16,891,175 | $ | - | $ | 16,891,175 |
Level 1:
Quoted Prices in Active Markets for Identical Liabilities
|
Level 2:
Significant Other Observable Inputs
|
Level 3:
Significant Unobservable Inputs
|
Total at December 31, 2010
|
|||||||||||||
Derivative Liabilities
|
$ | - | $ | 905,701 | $ | - | $ | 905,701 |
(A)
|
Members’ Deficit
|
(B)
|
Common Stock
|
(C)
|
Warrants
|
Warrants
|
Weighted Average Exercise Price
|
|||||||
Outstanding – December 31, 2010
|
14,032,444 | $ | 0.90 | |||||
Exercisable – December 31, 2010
|
14,032,444 | $ | 0.90 | |||||
Granted
|
11,250,000 | $ | 0.90 | |||||
Exercised
|
- | $ | - | |||||
Forfeited/Cancelled
|
- | $ | - | |||||
Outstanding – June 30, 2011
|
25,282,444 | $ | 0.90 | |||||
Exercisable – June 30, 2011
|
25,282,444 | $ | 0.90 |
Warrants Outstanding
|
Warrants Exercisable
|
||||
Range of
exercise price
|
Number
Outstanding
|
Weighted Average
Remaining Contractual Life (in years)
|
Weighted Average
Exercise Price
|
Number
Exercisable
|
Weighted Average
Exercise Price
|
$0.60 - $1.20 | 25,282,444 | 4.77 years | $0.90 | 14,032,044 | $0.90 |
(1)
|
Lease-License Agreement
|
No.
|
Description
|
|
31.1
|
Rule 13a-14(a)/ 15d-14(a) Certification of Principal Executive Officer and Principal Financial Officer
|
|
32.1
|
Section 1350 Certification of Principal Executive Officer and Principal Financial Officer
|
|
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 . |
The Brainy Brands Company, Inc.
|
|||
Date: September 14, 2011
|
By:
|
/s/ John Benfield | |
John Benfield | |||
Chief Executive Officer (principal executive officer, principal financial officer, and principal accounting officer) | |||
1 Year Triad Business Bank (PK) Chart |
1 Month Triad Business Bank (PK) Chart |
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