UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-K


(Mark One)


x
Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934

for the fiscal year ended December 31, 2010.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: 000-28311





SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.


(Exact name of small business issuer as specified in its charter)





Texas
76-027334(State or other jurisdiction of incorporation ororganization)
(IRS Employer Identification Number)





2180 Satellite Blvd. Suite 400, Duluth, GA 30097-4927


(Address of Principal Executive Office) (Postal Code)





(404) 551-5274


(Issuer’s telephone number, Including Area Code)





Securities registered under Section 12(g) of the Exchange Act:





common stock ($0.0001 Par Value)





Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.





Yes
o
No x





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.





Yes
o
No x





Indicate by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.





Yes
o
No x





Indicate by check mark whether the registrant has submitted electronically and posted in its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months or such shorter period that the registrant was required to submit and post such files).





Yes
o
No x





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this Chapter) is contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K þ.





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large Accelerated Filer

o

Accelerated Filer
oNon-Accelerated Filer

o

Smaller Reporting Company
x





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).





Yes
o
No x





The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity as of the last business day of the registrant’s most recently completed second fiscal quarter (September 30, 2011) was approximately $7,539,121.





The number of shares outstanding of each of the registrant’s classes of common stock as of September 30, 2011 was 62,826,011 shares of Common stock and9,879,854shares of series common stock.










SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.





TABLE of CONTENTS





PagePART I.Item 1.
Business

2Item 1A.
Risk Factors

6Item 2.
Properties

13Item 3.
Legal Proceedings

13PART II.Item 5.
Market for Common Equity and Related Stockholder Matters

14Item 7.
Management’s  Discussion and Analysis of Financial Condition and Results of Operations

17Item 8.
Financial Statements

20Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A.
Controls and Procedures

36Item 9B.
Other Information

38PART III.Item 10.
Directors, Officers,  Promoters and Corporate Governance

39Item 11.
Executive Compensation

40Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

41Item 13.
Certain Relationships and Related Transactions and Director IndependenceItem 14.
Principal Accounting Fees and Services

42PART IV.Item 15.
Exhibits

42Signatures

43





1




PART I





ITEM 1.           DESCRIPTION OF BUSINESS





General.





As used herein the terms “Company,” “we,” “our”, and “us” refer to Sibling Entertainment Group Holdings, Inc., a Texas corporation (formerly known as Sona Development Corporation) and its subsidiaries.  We were incorporated under the laws of the State of Texas on December 28, 1988, as Houston Produce Corporation and we changed our name on May 14, 2007, to “Sibling Entertainment Group Holdings, Inc.” to align our corporate identity with our entry into the entertainment business through an intended acquisition of Sibling Entertainment Group, Inc. (“Sibling”), and its four wholly owned subsidiaries: Sibling
Theatricals, Inc., Sibling Pictures, Inc., Sibling Music Corp., and Sibling Properties, Inc. and their subsidiaries including, among others, Dick Foster Productions, Inc., Adrenaline MMA, Inc., and Hats Holdings, Inc.





Although we were unable to complete this acquisition, during the first three quarters of 2010, we actively pursued opportunities in film, theatre, real estate, management, and music publishing.  In September 2010, the Company determined that the funding required to continue the entertainment business was not available to the Company.  During the fourth quarter of 2010, the Company exited the entertainment business and acquired Newco4Education, LLC (“N4E”) and thereby entered the charter school management business.





As reported in our Form 8K filed January 6, 2011, the Company transferred all of the Company’s entertainment and theatricals assets to Debt Resolution, LLC and exited the entertainment and theatricals business and entered into Conversion Agreements with all but one of the 44 holders of our 13% Series AA Secured Convertible Debentures, whereby such holders converted the principal and accrued interest of the Series AA Secured Convertible Debentures and the related warrants into shares of Debt Resolution, LLC and 1,018,947shares of the Company’s series common stock.  The shares issued to the holders of the Series AA
Secured Convertible Debentures are convertible into ten percent (10%) of the then outstanding common stock of the Company.  The Company’s agreement with the holders of the Series AA Debentures included consent to the acquisition of Newco4Education, LLC and a release of claims against the Company.





As reported in our 8K filed January 6, 2011, on December 30, 2010, we acquired N4Efor8,839,869shares ofshares of the Company’s series common stock which are convertible into 85% of the then outstanding common stock of the Company.





EMO Business Plan





N4E was formed June 10, 2010, to leverage the business opportunities created from the growing popularity of charter schools and to improve educational opportunities for students across the United States through the development of innovative curricula, computer based education tools, and tools for improvement teacher performance.  We intend to use the N4E business plan and methodologies to acquire educational management organizations and to manage and operate charter schools as one component of our business strategy to grow a large scale business that will manage and operate charter schools and develop and license curricula, computer based education services, and school operation and
management tools throughout the United States.  We have hired N4E’s management team to lead our efforts in this new initiative.





Overview of Charter Schools





Charter schools are primary, or secondary, schools that are part of the public education system and provide an alternative to other public schools.  Charter schools have the potential to facilitate education reforms and develop new and creative teaching methods that can be replicated in traditional public schools for the benefit of all children.  Charter schools receive public money but operate with freedom from many of the local and state regulations that apply to traditional public schools.  Charter schools allow parents, community leaders, educational entrepreneurs, and others the flexibility to innovate and provide students with increased educational options
within the public school system.  Charter schools are sponsored by local, state, or other organizations that monitor their quality while holding them accountable for academic results and responsible fiscal practices.  Charter schools may hire their own staff, develop their own curriculum, and set their own educational programs and methods of operation, subject to the terms of their charter and subject to the oversight of a local school board and another sponsor.  Charter schools are not allowed to charge tuition and are funded like other public schools, usually on a per student basis, at levels that are generally comparable but may be less that other public schools in the same district.  Based on industry estimates, there are approximately, 5,400 charter schools in the United States serving over 1,700,000 students.





2




Plan of Operation




We believe there is a significant opportunity to acquire existing educational management organizations (“EMOs”) and assume the operational and management responsibilities for existing charter schools.  We intend to utilize our access to capital markets to achieve capital efficiencies compared to our privately held competitors and to facilitate our acquisition of existing EMO operations.  Finally, we intend to develop curricula, computer based education services, and school operation and management tools that we will use and license to other EMOs, schools, and school systems.




Our ability to execute our business plan is dependent, among other things, on our ability to obtain capital, acquire other EMOs on terms that are favorable to us, hire and retain high quality, motivated teachers, administrators, and other staff, and cost effectively operate schools that are successful in meeting the requirements of their charters.





Charter Schools and EMOs




The charter for a charter school is generally awarded to a “not-for-profit” (NFP) entity which receives public funding.  The NFP may contract with a “for profit” education management organization (EMO) to operate the charter school.  The EMO generally charges fees of approximately 15% of gross pupil funding as allocated from the Board of Education or other public agency involved, of which 5% is the management fee for school operations, and 10% is the license fee for curriculum, systems, and testing.  In Georgia, for instance, the current allocation per student is $8,900, thus a 500 student school would have an annual budget of $4.45 million,
of which approximately 15%, or $667,500 would be allocated to the EMO for management and curriculum.




Competition




This is a highly fractured industry, and management believes it is ripe for consolidation. We have a limited number of direct competitors that have focused primarily or exclusively on operating charter schools. In the 2009/2010 school year there were over 5,100 charter schools in the US, most of which are single schools, or in a small group of schools. Below is a table listing school operators with 8 or more schools under management.  The charter school operators that may compete with us who are the largest operators are listed as follows.




Industry Profile


Organization (EMO)
# of SchoolsKIPP Schools
99Imagine Schools
72Edison Learning
64National Heritage Academies
61Big Picture Learning
60Mosaica Education
40Opportunities for Learning
34Aspire Public Schools
30Harmony Schools
25Charter Schools U.S.A.
19Academy Urban School L'dership
18Green Dot Public Schools
18Uncommon Schools
18Constellation Schools
18Achievement First
17Alliance - College Ready Schools
16Inner City Education Foundation
15American Quality Schools
15Lighthouse Academies
13White Hat Management
12Sequoia Schools
12High Tech High
10Noble Network of Charter Schools
10Partnerships Uplift Communities
10Algiers Charter Schools
9Friendship Public Charter
9Edvantages Academies
8Great Hearts Academies
8IDEA Public Schools
8Student Alternatives Program, Inc.
8




3





Total for Operators with 8 or more schools under management:  756.Data fromhttp://www.nupolis.com




This data demonstrates the highly fractured nature of the industry, opening the door for consolidation via acquisition.  Total Charter Schools in Operation in 2009/2010 5,100.  Percent in Large Organizations 12.16%, Percent in Smaller Organizations 87.84%.





Government Regulation Impacting this Industry





Federal and State Education Programs.





The charter schools we seek to manage will receive funds from federal and state programs to be used for specific educational purposes. If, on behalf of those schools, we fail to comply with the requirements of the various programs, we could be required to repay the funds and those schools could be determined ineligible for receipt of future federal funds.  We intend to develop and implement policies and procedures that are intended to comply with the regulations and requirements of these programs.  For example, Title I of the Elementary and Secondary Education Act of 1965 supports educationally disadvantaged children in areas of high poverty, Title II, Part A, provides
funding for the professional development of teachers, Title II, Part D, provides funding for technology programs, Title VII, provides funding for bilingual education programs, Title V, provides funding for innovative education programs, and the Public Charter School Program, provides start-up funding for charter schools.  Although we contemplate that we will receive federal and state funds indirectly through local school boards and charter boards, our receipt of these funds will likely subject us to extensive governmental regulation and scrutiny.





We could lose all or part of the funds we intend to receive if we fail to comply with applicable statutes or regulations, if the federal or state authorities reduce the funding for the programs, or if the charter schools we intend to manage are determined to be ineligible to receive funds under such programs.  To the extent that the laws and regulations governing federal and state programs change or are interpreted in a manner that would prevent charter schools from using federal funds to pay for the services we intend to provide, the loss of all or part of these funds would hurt our business.





No Child Left Behind Act.(“NCLB”)





This act is the 2001 reauthorization of the Elementary and Secondary Education Act of 1965. It contains numerous requirements pertaining to the receipt of a range of federal funds, including Title I. Two significant requirements of NCLB are standards pertaining to teacher qualifications and the requirement that schools make adequate yearly progress ("AYP") toward state standards for students.  The AYP requirements must be met not only by the aggregate school population, but also by ethnic/racial subgroups, students with disabilities, and English language learners.  Schools that fail to make AYP toward meeting state standards may lose some of their student enrollment due to
school choice provisions, may be required to allocate a portion of their Title I funding toward the provision of supplemental services to some students, and may be subject to state takeover or other forms of district or state intervention.  Failure to meet teacher qualification and related standards may result in the loss of NCLB funds at the school or district that failed to meet the Act's requirements.





4





Individuals with Disabilities in Education Act.





This act requires that students with qualified disabilities receive an appropriate education through special education and related services provided in a manner reasonably calculated to enable the child to receive educational benefit in the least restrictive environment. Our responsibility to provide the potentially extensive services required by this act varies depending on state law, type of school, and the terms of management agreements that we intend to enter into with charter schools.  We would be generally responsible for ensuring the requirements of this act are met in the charter schools we intend to manage, unless state law assigns that responsibility to another
entity.  If we were to be found in violation of this act in one of the charter schools we intend to manage, we may incur costs relating to the provision of compensatory education services, and may be liable for reasonable attorney fees incurred by the families of individual students with disabilities.





Family Educational Rights and Privacy Act.




The charter schools we intend to manage may be subject to the federal Family Educational Rights and Privacy Act, which protects the privacy of a student's educational record, and generally prohibits a school from disclosing a student's records to a third party without the prior consent of his or her parents. The law also gives parents certain rights with respect to their minor children's education records. The failure of the charter schools we intend to manage to comply with this law may result in termination of their eligibility to receive federal education funds.





Gun-Free Schools Act.




The Gun-Free Schools Act, which became effective in 1994, requires the charter schools we intend to manage to effect certain policies, assurances and reports regarding the discipline of students who bring weapons to our schools.  If those schools violate any of these requirements, they may be deemed ineligible to receive certain Federal education funds.





Federal Civil Rights Laws.





The charter schools we intend to manage must comply with federal civil rights laws or those schools could be determined ineligible to receive funds from federal programs or face criminal or civil penalties. These laws include the following:




●
Title VI of the Civil Rights Act of 1964.  Title VI prohibits recipients of federal financial assistance from discriminating on the basis of race, color, or national origin.


●
Title IX of the Education Amendments of 1972.  Title IX prohibits discrimination on the basis of gender by recipients of federal financial assistance.


●
Section 504 of the Rehabilitation Act of 1973.  Section 504 prohibits discrimination on the basis of disability by recipients of federal financial assistance.


●
Americans with Disabilities Act of 1990.  This act prohibits discrimination in employment against a qualified individual with a disability and requires that buildings, facilities, and vehicles associated with public services be accessible to individuals with disabilities.


●
Age Discrimination Act of 1975.  This act prohibits recipients of federal financial assistance from discriminating on the basis of age.


●
Age Discrimination in Employment Act of 1967.  This act prohibits discrimination on the basis of age in employment.


●
Equal Pay Act of 1963.  This act prohibits discrimination on the basis of gender in the payment of wages.


●
Title VII of the Civil Rights Act of 1964.  Title VII prohibits discrimination on the basis of gender in employment.


●
Drug-Free Workplace Act of 1988.  The Drug-Free Workplace Act requires a recipient of federal funds to certify that it provides a drug-free workplace. If we were to violate the certification and reporting requirements of this act, then we could be determined ineligible to receive federal funds.





5





State Regulations.





We are also subject to state statutory and regulatory requirements in the states in which we operate. All states have standards for the operation of schools concerning, for example, the length of the school year, curriculum, hours of the school day, physical education and other areas. We could be in violation of the management agreements we intend to enter into with charter boards or school districts if we were to fail to comply with these standards.





Foundation for Innovation in Education, Inc.





Foundation for Innovation in Education, Inc., is a Georgia non-profit corporation that was an N4E member and as a result of our acquisition of N4E holds approximately 37% of our series common stock.  Foundation for Innovation in Education has informed us that over time it intends to acquire other NFPs that hold the charters to charter schools, and may start charter schools itself, as well as develop certain programs aimed at improving the learning ability of certain segments of the student population.  Foundation for Innovation in Education may hire the Company, to be the EMO for charter schools that it starts and acquires, though it has no obligations with the Company at
this time.  Foundation for Innovation in Education intends to engage in research and other activities to advance the state education in America.




ITEM 1A.              RISK FACTORS





Risks Related to Our Business





Our future operating results are highly uncertain. Before deciding to invest in us or to maintain or increase your investment, you should carefully consider the risks described below, in addition to the other information contained in this annual report. If any of these risks actually occur, our business, financial condition or results of operations could be seriously harmed. In that event, the market price for our common stock could decline and you may lose all or part of your investment.





Effective December 30, 2010, We Entered A New Business; This Makes It Difficult To Evaluate Our Business





We have yet to enter into any agreement to acquire an EMO or manage a charter school. We have not recorded any revenue from our new business initiatives. Our management team has only recently begun to work together, and has no experience in operating educational management organizations and charter schools. We have no operating history on which you can base your evaluation of our business and prospects. Accordingly, the Company should be evaluated in light of the expenses, delays, uncertainties, and other difficulties frequently encountered by unseasoned business enterprises entering new markets with unproven products. No assurance can be given
that the Company will ever achieve profitable operations. Our failure to address these expenses, delays, uncertainties, and other difficulties could cause our operating results to suffer and result in the loss of all or part of your investment.





We Have A History Of Losses And Expect Losses In The Future





The Company has incurred losses since inception. We do not currently own, operate, or have agreements to acquire any school operations and therefore have no revenues. As a result, we expect to incur substantial net losses for the foreseeable future. Our ability to become profitable will depend upon our ability to generate and sustain revenue that is greater than our expenses. In order to generate revenue, we will need to enter into management agreements with charter schools, acquire other EMOs, and successfully acquire or develop and license curricula, computer based education services, and school operation and management tools. Our ability to generate revenue will be dependent, in part, on our
ability to obtain financing sufficient to execute our business plan. Even if we do achieve profitability, we may not sustain or increase profitability on a quarterly or annual basis. Failure to become and remain profitable may adversely affect the market price of our common stock, our ability to raise capital, and our ability to continue operations.





Political risks





Charter Schools are authorized by state statutes.  State legislatures may amend these statutes and the amendments may be unfavorable to our business.  Courts may declare these statutes unconstitutional in whole or in part.  In either event, we may be unable to grow our business and the market price of our common stock would be adversely affected.





6





The Private, For-Profit Management Of Charter Schools Is A Relatively New And Uncertain Industry, And It May Not Become Publicly Accepted





Our future is highly dependent upon the development, acceptance, and expansion of the market for private, for-profit management of charter schools. This market has only recently developed. The development of this market has been accompanied by significant press coverage and public debate concerning for-profit management of charter schools. If this business model fails to gain acceptance among the general public, educators, politicians and school boards, we may be unable to grow our business and the market price of our common stock would be adversely affected.





The Success Of Our Business Depends On Our Ability To Improve The Academic Achievement Of The Students Enrolled In Our Schools, And We May Face Difficulties In Doing So In The Future





We believe that the success of our business will be dependent, among other things, upon our ability to demonstrate general improvements in academic performance at the charter schools we intend to manage and operate. We anticipate that the management agreements with charter schools will contain performance requirements related to test scores and other measures of student achievement. If average student performance at our schools increases, whether due to improvements in achievement over time by individual students in our schools or changes in the average performance levels of new students entering our schools, aggregate absolute improvements in student performance will be more difficult to
achieve. If academic performance at our schools declines, or simply fails to improve, we could lose business and our reputation could be seriously damaged, which would impair our ability to gain new business or renew existing school management agreements.




We Could Incur Losses At Our Schools If We Are Unable To Enroll Enough Students





We expect that the amount of revenue we will receive for operating a charter school will be dependent on the number of students enrolled, while the majority of the facility, operating, and on-site administrative costs will be fixed. Therefore, achieving site-specific enrollment objectives will be an important factor in our ability to achieve satisfactory financial performance at any particular school. We may be unable to expand or maintain enrollment in the charter schools we manage. To the extent we are unable to meet enrollment objectives at a school, the school will be less financially successful and our
financial performance will be adversely affected.





We Desire Rapid Growth, Which May Strain Our Resources And May Not Be Sustainable





We desire to grow rapidly. Rapid growth may strain our managerial, operational, and other resources. If we are to manage our rapid growth successfully, we will need to hire and retain management personnel and other employees. We must also develop and improve our operational systems, procedures, and controls on a timely basis. If we fail to successfully manage our growth, we could experience client dissatisfaction, cost inefficiencies and lost growth opportunities, which could harm our operating results. We cannot guarantee that we will continue to grow at our historical rate.





We May Not Be Able To Attract And Retain Highly Skilled Principals And Teachers In The Numbers Required To Grow Our Business





Once we have acquired EMOs with management agreements with charter schools or entered into management agreements with charter schools, our success is likely to depend to a high degree upon our ability to attract and retain highly skilled school principals and teachers. We may need to hire new principals and new teachers to address turnover at the charter schools we manage. Currently, there is a well-publicized nationwide shortage of teachers and other educators in the United States. In addition, we may find it difficult to attract and retain principals and teachers for a variety of reasons, including the
following:





7




●
charter schools generally require our teachers to work a longer day and a longer year than most public schools;


●
charter schools tend to have a larger proportion of our schools in challenging locations, such as low-income urban areas, which may make attracting principals and teachers more difficult; and


●
charter schools generally impose more accountability on principals and teachers than do public schools as a whole.





These factors may increase the challenge we face in an already difficult market for attracting principals and teachers. Other EMO’s have experienced higher levels of turnover among teachers than is generally found in public schools nationally, which we attribute in part to these factors. If we fail to attract and retain principals and teachers in sufficient numbers or of a sufficient quality, we could experience client dissatisfaction and lost growth opportunities, which would adversely affect our business.





Our Business Could Suffer If We Lose The Services Of Key Executives





Our future success depends upon the continued services of a number of our key executive personnel, particularly our Chairman of the Board of Directors, our Chief Executive Officer, or Chief Financial Officer. These executives will be instrumental in determining our strategic direction and focus and in publicly promoting the concept of private management of public schools. If we lose the services of either or any of our other executive officers or key employees, our ability to grow our business would be seriously compromised and the market price of our common stock may be adversely affected. We do not maintain any key man insurance on any of our executives.





Our Management Agreements Will Be Terminable Under Specified Circumstances And Generally Expire After A Term Of Five Years





We expect that our school management agreements will generally have a term of five years. When we expand by adding an additional school under an existing management agreement, the term with respect to that school generally expires at the end of the initial five-year period. We have no experience in negotiating school management agreements, and we cannot be assured that any school management agreements will be negotiated or renewed. In addition, school management agreements may be terminable by the school district or charter board at will, with or without good reason, and our school management agreements may be
terminated for cause, including a failure to meet specified educational standards, such as academic performance based on standardized test scores. In addition, as a result of changes within a school district, such as changes in the political climate, we could from time to time face pressure to permit a school district or charter board to terminate our school management agreement even if they do not have a legal right to do so. If we fail to renew a significant number of school management agreements at the end of their term, or if school management agreements are terminated prior to their expiration, our reputation and financial results would be adversely affected.





Our Management Agreements Will Involve Financial Risk





Our school management agreements will provide that we will operate a school in return for per- pupil funding that generally does not vary with our actual costs. To the extent our actual costs under a school management agreement exceed our budgeted costs, or our actual revenue is less than planned because we are unable to enroll as many students as we anticipated or for any other reason, we would lose money at that school. We expect that our school management agreements will require us to continue operating a school for the duration of the school management agreement even if it becomes unprofitable to do so.


We May Need To Advance Or Loan Money To Charter Schools Or Their Related Charter Holding Equity That May Not Be Repaid





We may have to loan charter boards funds to finance the purchase or renovation of school facilities we manage or for other reasons. Loans to charter schools may be accelerated upon termination of the corresponding management agreement with the charter school. If these advances or loans are not repaid when due, our financial results could be adversely affected.





8





We Could Become Liable For Financial Obligations Of Charter Boards





We could have facility financing obligations for charter schools we no longer operate, because the terms of our facility financing obligations for some charter schools might exceed the term of the management agreement for those schools. While the charter board is generally responsible for locating and financing its own school building, the holders of school charters, which are often non-profit organizations, typically do not have the resources required to obtain the financing necessary to secure and maintain the school building. For this reason, if we want to obtain a management agreement with a particular charter board, we may help the charter board arrange for the necessary financing. For some
of the charter schools we expect to manage, we may enter into a long-term lease for the school facility which may exceed the initial term of the management agreement. If our management agreements were to be terminated, or not renewed in these charter schools, our obligations to make lease payments would continue, which could adversely affect our financial results for the school building, typically in the form of loan guarantees or cash advances. Although the term of these arrangements may be coterminous with the term of the corresponding management agreement, our guarantee may not expire until the loan is repaid in full. The lenders under these facilities may not be committed to release us from our obligations unless replacement credit support is provided. The default by any charter school under a credit facility that we have guaranteed could result in a claim against us for the full
amount of the borrowings. Furthermore, in the event any charter board becomes insolvent or has its charter revoked, our loans and advances to the charter board may not be recoverable, which could adversely affect our financial results.





We Expect Our Market To Become More Competitive





We expect the market for providing private, for-profit management of charter schools will become increasingly competitive. A variety of companies and entities could enter the market, including colleges and universities, other private companies that operate higher education or professional education schools, and others. Our existing competitors and these new market entrants could have financial, marketing and other resources significantly greater than ours. We will also compete for charter school funding with existing public schools that may pursue alternative reform initiatives, such as magnet schools and inter- district choice programs. In addition, in jurisdictions where voucher programs
have been authorized, we will compete with existing private schools for public tuition funds. Voucher programs provide for the issuance by local or other governmental bodies of tuition vouchers to parents worth a certain amount of money that they can redeem at any approved school of their choice, including private schools. If we are unable to compete successfully against any of these existing or potential competitors, our revenues could be reduced, resulting in increased losses.





Failure To Raise Necessary Additional Capital Could Restrict Our Growth And Hinder Our Ability To Compete





We are not certain when we will have positive cash flow, if at all. We expect that we will regularly need to raise funds in order to operate our business and may need to raise additional funds in the future. We cannot be certain that we will be able to obtain additional financing on favorable terms, if at all. If we issue additional equity securities, stockholders may experience dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of common stock. If we cannot raise funds on acceptable terms, if and when needed, we may not be able to take advantage
of future opportunities, grow our business or respond to competitive pressures or unanticipated requirements, which could seriously harm our business.





We Expect To Derive A Substantial Portion Of Our Revenues From Public School Funding, Which Is Dependent On Support From Federal, State, And Local Governments. Changes Or Reductions In Funding For Public School Systems Could Reduce Our Revenues And Cash Flows And Negatively Impact Our Margins And Impede The Growth Of Our Business.





The availability of funding to purchase our products and services is subject to many factors that affect government spending. These factors include downturns in general economic conditions, like those which we are currently experiencing, that can reduce government tax revenues and may affect education funding, emergence of other priorities that can divert government funding from educational objectives, periodic changes in government leadership that can change spending priorities, and the government appropriations process, which is often slow and unpredictable. In many instances, customers rely on specific funding appropriations to purchase our products. Curtailments, delays, or reductions in
this funding can delay or reduce revenues and cash flow we had otherwise forecasted to receive.





9





If We Are Unable To Adapt Our Products And Services To Technological Changes, To The Emergence Of New Computing Devices And To More Sophisticated Online Services, We May Lose Market Share And Service Revenue, And Our Business Could Suffer.





We need to anticipate, develop and introduce new products, services and applications on a timely and cost effective basis that keeps pace with technological developments and changing customer needs. We may encounter difficulties responding to these changes that could delay our introduction of products and services or require us to make larger than anticipated investments to maintain existing products. Software industries are characterized by rapid technological change and obsolescence, frequent product introductions, and evolving industry standards. Accordingly, it is difficult to predict the problems we may encounter in developing versions of our products and services and we may need to devote
significant resources to the creation, support and maintenance of our products and services. If we fail to develop or sell products and services cost effectively that respond to these or other technological developments and changing customer needs, we may be unable to successfully market our products and services and our revenue and business could materially suffer.





Misuse Or Misappropriation Of Our Proprietary Rights Or Inadvertent Infringement By Us On The Rights Of Others Could Adversely Affect Our Results Of Operations.





The intellectual property rights in the software we intend to develop will be essential to our business. We intend to rely on a combination of the laws of copyrights, trademarks, and trade secrets, as well as license agreements, employment and employment termination agreements, third-party non-disclosure agreements, and other methods to protect our proprietary rights. We intend to enforce our intellectual property rights when we become aware of any infringements or potential infringements and believe they warrant such action. If we were unsuccessful in our ability to protect these rights, our operating results could be adversely affected. Third parties may assert infringement claims against us
in the future. We may be required to modify our products, services or technologies or obtain a license to permit our continued use of those rights. We may not be able to do so in a timely manner or upon reasonable terms and conditions. Failure to do so could harm our business and operating results. In addition, we leverage certain third party generated products through license and/or royalty agreements and we have the risk that certain of these relationships will not continue or that the underlying products will not be properly supported or updated by the third parties.





If Our Security Measures Are Breached And Unauthorized Access Is Obtained To Our Web-Based Products, They May Be Perceived As Not Being Secure, Customers May Curtail Or Stop Using These Products And We May Incur Significant Legal And Financial Exposure And Liabilities.





We may develop web-based products that involve the storage of certain personal information with regard to the teachers and students using these products. If our security measures are breached and unauthorized access to this information occurs, our reputation will be damaged, our business may suffer, and we could incur significant liability. Because the techniques used to attempt unauthorized access to such systems change frequently and generally are not recognized until attempted on a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. If an actual or
perceived breach of our security occurs, the market perception of the security of our system could be harmed and we could lose sales and customers.





Claims Relating To Content Available On Or Accessible From, Our Web Sites May Subject Us To Liabilities And Additional Expense.





If we develop web-based products that incorporate content not under our direct control including content from, and links to, third-party web sites, and content uploaded by our customers, we could be subject to claims relating to this content. In addition to exposing us to potential liability, claims of this type could require us to change our web sites in a manner that could be less attractive to our customers and divert our financial and development resources.





10





We Rely On Government Funds For Specific Education Programs, And Our Business Could Suffer If We Fail To Comply With Rules Concerning The Receipt And Use Of The Funds





We expect to benefit from funds from federal and state programs to be used for specific educational purposes. Funding from the federal government under Title I of the Elementary and Secondary Education Act provides federal funds for children from low-income families. A number of factors relating to these government programs could lead to adverse effects on our business:





●
These programs have strict requirements as to eligible students and allowable activities. If we or the charter schools that we intend to manage fail to comply with the regulations governing the programs, we or the charter schools that we intend to manage could be required to repay the funds or be determined ineligible to receive these funds, which would harm our business.





If the income demographics of a district's population were to change over the life of a management agreement for a charter school, resulting in a decrease in Title I funding for the charter school, we would receive less revenue for operating the charter school and our financial results could suffer.




●
Funding from federal and state education programs is allocated through formulas. If federal or state legislatures or, in some case, agencies were to change the formulas, we could receive less funding and the growth and financial performance of our business would suffer.





●
Federal, state and local education programs are subject to annual appropriations of funds. Federal or state legislatures or local officials could drastically reduce the funding amount of appropriation for any program, which would hurt our business and our ability to grow.





The authorization for the Elementary and Secondary Education Act, including Title I, has expired and this act is being funded by Congress on an interim appropriation basis. If Congress does not reauthorize or continue to provide interim appropriation for the Elementary and Secondary Education Act, we would receive less funding and our growth and financial results would suffer. Most federal education funds are administered through state and local education agencies, which allot funds to charter boards. These state and local education agencies are subject to extensive government regulation concerning their eligibility for federal funds. If these agencies were declared ineligible to receive federal
education funds, the receipt of federal education funds by the charter schools we intend to manage could be delayed, which could in turn delay our payment from the charter schools we intend to manage. In addition, we could become ineligible to receive these funds if any of our high-ranking employees commit serious crimes.





We Could Be Subject To Extensive Government Regulation Because We Benefit From Federal Funds, And Our Failure To Comply With Government Regulations Could Result In The Reduction Or Loss Of Federal Education Funds





Because we expect to benefit from federal funds, we must also comply with a variety of federal laws and regulations not directly related to any federal education program, such as federal civil rights laws and laws relating to lobbying. Our failure to comply with these federal laws and regulations could result in the reduction or loss of federal education funds which would cause our business to suffer. In addition, our management agreements are potentially covered by federal procurement rules and regulations because our school district and charter board clients pay us, in part, with funds received from federal programs. Federal procurement rules and regulations generally require competitive
bidding, awarding contracts based on lowest cost and similar requirements. If a court or federal agency determined that a management agreement was covered by federal procurement rules and regulations and was awarded without compliance with those rules and regulations, then the management agreement could be voided and we could be required to repay any federal funds we received under the management agreement, which would hurt our business.





Risks Related to Our Securities




Since our common stock is thinly traded it is more susceptible to extreme rises or declines in price, and you may not be able to sell your shares at or above the price paid.




Since our common stock is thinly traded, its trading price is likely to be highly volatile and could be subject to extreme fluctuations in response to various factors, many of which are beyond our control, including:




11




●
the trading volume of our shares;




●
the number of securities analysts, market-makers and brokers following our common stock;




●
changes in, or failure to achieve, financial estimates by securities analysts;




●
new products or services introduced or announced by us or our competitors;




●
actual or anticipated variations in quarterly operating results;




●
conditions or trends in our business industries;




●
announcements by us of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;




●
additions or departures of key personnel;




●
sales of our common stock; and





●
general stock market price and volume fluctuations of publicly-traded, and particularly microcap, companies.




You may have difficulty reselling shares of our common stock, either at or above the price you paid, or even at fair market value. The stock markets often experience significant price and volume changes that are not related to the operating performance of individual companies, and because our common stock is thinly traded it is particularly susceptible to such changes. These broad market changes may cause the market price of our common stock to decline regardless of how well we perform as a company. In addition, securities class action litigation has often been initiated following periods of volatility in the market price of a company’s securities. A securities class action suit
against us could result in substantial legal fees, potential liabilities and the diversion of management’s attention and resources from our business. Moreover, and as noted below, our shares are currently traded on the “pink sheets” and, further, are subject to the penny stock regulations. Price fluctuations in such shares are particularly volatile and subject to manipulation by market-makers, short-sellers and option traders.




Our common stock is subject to the “penny stock” regulations, which are likely to make it more difficult to sell.




Our common stock is considered a “penny stock,” which generally is a stock trading under $5.00 and not registered on a national securities exchange or quoted on the Nasdaq National Market. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. These rules generally have the result of reducing trading in such stocks, restricting the pool of potential investors for such stocks, and making it more difficult for investors to sell their shares once acquired. Prior to a transaction in a penny
stock, a broker-dealer is required to:




●
deliver to a prospective investor a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market;




●
provide the prospective investor with current bid and ask quotations for the penny stock;




●
explain to the prospective investor the compensation of the broker-dealer and its salesperson in the transaction;




●
provide investors monthly account statements showing the market value of each penny stock held in the their account; and




●
make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.




12





These requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that is subject to the penny stock rules. Since our common stock is subject to the penny stock rules, investors in our common stock may find it more difficult to sell their shares.




Future sales of shares of our common stock by our stockholders could cause our stock price to decline.





Future sales of shares of our common stock could adversely affect the prevailing market price of our stock. If our significant stockholders sell a large number of shares, or if we issue a large number of shares, the market price of our stock could decline. Moreover, the perception in the public market that stockholders might sell shares of our stock could depress the market for our shares.  If our significant stockholders sell substantial amounts of our common stock in the public market, such sales could create a circumstance commonly referred to as an “overhang,” in anticipation of which the market price of our common stock could fall.  The existence of an
overhang, whether or not sales have occurred or are occurring, also could make it more difficult for us to raise additional financing through the sale of equity or equity-related securities in the future at a time and price we deem reasonable or appropriate.





We will issue additional shares of common stock upon conversion of our series common stock and may issue additional shares capital stock to raise capital or complete acquisitions, which would substantially reduce the equity interest of our current stockholders.





The outstanding shares of our series common stock automatically convert into 95% of the outstanding common stock (giving effect to the conversion) upon the vote of holders of two-thirds of outstanding series common stock, voting as a separate series.  In addition, we issue a substantial number of additional shares of our common stock to complete a business combination or to raise capital.  At this time, the Company is not aware of any intent of the holders of series common stock to vote to convert into common stock.  The issuance of additional shares of our common stock may significantly reduce the equity interest of our existing stockholders and adversely
affect prevailing market prices for our common stock.





We have not paid dividends in the past and do not expect to pay dividends in the future. Any return on investment may be limited to the value of our common stock.





We have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the Board of Directors may consider relevant.  As the date of this report, our management intends to follow a policy of retaining all of our earnings to finance the development and execution of our strategy and the expansion of our business. If we do not pay dividends, our common stock may be less valuable because a return on your investment will occur only if our stock price appreciates.





ITEM 2.           DESCRIPTION OF PROPERTY





The Company does not own any real or personal property.  The Company maintains an office at 2180 Satellite Blvd.Suite 400, Duluth, GA 30097-4927.  Its employees work from locations which are not owned or leased by the Company.





ITEM 3.           LEGAL PROCEEDINGS





At the conclusion of 2010, to be best of our knowledge there are no outstanding legal proceedings involving the Company.





13





PART II





ITEM 5.           MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS





The Company’s common stock was quoted on the Over the Counter Bulletin Board, a service maintained by the National Association of Securities Dealer, Inc., under the symbol, “SIBE” until mid-year 2009. In the fourth quarter, 2009 the Company was delisted from the OTC Bulletin Board Exchange for failure to make timely filings.





Trading in the common stock in the over-the-counter market in the preceding two years has been limited and sporadic and the quotations set forth below are not necessarily indicative of actual market conditions. Further, these prices reflect inter-dealer prices without retail mark-up, mark-down, or commission, and may not necessarily reflect actual transactions.





Year
Quarter Ending

High

Low2010
31-Dec
$
0.02
$
0.0230-Sep
$
0.01
$
0.0130-Jun
$
0.02
$
0.0231-Mar
$
0.0431
$
0.04312009
31-Dec
$
0.041
$
0.04129-Sep
$
0.0551
$
0.055130-Jun
$
0.0155
$
0.015531-Mar
$
0.05
$
0.042008
31-Dec
$
0.25
$
0.0430-Sep
$
0.27
$
0.1530-Jun
$
0.38
$
0.1631-Mar
$
0.52
$
0.14





Record Holders





As of September 15, 2011, there were 126 stockholders of record (based on our transfer agent list) holding a total of 62,826,011 shares of Common stock and9,879,854shares of series common stock.  Holders of common stock and series common stock vote together as a single class on all matters which our stockholders are entitled to vote.  In addition, holders of series common stock are entitled to a series vote to approve certain material transactions.  Each share of equity common stock is entitled to one vote and each
share of series common stock is entitled to a number of votes equal to the number of shares of common stock into which one share of series common stock is convertible on the record date of the vote.  If the Board of Directors declares a dividend on equity common stock, an equivalent dividend (based on the number of shares of equity common stock into which a share series common stock is then convertible) must be paid in respect of series common stock. Holders of the common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock.





Dividends





The Company has not declared any cash dividends since inception and does not anticipate paying any dividends in the foreseeable future. The payment of dividends is within the discretion of the board of directors and will depend on the Company’s earnings, capital requirements, financial condition, and other relevant factors. There are no restrictions that currently limit the Company’s ability to pay dividends on its common stock other than those generally imposed by applicable state law.





14





Recent Sales of Unregistered Securities





On February 18, 2010, the Company entered into an agreement with Highlands Capital to extinguish outstanding debt owed by the Company in exchange for the Company’s common stock in the aggregate of 285,750 shares.





On November 3, 2010, the Company acted on the following matters that resulted in issuance of the Company’s common stock.





●
The Company entered into an agreement with Michael Baybak to settle outstanding debt owned by the Company in exchange for 3,300,000 shares of common stock.





●
The Company entered into an agreement with Broad Street Ventures to settle consulting fees due from the Company in exchange for 3,000,000 shares of common stock.




●
The Company entered into an agreement with Ira Gaines to provide consulting services in exchange for 1,000,000 shares of common stock.




●
The Company entered into an agreement with Jamison Firestone to provide intermediary and translation services in dealing with foreign investors in connection with the conversion of the Series AA Debentures in exchange for 600,000 shares of common stock.




●
The Company issued 2,700,000 of common stock to Mitchell Maxwell for services rendered as a member of the board of directors and in lieu of cash compensation as the Company’s Chief Executive Officer and President.




●
The Company issued 650,000 shares of common stock to Christian Fitzgerald for board of director services.




●
The Company issued 375,000 of its common stock to Richard Bernstein for board of director services.




In the fourth quarter, 2010, the Company received notice from Capital Securities Management, Inc. of their intent to exercise its 2008 warrant agreement.  Subsequently, on November 26, 2010, the Company issued to Capital Securities Management, Inc. 271,000 shares of the Company’s common stock.





In the fourth quarter, 2010, the Company received notice from Vertical Innovation, Inc. of their intent to exercise its 2009 warrant agreement. Subsequently, on November 26, 2010, the Company issued to Vertical Innovation, Inc. 3,000,000 shares of the Company’s common stock.





In the fourth quarter 2010, the Company informed Vertical Innovation, Inc. of their intention to issue common stock in payment for services rendered under the 2009 Vertical Innovation, Inc. Consulting Agreement. Subsequently, on November 3, 2010, the Company issued to Vertical Innovation, Inc. 2,600,000 shares of the Company’s common stock in payment for services rendered from November 2009 to November, 2010.  Additionally, on November 26, 2010, the Company issued to Vertical Innovation, Inc. 200,000 shares of the Company’s common stock for payment for additional services rendered in December, 2010 in relation to the acquisition of N4E.





On December 21, 2010, the Company entered into an agreement with Rochester Wealth Management to provide consulting services in connection with the conversion of the Series AA Debentures in exchange for 1,050,000 shares of common stock.





Also, on December 21, 2010, the Company acted on the following matters that resulted in issuance of the Company’s common stock.





15




●
The Company entered into an investor relations agreement with Bear Creek Capital to provide investor relations consulting services in exchange for 500,000 shares of common stock.





●
The Company entered into a consulting agreement with Carol Castelli to provide certain consulting services in exchange for 300,000 shares of common stock.





●
The Company entered into an agreement with Anslow & Jaclin LLP to provide certain legal services in exchange for 250,000 shares of common stock.





●
The Company entered into an agreement with Taylor Butterfield and Worth to provide certain consulting services in exchange for 200,000 shares of common stock.





●
The Company entered into an agreement with Mark Caruso to provide certain consulting services in exchange for 250,000 shares of common stock.





On December 30, 2010, the Company issued 8,839,869shares of our series common stock pursuant to a Securities Exchange Agreement by and among the Company, N4E, and the N4E Members.





In conjunction with the acquisition of N4E, issued 1,018,947 shares of our series common stock pursuant to debt conversion agreements with the holders of the Company’s Series AA Debentures and related warrants.





During the first quarter, 2011, the Company took steps to significantly reduce outstanding debts associated with the acquisition of N4E by issuance of the Company’s common stock as follows:





On December 31, 2010, the Company entered into an agreement with Mr. Richard Smyth, pursuant to which the Company issued 2,471,500 shares of common stock in payment of consulting services rendered to N4E in connection with the formation and development of the strategy and business plans of N4E.





On December 31, 2010, the Company entered into an agreement with Meshugeneh LLC, pursuant to which the Company issued 4,250,000 shares of common stock in payment of consulting services rendered to N4E in connection with the formation and development of the strategy and business plans of N4E.





On December 31, 2010, the Company entered into an agreement with Betsey V. Peterzell, pursuant to which the Company issued 1,075,000 shares of common stock in payment of legal services rendered to N4E.





On December 31, 2010, the Company entered into an agreement with Michael Baybak, pursuant to which the Company issued 2,000,000 shares of common stock for services rendered to the Company in connection with the acquisition of N4E.





On March 1, 2011, as amended June 1, 2011, the Company entered into an agreement with Gerald F. Sullivan, pursuant to which the Company issued 1,600,000 shares of common stock for services rendered to the Company in connection with the formation and development of strategy and business plans of N4E.





On March 1, 2011, as amended June 1, 2011, the Company entered into an agreement with Viraxid Corporation, pursuant to which the Company issued 766,666 shares of common stock for accounting and bookkeeping services rendered to N4E.





On March 1, 2011, as amended June 1, 2011, the Company entered into an agreement with Stephen Carlson, pursuant to which the Company issued 966,666 shares of common stock for consulting services rendered to N4E in connection with the development of strategy and business plans of N4E and for services rendered to the Company as CEO during the first quarter of 2011.





On March 1, 2011, the Company entered into an agreement with Oswald A. Gayle, pursuant to which the Company issued 472,233 shares of common stock for services rendered to the Company as CEO during the first quarter of 2011.





16


ITEM 7.     Management’s Discussion and Analysis of Financial Condition and Results of Operations.





This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this report contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the subsections entitled
“Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition” below and the subsection entitled “Risk Factors” above. The following discussion should be read in conjunction with our financial statements and notes thereto included in this report.





Results of Operations





The Company did not generate any significant revenues within the twelve months of operation ending December 31, 2010. The Company’s net loss amounted to $334,430. The net loss was primarily the result of the expenses surrounding the developmental costs.





The 2010 operating expenses were mainly related to accrued expenses for legal and advisory services surrounding the reverse merger and financial consultants in connection with assisting the Company in raising funds and pursuing possible acquisitions.





Capital Expenditures





The Company expended no amounts on capital expenditures for the period from June 10, 2010 (inception) to December 31, 2010.





Capital Resources and Liquidity





The Company is in the development stage.  The Company is subject to the risks associated with activities of development stage companies.  We currently have limited sources of capital, including the public and private placement of equity securities and the possibility of debt. Additional sources of debt will be limited, and we cannot provide assurance that these sources of funds will be available in the future.  The Company will take sufficient action to raise additional debt and or equity as the markets will allow. At year-end 2010, the Company had current assets of $89,704 and total assets of $89,704. These assets consist solely of pre-paid expenses arising from
long-term contractual obligations. Stockholders’ equity (deficit) in the Company was $(376,590) at December 31, 2010.





Forward Looking Statements and Factors That May Affect Future Results and Financial Condition





The statements contained in sections titled “Plan of Operation” and “Description of Business”, with the exception of historical facts are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which reflect our current expectations and beliefs regarding our future results of operations, performance, and achievements. These statements are subject to risks and uncertainties and are based upon assumptions and beliefs that may or may not materialize. These forward looking statements include, but are not limited to, statements concerning:





●
our anticipated financial performance and business plan;





●
the sufficiency of existing capital resources;





●
our ability to raise additional capital to fund cash requirements for future operations;





●
uncertainties related to the Company’s future business prospects with Sibling Entertainment, Inc.;





●
the ability of the Company to generate revenues to fund future operations;





●
the volatility of the stock market and;





●
general economic conditions.





17





We wish to caution readers that the Company’s operating results are subject to various risks and uncertainties that could cause our actual results to differ materially from those discussed or anticipated; including the factors set forth in the section entitled “Risk Factors” included elsewhere in this report. We also wish to advise readers not to place any undue reliance on the forward looking statements contained in this report, which reflect our beliefs and expectations only as of the date of this report. We assume no obligation to update or revise these forward looking statements to reflect new events or circumstances or any changes in our beliefs or expectations, other that
is required by law.





Critical Accounting Policies





a) Use of Estimates





The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.





(b) Income Taxes





The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.





(c) Financial Instruments





In accordance with the requirements of Financial Accounting Standards Board Accounting Standard Codification (“ASC”) 825-10-50, “Financial Instruments-Disclosure,” the Company has determined the estimated fair value of financial instruments using available market information and appropriate valuation methodologies. The carrying values of cash, promissory notes, accounts payable and amounts due to related parties approximate fair values due to the short-term maturity of the instruments.





Effect of Recent Accounting Pronouncements





Fair Value Measurements and Disclosures ASC 820, Improving Disclosures about Fair Value Measurements: In January 2010, the Financial Accounting Standards Board (FASB) issued accounting guidance intended to improve disclosures related to fair value measurements. This guidance requires significant transfers in and out of Level 1 and Level 2 fair value measurements to be disclosed separately along with the reasons for the transfers. Additionally, in the reconciliation for the fair value measurements using significant unobservable inputs (Level 3), information about purchases, sales, issuances and settlements must be presented separately (cannot net as one number). This guidance also provides
clarification for existing disclosures on (i) level of disaggregation and (ii) inputs and valuation techniques. In addition, this guidance includes conforming amendments for employers’ disclosure of postretirement benefit plan assets. This guidance was effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are required for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of ASC 820 did not have a material impact on the Company’s consolidated results of operations or financial position.





18





In December 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2010-29, Business Combinations (Topic 805) - Disclosure of Supplementary Pro Forma Information for Business Combinations. This ASU requires a public entity to disclose pro forma information for business combinations that occurred in the current reporting period. The disclosures include pro forma revenue and earnings of the combined entity for the current reporting period as though the acquisition date for all business combinations that occurred during the year had been as of the beginning of the annual reporting period.  If comparative financial statements are presented, the
pro forma revenue and earnings of the combined entity for the comparable prior reporting period should be reported as though the acquisition date for all business combinations that occurred during the current year had been as of the beginning of the comparable prior annual reporting period. ASU 2010-29 affects any public entity as defined by Topic 805 that enters into business combinations that are material on an individual or aggregate basis. ASU 2010-29 is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. The Company does not expect the provisions of ASU 2010-29 to have an effect on its financial position, results of operations or cash flows. We have determined that all other recently issued accounting standards will not
have a material impact on our consolidated financial statements, or do not apply to our operations.





Going Concern





The financial statements have been prepared on the basis of a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated any revenues or completed development of any commercially acceptable products or services to date, has a working capital deficiency of $376,590 at December 31, 2010 and has incurred a loss of $334,430 since inception, and further significant losses are expected to be incurred in the Company’s development stage. The Company will depend almost exclusively on outside capital through the issuance of common shares, and advances from related parties to finance ongoing operating
losses. The ability of the Company to continue as a going concern is dependent on raising additional capital and ultimately on generating future profitable operations. There can be no assurance that the Company will be able to raise the necessary funds when needed to finance its ongoing costs. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying financial statements do not include any adjustments relative to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.





19




ITEM 8.     FINANCIAL STATEMENTS





SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.


(A Development Stage Company)




FINANCIAL STATEMENTS




As of December 31, 2010




with




Report of Independent Registered Public Accounting Firm




20




Report of Independent Registered Public Accounting Firm








To the Board of Directors and Stockholders of


Sibling Entertainment Group Holdings, Inc. (a Development Stage Company)








We have audited the accompanying balance sheets of Sibling Entertainment Group Holdings, Inc. (“the Company”) (a Development Stage Company) as of December 31, 2010 and the related statements of operations, stockholders’ equity (deficit), and cash flows for the period from inception (June 10, 2010) to December 31, 2010.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.





We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over
financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.





In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sibling Entertainment Group Holdings, Inc. as of December 31, 2010 and the results of their operations and their cash flows for the period from inception (June 10, 2010) to December 31, 2010, in conformity with U.S. generally accepted accounting principles.





The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in the notes to the financial statements, the Company’s significant operating losses and significant working capital deficiency raise substantial doubt about its ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.







Somerset, New Jersey


September 19, 2011





21




SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.


(A Development Stage Company)


CONSOLIDATED BALANCE SHEET


As of DECEMBER 31, 2010




ASSETSCurrent assets:Pre-paid expenses

$
89,704Total current assets


89,704Total assets

$
89,704LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)Current liabilities:Accounts payable

$
116,767Accrued liabilities


91,597Liabilities to be settled in stock


21,500Liabilities to be settled in stock - related parties


134,430Amounts due to related parties


42,000Short-term notes payable


60,000Total current liabilities

$
466,294Stockholders' equity (deficit)Convertible series common stock, $.0001 par value, 10,000,000 shares authorized, 9,879,854 shares issued and outstanding
988Common stock, $.0001 par value, 90,000,000 shares authorized, 46,635,816 shares issued and outstanding
4,664Deficit accumulated during the development phase


(382,242)Total stockholders' equity (deficit)


(376,590)Total liabilities and stockholders' equity (deficit)

$
89,704






22





SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.


(A Development Stage Company)


CONSOLIDATED STATEMENT OF OPERATIONS


FOR THE PERIOD FROM JUNE 10, 2010 (DATE OF INCEPTION) TO DECEMBER 31, 2010




Operating expenses:General and administrative costs

$
194,228Professional fees


139,302Loss from operations


(333,530
)Non-operating income (expense):Interest expense


(900
)Net loss

$
(334,430
)Earnings (loss) per common share:Basic earnings (loss) per share:Convertible series common

$
(0.03
)Common stock


-Diluted earnings (loss) per share:Convertible series common


(0.03
)Common stock


-Weighted average number of common sharesoutstanding:Convertible series common


9,879,854Common stock


46,635,816





See notes to consolidated financial statements




23





SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.


(A Development Stage Company)


CONSOLIDATED STATEMENT OF CASH FLOWS


FOR THE PERIOD FROM JUNE 10, 2010 (DATE OF INCEPTION) TO DECEMBER 31, 2010




OPERATING ACTIVITIES:Net loss

$
(334,430)Adjustments to reconcile net loss to net cash used in operating activities:Changes in operating assets and liabilities:Accounts payable


106,400Liabilities to be settled in stock


155,930Due to related parties


42,000Net cash used in operating activities


(30,100)FINANCING ACTIVITIES:Capital contribution


100Proceeds from notes payable


30,000Net cash provided by operating activities


30,100NET INCREASE (DECREASE) IN CASH


-CASH, BEGINNING OF PERIOD


-CASH, END OF PERIOD


-
  See notes to consolidated financial statements
 24




SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.


(A Development Stage Company)


CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)


FOR THE PERIOD FROM JUNE 10, 2010 (DATE OF INCEPTION) TO DECEMBER 31, 2010





DeficitConvertible Series











Additional


Accumulated

During theCommon





Common





Paid-In


DevelopmentShares


Amount


Shares


Amount


Capital


Stage


TotalBalance at June 10, 2010 (Date of Inception)


-


$
-



-


$
-


$
100


$
-


$
100Reverse merger recapitalization


9,879,854



988



46,635,816



4,664



(100
)


(47,812
)


(42,260
)Net loss


-



-



-



-



-



(334,430
)


(334,430
)Balance at December 31, 2010


9,879,854


$
988



46,635,816


$
4,664


$
-


$
(382,242
)

$
(376,590
)





See notes to consolidated financial statements




25





SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.


(A Development Stage Company)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER 31, 2010





Note 1 - Nature of Operations and Basis of Presentation





(a) Organization





Sibling Entertainment Group Holdings, Inc., referenced as the “SIBE,” “Company,” “we,” “our,” and “us” 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. Our name changed on May 14, 2007 to “Sibling Entertainment Group Holdings, Inc.”, in New York City.  Our
business plan called for focusing on large group sales of tickets to New York based entertainment shows, mostly Broadway plays. We intended to create a full-featured Internet website and registered the domain name Stageseats.com on May 14, 2009.  We hired an existing industry expert to head the entity and to execute the business plan.  We started booking tickets in April 2009 and continued until November 27, 2009 when we closed the business due to our manager abruptly resigning and lack of funding to continue the business.  In September 2009, the executives of SIBE discussed several different methods of obtaining intellectual property from which to launch the next Broadway play. In the fourth quarter of 2009, the Company continued to engage in additional capital efforts. During 2010, the Company continued to pursue additional opportunities in the
entertainment industry as well as synergistic opportunities in other industries.





On December 30, 2010, Sibling Entertainment Group Holdings, Inc. (SIBE), entered into a Securities Exchange Agreement with NEWCO4EDUCATION, LLC (“N4E”), and the members of N4E. Pursuant to the Securities Exchange Agreement, SIBE has acquired N4E in exchange for 8,839,869 shares of SIBE’s newly authorized convertible series common stock. For accounting purposes, the acquisition has been treated as an acquisition of SIBE by N4E and as a recapitalization of N4E’s equity. N4E is the surviving and continuing entity and the historical financials following the reverse merger transaction will be those of N4E. As part of the recapitalization of N4E,  the equity
transactions since its inception have been retroactively restated to include the equivalent shares of the Company’s common stock received in the merger.  Accordingly, the statement of changes in shareholders’ deficit reflects the restatement of these transactions. The consolidated financial statements are based on the historical consolidated financial statements of N4E after giving effect to the reverse merger.





The Company, through its wholly-owned subsidiary, N4E, focuses on providing services and technology aimed at increasing the performance in educational settings and operates through two (2) divisions, its Educational Management Organization (EMO) and its Technology and Services Group (TSG). The EMO intends to provide school management services, primarily within the charter school arena. The TSG division is focused on the development and deployment of software, systems and procedures to enhance the rate of learning in both primary and secondary education. It is based in Atlanta, Georgia. The Company is considered a development stage company in accordance with ASC 915, “Development Stage
Entities”.





(b) Going Concern





The financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated any revenues or completed development of any commercially acceptable products or services to date, and has incurred losses of $334,430 since inception, and further significant losses are expected to be incurred during the Company’s development stage. The Company will depend almost exclusively on outside capital through the issuance of common shares, debentures, and other loans, and advances from related parties to finance ongoing operating losses. The ability of the
Company to continue as a going concern is dependent on raising additional capital and ultimately on generating future profitable operations. There can be no assurance that the Company will be able to raise the necessary funds when needed to finance its ongoing costs. The accompanying financial statements do not include any adjustments relative to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.




26





SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.


(A Development Stage Company)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER 31, 2010





Note 2 - Summary of Significant Accounting Policies





(a) Use of Estimates





The preparation of financial statements in conformity with United States Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.





(b) Income Taxes





The Company utilizes Financial Accounting Standards Board Codification (‘ASC”), ASC 740, “Accounting for Income Taxes”, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the estimated tax consequences in future years of differences between the tax bases of assets and liabilities, and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the period in which the differences are expected to affect taxable
income.




(c) Financial Instruments





In accordance with the requirements of ASC 825, “Financial Instruments, Disclosures about Fair Value of Financial Instruments,” the Company has determined the estimated fair value of financial instruments using available market information and appropriate valuation methodologies. The carrying values of cash, accounts payable, and amounts due to related parties approximate fair values due to the short-term maturity of the instruments.





(d) Stock-Based Compensation





The Company accounts for stock-based compensation in accordance ASC 718, “Stock Compensation”. Under the provisions of ASC 718, stock-based compensation cost is estimated at the grant date based on the award’s fair value as calculated by the Black-Scholes-Merton (BSM) option-pricing model and/or market price of conversion shares, and is recognized as expense over the requisite service period. The BSM model requires various highly judgmental assumptions including volatility and expected option life. If any of the assumptions used in the BSM model change significantly, stock-based compensation expense may differ materially in the future from that recorded in the current period.
In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. The Company estimates the forfeiture rate based on historical experience. Further, if the extent of the Company’s actual forfeiture rate is different from the estimate, then the stock-based compensation expense is adjusted accordingly.




The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with ASC 505-50 “Equity Based Payments to Non-Employees. Costs are measured at the estimated fair market value of the consideration received, or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by ASC 505-50.





27





SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.


(A Development Stage Company)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER 31, 2010





Note 2 - Summary of Significant Accounting Policies (continued)





(e) Recent Accounting Pronouncements





Fair Value Measurements and Disclosures ASC 820, Improving Disclosures about Fair Value Measurements: In January 2010, the Financial Accounting Standards Board (FASB) issued accounting guidance intended to improve disclosures related to fair value measurements. This guidance requires significant transfers in and out of Level 1 and Level 2 fair value measurements to be disclosed separately along with the reasons for the transfers. Additionally, in the reconciliation for the fair value measurements using significant unobservable inputs (Level 3), information about purchases, sales, issuances and settlements must be presented separately (cannot net as one number). This guidance also provides
clarification for existing disclosures on (i) level of disaggregation and (ii) inputs and valuation techniques. In addition, this guidance includes conforming amendments for employers’ disclosure of postretirement benefit plan assets. This guidance was effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the rollforward of activity in Level 3 fair value measurements. Those disclosures are required for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of ASC 820 did not have a material impact on the Company’s consolidated results of operations or financial position.





In December 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2010-29, Business Combinations (Topic 805) - Disclosure of Supplementary Pro Forma Information for Business Combinations. This ASU requires a public entity to disclose pro forma information for business combinations that occurred in the current reporting period. The disclosures include pro forma revenue and earnings of the combined entity for the current reporting period as though the acquisition date for all business combinations that occurred during the year had been as of the beginning of the annual reporting period.  If comparative financial statements are presented, the
pro forma revenue and earnings of the combined entity for the comparable prior reporting period should be reported as though the acquisition date for all business combinations that occurred during the current year had been as of the beginning of the comparable prior annual reporting period. ASU 2010-29 affects any public entity as defined by Topic 805 that enters into business combinations that are material on an individual or aggregate basis. ASU 2010-29 is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. The Company does not expect the provisions of ASU 2010-29 to have an effect on its financial position, results of operations or cash flows. We have determined that all other recently issued accounting standards will not
have a material impact on our consolidated financial statements, or do not apply to our operations.





Note 3 - Net Loss Per Share





The Company computes loss per share in accordance with ASC 260, “Earnings Per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. This guidance requires companies that have multiple classes of equity securities to use the “two class” or “if converted method” in computing earnings per share.  We compute loss per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for common stock and any
participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Under the two-class method, earnings per common share are computed by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and participating securities based on the weighted average shares outstanding during the period. The Company has excluded all common equivalent shares outstanding for warrants to purchase common stock from the calculation of diluted net loss per share because all such securities are antidilutive for the periods presented. The Company had in place an issuance of warrants per Stock
Subscription





28





SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.


(A Development Stage Company)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS





Note 3 - Net Loss Per Share (continued)





Agreement – Series BB – 2009, whereby holders were entitled to received one of each of the Series BB-1 and BB-2 warrants for each two shares subscribed. There were two types of warrants, a) three year warrant to purchase common stock at an exercise price of $0.20 per share (the “BB-1 Warrant”), and b) three year warrant to purchase shares of SIBE common stock at an exercise price of $0.50 per share (the “BB-2 Warrant”). At the period ended December 31, 2010 there were a total of 2,165,000 of Series BB-1 and 2,165,000 of series BB-2 outstanding.





Note 4 - Pre-paid expenses





Prep-paid expenses are comprised of:




December 31,2010Total value of share compensation over term

$
153,000Less: Compensation expense to date


(63,296
)$
89,704





On November 3, 2010, the Company issued 3,000,000 shares of common stock at a value of $0.051 per share, as compensation to Broad Street Ventures, LLC. This was based on an agreement entered into on March 5, 2010 (commitment date) for a period of two years and was non-cancelable by either party. Broad Street Ventures, LLC, was engaged on a non-exclusive basis to provide advice to the Company regarding its capital formation program.





Note 5 - Due to Related Parties





Related party payables consist of the following:




December 31,2010Liabilities to be settled in stock - related parties

$
134,430$
134,430




Richard P. Smyth, and Meshugeneh, LLC, (Mr. Smyth is the sole member and manager of Meshugeneh, LLC), both of which were significant shareholders of the Company, had balances owed to them by the Company in the amounts of $49,430 and $85,000 respectively at December 30, 2010 for consulting services on a non-exclusive basis.





On December 31, 2010, the Company agreed to permit settlement of the liabilities at a conversion price per share of $0.02 equal to the face of the debt, the conversion price being the price of the stock on that day on the parent’s books. Any issuance of this common stock would be subject to Rule 144 of the Securities Act of 1934. These liabilities were settled after year-end (see Note 10).




December 31,2010Due to a significant shareholder

$
42,000$
42,000





29





SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.


(A Development Stage Company)


NOTES TO THE FINANCIAL STATEMENTS





Note 5 - Due to Related Parties (continued)





Stephen C. Carlson was contracted through December 31, 2010 as a consultant to provide advisory services on a non-exclusive basis. At December 31, 2010 the Company owed $10,000 to Mr. Carlson for these provided services.





Gerald F. Sullivan was contracted through December 31, 2010 as a consultant to provide advisory services on a non-exclusive basis. At December 31, 2010 the Company owed $32,000 to Mr. Sullivan for these provided services.





These liabilities were settled after year-end (see Note 10).





Note 6 - Short-Term Notes Payable





Short term notes payable consists of the following:




December 31,2010Short-term Note

$
30,000Debenture


30,000Total Short-term Notes Payable

$
60,000





At December 31, 2010 the Company had a note payable balance of $30,000. This represents a short term note with an annual interest rate of 12.0%. In the event that a Liquidity Event occurs earlier than the agreed to three month period, then the full principal amount together with any interest due and outstanding, shall become payable in full no later than five business following the liquidity event, or the fifth business day following the Liquidity Event, whichever is earlier.





On December 30, 2010, the Company entered into Conversion Agreements with all but one of the holders of the Series AA debentures previously issued by SIBE and held on that date. Pursuant to the conversion agreements, the holders accepted a total of 1,018,947 shares of convertible series common stock and one-hundred percent (100%) of the membership interests of a new, wholly-owned subsidiary of SIBE, Debt Resolution, LLC (DR LLC) in full settlement of their debentures, underlying warrants and accrued interest as of that date. The Conversion Agreements released all claims that 43 of the holders of the debentures had, have, or might have against SIBE.  Following this transaction, the
Company now has a debenture balance of $30,000 and accrued interest of $13,138 as of December 31, 2010.





Note 7 - Income Taxes




The Company accounts for income taxes under FASB ASC 740 –. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment. ASC 740 also requires that uncertain tax positions are evaluated in a two-step process, whereby (1) it is determined whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the largest amount of tax benefit that is greater than fifty percent likely of being realized upon ultimate settlement with the related tax authority would be recognized.





The Company had net operating loss carryforwards (“NOL”) available to offset future taxable income approximating $7.0M as of December 31, 2010. In general, the rules of Internal Revenue Code (“IRC”) Section 382 apply to limit a corporation's




30





SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.


(A Development Stage Company)


NOTES TO THE FINANCIAL STATEMENTS


DECEMBER 31, 2010





Note 7 - Income Taxes (continued)





ability to utilize existing NOL carryovers once the corporation experiences an "ownership change." In general, the rules of IRC Section 382 allow post-change corporations to use pre-change NOLs, but limit the amount that may be used annually to a percentage of the entity value of the corporation at the date of change of ownership. We do not have an accrual for uncertain tax positions as of December 31, 2010.  If interest and penalties were to be assessed, we would charge interest to Interest Expense, and penalties to Other Operating Expense. It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 months of the reporting date.





Note 8 - Supplemental Cash Flow Information





Non-Cash Investing and Financing Activities:





Effect of reverse merger recapitalization -




Net liabilities transferred during reverse merger recapitalization:Prepaid expenses

$
89,704Accounts payable


(10,367
)Accrued expenses


(91,597
)Short term notes payable


(30,000
)$
(42,260
)Equity issued to effect reverse merger recapitalization:Series B Common

$
(988
)Common Stock


(4,664
)Adjustments to capital account structure

$
(47,912
)Summary of adjustments:Additional paid-in capital

$
100Deficit accumulated during development stage


47,812$
47,912





Note 9 – Reverse Merger with NEWCO4EDUCATION, LLC





On December 30, 2010, the Company, pursuant to a Securities Exchange Agreement, acquired all of the outstanding membership interests of NEWCO4EDUCATION, LLC by issuance of 8,839,869 shares of convertible series common stock. Each share of series common stock will entitle the holder thereof to a number of votes equal to the series conversion ratio determined as of the record date on all matters submitted to a vote of the stockholders of the Corporation. The holders of Series Common Stock shall be entitled to receive dividends when, as, and if declared by the Board of Directors out of funds legally available for that purpose. The Exchange Agreement was contingent on the consummation of two
other transactions, which were completed as follows:




On December 29, 2010, the Company entered into a Loan Assignment Agreement with Sibling Theatricals, Inc. ("STI") and Debt Resolution, LLC ("DR LLC"), a newly formed subsidiary of the Company. Pursuant to the Loan Assignment Agreement, the Company assigned the Loan Receivable with STI and the related accrued interest receivable and certain related liabilities underlying these theatrical assets for 1 million membership interests in DR




31




SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.


(A Development Stage Company)


NOTES TO THE FINANCIAL STATEMENTS


DECEMBER 31, 2010





Note 9 – Reverse Merger with NEWCO4EDUCATION, LLC (continued)





LLC. The Company's ownership interest in DR LLC was transferred to the Series AA debenture holders the next day as part of the settlement of those debt obligations (see below). The Company effectively exited the theatricals business as a result of these transactions.




On December 30, 2010, the Company entered into Conversion Agreements with all but one of the holders of the Series AA convertible debentures held on that date. Pursuant to the conversion agreements, the holders accepted a total of 1,018,947 shares of convertible series common stock and one-hundred percent (100%) of the membership interests of DR LLC in full settlement of their debentures, underlying warrants and accrued interest as of that date. The Conversion Agreements released all claims that 43 of the holders of the debentures had, have, or might have against the Company.





For accounting purposes, the acquisition has been treated as an acquisition of the Company by N4E and as a recapitalization of N4E. The historical financial statements prior to December 30, 2010 are those of N4E. The Pro forma information giving effect to the merger transactions noted above as if the merger took place on June 10, 2010 (date of inception - N4E) is as follows:




32




SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.(A Development Stage Company)PROFORMA COMBINED BALANCE SHEETSDecember 31, 2010Sibling Entertainment Group Holdings, Inc.


Debt Resolution, LLC


Newco4Ed, LLC


Proforma Adjustments

Proforma CombinedDecember

29, 2010


December

29, 2010


December

31, 2010


December

31, 2010

December

31, 2010ASSETSCurrent assets:Cash

$
0


$
0


$
0


$
0



$
0Pre-paid expenses


89,704



-



-



-




89,704Escrow with Attorney


1,000



-



-



(1,000
)
(a)


-Deposits


604



-



-



(604
)
(a)


-Total current assets


91,308



-



-



(1,604
)



89,704Receivable from related party


3,716,190



-



-



(3,716,190
)
(a)


-Investment


1



-



-



(1
)
(a)


-Total assets

$
3,807,499


$
0


$
0


$
(3,717,795
)


$
89,704LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)Current liabilities:Accounts payable

$
10,367


$
-


$
106,400


$
-



$
116,767Accrued liabilities


1,113,363



-



-



(1,021,766
)
(b)


91,597Liabilities to be settled in stock


155,930



-



-



-




155,930Amounts due to related parties


73,667



-



42,000



(73,667
)
(b)


42,000Intercompany


(155,930
)


-



155,930



-




-Short-term loan payable, net of discount


2,555,000



-



30,000



(2,525,000
)
(b)


60,000Total current liabilities

$
3,752,397


$
-


$
334,330


$
(3,620,433
)


$
466,294Stockholders' equityConvertible series common stock, $.0001 par value, 10,000,000 shares authorized


-



-



-



104

(b)884

(c)


988Common stock, $.0001 par value, 90,000,000 shares authorized


4,664



-



-



-




4,664Additional paid-in capital


7,055,754



-



100



1,865,330

(b)(8,921,184
)
(c)


-Deficit accumulated during the development phase


(7,005,316
)


-



(334,430
)


(3,717,795
)
(a)1,754,999

(b)8,920,300

(c)


(382,242
)Total stockholders' equity (deficit)


55,102



-



(334,330
)


(97,362
)



(376,590
)Total liabilities and stockholders' equity (deficit)

$
3,807,499


$
-


$
-


$
(3,717,795
)


$
89,704




33
 
  SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.
 (A Development Stage Company)
 NOTES TO THE FINANCIAL STATEMENTS
 DECEMBER 31, 2010


SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.(A Development Stage Company)PRO FORMA COMBINED STATEMENT OF OPERATIONSPeriod from June 10, 2010 (Inception) through December 31, 2010Sibling Entertainment Group Holdings, Inc.

through

December 29, 2010


Debt Resolution, LLC

through

December 29, 2010


Newco4Ed, LLC

through

December 31, 2010


Proforma Adjustments



Proforma Combined

through

December 31, 2010Operating expenses:Stock for consulting

$
303,782


$
-






(303,782
)
(c)

$
-Stock for services


74,500



-






(74,500
)
(c)


-General and administrative costs


29,936



-



333,530



1,604

(a)(31,540
)
(c)


333,530Bad debt expense


-



-







3,716,191

(a)(3,716,191
)
(c)


-Recovery of consulting fees


-



-












-Gain (Loss) from operations


(408,218
)


-



(333,530
)


408,218




(333,530
)Non-operating income (expense):Interest income - related party


383,250



-







(383,250
)
(c)


-Interest expense - related party


(6,689
)


-







6,689

(c)


-Interest expense


(392,200
)


-



(900
)


392,200

(c)


(900
)Gain on sale of investment


-



-







73,667

(b)(73,667
)
(c)


-Gain on forgiveness of debt


47,912



-







1,681,332

(b)(1,729,244
)
(c)


-Write down of promissory notes


-



-












-Net loss

$
(375,945
)

$
-


$
(334,430
)

$
375,945



$
(334,430
)Loss per share - basic and diluted

$
(0.01
)














$
(0.01
)Weighted average common sharesoutstanding - basic and diluted


28,413,611



-



-



18,222,205




46,635,816




Notes to Pro forma Statements





(a)
To record transfer of theatrical assets and liabilities to Debt Resolution, LLC pursuant to Loan Assignment Agreement, and record bad debt expense for full write-down of assets to fair value





34





SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.


(A Development Stage Company)


NOTES TO THE FINANCIAL STATEMENTS


DECEMBER 31, 2010





Note 9 – Reverse Merger with NEWCO4EDUCATION, LLC (continued)





Notes to Pro forma Statements (continued)





(b)
To record settlement of convertible debentures via issuance of 1,039,985 shares of convertible series common stock and 100% of membership interests of Debt Resolution, LLC





(c)
To record effect of reverse merger recapitalization of N4E





The historical information in Statement of Operations for SIBE was for period from January 1, 2010 to December 29,   2010.





Note 10 - Legal Proceedings




We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.





Note 11 –Subsequent Events





Sibling Entertainment Group Holdings, Inc., elected on January 5, 2011 to amend the service contract of Mr. Gerald. F. Sullivan by extending it for the 2011 calendar year and it may be cancelled at any time with 30 days’ notice.





In 2011, the Company took steps to significantly reduce outstanding debts associated with the acquisition of N4E.  The Company acted on the following matters to resolve remaining debt arising from consulting services, legal services, or other expenses incurred by or on behalf of  N4E or in completion of the acquisition of N4E where such action  resulted in issuance of the Company’s restricted Common Stock.





The Company entered into an agreement on March 1, 2011 as amended June 1, 2011 with Gerald F. Sullivan to convert debt for consulting services originally incurred with the formation and development of strategy and business plans in exchange for the Company’s restricted Common Stock in the aggregate of 1,600,000 shares at $.03 per share.





The Company entered into an agreement on March 1, 2011 as amended June 1, 2011 with Viraxid Corporation to convert debt for accounting and bookkeeping services for N4E in exchange for the Company’s restricted Common Stock in the aggregate of 766,666 shares at $.03 per share.





The Company entered into an agreement on March 1, 2011 as amended June 1, 2011 with Stephen Carlson to convert debt for consulting services to N4E prior to the acquisition by the Company on December 30, 2010 and debt for services as CEO during the first quarter of 2011 in exchange for the Company’s restricted Common Stock in the aggregate of 966,666 shares at $.03 per share.





The Company entered into an agreement with Oswald A. Gayle on March 1, 2011 to convert debt for services as CFO during the first quarter of 2011 in exchange for the Company’s restricted Common Stock in the aggregate of 472,233 shares at $.03 per share.





35


ITEM 9A.           CONTROLS AND PROCEDURES





Management’s Report on Internal Controls over Financial Reporting





Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the interim or annual financial statements.





Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.





The Company’s management did not assess the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010 in accordance with a recognized framework, due to its lack of resources. However, we have identified what we believe to be material weaknesses.





A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.





The material weaknesses identified were (i) lack of segregation of duties, (ii) lack of sufficient resources with SEC, generally accepted accounting principles (GAAP) and tax accounting expertise; and (iii) inadequate security over information technology. These control deficiencies resulted in audit adjustments to the Company’s 2010 and 2009 annual financial statements. Accordingly, management has determined that these control deficiencies constitute material weaknesses.





Because of these material weaknesses, management concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2010.  This report does not include an attestation report of our registered public accounting firm regarding our internal controls over financial reporting. The disclosure contained under this Item 9A was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only the disclosure under this Item 8A in this annual report.





The auditors did not test the effectiveness of nor relied on the internal controls of the Company for the fiscal years ended December 31, 2010 or 2009.





As reported in our Annual Report on Form 10-K for the year ended December 31, 2009, based upon an evaluation of the effectiveness of disclosure controls and procedures, the Company has determined that there are material weaknesses in our disclosure controls and procedures.  It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.




36





During the twelve months ended December 31, 2010, we continued our comprehensive evaluation relating to the effectiveness of disclosure controls and procedures. As a result of such review, we have implemented several changes, among which included:





§
We have started the documentation of formal policies and procedures necessary to adequately review significant accounting transactions
  §
We have more specifically defined existing key controls, and developed additional controls, applicable to the review of significant accounting transactions and the accounting treatment of such transactions
  §
We have implemented a formal audit committee with a financial expert, and  the Company now has the board oversight role within the financial reporting process
  §
We have enhanced the documentation regarding conclusions reached in the implementation of generally accepted accounting principles
  §
We have added additional levels of review by qualified personnel of the application of each key control
  Based on the foregoing efforts, we believe that the material weaknesses as reported will eventually be fully remediated.
 
 During the year ended December 31, 2010, there were no other changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


37





ITEM 9B.           OTHER INFORMATION





None.





38





PART III





ITEM 10.           DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT




On December 30, 2010, in conjunction with the acquisition of N4E, the Board of Directors of Sibling appointed following officers and directors, with a term of office that commenced December 31, 2010:




Name
Age
Positions and OfficesGerald F. Sullivan
69
Chairman of the Board of Directors,  chair of the Compensation CommitteeStephen C. Carlson
65
Director, Chief Executive Officer,Amy Savage-Austin, PhD
41
Director and chair of the Audit CommitteeOswald A. Gayle
51
Chief Financial Officer and Secretary




Each of our current directors was appointed to serve as a director by the then existing Board of Directors and serves a term that ends at the next annual meeting of stockholders and until a successor is elected and qualified, or until his or her earlier resignation or removal.  No family relationship exists among any of our directors or executive officers.  None of our directors would be considered to be independent.




Our executive officers are appointed by, and serve at the discretion of, our Board of Directors for a term ending at the first meeting of our Board of Directors after the next annual meeting of stockholders, or until his earlier resignation.




The following are the names and present principal occupations or employment, and material occupations, positions, offices or employments for the past five years, of each directors and executive officers of the Company that were appointed in connection with the acquisition of N4E.




Gerald F. Sullivan.Mr. Sullivan has served 35 years as an executive in various industries including, but not limited to, commercial banking, home health care, and application software development and sales and seven years as a college professor, teaching finance and management in classroom and online environments. He holds a Doctor of Business Administration.




Stephen C. Carlson.Mr. Carlson has 40 years’ experience in business to business software system sales and provides strategic management consulting to a variety of technology and consumer products.  He is currently a college professor, teaching marketing and management, in classroom and online environments. His education includes a Doctor of Business Administration.




Amy Savage-Austin.Ms. Savage-Austin has 10 years’ experience, primarily in the area of finance with large publicly traded corporations.  She currently is Assistant Professor and Program Director for Undergraduate Studies at a University. She has both classroom and online teaching experience, and holds a Ph.D. in Business.




Oswald A. Gayle.Mr. Gayle is a senior financial executive with extensive public company experience. His educational background includes a Graduate Certificate of Taxation from Fordham Business School and a Bachelor of Science from the University of London. He is both a Certified Public Accountant (USA) and a Chartered Accountant (U.K.).




The following are the names, title, age, and present principal occupations or employment, and material occupations, positions, offices or employments for the past five years, of the other non-executive members of our management team.




A. Dixon McLeod, Director of Quality and Compliance - Age 60 - Has 33 years of primary education experience as worked as classroom teacher, assistant principal, principal, central office administrator overseeing charter school applications and dean of students as well Director of Education Programs at the university level. He holds a Doctor of Education degree.




39




Timothy G. Drake, Director of Technology Platforms - Age 60 - Managing Partner, Higher Learning Technologies Group, LLC , fourteen years’ experience in the online education field. An executive in both for profit and not for profit organizations. Functioned as an operating executive and consultant in the online learning field, worked with numerous organizations across the country in all phases of the development and execution of online learning programs. He holds a PhD in Business.




Gerry L. Bedore Jr., Director of Technology Services - Age 54 - Dr. Bedore co-founded the Socrates Distance Learning Technologies Group, served as an Executive Committee Member of Education Management Corporation Online Higher Education, and has supported the development of world-class online programs for many of the world's most recognized colleges and universities. He has extensive teaching experience in both classroom and online environments. He has a Ph. D in Education.





Disclosure of Family Relationships.





A former director of the Corporation, Ms. Victoria Maxwell, and a current director, Mr. Mitchell Maxwell, are siblings.  Ms. Maxwell resigned as a director of the Company in 2009.




Board of Directors Committees





The board of directors has not yet established an audit committee or a compensation committee. An audit committee typically reviews, acts on and reports to the board of directors with respect to various auditing and accounting matters, including the recommendations and performance of independent auditors, the scope of the annual audits, fees to be paid to the independent auditors, and internal accounting and financial control policies and procedures.





Code of Ethics





The Company has adopted a Code of Ethics within the meaning of Item 406(b) of Regulation S-B of the Securities Exchange Act of 1934. The Code of Ethics applies to directors and senior officers, such as the principal executive officer, principal financial officer, controller, and persons performing similar functions. The Company original incorporated its Code of Ethics in Form 10K filed with the SEC on March 30, 2004 and referenced as Exhibit 14 to this Form 10-K. Further, the Company’s Code of Ethics is available in print, at no charge, to any security holder who requests such information by contacting the Company.





Compliance with Section 16(a) of the Exchange Act





Based solely upon a review of Forms 3, 4 and 5 furnished to the Company, the Company is unaware of an individuals or entities who during the period ended December 31, 2010, were directors, officers, or beneficial owners of more than ten percent of the common stock of the Company, and who failed to file, on a timely basis, reports required by Section 16(a) of the Securities Exchange Act of 1934.





ITEM 11.           EXECUTIVE COMPENSATION





Executive Compensation





Except as set forth below, no compensation in excess of $100,000 was awarded to, earned by, or paid to any executive officer of the Company during the years 2008, 2009 and 2010. The following table and the accompanying notes provide summary information for each of the last three fiscal years concerning cash and non-cash compensation paid or accrued by the Company’s current and past officers over the past three years.





Summary Compensation TableLong Term Compensation



Annual CompensationAwards


PayoutsName and Principal

Positions

Year


Salary


Bonus


Other Annual

Compensation



Restricted

Stock

Award(s)


Securities

Underlying

Options


LTIP

payouts


All Other

Compensation($)


($)


($)



($)


SARs(#)


($)


($)Mitchell Maxwell,

2010


$0


-


-






-


-


-President / CEO

2009


$0


-


-



$87,500


-


-


-2008


$0


-


-






-


-


-James Cardwell

2010


$0COO / CFO

2009


$0









$37,0002008Richard Bernstein

2010


$0


-


-






-


-


-VicePresident

2009


$0


-


-



$25,000


-


-


-2008


$0


-


-






-


-


-





40





ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





The following table sets forth, as of December 31, 2010, the number of shares of our common stock and series common stock  beneficially owned by (a) each person or group who was known to us to be the beneficial owner of more than 5% of either of our outstanding common stock or outstanding series common stock, (b) each of our current directors, (c) our chief executive officer and chief financial officer; and (d) all our directors and executive officers, as a group (6 persons). Unless otherwise noted, the business address of each individual listed below is c/o Sibling Entertainment Group Holdings, Inc., 2180 Satellite Blvd, Suite 400, Duluth, GA 30097. The beneficial ownership
percentages reflected in the table below are based on 46,635,816 shares of our common stock and 9,879,854 shares of our series common stock outstanding as of December 31, 2010.





Name and Address of Beneficial Owners
Amount and

Nature of

Beneficial

Ownership (1)
Percentage of

Total Shares of

Outstanding

Common Stock

(1)Greater than 5% stockholders:Foundation For Innovation in Education, Inc
3,263,869(2)
31.38%Richard P. Smyth
1,037,800(2)(5)
9.98%Directors and named executive officers:Amy Savage-Austin
261,000(2)
2.51%Stephen C. Carlson
476,500(2)
4.58%Christian Fitzgerald
650,000(3)
*%Mitchell Maxwell
4,177(2)(4)

5,000,000(3)
*%Oswald A. Gayle
200,000(2)
1.92%Gerald F. Sullivan
518,900(2)
4.99%All directors and executive officers as a group (6 persons)
5,650,000(3)

1,460,577(2)(4)
14.65%





*  Less than 1%




(1) "Beneficial ownership" generally means any person who, directly or indirectly, has or shares voting or investment power with respect to a security or has the right to acquire such power within 60 days.  Shares of common stock subject to options or warrants that are currently exercisable or exercisable within 60 days of December 31, 2010 are deemed outstanding for computing the ownership percentage of the person holding such options, but are not deemed outstanding for computing the ownership percentage of any other person.  Restricted stock is included in the beneficial ownership amounts
even though it may not be transferred





(2) Shares of series common stock. As of December 31, 2010, each share of series common stock is convertible into 89.68558685 shares of common stock and entitles and the holder thereof to 89.68558685 votes.




(3) Shares of common stock




(4) Includes 4,177 shares of series common stock registered in the name of Zachwell, Ltd. which is owned by Mitchell Maxwell.




(5) Includes 518,900 shares of series common stock registered in the name of  Meshugeneh, LLC. Mr. Smyth is the sole member and manager of Meshugeneh, LLC.




41





As a result of the issuance of securities described below, a change in control has occurred.




On December 30, 2010, pursuant to the Securities Exchange Agreement described in Item 1.01 of Form 8-K filed January 6, 2011, the N4E members collectively hold 8,839,869 shares of our series common stock. The shares of Series Common Stock issued to the N4E members represents in the aggregate, 85% of the voting power of the Company and upon conversion of the series common stock into our common stock, the N4E members will hold 85% of the shares of common stock outstanding on the date of conversion.





Securities Offerings and Shares Issued for Services




Date
Common Shares Issued
Common Shares OutstandingBalance at December 31, 2009

22,664,066Stock issued for debt or warrant conversion
9,456,750
32,120,816Stock issued for consulting and legal fees
7,350,000
39,470,816Stock issued for services
3,725,000
43,195,816Stock issued for financing
3,440,000
46,635,816Balance at December 31, 2010

46,635,816





ITEM 14.           PRINCIPAL ACCOUNTANT FEES AND SERVICES





Audit Fees





Rosenberg, Rich, Baker, Berman & Company provided audit services to the Company in connection with its annual report for the fiscal years ended December 31, 2010 and 2009.  The aggregate fees billed by Rosenberg, Rich, Baker, Berman & Company for the review and audit of the Company’s quarterly and annual financial statements were approximately $10,000 and $10,000, respectfully.





Audit Related Fees





Rosenberg, Rich, Baker, Berman & Company billed to the Company no fees in 2010 and 2009 for professional services that are reasonably related to the audit or review of the Company’s financial statements that are not disclosed in “Audit Fees” above; and





Tax Fees





Rosenberg, Rich, Baker, Berman & Company billed to the Company no fees in 2010 and 2009 for professional tax services rendered; and





All Other Fees





Rosenberg, Rich, Baker, Berman & Company billed to the Company no fees in 2010 and 2009 for other professional services rendered or any other services not disclosed above; and





Audit Committee Pre-Approval





The Company has a standing audit committee.  All services provided to the Company by Rosenberg, Rich, Baker, Berman & Company as detailed above were pre-approved by the Company’s audit committee. The Company’s independent auditors, Rosenberg, Rich, Baker, Berman & Company performed all work using only their own full time permanent employees.





ITEM 15.           EXHIBITS





Exhibits required by Item 601 of Regulation S-B are listed in the Index to Exhibits beginning on Page 63 of this Form 10-K, which is incorporated herein by reference.





42





SIGNATURES





In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the dates indicated.





Signature

Title

Date/s/ Mitchell Maxwell

Director

October  14, 2011Mitchell Maxwell

Chief Executive Officer & Acting Chief Financial Officer/s/ Christian Fitzgerald

Director

October 14, 2011Christian Fitzgerald





43





INDEX TO EXHIBITS





Exhibit No.

Description2.1

Securities Exchange Agreement by and among Sibling Entertainment Group Holdings, Inc., Newco4Education I, LLC and the members of Newco4Education I, LLC dated as of December 30, 201043(i)

Articles of Incorporation of the Company13(i)(b)

Amended Articles of Incorporation of the Company13(i)(c)

Amended Articles of Incorporation of the Company filed with the State of Texas on November 27, 2002.23(i)(d)

Certificate of Designation43(iii)

Bylaws of the Company110.1

Loan Assignment Agreement by and among Sibling Entertainment Group Holdings, Inc., Sibling Theatricals, Inc., and Debt Resolution, LLC dated as of December 29, 2010410.2

Form of Conversion Agreement, by and between Sibling Entertainment Group Holdings, Inc. and each holder of 13% Series AA Debentures410.3

Lock-Up Agreement by and between Sibling Entertainment Group Holdings, Inc. and Mitchell Maxwell dated as of December 30, 2010410.4

Lock-Up Agreement by and between Sibling Entertainment Group Holdings, Inc. and Ray Meyers dated as of December 30, 2010410.5

Stock Restriction Agreement by and between Sibling Entertainment Group Holdings, Inc. and Gerry L. Bedore Jr. dated as of December 30, 2010410.6

Stock Restriction Agreement by and between Sibling Entertainment Group Holdings, Inc. and Timothy G. Drake dated as of December 30, 2010410.7

Stock Restriction Agreement by and between Sibling Entertainment Group Holdings, Inc. and Oswald Gayle dated as of December 30, 2010410.8

Stock Restriction Agreement by and between Sibling Entertainment Group Holdings, Inc. and Amy Savage-Austin dated as of December 30, 2010410.9

Stock Restriction Agreement by and between Sibling Entertainment Group Holdings, Inc. and Stephen C. Carlson dated as of December 30, 2010410.10

Stock Restriction Agreement by and between Sibling Entertainment Group Holdings, Inc. and A. Dixon McLeod dated as of December 30, 2010414

Code of Ethics dated March 1, 2004.331.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, promulgated under the Securities and Exchange Act of 1934, as amended.*31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, promulgated under the Securities and Exchange Act of 1934, as amended.*32.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**




1
Incorporated by reference from the Form 10SB/A filed with the Commission on April 18, 2000
  2
Incorporated by reference from the Form 10K filed with the Commission on April 3, 2003
  3
Incorporated by reference from the Form 10K filed with the Commission on March 30, 2004
  4
Incorporated by reference form the Form 8K filed with the Commission on January 6, 2011
  *
Filed herewith
  **
Furnished herewith