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<p style="margin: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 14pt"><b>UNITED
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 14pt"><b>SECURITIES
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">For
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">_______________________________________________</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">(Former
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Check
whether the issuer (1) filed all reports required to be filed by section 13 or 15(d) of the Exchange Act during the past 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. <span id="xdx_90A_edei--EntityCurrentReportingStatus_c20211001__20211231_zUH74CjYwi1b"><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" name="dei:EntityCurrentReportingStatus">Yes</ix:nonNumeric></span> &#9746; No &#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Indicate
by check mark whether the registrant has submitted every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (&#167;232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files). <span id="xdx_90A_edei--EntityInteractiveDataCurrent_c20211001__20211231_z6n8eMhESA97"><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" name="dei:EntityInteractiveDataCurrent">Yes</ix:nonNumeric></span> &#9746; No &#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company
or an emerging growth company. See the definitions of &#8220;large accelerated filer,&#8221; &#8220;accelerated filer,&#8221; &#8220;non-accelerated
filer,&#8221; &#8220;smaller reporting company&#8221; and &#8220;emerging growth company&#8221; in Rule 12b-2 of the Exchange Act.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="background-color: white">
    <td style="width: 44%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Large accelerated filer</span></td>
    <td style="width: 8%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></td>
    <td style="width: 40%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accelerated filer</span></td>
    <td style="width: 8%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></td></tr>
  <tr style="background-color: white">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_909_edei--EntityFilerCategory_c20211001__20211231_zApyCN54QY67"><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" format="ixt-sec:entityfilercategoryen" name="dei:EntityFilerCategory">Non-accelerated filer</ix:nonNumeric></span></span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Smaller reporting company</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_906_edei--EntitySmallBusiness_c20211001__20211231_zLjzTvbca8o"><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" format="ixt:booleantrue" name="dei:EntitySmallBusiness">&#9746;</ix:nonNumeric></span></span></td></tr>
  <tr style="background-color: white">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Emerging growth company</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90B_edei--EntityEmergingGrowthCompany_c20211001__20211231_z47b0gQhRvef"><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" format="ixt:booleanfalse" name="dei:EntityEmergingGrowthCompany">&#9744;</ix:nonNumeric></span></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 288pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. &#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes&#160;&#9744; <span id="xdx_908_edei--EntityShellCompany_c20211001__20211231_zEwQVAKqJwfl"><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" format="ixt:booleanfalse" name="dei:EntityShellCompany">No</ix:nonNumeric></span>&#160;&#9746;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">State
the number of shares outstanding of each of the issuer&#8217;s classes of common equity, as of the latest practicable date: <span id="xdx_903_edei--EntityCommonStockSharesOutstanding_iI_c20220218_zRhWWDNphrX2"><ix:nonFraction name="dei:EntityCommonStockSharesOutstanding" contextRef="AsOf2022-02-18" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">13,650,941</ix:nonFraction></span>
shares of common stock as of February 18, 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>CREATIVE LEARNING CORPORATION</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>FORM 10-Q</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Period Ended December 31, 2021</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>TABLE OF CONTENTS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="width: 7%">&#160;</td>
    <td style="width: 85%">&#160;</td>
    <td style="border-bottom: black 1pt solid; width: 8%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Page&#160;No.</b></span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><a href="#a_001">PART I</a></b></span></td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="background-color: white">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 1.</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_002">Condensed Consolidated Financial
    Statements</a></span></td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr style="background-color: white">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 2.</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_003">Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations</a></span></td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">12</span></td></tr>
  <tr style="background-color: white">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 3.</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_004">Quantitative and Qualitative Disclosure About Market Risk</a></span></td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">13</span></td></tr>
  <tr style="background-color: white">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 4.</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_005">Controls and Procedures</a></span></td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">13</span></td></tr>
  <tr style="background-color: white">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><a href="#a_006">PART II</a></b></span></td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="background-color: white">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 1.</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_007">Legal Proceedings</a></span></td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">15</span></td></tr>
  <tr style="background-color: white">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item&#160;1A.</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_008">Risk Factors</a></span></td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">15</span></td></tr>
  <tr style="background-color: white">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 2.</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_009">Unregistered Sales of Equity Securities and Use of Proceeds</a></span></td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">15</span></td></tr>
  <tr style="background-color: white">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 3.</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_010">Defaults Upon Senior Securities</a></span></td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">15</span></td></tr>
  <tr style="background-color: white">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 4.</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_011">Mine Safety Disclosures</a></span></td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">15</span></td></tr>
  <tr style="background-color: white">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 5.</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_012">Other Information</a></span></td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">15</span></td></tr>
  <tr style="background-color: white">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 6.</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_013">Exhibits</a></span></td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">16</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt"><i>Unless the context otherwise
requires, when we use the words the &#8220;Company,&#8221; &#8220;Creative Learning,&#8221; &#8220;we,&#8221; &#8220;us,&#8221; &#8220;our&#8221;
or &#8220;our Company&#8221; in this Form 10-Q, we are referring to Creative Learning Corporation, a Delaware corporation, and its subsidiaries.</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">This Quarterly Report on Form 10-Q
(the &#8220;Report&#8221; or the &#8220;Form 10-Q&#8221;) includes forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements can be identified by the
use of forward-looking terminology, including the words &#8220;believes,&#8221; &#8220;estimates,&#8221; &#8220;anticipates,&#8221; &#8220;expects,&#8221;
&#8220;intends,&#8221; &#8220;plans,&#8221; &#8220;may,&#8221; &#8220;will,&#8221; &#8220;potential,&#8221; &#8220;projects,&#8221; &#8220;predicts,&#8221;
&#8220;continue,&#8221; or &#8220;should,&#8221; or, in each case, their negative or other variations or comparable terminology. There
can be no assurance that actual results will not materially differ from expectations. You should read statements that contain these words
carefully because they:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="width: 5%">&#160;</td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="width: 5%">&#160;</td>
    <td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="width: 93%; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">contain projections of future results of operations or financial condition; or</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="width: 5%">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 54pt; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">We believe it is important to communicate
our expectations to our stockholders. However, there may be events in the future that we are not able to accurately predict or over which
we have no control. The risk factors and cautionary language discussed in this Form 10-Q and in our Form 10-K for the year ended September
30, 2021 provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations
described by us in our forward-looking statements, including among other things:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="width: 5%">&#160;</td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="width: 5%">&#160;</td>
    <td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="width: 5%">&#160;</td>
    <td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="width: 5%">&#160;</td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="width: 5%">&#160;</td>
    <td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="width: 5%">&#160;</td>
    <td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">You should not place undue reliance
on these forward-looking statements, which speak only as of the date of this Form 10-Q. Forward-looking statements involve known and unknown
risks and uncertainties that may cause our actual future results to differ materially from those projected or contemplated in the forward-looking
statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">All forward-looking statements
included herein attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements
contained or referred to above. Except to the extent required by applicable laws and regulations, we undertake no obligation to update
these forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated
events. You should be aware that the occurrence of the events described in the &#8220;Risk Factors&#8221; section and elsewhere in this
Form 10-Q could have a material adverse effect on us.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><span id="a_001"></span>PART I</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><span id="a_002"></span>Item 1. Financial Statements</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>CREATIVE LEARNING CORPORATION</b>&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Condensed Consolidated Balance Sheets</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>(Unaudited)</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

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  <tr id="xdx_40F_eus-gaap--AccountsPayableOtherCurrent_i02I_maCz6MS_zs3F1AMZowYd" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40D_esrt--BankLoans_i02I_maCz6MS_zRWm2rOXeVjc" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_40D_eus-gaap--LeaseDepositLiability_i02I_d0_maCz6MS_zNObKNIYvvU" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_403_eus-gaap--AccruedLiabilitiesCurrent_i02I_maCz6MS_zKustZTRyxic" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_407_eus-gaap--LiabilitiesCurrent_i01TI_mtCz6MS_maCzKNo_zalJn4k0fNb7" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_407_eus-gaap--DeferredRevenueNoncurrent_i01I_maCzKNo_zMk81RabuOu3" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_405_eus-gaap--Liabilities_iTI_mtCzKNo_maLASEzePP_zFEpS4VI1juc" style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40D_eus-gaap--CommitmentsAndContingencies_iI_d0_maCzjsp_z3TLRD9n3wY8" style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40B_eus-gaap--StockholdersEquityAbstract_iB_zSLydqqCIkKe" style="vertical-align: bottom; background-color: White">
    <td style="padding: 0pt 0pt 0pt 10pt; text-align: left; text-indent: -10pt">Stockholders&#8217; Equity (Deficit)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_405_eus-gaap--PreferredStockValue_i01I_d0_maCziNY_maSEzLc8_zuHf5BxrP9ek" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:PreferredStockValue" contextRef="AsOf2021-09-30" format="ixt:zerodash" decimals="0" unitRef="USD">&#8212;</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_406_eus-gaap--CommonStockValue_i01I_maCziNY_maSEzLc8_zLQwV8PyVNY4" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40D_eus-gaap--AdditionalPaidInCapitalCommonStock_i01I_maCziNY_maSEzLc8_zGgcMbjSjcsi" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_402_eus-gaap--TreasuryStockCommonValue_i01NI_di_msSEzLc8_ziOSkidBpwfd" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40A_eus-gaap--RetainedEarningsAccumulatedDeficit_i01I_maCziNY_maSEzLc8_zoHT1PMIJisd" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">The accompanying notes are an integral part of the
condensed consolidated unaudited financial statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>CREATIVE LEARNING CORPORATION</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Condensed Consolidated Statements of Operations
</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>(Unaudited)</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">The accompanying notes are an integral part of the
condensed consolidated unaudited financial statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Creative Learning Corporation</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Condensed Consolidated Statement of Changes in
Stockholders&#8217; Equity (Deficit) </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>(Unaudited)</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">For the three months ended December 31, 2021&#160;</p>

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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0295">&#8212;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0296">&#8212;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr>
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    <td style="padding: 0pt 0pt 0pt 10pt; font-weight: bold; text-indent: -10pt">Balance, December 31, 2021</td><td style="padding-bottom: 2.5pt">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">For the three months ended December 31, 2020&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">The accompanying notes are an integral part of the
condensed consolidated unaudited financial statements</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>CREATIVE LEARNING CORPORATION</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Condensed Consolidated Statements of Cash Flows
</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>(Unaudited)</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

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  <tr id="xdx_40C_eus-gaap--IncreaseDecreaseInPrepaidExpensesOther_i02N_di_msCz7fs_zdvpEDG6wEN7" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_40C_eus-gaap--NetCashProvidedByUsedInFinancingActivitiesAbstract_iB_d0_zmbKgPlX0y7" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt">&#160;</td><td>&#160;</td>
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  <tr id="xdx_405_eus-gaap--SupplementalCashFlowInformationAbstract_iB_zGPgWm0vdR1e" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40B_ecustom--CashPaidDuringPeriodFor_i01_zviucH6XMhXb" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_405_eus-gaap--IncreaseDecreaseInPrepaidInterest_i01_d0_zShgkVDiy5g2" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_402_eus-gaap--CashFlowNoncashInvestingAndFinancingActivitiesDisclosureAbstract_i01B_znty9jpf1WQc" style="vertical-align: bottom; background-color: White">
    <td style="padding: 0pt 0pt 0pt 10pt; text-align: left; text-indent: -10pt">Noncash investing and financing activities:</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">The accompanying notes are an integral part of the
condensed consolidated unaudited financial statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>CREATIVE LEARNING CORPORATION</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Notes to Condensed Consolidated Unaudited Financial
Statements&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31, 2021</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

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Significant Accounting Policies</span></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Creative Learning Corporation (the
&#8220;Company&#8221;) operates wholly owned subsidiaries, BFK Franchise Co., LLC (&#8220;BFK&#8221;) and SF Franchise Company, LLC (&#8220;SF&#8221;),
under the trade names Bricks 4 Kidz&#174; and Sew Fun Studios&#8482; respectively,&#160;that offer children&#8217;s enrichment and education
franchises. As of December 31, 2021, BFK had 274 global Bricks 4 Kidz&#174; and Sew Fun Studios&#174; franchise territories, 28 Bricks 4
Kidz&#174; master franchises, and 134&#160;Bricks 4 Kidz&#174; sub-franchises operating in 39 countries.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="us-gaap:BasisOfAccountingPolicyPolicyTextBlock"><p id="xdx_841_eus-gaap--BasisOfAccountingPolicyPolicyTextBlock_z5y6O7QXJ4vi" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i><span id="xdx_86D_zgTxqQtCzupa">Basis of Presentation</span></i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The accompanying unaudited consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial
information, with the instructions to Form 10-Q and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required for complete financial statements. In the opinion of management, these consolidated financial statements contain
all normal recurring adjustments considered necessary for a fair presentation of the Company&#8217;s results for the interim periods that
have been included. The results for the three months ended December 31, 2021 are not necessarily indicative of the results to be expected
for the full year. These statements should be read in conjunction with the Company&#8217;s audited consolidated financial statements and
management&#8217;s discussion and analysis included in the Company&#8217;s annual report on Form 10-K for the year ended September 30,
2021.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company has been involved in
transactions with related parties. A party is considered to be related to the Company if the party directly or indirectly or through one
or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal
owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other
parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the
other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which
can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one
of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be
prevented from fully pursuing its own separate interests is also a related party.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="us-gaap:UseOfEstimates"><p id="xdx_847_eus-gaap--UseOfEstimates_z7pKSpKgGKpc" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i><span id="xdx_864_zexMBuLheIsl">Use of Estimates</span></i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The preparation of financial statements
in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the
reported amounts of revenues and expenses during the reporting period. The more significant estimates and assumptions made by management
include allowance for doubtful accounts, the valuation allowance for deferred tax assets, depreciation of property and equipment, amortization
of intangible assets, recoverability of long-lived assets and fair market value of equity instruments. Actual results could differ from
those estimates as the current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company had restricted cash
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from the franchisees. Per the franchise agreements a marketing fund of 2% of franchisees gross cash receipts is collected and held to
be spent on the promotion of the brand. Any cash collected by the Company for marketing funds is held in a separate bank account and any
balance at period end is presented as &#8220;restricted cash&#8221; and &#8220;accrued marketing fund&#8221; or &#8220;marketing fund
receivable&#8221; on the balance sheet.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company reviews accounts and
notes receivable periodically for collectability, establishes an allowance for doubtful accounts, and records bad debt expense when deemed
necessary. The Company records an allowance for doubtful accounts and notes that is based on historical trends, customer knowledge, any
known disputes, and the aging of the accounts receivable balances combined with management&#8217;s estimate of future potential recoverability.
Receivables and notes are written off against the allowance after all attempts to collect a receivable have failed. The Company believes
its allowance for doubtful accounts at December 31, 2021 and September 30, 2021 are adequate, but actual write-offs could exceed the recorded
allowance.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

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</ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="us-gaap:PropertyPlantAndEquipmentPolicyTextBlock"><p id="xdx_842_eus-gaap--PropertyPlantAndEquipmentPolicyTextBlock_zb6tbjB8TANb" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i><span id="xdx_86E_z69bBORKBnU7">Property, Equipment and Depreciation</span></i></b></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Property and equipment are stated
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from three to forty years. Expenditures for additions and improvements are capitalized, while repairs and maintenance costs are expensed
as incurred. The cost and related accumulated depreciation of property and equipment sold or otherwise disposed of are removed from the
accounts and any gain or loss is recorded in the year of disposal.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>&#160;</i></b></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="us-gaap:ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock"><p id="xdx_841_eus-gaap--ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock_zAsIc2ggE8yi" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i><span id="xdx_86F_zAJGy9MaXkB8">Long-Lived Assets</span></i></b></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company&#8217;s long-lived
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operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.&#160;&#160;Recoverability
of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected
to be generated by the asset.&#160;If such asset is considered to be impaired, the impairment to be recognized is measured by the amount
by which the carrying amount of the asset exceeds its fair value.&#160;&#160;Impairment evaluations involve management&#8217;s estimates
of asset useful lives and future cash flows.&#160;&#160;Actual useful lives and cash flows could be different from those estimated by
management which could have a material effect on our reporting results and financial positions.&#160;&#160;Fair value is determined through
various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered
necessary.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="us-gaap:RevenueRecognitionLeasesOperating"><p id="xdx_84F_eus-gaap--RevenueRecognitionLeasesOperating_zDxuUwoWWso" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i><span id="xdx_86C_zVsPEGWyJ5k4">Accounting for Operating Leases</span></i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company&#8217;s operating
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Street, Milpitas, CA 94035. In accordance with ASC 842 &#8211; Leases, the Company has recorded a Right-of-Use Asset and Lease
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month in the last month, plus a pro rata share of common area expenses. The Right-of-Use Asset is being recognized over its useful
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="us-gaap:IntangibleAssetsFiniteLivedPolicy"><p id="xdx_841_eus-gaap--IntangibleAssetsFiniteLivedPolicy_zRSykPHDt3v3" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><span id="xdx_86F_zsHyBNMOoqdc">Intangible Asset</span></i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company records intangible
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assets will be expensed as incurred. During the year ended September 30, 2021 the Company acquired intellectual property consisting of
software and content for $<span id="xdx_908_ecustom--IntellectualProperty_c20201001__20210930__us-gaap--PropertyPlantAndEquipmentByTypeAxis__us-gaap--SoftwareDevelopmentMember_zDj4xP3RmAQl" title="Intellectual property"><ix:nonFraction name="clcn:IntellectualProperty" contextRef="From2020-10-012021-09-30_us-gaap_SoftwareDevelopmentMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">168,000</ix:nonFraction></span>. The intangible asset is being amortized over its useful life of <span id="xdx_904_eus-gaap--PropertyPlantAndEquipmentUsefulLife_dtY_c20201001__20210930__us-gaap--PropertyPlantAndEquipmentByTypeAxis__us-gaap--SoftwareAndSoftwareDevelopmentCostsMember_zLq2Kzp4xKyd" title="Property and Equipment"><ix:nonNumeric contextRef="From2020-10-012021-09-30_us-gaap_SoftwareAndSoftwareDevelopmentCostsMember" format="ixt-sec:duryear" name="us-gaap:PropertyPlantAndEquipmentUsefulLife">5</ix:nonNumeric></span> years and the Company recognized
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The carrying amounts of cash, accounts
receivable, and accounts payable approximate fair value because of the relative short-term maturity of these items and current payment
expected. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and therefore
cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The Company does not hold or issue
financial instruments for trading purposes, nor does it utilize derivative instruments. Notes receivable are recorded at par value less
allowance for doubtful accounts. The carrying amount is consistent with fair value based upon similar notes issued to other franchisees.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">ASC 825, Financial Instruments,
clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities
and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The determination of where assets
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The carrying value of financial
assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured
on a non-recurring basis are those that are adjusted to fair value when a significant event occurs.&#160;&#160;The Company had no financial
assets or liabilities carried and measured on a recurring basis during the reporting periods. Financial assets and liabilities measured
on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared.</p>

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<ix:exclude><p id="xdx_23F_ziPmxcGVl547" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt"><i>&#160;</i></p></ix:exclude>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company generates almost all
of its revenue from contracts with customers. The Company&#8217;s franchise agreements enter the parties into a contractual agreement,
typically over a ten years term, and include performance obligations as follows: protected territory designation, access to proprietary
manuals and handbooks, initial training and on-going assistance, consulting, promotion of goodwill, administration of marketing fund,
marketing and promotion items, initial marketing program development assistance, company website access, Franchise Management Tool access,
lessons and model plans, project kits, Duplo bricks, frames stop motion animation software, and use of the franchisor&#8217;s intellectual
property (IP) (e.g., trade name &#8211; Bricks for Kidz). Upon entering into a franchise agreement, the Company charges an initial franchise
fee, which is fully collectible and nonrefundable as of the date of the signing of the franchise agreement. Further, because the Company&#8217;s
franchises are primarily a mobile concept and do not require finding locations or construction, the franchisees can begin operations as
soon as they complete training.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Per the terms of the franchise
agreements, the Company charges for royalty fees on a monthly basis, generally set at a fixed amount, but in some cases are based on a
percentage of franchisee&#8217;s monthly gross revenues. The Company also charges fees for a marketing fund, generally based on 2% of
franchisee&#8217;s monthly gross revenues, which is managed by the Company, to allocate towards national branding of the Company&#8217;s
concepts to benefit the franchisees. Lastly, the Company charges for technology fees on a monthly basis, generally at a fixed amount,
for the use of the company Franchise Management tool as well as company emails, etc.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Effective October 1, 2018 the Company
began recognizing revenue under ASC 606. The Company considers initial franchise fees to be a part of the license of symbolic intellectual
property (&#8220;IP&#8221;), therefore the performance obligation related to these fees is satisfied over time as the Company fulfills
its promise to grant the customer rights to use, and benefit from, the Company&#8217;s IP, as well as support and maintain the IP. The
initial franchise fee, then, is recorded as deferred revenue at inception and recognized on a straight-line basis over the contract term.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">In accordance with ASC 606-10-55-65,
the Company has determined that the royalty fees, marketing fees, and technology fees are subject to a sales and usage-based royalties&#8217;
constraint on licenses of IP. Accordingly, these fees are recognized as revenue at the later of when the sales or usage occurs or the
related performance obligation is satisfied. Technology fees are recorded net of processing fees. Marketing fees are limited to the lesser
of marketing amounts earned or expensed; therefore, the Company will recognize amounts received in excess of amounts spent on the balance
sheet in the accrued marketing fund liability and will recognize amounts spent in excess of amounts received on the balance sheet in the
marketing fund receivable.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company collects transfer fees
when contracts are transferred between parties and accounts for the transfer as a contract modification under ASC 606. Because the transfer
does not increase the scope of the contract or promise any additional goods or services and there are no new distinct services that will
be provided after the transfer the Company considers the transfer fee part of the existing contract. Transfer fees, then, are recorded
as deferred revenue at inception and recognized on a straight-line basis over the remaining contract term.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">When contracts are terminated due
to default, or in conjunction with an early termination agreement, the Company accounts for the early termination as a contract modification
under ASC 606. Because the termination eliminates any future performance obligations of the Company any deferred revenue associated with
the terminated contract is recognized into revenue at the time of termination, along with any early termination fees, in the initial franchise
fee line on the Company&#8217;s Statement of Operations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company generates revenue from
sales of merchandise where the performance obligation is met, and therefore revenue recognized, upon the delivery of merchandise to the
customer.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="clcn:ContractLiabilityDeferredRevenuePolicyTextBlock"><p id="xdx_841_ecustom--ContractLiabilityDeferredRevenuePolicyTextBlock_z6acIvUKS2Dg" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><span id="xdx_869_zpEzf9YITKm8">Contract Liability &#8211; Deferred Revenue</span></i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">In conjunction with the adoption
of ASC 606, effective October 1, 2018 the Company recorded deferred revenue as a contract liability for its initial franchise fees collected
and related to contracts with remaining performance obligations. During the three months ended December 31, 2021 the activity in the deferred
revenue account was as follows:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="clcn:SummaryOfDeferredRevenueActivityTableTextBlock"><table cellpadding="0" cellspacing="0" id="xdx_88A_ecustom--SummaryOfDeferredRevenueActivityTableTextBlock_zb70si8oRFu5" summary="xdx: Disclosure - Nature of Organization and Summary of Significant Accounting Policies (Details 1)" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-top: 0pt; text-align: left; padding-left: 10pt; padding-right: 0pt; text-indent: -10pt"><span id="xdx_8BA_zC54zj1fLD47" style="display: none">Summary of deferred revenue activity</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; width: 70%; padding-left: 10pt; padding-right: 0pt; text-indent: -10pt">Balance, September 30, 2021</td><td style="width: 10%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-top: 0pt; text-align: left; padding-left: 10pt; padding-right: 0pt; text-indent: -10pt">Initial franchise fees collected</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98C_ecustom--InitialFranchiseFeesCollected_pp0p0_d0_c20211001__20211231_zCjMYolDg0aa" title="Initial franchise fees collected" style="text-align: right"><ix:nonFraction name="clcn:InitialFranchiseFeesCollected" contextRef="From2021-10-01to2021-12-31" format="ixt:zerodash" decimals="0" scale="0" unitRef="USD">&#8212;</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
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    <td style="padding: 0pt 0pt 1pt 10pt; text-align: left; text-indent: -10pt">Deferred revenue recognized into revenue</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td id="xdx_988_ecustom--RevenueRecognizedIntoRevenue_pp0p0_c20211001__20211231_zm48oX2QLqL3" title="Deferred revenue recognized into revenue" style="border-bottom: Black 1pt solid; text-align: right">(<ix:nonFraction name="clcn:RevenueRecognizedIntoRevenue" contextRef="From2021-10-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">150,905</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-top: 0pt; padding-right: 0pt; padding-left: 10pt; text-indent: -10pt">Balance, December 31, 2021</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td id="xdx_987_ecustom--DeferredRevenueCurrentPortion_iI_pp0p0_c20211231_zIXmI76vK3Xh" title="Current portion" style="border-bottom: Black 1pt solid; text-align: right">(<ix:nonFraction name="clcn:DeferredRevenueCurrentPortion" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">708,172</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<ix:exclude><p id="xdx_23F_zanWHIDN4GJj" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p></ix:exclude>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Amounts expected to be recognized
into revenue related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2021 were as follows:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

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    <td style="text-align: left"><span id="xdx_8BB_zJFjJRRU9om6" style="display: none">Summary of performance obligations</span></td><td>&#160;</td>
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<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="clcn:ContractLiabilityAssetAccruedMarketingFundMarketingFundReceivablePolicyTextBlock"><p id="xdx_84F_ecustom--ContractLiabilityAssetAccruedMarketingFundMarketingFundReceivablePolicyTextBlock_z74jit64reze" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><span id="xdx_867_zMfx1ZfKPGB7">Contract Liability / Asset &#8211; Accrued Marketing
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Per the terms of the franchise
agreements, the Company collects 2% of franchisee&#8217;s gross revenues for a marketing fund, managed by the Company, to allocate toward
national branding of the Company&#8217;s concepts to benefit the franchisees.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The marketing fund amounts owed
to the Company are accounted for as a liability on the balance sheet and the actual collections are deposited into a marketing fund bank
account, presented as restricted cash on the balance sheet. Expenses pertaining to the marketing fund activities are paid from the marketing
fund and reduce the liability account. Upon adoption of FASB 606 on October 1, 2018, the Company presents these marketing fund revenues
and expenses on a gross basis on its statement of operations. Any unused funds at the end of the period are recorded as accrued marketing
fees or any funds used in excess of funds collected are recorded as a marketing fund receivable. The Company expects to collect this advance
in future periods from the 2% fees collected on future franchisee gross revenues. The activity in the accrued marketing fund liability
account for the three months ended December 31, 2021 was as follows:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="clcn:SummaryOfAccruedMarketingFundForAdvertisingFundRevenueAccountsTableTextBlock"><table cellpadding="0" cellspacing="0" id="xdx_88C_ecustom--SummaryOfAccruedMarketingFundForAdvertisingFundRevenueAccountsTableTextBlock_zb2nkiUJFES2" summary="xdx: Disclosure - Nature of Organization and Summary of Significant Accounting Policies (Details 3)" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left"><span id="xdx_8BB_z36yfLpx9Qn6" style="display: none">Summary of accrued marketing fund for advertising fund revenue accounts</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">$</td><td id="xdx_980_ecustom--AccruedMarketingFundForAdvertisingFundRevenue_pp0p0_c20211001__20211231_zRvLsOD4Mupa" title="Accrued marketing fund for advertising fund revenue at beginning" style="width: 18%; text-align: right">(<ix:nonFraction name="clcn:AccruedMarketingFundForAdvertisingFundRevenue" contextRef="From2021-10-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">23,886</ix:nonFraction></td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Marketing fund billings recognized into income</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_988_ecustom--MarketingFundBillings_pp0p0_d0_c20211001__20211231_zokIgq8qRa28" title="Marketing fund billings" style="text-align: right"><ix:nonFraction name="clcn:MarketingFundBillings" contextRef="From2021-10-01to2021-12-31" format="ixt:zerodash" decimals="0" scale="0" unitRef="USD">&#8212;</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td id="xdx_986_ecustom--CommissionsRecognizedIntoExpense_pp0p0_d0_c20211001__20211231_zp4DA5wCyBPa" title="Commissions recognized into expense" style="text-align: right"><ix:nonFraction name="clcn:CommissionsRecognizedIntoExpense" contextRef="From2021-10-01to2021-12-31" format="ixt:zerodash" decimals="0" scale="0" unitRef="USD">&#8212;</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt">Marketing funds advanced by the Company</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td id="xdx_98B_ecustom--MarketingFundsAdvancedByCompany_c20211001__20211231_pp0p0" title="Marketing funds advanced by the Company" style="border-bottom: Black 1pt solid; text-align: right">(<ix:nonFraction name="clcn:MarketingFundsAdvancedByCompany" contextRef="From2021-10-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">1,168</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_983_ecustom--AccruedMarketingFundForAdvertisingFundRevenues_pp0p0_c20211001__20211231_zf58w4EUjxNg" title="Accrued marketing fund for advertising fund revenue at ending" style="border-bottom: Black 2.5pt double; text-align: right">(<ix:nonFraction name="clcn:AccruedMarketingFundForAdvertisingFundRevenues" contextRef="From2021-10-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">25,054</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>&#160;</i></b></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="clcn:ContractAssetPrepaidCommissionExpensePolictyTextBlock"><p id="xdx_84D_ecustom--ContractAssetPrepaidCommissionExpensePolictyTextBlock_zGXgDP2DiSPc" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><span id="xdx_864_zhd0rJivDgY4">Contract Asset &#8211; Prepaid Commission Expense</span></i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 18pt">In accordance with ASC 606 the
costs related to obtaining a contract are to be capitalized as long as the costs are recoverable and incremental. Effective October 1,
2018, the date the Company adopted ASC 606, it capitalized the value of sales commissions as a contract asset and is amortizing those
costs straight-line over the contract life of the franchise agreement to which they relate. During the three months ended December 31,
2021, the activity in the contract asset account was as follows:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 18pt">&#160;</p>

<ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="clcn:SummaryOfContractAssetActivityTableTextBlock"><table cellpadding="0" cellspacing="0" id="xdx_88F_ecustom--SummaryOfContractAssetActivityTableTextBlock_z9JwRvx8pAzi" summary="xdx: Disclosure - Nature of Organization and Summary of Significant Accounting Policies (Details 4)" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left"><span id="xdx_8BA_znvDjlAxJXE6" style="display: none">Summary of contract asset activity</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 70%">Balance, September 30, 2021</td><td style="width: 10%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_98F_eus-gaap--AccruedLiabilitiesForCommissionsExpenseAndTaxes_iS_pp0p0_c20210930_zhpZZeIxZ5oc" title="Commission expense at beginning" style="width: 18%; text-align: right"><ix:nonFraction name="us-gaap:AccruedLiabilitiesForCommissionsExpenseAndTaxes" contextRef="AsOf2021-09-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">426,489</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Commissions paid</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_982_eus-gaap--PaymentsForCommissions_pp0p0_d0_c20211001__20211231_z2xJT0U3osfa" title="Commissions paid" style="text-align: right"><ix:nonFraction name="us-gaap:PaymentsForCommissions" contextRef="From2021-10-01to2021-12-31" format="ixt:zerodash" decimals="0" scale="0" unitRef="USD">&#8212;</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt">Commissions recognized into expense</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td id="xdx_98B_eus-gaap--AmortizationOfDeferredSalesCommissions_iN_pp0p0_di_c20211001__20211231_zCzT5tY4EPS7" title="Commissions recognized into expense" style="border-bottom: Black 1pt solid; text-align: right">(<ix:nonFraction name="us-gaap:AmortizationOfDeferredSalesCommissions" contextRef="From2021-10-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">41,302</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>Balance, December 31, 2021</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98E_eus-gaap--AccruedLiabilitiesForCommissionsExpenseAndTaxes_iE_pp0p0_c20211231_zhcuneP1mjhc" title="Commissions expense at end" style="text-align: right"><ix:nonFraction name="us-gaap:AccruedLiabilitiesForCommissionsExpenseAndTaxes" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">385,187</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td id="xdx_982_ecustom--PrepaidcommissionCurrentPortion_c20211231_pp0p0" title="Current portion" style="border-bottom: Black 1pt solid; text-align: right">(<ix:nonFraction name="clcn:PrepaidcommissionCurrentPortion" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">155,517</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Prepaid commission expense, net of current portion</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98F_ecustom--PrepaidCommissionExpenseNetOfCurrentPortion_c20211231_pp0p0" title="Prepaid commission expense, net of current portion" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="clcn:PrepaidCommissionExpenseNetOfCurrentPortion" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">229,670</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="us-gaap:AdvertisingCostsPolicyTextBlock"><p id="xdx_84A_eus-gaap--AdvertisingCostsPolicyTextBlock_zkrL5OdPe9qh" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><span id="xdx_86A_zQFvwkDLKH6">General Advertising Costs</span></i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">General advertising costs are expensed
as incurred. The Company incurred general advertising costs for the three months ended December 31, 2021 and 2020 of $<span id="xdx_903_eus-gaap--SellingGeneralAndAdministrativeExpense_c20211001__20211231_z01rk8PgZrC2" title="General advertising costs"><ix:nonFraction name="us-gaap:SellingGeneralAndAdministrativeExpense" contextRef="From2021-10-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">28,544</ix:nonFraction></span> and $<span id="xdx_903_eus-gaap--SellingGeneralAndAdministrativeExpense_c20201001__20201231_z8OX6VqpzKS7" title="General advertising costs"><ix:nonFraction name="us-gaap:SellingGeneralAndAdministrativeExpense" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,724</ix:nonFraction></span>,
respectively.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="us-gaap:IncomeTaxPolicyTextBlock"><p id="xdx_848_eus-gaap--IncomeTaxPolicyTextBlock_zh0AKW6EiBZj" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i><span id="xdx_860_zUKAToRNfI5g">Income Taxes</span></i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The provision for income taxes
and deferred income taxes are determined using the asset and liability method. Deferred tax assets and liabilities are determined based
on temporary differences between the financial carrying amounts and the tax basis of assets and liabilities using enacted tax rates in
effect in the years in which the temporary differences are expected to reverse. On a periodic basis, the Company assesses the probability
that its net deferred tax assets, if any, will be recovered. If after evaluating all of the positive and negative evidence, a conclusion
is made that it is more likely than not that some portion or all of the net deferred tax assets will not be recovered, a valuation allowance
is provided by a charge to tax expense to reserve the portion of the deferred tax assets which are not expected to be realized. Given
previous recurring losses, the Company cannot conclude that it is more likely than not that such assets will be realized, therefore a
full valuation allowance has been recorded during the three months ended December 31, 2021.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<ix:exclude><p id="xdx_230_z87pSm2sNoE3" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt"></p></ix:exclude>

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<ix:exclude><p id="xdx_233_zPw7ZtWkRE97" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company reviews its filing
positions for all open tax years in all U.S. federal and state jurisdictions where the Company is required to file.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">When there are uncertainties related
to potential income tax benefits, in order to qualify for recognition, the position the Company takes has to have at least a &#8220;more
likely than not&#8221; chance of being sustained (based on the position&#8217;s technical merits) upon challenge by the respective authorities.
The term &#8220;more likely than not&#8221; means a likelihood of more than 50 percent. Otherwise, the Company may not recognize any of
the potential tax benefit associated with the position. The Company recognizes a benefit for a tax position that meets the &#8220;more
likely than not&#8221; criterion at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon its
effective resolution. Unrecognized tax benefits involve management&#8217;s judgment regarding the likelihood of the benefit being sustained
with the ultimate realization being dependent on generating sufficient taxable income in future years. The final resolution of uncertain
tax positions could result in adjustments to recorded amounts and may affect our results of operations, financial position and cash flows.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company&#8217;s policy is to
recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties
at December 31, 2021 and September 30, 2021 and has not recognized interest and/or penalties during the three months ended December 31,
2021, since there are no material unrecognized tax benefits. Management believes no material change to the amount of unrecognized tax
benefits will occur within the next twelve months.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The tax years subject to examination
by major tax jurisdictions include the years 2015 and forward by the U.S. Internal Revenue Service.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="us-gaap:EarningsPerSharePolicyTextBlock"><p id="xdx_849_eus-gaap--EarningsPerSharePolicyTextBlock_zLdQfCWVZ9Oa" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i><span id="xdx_865_zEOBXwhztnnj">Net earnings (loss) per share</span></i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Basic earnings per share are computed
by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per
share reflect the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted
during the period. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="us-gaap:ShareBasedCompensationOptionAndIncentivePlansPolicy"><p id="xdx_848_eus-gaap--ShareBasedCompensationOptionAndIncentivePlansPolicy_zRh3zTYJVOdg" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i><span id="xdx_86C_zsRCH4MXnt2e">Stock-based compensation</span></i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company accounts for employee
stock awards for services based on the grant date fair value of the instrument issued, and those issued to non-employees are recorded
based on the grant date fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably
measurable. Stock awards are expensed over the service period.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">During the three months ended December
31, 2021, the Company issued <span id="xdx_90B_eus-gaap--StockIssuedDuringPeriodSharesShareBasedCompensation_c20211001__20211231_zgSkepxGcB0j" title="Stock based compensation shares"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesShareBasedCompensation" contextRef="From2021-10-01to2021-12-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">20,000</ix:nonFraction></span> shares for stock-based compensation valued at $<span id="xdx_908_eus-gaap--StockIssuedDuringPeriodValueShareBasedCompensation_c20211001__20211231_zYEqYwfftEi9" title="Stock based compensation"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodValueShareBasedCompensation" contextRef="From2021-10-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">3,200</ix:nonFraction></span>, based on the market value of the Company shares
on the grant date, and issued <span id="xdx_90E_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriod_c20211001__20211231_z8zDEpF4BHM" title="Shares on grant stock based compensation"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriod" contextRef="From2021-10-01to2021-12-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">155,103</ix:nonFraction></span> shares upon the cashless exercise of <span id="xdx_90E_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVestedInPeriod_c20211001__20211231_zmKxiHCwE3hk" title="Stock option stock based compensation"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVestedInPeriod" contextRef="From2021-10-01to2021-12-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">294,778</ix:nonFraction></span> stock options.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="us-gaap:PriorPeriodReclassificationAdjustmentDescription"><p id="xdx_846_eus-gaap--PriorPeriodReclassificationAdjustmentDescription_zXgx9vZ4Zbu6" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><span id="xdx_867_zrSRTfL6ccGl">Reclassifications</span></i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 22.5pt">Certain prior year amounts have
been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of
operations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 22.5pt">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">All newly issued accounting pronouncements,
but not yet effective, have been deemed either immaterial or not applicable.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

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</ix:nonNumeric></ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="us-gaap:LoansNotesTradeAndOtherReceivablesDisclosureTextBlock"><p id="xdx_80A_eus-gaap--LoansNotesTradeAndOtherReceivablesDisclosureTextBlock_zm8d4ItUEXii" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>(2)&#160;<span id="xdx_821_z0acPK1NAoD7">Notes and Other Receivables</span></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">At December 31, 2021 and September
30, 2021, the Company held certain notes receivable totaling approximately $<span id="xdx_908_eus-gaap--OtherReceivables_c20211231_pp0p0" title="Other receivables"><ix:nonFraction name="us-gaap:OtherReceivables" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">6,000</ix:nonFraction></span> and $<span id="xdx_90D_eus-gaap--OtherReceivables_c20210930_pp0p0" title="Other receivables"><ix:nonFraction name="us-gaap:OtherReceivables" contextRef="AsOf2021-09-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">6,000</ix:nonFraction></span>, respectively, net of allowances, for extended
payment terms of franchise fees. The notes receivable bear interest of <span id="xdx_905_eus-gaap--DebtInstrumentInterestRateDuringPeriod_dp_c20211001__20211231_zjaBm5QaEzq1" title="Interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-10-01to2021-12-31" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">4</ix:nonFraction></span>% per annum with monthly payments, payable within four years.
The Company analyzes the collectability of all receivables and reserves accordingly.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="us-gaap:CommitmentsAndContingenciesDisclosureTextBlock"><p id="xdx_80C_eus-gaap--CommitmentsAndContingenciesDisclosureTextBlock_zgxmRJHDDmfj" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>(3) <span id="xdx_826_zzBRZkJtHHH3">Commitments and Contingencies</span></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Litigation </i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company is subject to litigation
claims arising in the ordinary course of business. The Company believes that it has adequately accrued for legal matters in accordance
with the requirements of GAAP. The Company records litigation accruals for legal matters which are both probable and estimable and for
related legal costs as incurred. The Company does not reduce these liabilities for potential insurance or third-party recoveries.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">On February 24, 2017, franchisee,
Team Kasa, LLC, along with its three owners, filed suit in the Eastern District of New York (Case No. 2:17-cv-01074) against former CEO
Brian Pappas and Franventures, as well as four other defendants seeking damages under the New York Franchise Sales Act. The same Plaintiffs
also initiated an arbitration proceeding against the Company on the same issues (American Arbitration Association, Case No. 01-17-0001-1968),
alleging the Company is jointly and severally liable for damages resulting from the allegations against Mr. Pappas and Franventures. The
Company is contesting the allegations and its liability for any damages in the arbitration case. Both cases have been held in abeyance
as the parties seek a resolution.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Lease</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">On October 21, 2021, the Company
leased approximately 2,480 square feet of office space at 1637 S. Main Street, Milpitas, CA 94035 for its corporate offices. The lease
has a term of two years and one month. The Company is obligated to pay base rent of $<span id="xdx_908_eus-gaap--DebtInstrumentPeriodicPayment_c20211001__20211021_zFtw1Xb4GqQ" title="Debt instrument periodic payment first year"><ix:nonFraction name="us-gaap:DebtInstrumentPeriodicPayment" contextRef="From2021-10-012021-10-21" format="ixt:numdotdecimal" decimals="0" unitRef="USD">4,588</ix:nonFraction></span> per month in the first year, $<span id="xdx_90F_ecustom--DebtInstrumentPeriodicPaymentNextTwelveMonths_c20211001__20211021_zFBDYF56wuK" title="Debt instrument periodic payment  next two yerars"><ix:nonFraction name="clcn:DebtInstrumentPeriodicPaymentNextTwelveMonths" contextRef="From2021-10-012021-10-21" format="ixt:numdotdecimal" decimals="0" unitRef="USD">4,726</ix:nonFraction></span> per month
in the second year, and $<span id="xdx_906_ecustom--DebtInstrumentPeriodicPaymentNextTwoYears_c20211001__20211021_zeu4D9gvWUT1" title="Debt instrument periodic payment last year"><ix:nonFraction name="clcn:DebtInstrumentPeriodicPaymentNextTwoYears" contextRef="From2021-10-012021-10-21" format="ixt:numdotdecimal" decimals="0" unitRef="USD">4,867</ix:nonFraction></span> per month in the last month, plus a pro rata share of common area expenses. On November 1, 2021, the Company
relocated its corporate offices to the Milpitas, California location.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="us-gaap:RelatedPartyTransactionsDisclosureTextBlock"><p id="xdx_807_eus-gaap--RelatedPartyTransactionsDisclosureTextBlock_zR5jkl8yteyd" style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;<b>(4) <span id="xdx_82E_z5KH1stqYAC">Related Party Transactions</span></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Christopher Rego has been a director since February
5, 2020, and our Chief Executive Officer since May 1, 2020. Prior to his appointment, Mr. Rego purchased an active franchise in California.
During the three months ended December 31, 2021 the Company recognized royalty revenue from the franchise of $<span id="xdx_90E_eus-gaap--Revenues_c20211001__20211231__srt--ConsolidatedEntitiesAxis__us-gaap--FranchiseMember__us-gaap--IncomeStatementLocationAxis__custom--RoyaltyRevenuesMember_pp0p0" title="Revenue"><ix:nonFraction name="us-gaap:Revenues" contextRef="From2021-10-012021-12-31_us-gaap_FranchiseMember_custom_RoyaltyRevenuesMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,688</ix:nonFraction></span> and recognized marketing
fee revenue from the franchise of $<span id="xdx_905_eus-gaap--Revenues_c20211001__20211231__srt--ConsolidatedEntitiesAxis__us-gaap--FranchiseMember__us-gaap--IncomeStatementLocationAxis__custom--MarketingRevenueMember_pp0p0" title="Revenue"><ix:nonFraction name="us-gaap:Revenues" contextRef="From2021-10-012021-12-31_us-gaap_FranchiseMember_custom_MarketingRevenueMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">0</ix:nonFraction></span>. Total payments made by the franchisee were $<span id="xdx_90C_eus-gaap--Revenues_c20211001__20211231__srt--ConsolidatedEntitiesAxis__us-gaap--FranchiseMember_pp0p0" title="Revenue"><ix:nonFraction name="us-gaap:Revenues" contextRef="From2021-10-012021-12-31_us-gaap_FranchiseMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,125</ix:nonFraction></span> As of December 31, 2021 and September 30, 2021
the accounts receivable balance with the franchisee was $<span id="xdx_904_eus-gaap--AccountsReceivableNet_c20211231__srt--ConsolidatedEntitiesAxis__us-gaap--FranchiseMember_pp0p0" title="Accounts receivable"><ix:nonFraction name="us-gaap:AccountsReceivableNet" contextRef="AsOf2021-12-31_us-gaap_FranchiseMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,210</ix:nonFraction></span> and $<span id="xdx_903_eus-gaap--AccountsReceivableNet_c20210930__srt--ConsolidatedEntitiesAxis__us-gaap--FranchiseMember_pp0p0" title="Accounts receivable"><ix:nonFraction name="us-gaap:AccountsReceivableNet" contextRef="AsOf2021-09-30_us-gaap_FranchiseMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,897</ix:nonFraction></span>, respectively and the franchisee had deferred revenue balances
of $<span id="xdx_90A_eus-gaap--DeferredRevenueCurrent_c20211231__srt--ConsolidatedEntitiesAxis__us-gaap--FranchiseMember_pp0p0" title="Deferred revenue"><ix:nonFraction name="us-gaap:DeferredRevenueCurrent" contextRef="AsOf2021-12-31_us-gaap_FranchiseMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">0</ix:nonFraction></span>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">John Simento has been a director of the Company since
May 19, 2020. Prior to Mr. Rego&#8217;s and Mr. Simento&#8217;s appointments with the Company, they purchased a Company franchise in the
United Arab Emirates (the &#8220;UAE&#8221;). The Company filed an arbitration complaint against them in December 2019 regarding issues
related to opening the franchise. The complaint was resolved by a Settlement Agreement dated February 5, 2020. Under the Settlement Agreement,
the Company forgave all back royalty fees through July 2019, equaling $<span id="xdx_903_eus-gaap--AdministrativeFeesExpense_c20211001__20211231_zawqD2Mm8u8a" title="Royalty fee"><ix:nonFraction name="us-gaap:AdministrativeFeesExpense" contextRef="From2021-10-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">18,825</ix:nonFraction></span>, and agreed to defer all other fees until the franchise
was able to obtain a business license to operate in the UAE., which is currently delayed due to the Coronavirus pandemic. The franchise
is currently non-operational as a result of an inability to obtain the issuance of a business license from the UAE due to the Coronavirus
pandemic. If the franchise is not able to procure the necessary authorizations to operate, the franchisees would not owe any franchise
fees. As a consequence, we have not realized any revenue from the franchise and no payments have been received on outstanding balances.
As of December 31, 2021 and September 30, 2021 the accounts receivable balance with the franchise was $<span id="xdx_90C_eus-gaap--IndefiniteLivedFranchiseRights_iI_c20211231_zNrI0Uy392Z4" title="Accounts Receivable Franchise Balances"><ix:nonFraction name="us-gaap:IndefiniteLivedFranchiseRights" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">10,613</ix:nonFraction></span> and the Company had allowed
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Mr. Rego is also the CEO of Teknowland, a software development
company, with which the Company entered into an agreement on March 10, 2020 to perform development and maintenance services in relation
to the Company&#8217;s franchise management software. The term of the agreement was six months, subject to auto-renewal until Teknowland
had completed its obligations under the agreement, but subject to each party&#8217;s right to terminate the agreement at any time on 30
days&#8217; notice. Under the agreement, the Company was obligated to pay Teknowland a fee of $<span id="xdx_90E_eus-gaap--DueToRelatedPartiesCurrent_c20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--ChristopherRegoMember__dei--LegalEntityAxis__custom--TeknowlandMember_pp0p0" title="Due to related party"><ix:nonFraction name="us-gaap:DueToRelatedPartiesCurrent" contextRef="AsOf2021-12-31_custom_ChristopherRegoMember_custom_TeknowlandMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">12,900</ix:nonFraction></span> per month for development and maintenance
services. Starting in November 2020, the Company and Teknowland orally agreed to reduce the monthly amount that the Company was obligated
to pay to $<span id="xdx_90B_eus-gaap--AccountsPayableRelatedPartiesCurrent_c20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--ChristopherRegoMember__dei--LegalEntityAxis__custom--TeknowlandMember_pp0p0" title="Account payable, related party"><ix:nonFraction name="us-gaap:AccountsPayableRelatedPartiesCurrent" contextRef="AsOf2021-12-31_custom_ChristopherRegoMember_custom_TeknowlandMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">3,000</ix:nonFraction></span> <span id="xdx_909_eus-gaap--DebtInstrumentFrequencyOfPeriodicPayment_dtM_c20211001__20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--ChristopherRegoMember__dei--LegalEntityAxis__custom--TeknowlandMember_zlk72G678Hab" title="Frequency of periodic payments"><ix:nonNumeric contextRef="From2021-10-012021-12-31_custom_ChristopherRegoMember_custom_TeknowlandMember" name="us-gaap:DebtInstrumentFrequencyOfPeriodicPayment">per month</ix:nonNumeric></span>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 36pt">&#160;</p>

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<ix:exclude><p id="xdx_23F_zE8JqZtNW6t2" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 36pt">&#160;</p></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">During the year ended September 30, 2020, the Company
and Mr. Rego orally agreed that Mr. Rego and Teknowland would develop an eLearning program to enable the Company to offer educational
programs over the internet. No agreement was reached regarding whether the Company or Teknowland would own the eLearning program, or the
terms under which the Company would be entitled to use the program on a long-term basis, whether as owner or licensee. <span id="xdx_906_eus-gaap--RelatedPartyTransactionDescriptionOfTransaction_c20211001__20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--ChristopherRegoMember__dei--LegalEntityAxis__custom--TeknowlandMember" title="Description of related party transactions"><ix:nonNumeric contextRef="From2021-10-012021-12-31_custom_ChristopherRegoMember_custom_TeknowlandMember" name="us-gaap:RelatedPartyTransactionDescriptionOfTransaction">The Company orally
agreed to pay Teknowland $10,000 per month for five months for hosting and content costs incurred by Teknowland</ix:nonNumeric></span>. After testing the program,
the Company&#8217;s board decided in December 2020 not to pursue the E-Learning program.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Beginning in January 2021, Teknowland began hosting
the Company&#8217;s website at a cost of $<span id="xdx_906_eus-gaap--OtherExpenses_c20210101__20210131__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TeknowlandMember_pp0p0" title="Website expense"><ix:nonFraction name="us-gaap:OtherExpenses" contextRef="From2021-01-012021-01-31_custom_TeknowlandMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">5,000</ix:nonFraction></span> per month pursuant to an oral agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">On February 12, 2021, the Company, Chris Rego and Teknowland
entered into an agreement under which the parties mutually agreed to terminate the March 10, 2020 agreement to develop and maintain the
Company&#8217;s franchise management system, and the oral agreement under which Teknowland hosted the Company&#8217;s website. In both
cases, the Company has engaged an independent firm to provide the services. Under the same agreement, the Company agreed to transfer and
assign to Teknowland all of the Company&#8217;s rights in the E-Learning program developed by Teknowland for the Company. The Company
evaluated the E-Learning program on a trial basis, and elected not to pursue it as a line of business. The Company agreed to pay Teknowland
$<span id="xdx_908_eus-gaap--RepaymentsOfRelatedPartyDebt_c20210201__20210212__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--ChrisRegoMember__dei--LegalEntityAxis__custom--TeknowlandMember_pp0p0" title="Payment to related party"><ix:nonFraction name="us-gaap:RepaymentsOfRelatedPartyDebt" contextRef="From2021-02-012021-02-12_custom_ChrisRegoMember_custom_TeknowlandMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">50,000</ix:nonFraction></span> to pay all invoices associated with the two agreements and the E-Learning program, of which $<span id="xdx_90E_eus-gaap--RepaymentsOfRelatedPartyDebt_c20210401__20210630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--ChrisRegoMember__dei--LegalEntityAxis__custom--TeknowlandMember_pp0p0" title="Payment to related party"><ix:nonFraction name="us-gaap:RepaymentsOfRelatedPartyDebt" contextRef="From2021-04-012021-06-30_custom_ChrisRegoMember_custom_TeknowlandMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">20,000</ix:nonFraction></span> was payable at execution of
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been paid.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 36pt"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">On December 7, 2021, the
Company entered into a Sale Agreement with StroomX, LLC (the &#8220;Purchaser&#8221;), under which the Company agreed to sell all of
the Company&#8217;s subsidiaries (the &#8220;Learning Subsidiaries&#8221;) involved in its learning business (the &#8220;Learning
Business&#8221;), as well as any assets of the Learning Business that are not owned by the Learning Subsidiaries, to the Purchaser.
In connection with the sale, the Purchaser agreed to pay the Company in cash or stock of the Company at the Purchaser&#8217;s
election, assume all liabilities of the Learning Business, and to indemnify and hold the Company harmless from any such liabilities.
The Purchaser is controlled by Christopher Rego. As of the date of this filing the closing of the sale had not yet occurred.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-10-01to2021-12-31" escape="true" name="us-gaap:AssetAcquisitionTextBlock"><p id="xdx_807_eus-gaap--AssetAcquisitionTextBlock_zVUQlra5krnb" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>(5) <span id="xdx_826_zx0mDer2aWNi">Acquisition of Assets</span></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">On December 7, 2021, the Company,
DriveItAway, Inc., a Delaware corporation (&#8220;DIA&#8221;), and the existing shareholders of DIA executed an Agreement and Plan of
Share Exchange (the &#8220;Share Exchange Agreement&#8221;), under which the Company would acquire all of the issued and outstanding common
stock of DIA by issuing one share of Series A Convertible Preferred Stock (the &#8220;Series A Preferred&#8221;) of the Company for each
outstanding share of DIA common stock (the &#8220;Share Exchange&#8221;). As a result of the Share Exchange, DIA will become a wholly-owned
subsidiary of the Company. Each share of Series A Preferred will be convertible into that number of shares of common stock of the Company
which would entitle the Series A Preferred holders to 85% of the Company&#8217;s common stock, determined on a fully-diluted basis, but
prior to any shares issued or issuable as a result of the Financing (as defined below). The exact conversion rate of the Series A Preferred
will be determined at closing of the Share Exchange. In addition, each share of Series A Preferred will be entitled to dividends and voting
rights on an &#8220;as converted&#8221; basis with the common stockholders. Upon closing of the Share Exchange, all of the existing members
of the board of directors (the &#8220;Board&#8221;) of the Company have agreed to resign, and John Possumato, Adam Potash and Paul Patrizio
will be appointed to the Company&#8217;s Board. Upon closing of the Share Exchange, Christopher Rego and Rod Whiton have agreed to resign
as officers, and upon their resignation John Possumato will be appointed chief executive officer and Adam Potash will be appointed chief
operating officer. Mike Elkin has agreed to remain as chief financial officer of the Company. Closing of the Share Exchange Agreement
is subject to a number of conditions, and is expected to occur during 2022, provided that the closing conditions are satisfied or waived.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">DIA is the first national dealer
focused mobility platform that enables car dealers to sell more vehicles in a seamless way through eCommerce, with its exclusive &#8220;Pay
as You Go&#8221; app-based subscription program. DIA provides a comprehensive turn-key, solutions driven program with proprietary mobile
technology and driver app, insurance coverages and training to get dealerships up and running quickly and profitably in emerging online
sales opportunities. The company is planning to soon to expand its easy and transparent consumer app &#8217;subscription to ownership&#8217;
platform to enable entry level consumers to drive and acquire new electric vehicles.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">On April 28, 2020, the Company
was granted a loan (the &#8220;Loan&#8221;) from First Bank of the Lake in aggregate amount of $<span id="xdx_909_ecustom--AggregateOfAmount_c20211001__20211231_z2mlzkCP6WZ5" title="Aggregate of amount"><ix:nonFraction name="clcn:AggregateOfAmount" contextRef="From2021-10-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">119,980</ix:nonFraction></span>, pursuant to the Paycheck Protection
Program (the &#8220;PPP&#8221;) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The Loan, which was in the
form of a Note dated April 24, 2020 issued by the Company, matures on April 23, 2022 and bears interest at a rate of 1% per annum, payable
monthly commencing on October 23, 2020. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties.
Funds from the Loan may only be used for payroll costs, cost used to continue group health care benefits, mortgage payments, rent, utilities
and interest on other debt obligations incurred before February 15, 2020. The Company used the entire Loan amount for qualifying expenses.
Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES
Act.&#160;The Company used the entire loan amount for qualifying expenses therefore, on January 25, 2022, the PPP Loan was forgiven by
the SBA.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company performed a review
of events subsequent to the balance sheet date through the date the financial statements were issued and determined that there were no
additional events requiring recognition or disclosure in the financial statements.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><span id="a_003"></span>Item 2. Management&#8217;s Discussion and Analysis of Financial Condition
and Plan of Operation</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Overview</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Creative Learning Corporation,
operating under the trade names of Bricks 4 Kidz&#174; and Sew Fun Studios&#174;, offers educational and enrichment programs to children
ages 3 to 13+ through its franchisees (the &#8220;<i>Learning Business</i>&#8221;). The Company&#8217;s business model is to sell franchise
territories and collect a one-time franchise fee and subsequent monthly royalty fees from each territory. Through the Company&#8217;s
franchise business model, which includes a proprietary curriculum and marketing strategy plus a proprietary franchise management tool,
the Company provides a wide variety of programs designed to enhance students&#8217; problem solving and critical thinking skills. BFK
had 274 global Bricks 4 Kidz&#174; and Sew Fun Studios&#174; franchise territories, 28 Bricks 4 Kidz&#174; master franchises, and 134&#160;Bricks
4 Kidz&#174; sub-franchises operating in 39 countries.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">As a result of challenges faced
by our Learning Business, in December 2021, our board elected to change the business focus of the Company by entering into the Share Exchange
Agreement to acquire DriveItAway, Inc. and a separate agreement to dispose of our Learning Business if the acquisition of DIA closes..&#8221;
As a result, the following description of our operating results and liquidity may not be representative of our future operating results
and liquidity.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Three Months ended December 31, 2021 and 2020</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Revenues were $373,990 during the
three months ended December 31, 2021, as compared to $757,008 during the three months ended December 31, 2020. The drop in gross revenues
in 2021 as compared to 2020 is mainly attributable to a decrease of approximately $143,000 in royalty fees and a decrease of approximately
$238,000 in initial franchise fees.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Initial franchise fees were $150,905
during the three months ended December 31, 2021, as compared to $389,004 during the three months ended December 31, 2020, a decline of
$238,099. The decrease in initial franchise fees during the three months ended December 31, 2021 was primarily due to fewer new franchise
sales due to the COVID-19 pandemic, as well as fewer terminations of existing franchises, which results in the acceleration of deferred
franchise revenues.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Royalty fee revenues were $189,147
during the three months ended December 31, 2021 as compared to $331,892 during the three months ended December 31, 2020, a decline of
$142,745. Royalty fee revenues decreased as compared to the comparative periods due to the offboarding of franchisees during the year
ended September 30, 2021, and the three months ended December 31, 2021, which resulted in fewer franchisees being charged royalties in
the current period versus the same period of the prior fiscal year. In addition, royalty fee revenues were lower because of the interruption
of normal operation at many franchises because of the COVID-19 pandemic.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Marketing fund revenues were $0
during the three months ended December 31, 2021, as compared to $0 during the three months ended December 31, 2020. The Company had no
marketing fund revenue in the current period due to the impact of COVID-19. In particular, due to the impact of the COVID-19 pandemic
on the business of our franchisees, we voluntarily elected to cease charging our franchises for marketing fees in March 2020. The Company
expects to resume charging franchisees for marketing when they are able to return to normal operations following the COVID-19 pandemic.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Technology fees were $33,938 during
the three months ended December 31, 2021, as compared to $36,112 during the three months ended December 31, 2020. Technology fees decreased
during the three months ended December 31, 2021 over the comparative prior period due to the impact of the COVID-19 on our franchisees&#8217;
operations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Operating expenses were $386,059
during the three months ended December 31, 2021, as compared to $535,487 during the three months ended December 31, 2020. Operating expenses
declined in 2021 as compared to 2020 primarily due to lower franchise commission expense, professional fees and bad debt. Franchise commissions
decreased as a result of the offboarding of franchisees in the prior year, which triggered the recognition of prepaid commissions into
expense in the prior year. Professional fees decreased due to settlement of litigation cases in the prior year . Bad debt expense decreased
due to fewer charge-offs of bad debt as compared to the prior year.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Net income (loss) for the three
months ended December 31, 2021 was $(12,372) as compared to $223,467 in the three months ended December 31, 2020. The net loss in the
three months ended December 31, 2021 as compared to the net income in the three months ended December 31, 2020 was a result of lower revenues
partially offset by lower expenses as discussed in detail above.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Liquidity and Capital Resources</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company&#8217;s primary source
of liquidity is cash generated through operations. As of December 31, 2021, the Company had approximately $279,000 of unrestricted cash,
and used cash flow from operations of approximately $72,000 in the three months ended December 31, 2021&#160;&#160;. The Company believes
it has sufficient cash on hand to cover expenses for the next 12 months, provided the Company operates only the Learning Business for
the next 12 months. However, the Company has entered into agreements to acquire DIA and dispose of the Learning Business, and if those
agreements are consummated the Company&#8217;s liquidity will be determined in reference to DIA&#8217;s profitability and capital needs
instead.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company is dependent upon both
franchise sales and royalty fees to continue current business operations and liquidity.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The recent COVID-19 outbreak has
been declared a pandemic by the World Health Organization, has spread to the United States and many other parts of the world and has adversely
affected our business operations, employee availability, financial condition, liquidity and cash flow and the length of such impacts are
uncertain.&#160; The outbreak of the COVID-19 continues to grow both in the United States and globally, and related government and private
sector responsive actions have and will continue to adversely affect our business operations. It is impossible to predict the effect and
ultimate impact of the COVID-19 pandemic as the situation is rapidly evolving.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The spread of COVID-19 has caused
public health officials to recommend precautions to mitigate the spread of the virus, including warning against congregating in heavily
populated areas without masks, vaccinations and testing, such as malls and shopping centers. Among the precautions was the cessation of
in-person learning at a substantial portion of the schools in the United States, which has adversely impacted our royalty revenue from
franchisees and our ability to sell new franchises. There is significant uncertainty around the breadth and duration of these school closures
and other business disruptions related to COVID-19, as well as its impact on the U.S. and global economy. Many public schools resumed
some or all in person learning in the Fall of 2021, but many have since reverted back to remote learning with the advent of the Omicron
strain of COVID-19 in December 2021. The extent to which COVID-19 impacts our results will depend on future developments, which are highly
uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions taken
to contain it or treat its impact. We have asked some of our corporate employees whose jobs allow them to work remotely to do so a few
days a week for the foreseeable future. Such precautionary measures could create operational challenges, as we adjust to a remote workforce,
which could adversely impact our business.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Cash funds are used for ongoing
operating expenses, the purchase of equipment, and software development.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><span id="a_004"></span>Item 3. Quantitative and Qualitative Disclosures about Market Risk</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Not applicable to us as a smaller
reporting company.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><span id="a_005"></span>Item 4. Controls and Procedures</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt"><i>Evaluation of Disclosure Controls
and Procedures</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">As of the end of the period covered
by this report (the &#8220;Evaluation Date&#8221;), we carried out an evaluation regarding the three months ended December 31, 2021, under
the supervision and with the participation of our management, including our President and Chief Financial Officer, of the effectiveness
of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934,
as amended (the &#8220;Exchange Act&#8221;). Based upon this evaluation, our management concluded that, as of the Evaluation Date, our
disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed in the
reports that are filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified
by the Securities and Exchange Commission&#8217;s rules and forms and that our disclosure controls and procedures are designed to ensure
that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated
to our management, as appropriate, to allow timely decisions regarding required disclosure.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Because of the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance that the Company&#8217;s disclosure controls and procedures
will detect or uncover every situation involving the failure of persons within the Company to disclose material information otherwise
required to be set forth in the Company&#8217;s periodic reports.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt"><i>Changes in Internal Control
Over Financial Reporting</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company&#8217;s management
is also responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">The Company continues to have the
following material weaknesses in internal control:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 72px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We have not established and/or maintained adequately designed internal controls in order to prevent or detect and correct material misstatements to the financial statements, including internal controls related to complex or nonroutine transactions.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 72px">&#160;</td>
    <td style="width: 24px">&#9679;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We lack the necessary accounting resources with sufficient SEC reporting experience, US GAAP knowledge and accounting experience.</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Management believes that despite
our material weaknesses, our consolidated financial statements for the quarter ended December 31, 2021 are fairly stated, in all material
respects, in accordance with GAAP.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><span id="a_006"></span>PART II</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><span id="a_007"></span>Item 1. Legal Proceedings</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt"><span style="background-color: white">The
discussion of pending legal matters included in Item 3 of the Company&#8217;s Annual Report on Form 10-K for the fiscal year ended September
30, 2021 is incorporated herein by reference.</span>&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">There have been no material changes
in legal proceedings since the filing of the Form 10-K.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><span id="a_008"></span>Item 1A. Risk Factors </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">For information regarding factors
that could affect the Company&#8217;s results of operations, financial condition and liquidity, see the risk factors discussed under Part
II, Item&#160;1A of the Company&#8217;s most recent annual report on Form 10-K.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><span id="a_009"></span>Item 2. Unregistered Sales of Equity Securities and Use of Proceeds</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Not applicable.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><span id="a_010"></span>Item 3. Defaults Upon Senior Securities</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Not applicable.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><span id="a_011"></span>Item 4. Mine Safety Disclosures</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Not applicable.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><span id="a_012"></span>Item 5. Other Information</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">None</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><span id="a_013"></span>Item 6. Exhibits</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Exhibits</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>SIGNATURES</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">17</p>

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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
☒
Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
For
the quarterly period ended
December 31, 2021
☐
Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
For
the transition period from __________ to __________
Commission
File Number:
000-52883
CREATIVE LEARNING CORPORATION
(Exact
name of registrant as specified in its charter)
Delaware
20-4456503
(State or other jurisdiction
    of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1637 S. Main Street
Milpitas
,
CA
94035
(Address
of principal executive offices, including Zip Code)
(904)
824-3133
(Issuer's
telephone number, including area code)
_______________________________________________
(Former
name or former address if changed since last report)
Check
whether the issuer (1) filed all reports required to be filed by section 13 or 15(d) of the Exchange Act during the past 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
☒ No ☐
Indicate
by check mark whether the registrant has submitted every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files).
Yes
☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company
or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "non-accelerated
filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☒
Emerging growth company
☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No
☒
State
the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:
13,650,941
shares of common stock as of February 18, 2022.
CREATIVE LEARNING CORPORATION
FORM 10-Q
Period Ended December 31, 2021
TABLE OF CONTENTS
Page No.
PART I
Item 1.
Condensed Consolidated Financial
    Statements
1
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
12
Item 3.
Quantitative and Qualitative Disclosure About Market Risk
13
Item 4.
Controls and Procedures
13
PART II
Item 1.
Legal Proceedings
15
Item 1A.
Risk Factors
15
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
15
Item 3.
Defaults Upon Senior Securities
15
Item 4.
Mine Safety Disclosures
15
Item 5.
Other Information
15
Item 6.
Exhibits
16
Unless the context otherwise
requires, when we use the words the "Company," "Creative Learning," "we," "us," "our"
or "our Company" in this Form 10-Q, we are referring to Creative Learning Corporation, a Delaware corporation, and its subsidiaries.
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q
(the "Report" or the "Form 10-Q") includes forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements can be identified by the
use of forward-looking terminology, including the words "believes," "estimates," "anticipates," "expects,"
"intends," "plans," "may," "will," "potential," "projects," "predicts,"
"continue," or "should," or, in each case, their negative or other variations or comparable terminology. There
can be no assurance that actual results will not materially differ from expectations. You should read statements that contain these words
carefully because they:
●
discuss future expectations;
●
contain projections of future results of operations or financial condition; or
●
state other "forward-looking" information.
We believe it is important to communicate
our expectations to our stockholders. However, there may be events in the future that we are not able to accurately predict or over which
we have no control. The risk factors and cautionary language discussed in this Form 10-Q and in our Form 10-K for the year ended September
30, 2021 provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations
described by us in our forward-looking statements, including among other things:
●
the operating and financial results of and our relationships with our franchisees;
●
actions taken by our franchisees that may harm our business;
●
incidents that may impair the value of our brand;
●
our failure to successfully implement our growth strategy;
●
changing economic conditions;
●
our need for additional financing;
●
risks associated with our franchisees;
●
litigation and regulatory issues;
●
our failure to comply with current or future laws or regulations; and
●
The impact of the Coronavirus (COVID-19) pandemic.
You should not place undue reliance
on these forward-looking statements, which speak only as of the date of this Form 10-Q. Forward-looking statements involve known and unknown
risks and uncertainties that may cause our actual future results to differ materially from those projected or contemplated in the forward-looking
statements.
All forward-looking statements
included herein attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements
contained or referred to above. Except to the extent required by applicable laws and regulations, we undertake no obligation to update
these forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated
events. You should be aware that the occurrence of the events described in the "Risk Factors" section and elsewhere in this
Form 10-Q could have a material adverse effect on us.
ii
PART I
Item 1. Financial Statements
CREATIVE LEARNING CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
December 31, 2021
September 30,
2021
(Audited)
Current Assets:
Cash
$
278,876
$
349,923
Restricted Cash (marketing fund)
3,113
4,951
Accounts receivable, less allowance for doubtful accounts of approximately $
939,000
and $
873,000
, respectively
52,579
103,704
Prepaid commission expense
155,517
162,817
Prepaid expense
—
—
Marketing fund receivable
25,054
23,886
Notes receivables - current portion, less allowance for doubtful accounts of approximately $
91,000
and $
91,000
, respectively
5,847
5,847
Total Current Assets
520,986
651,128
Security deposit
4,867
—
Intangibles
154,000
162,400
Right of Use Asset
96,376
—
Prepaid commission expense - net of current portion
229,670
263,672
Property and equipment, net of accumulated depreciation of approximately $
575,000
and $
556,000
, respectively
7,543
25,830
Total Assets
$
1,013,442
$
1,103,030
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable
$
57,862
$
168,848
SBA Loan - PPP
119,980
119,980
Deferred revenue
708,172
697,675
Lease Liability
101,219
—
Accrued liabilities
327,003
246,747
Total Current Liabilities
1,314,236
1,233,250
Deferred revenue - net of current portion
1,110,401
1,271,803
Total Liabilities
2,424,637
2,505,053
Commitments and Contingencies (Note 3)
—
—
Stockholders' Equity (Deficit)
Preferred stock, $
.0001
par value;
10,000,000
shares authorized;
-
0
- shares issued and outstanding
—
—
Common stock, $
.0001
par value;
50,000,000
shares authorized
13,716,041
shares issued and
13,700,941
shares outstanding as of December 31, 2021;
13,540,938
shares issued and
13,525,838
shares outstanding as of September 30, 2021
1,369
1,352
Additional paid in capital
3,066,745
3,063,562
Treasury Stock
15,100
shares at December 31, 2021 and September 30, 2021, at cost
(
18,126
)
(
18,126
)
Accumulated Deficit
(
4,461,183
)
(
4,448,811
)
Total Stockholders' Equity (Deficit)
(
1,411,195
)
(
1,402,023
)
Total Liabilities and Stockholders' Equity (Deficit)
$
1,013,442
$
1,103,030
The accompanying notes are an integral part of the
condensed consolidated unaudited financial statements.
1
CREATIVE LEARNING CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
For the three months ended December 31,
2021
2020
REVENUES
Royalty fees
$
189,147
$
331,892
Marketing fund revenue
—
—
Initial franchise fees
150,905
389,004
Technology fees
33,938
36,112
Merchandise sales
—
—
TOTAL REVENUES
373,990
757,008
OPERATING EXPENSES
Salaries and payroll taxes and stock-based compensation
134,780
137,359
Professional, legal and consulting fees
67,543
105,287
Bad debt expense
6,161
49,211
Other general and administrative expenses
80,408
122,717
Franchise commissions
41,302
87,936
Franchise training and expenses
—
—
Depreciation and amortization
27,321
31,253
General advertising
28,544
1,724
Franchise marketing fund expense
—
—
TOTAL OPERATING EXPENSES
386,059
535,487
OPERATING INCOME (LOSS)
(
12,069
)
221,521
OTHER INCOME (EXPENSE)
(
303
)
1,946
INCOME (LOSS) BEFORE INCOME TAXES
(
12,372
)
223,467
PROVISION FOR INCOME TAXES
—
—
NET INCOME (LOSS)
$
(
12,372
)
$
223,467
NET INCOME PER SHARE
Basic
$
0.00
$
0.02
Diluted
$
0.00
$
0.02
Basic weighted average number of common shares outstanding
13,175,838
13,298,310
Diluted weighted average number of common shares outstanding
13,415,151
13,680,319
The accompanying notes are an integral part of the
condensed consolidated unaudited financial statements.
2
Creative Learning Corporation
Condensed Consolidated Statement of Changes in
Stockholders' Equity (Deficit)
(Unaudited)
For the three months ended December 31, 2021
Treasury Stock
Common stock
Additional Paid-in
Accumulated
Total Stockholder's Equity
Shares
Value
Shares
Amount
Capital
Deficit
(Deficit)
Balance, September 30, 2021 (Audited)
(
15,100
)
$
(
18,126
)
13,540,938
$
1,352
$
3,063,562
$
(
4,448,811
)
$
(
1,402,023
)
Shares issued for option exercise
—
—
155,103
15
(
15
)
—
—
Stock based compensation
—
—
20,000
2
3,198
—
3,200
Net Income (Loss)
—
—
—
—
—
(
12,372
)
(
12,372
)
Balance, December 31, 2021
(
15,100
)
$
(
18,126
)
13,716,041
$
1,369
$
3,066,745
$
(
4,461,183
)
$
(
1,411,195
)
For the three months ended December 31, 2020
Treasury Stock
Common stock
Additional Paid-in
Accumulated
Total Stockholder's Equity
Shares
Value
Shares
Amount
Capital
Deficit
(Deficit)
Balance, September 30, 2020 (Audited)
(
65,100
)
$
(
34,626
)
13,363,410
$
1,334
$
2,990,080
$
(
4,773,713
)
$
(
1,816,925
)
Net Income (Loss)
—
—
—
—
—
223,467
223,467
Balance, December 31, 2020
(
65,100
)
$
(
34,626
)
13,363,410
$
1,334
$
2,990,080
$
(
4,550,246
)
$
(
1,593,458
)
The accompanying notes are an integral part of the
condensed consolidated unaudited financial statements
3
CREATIVE LEARNING CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the three months ended
December 31,
2021
2020
Cash flows from operating activities:
Net income (loss)
$
(
12,372
)
$
223,467
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization
27,321
31,254
Lease cost, net of repayment
4,843
—
Bad debt expense
6,161
49,211
Stock based compensation
3,200
—
Changes in operating assets and liabilities:
Accounts receivable
44,964
1,289
Prepaid expenses
—
10,452
Prepaid commission expense
41,302
87,936
Deposits
(
4,867
)
833
Accounts payable
(
110,986
)
(
2,043
)
Accrued liabilities
80,256
13,845
Deferred Revenue
(
150,905
)
(
388,048
)
Accrued marketing fund
(
1,168
)
(
6,000
)
Net cash provided by (used in) operating activities
(
72,251
)
22,196
Cash flows from investing activities:
Acquisition of property and equipment
(
634
)
(
169
)
Sale of assets held for sale
—
—
Collection of notes receivable
—
828
Net cash provided by (used in) investing activities
(
634
)
659
Cash flows from financing activities
—
—
Net change in cash, cash equivalents and restricted cash
(
72,885
)
22,855
Cash, cash equivalents and restricted cash at beginning of period
354,874
447,853
Cash, cash equivalents and restricted cash at end of period
$
281,989
$
470,708
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest
$
—
$
—
Income taxes
$
—
$
—
Noncash investing and financing activities:
Stock issued for option exercise
$
15
—
Recognition of lease liability and ROU asset at lease commencement
$
104,756
—
The accompanying notes are an integral part of the
condensed consolidated unaudited financial statements.
4
CREATIVE LEARNING CORPORATION
Notes to Condensed Consolidated Unaudited Financial
Statements
December 31, 2021
(1)
Nature of Organization and Summary of
Significant Accounting Policies
Nature of Organization
Creative Learning Corporation (the
"Company") operates wholly owned subsidiaries, BFK Franchise Co., LLC ("BFK") and SF Franchise Company, LLC ("SF"),
under the trade names Bricks 4 Kidz® and Sew Fun Studios™ respectively, that offer children's enrichment and education
franchises. As of December 31, 2021, BFK had 274 global Bricks 4 Kidz® and Sew Fun Studios® franchise territories, 28 Bricks 4
Kidz® master franchises, and 134 Bricks 4 Kidz® sub-franchises operating in 39 countries.
Basis of Presentation
The accompanying unaudited consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial
information, with the instructions to Form 10-Q and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required for complete financial statements. In the opinion of management, these consolidated financial statements contain
all normal recurring adjustments considered necessary for a fair presentation of the Company's results for the interim periods that
have been included. The results for the three months ended December 31, 2021 are not necessarily indicative of the results to be expected
for the full year. These statements should be read in conjunction with the Company's audited consolidated financial statements and
management's discussion and analysis included in the Company's annual report on Form 10-K for the year ended September 30,
2021.
Related Parties
The Company has been involved in
transactions with related parties. A party is considered to be related to the Company if the party directly or indirectly or through one
or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal
owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other
parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the
other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which
can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one
of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be
prevented from fully pursuing its own separate interests is also a related party.
Use of Estimates
The preparation of financial statements
in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the
reported amounts of revenues and expenses during the reporting period. The more significant estimates and assumptions made by management
include allowance for doubtful accounts, the valuation allowance for deferred tax assets, depreciation of property and equipment, amortization
of intangible assets, recoverability of long-lived assets and fair market value of equity instruments. Actual results could differ from
those estimates as the current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.
Cash, Restricted Cash and Cash Equivalents
The Company had restricted cash
of approximately $
3,000
and $
5,000
at December 31, 2021 and September 30, 2021, respectively, associated with marketing funds collected
from the franchisees. Per the franchise agreements a marketing fund of 2% of franchisees gross cash receipts is collected and held to
be spent on the promotion of the brand. Any cash collected by the Company for marketing funds is held in a separate bank account and any
balance at period end is presented as "restricted cash" and "accrued marketing fund" or "marketing fund
receivable" on the balance sheet.
Accounts and Note Receivables
The Company reviews accounts and
notes receivable periodically for collectability, establishes an allowance for doubtful accounts, and records bad debt expense when deemed
necessary. The Company records an allowance for doubtful accounts and notes that is based on historical trends, customer knowledge, any
known disputes, and the aging of the accounts receivable balances combined with management's estimate of future potential recoverability.
Receivables and notes are written off against the allowance after all attempts to collect a receivable have failed. The Company believes
its allowance for doubtful accounts at December 31, 2021 and September 30, 2021 are adequate, but actual write-offs could exceed the recorded
allowance.
5
Property, Equipment and Depreciation
Property and equipment are stated
at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets, which range
from three to forty years. Expenditures for additions and improvements are capitalized, while repairs and maintenance costs are expensed
as incurred. The cost and related accumulated depreciation of property and equipment sold or otherwise disposed of are removed from the
accounts and any gain or loss is recorded in the year of disposal.
Fixed Assets
Useful Life
Equipment
5
years
Furniture and Fixtures
5
years
Software
3
years
Long-Lived Assets
The Company's long-lived
assets consist of property and equipment, and intangible assets. The Company tests for impairment losses on long-lived assets used in
operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.  Recoverability
of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected
to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount
by which the carrying amount of the asset exceeds its fair value.  Impairment evaluations involve management's estimates
of asset useful lives and future cash flows.  Actual useful lives and cash flows could be different from those estimated by
management which could have a material effect on our reporting results and financial positions.  Fair value is determined through
various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered
necessary.
Accounting for Operating Leases
The Company's operating
leases consist of a twenty-five month lease (commencing November 1, 2021 through November 1, 2023) for office space at 1637 S. Main
Street, Milpitas, CA 94035. In accordance with ASC 842 – Leases, the Company has recorded a Right-of-Use Asset and Lease
Liability of $
104,756
at the lease commencement, based on the discounted minimum rent payments under the office lease. The discount rate used was equal to
the Company's cost of capital (6%).
The
Company is obligated to pay base rent of $4,588 per month in the first year, $4,726 per month in the second year, and $4,867 per
month in the last month, plus a pro rata share of common area expenses. The Right-of-Use Asset is being recognized over its useful
life. Rental expense related to the lease during the three months ended December 30, 2021 was $12,571
.
Intangible Asset
The Company records intangible
assets at cost and then amortizes the intangible asset over its useful life. Costs incurred to renew or extend the term of any intangible
assets will be expensed as incurred. During the year ended September 30, 2021 the Company acquired intellectual property consisting of
software and content for $
168,000
. The intangible asset is being amortized over its useful life of
5
years and the Company recognized
$
8,400
worth of amortization expense during the three months ended December 31, 2021, which resulted in an intangible asset balance of
$
154,000
as of December 31, 2021. Amortization expense of $
33,600
is expected annually through September 30, 2025 with amortization expense
of $
28,000
expected for the year ended
September 30, 2026
.
Fair Value of Financial Instruments
The carrying amounts of cash, accounts
receivable, and accounts payable approximate fair value because of the relative short-term maturity of these items and current payment
expected. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and therefore
cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The Company does not hold or issue
financial instruments for trading purposes, nor does it utilize derivative instruments. Notes receivable are recorded at par value less
allowance for doubtful accounts. The carrying amount is consistent with fair value based upon similar notes issued to other franchisees.
ASC 825, Financial Instruments,
clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities
and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows:
Level 1:
Quoted prices in active markets for identical assets or liabilities.
Level 2:
Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability.
Level 3:
Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The determination of where assets
and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The carrying value of financial
assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured
on a non-recurring basis are those that are adjusted to fair value when a significant event occurs.  The Company had no financial
assets or liabilities carried and measured on a recurring basis during the reporting periods. Financial assets and liabilities measured
on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared.
6
Revenue Recognition
The Company generates almost all
of its revenue from contracts with customers. The Company's franchise agreements enter the parties into a contractual agreement,
typically over a ten years term, and include performance obligations as follows: protected territory designation, access to proprietary
manuals and handbooks, initial training and on-going assistance, consulting, promotion of goodwill, administration of marketing fund,
marketing and promotion items, initial marketing program development assistance, company website access, Franchise Management Tool access,
lessons and model plans, project kits, Duplo bricks, frames stop motion animation software, and use of the franchisor's intellectual
property (IP) (e.g., trade name – Bricks for Kidz). Upon entering into a franchise agreement, the Company charges an initial franchise
fee, which is fully collectible and nonrefundable as of the date of the signing of the franchise agreement. Further, because the Company's
franchises are primarily a mobile concept and do not require finding locations or construction, the franchisees can begin operations as
soon as they complete training.
Per the terms of the franchise
agreements, the Company charges for royalty fees on a monthly basis, generally set at a fixed amount, but in some cases are based on a
percentage of franchisee's monthly gross revenues. The Company also charges fees for a marketing fund, generally based on 2% of
franchisee's monthly gross revenues, which is managed by the Company, to allocate towards national branding of the Company's
concepts to benefit the franchisees. Lastly, the Company charges for technology fees on a monthly basis, generally at a fixed amount,
for the use of the company Franchise Management tool as well as company emails, etc.
Effective October 1, 2018 the Company
began recognizing revenue under ASC 606. The Company considers initial franchise fees to be a part of the license of symbolic intellectual
property ("IP"), therefore the performance obligation related to these fees is satisfied over time as the Company fulfills
its promise to grant the customer rights to use, and benefit from, the Company's IP, as well as support and maintain the IP. The
initial franchise fee, then, is recorded as deferred revenue at inception and recognized on a straight-line basis over the contract term.
In accordance with ASC 606-10-55-65,
the Company has determined that the royalty fees, marketing fees, and technology fees are subject to a sales and usage-based royalties'
constraint on licenses of IP. Accordingly, these fees are recognized as revenue at the later of when the sales or usage occurs or the
related performance obligation is satisfied. Technology fees are recorded net of processing fees. Marketing fees are limited to the lesser
of marketing amounts earned or expensed; therefore, the Company will recognize amounts received in excess of amounts spent on the balance
sheet in the accrued marketing fund liability and will recognize amounts spent in excess of amounts received on the balance sheet in the
marketing fund receivable.
The Company collects transfer fees
when contracts are transferred between parties and accounts for the transfer as a contract modification under ASC 606. Because the transfer
does not increase the scope of the contract or promise any additional goods or services and there are no new distinct services that will
be provided after the transfer the Company considers the transfer fee part of the existing contract. Transfer fees, then, are recorded
as deferred revenue at inception and recognized on a straight-line basis over the remaining contract term.
When contracts are terminated due
to default, or in conjunction with an early termination agreement, the Company accounts for the early termination as a contract modification
under ASC 606. Because the termination eliminates any future performance obligations of the Company any deferred revenue associated with
the terminated contract is recognized into revenue at the time of termination, along with any early termination fees, in the initial franchise
fee line on the Company's Statement of Operations.
The Company generates revenue from
sales of merchandise where the performance obligation is met, and therefore revenue recognized, upon the delivery of merchandise to the
customer.
Contract Liability – Deferred Revenue
In conjunction with the adoption
of ASC 606, effective October 1, 2018 the Company recorded deferred revenue as a contract liability for its initial franchise fees collected
and related to contracts with remaining performance obligations. During the three months ended December 31, 2021 the activity in the deferred
revenue account was as follows:
Balance, September 30, 2021
$
1,969,478
Initial franchise fees collected
—
Deferred revenue recognized into revenue
(
150,905
)
Balance, December 31, 2021
1,818,573
Current portion
(
708,172
)
Deferred revenue, net of current portion
$
1,110,401
7
Amounts expected to be recognized
into revenue related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2021 were as follows:
Twelve months ended December 31, 2022
$
708,172
Twelve months ended December 31, 2023
581,616
Twelve months ended December 31, 2024
312,703
Twelve months ended December 31, 2025
143,120
Twelve months ended December 31, 2026 and thereafter
72,962
Total
$
1,818,573
Contract Liability / Asset – Accrued Marketing
Fund / Marketing Fund Receivable
Per the terms of the franchise
agreements, the Company collects 2% of franchisee's gross revenues for a marketing fund, managed by the Company, to allocate toward
national branding of the Company's concepts to benefit the franchisees.
The marketing fund amounts owed
to the Company are accounted for as a liability on the balance sheet and the actual collections are deposited into a marketing fund bank
account, presented as restricted cash on the balance sheet. Expenses pertaining to the marketing fund activities are paid from the marketing
fund and reduce the liability account. Upon adoption of FASB 606 on October 1, 2018, the Company presents these marketing fund revenues
and expenses on a gross basis on its statement of operations. Any unused funds at the end of the period are recorded as accrued marketing
fees or any funds used in excess of funds collected are recorded as a marketing fund receivable. The Company expects to collect this advance
in future periods from the 2% fees collected on future franchisee gross revenues. The activity in the accrued marketing fund liability
account for the three months ended December 31, 2021 was as follows:
Marketing fund liability (receivable), September 30, 2021
$
(
23,886
)
Marketing fund billings recognized into income
—
Marketing funds recognized into expense
—
Marketing funds advanced by the Company
(
1,168
)
Marketing fund liability (receivable), December 31, 2021
$
(
25,054
)
Contract Asset – Prepaid Commission Expense
In accordance with ASC 606 the
costs related to obtaining a contract are to be capitalized as long as the costs are recoverable and incremental. Effective October 1,
2018, the date the Company adopted ASC 606, it capitalized the value of sales commissions as a contract asset and is amortizing those
costs straight-line over the contract life of the franchise agreement to which they relate. During the three months ended December 31,
2021, the activity in the contract asset account was as follows:
Balance, September 30, 2021
$
426,489
Commissions paid
—
Commissions recognized into expense
(
41,302
)
Balance, December 31, 2021
385,187
Current portion
(
155,517
)
Prepaid commission expense, net of current portion
$
229,670
General Advertising Costs
General advertising costs are expensed
as incurred. The Company incurred general advertising costs for the three months ended December 31, 2021 and 2020 of $
28,544
and $
1,724
,
respectively.
Income Taxes
The provision for income taxes
and deferred income taxes are determined using the asset and liability method. Deferred tax assets and liabilities are determined based
on temporary differences between the financial carrying amounts and the tax basis of assets and liabilities using enacted tax rates in
effect in the years in which the temporary differences are expected to reverse. On a periodic basis, the Company assesses the probability
that its net deferred tax assets, if any, will be recovered. If after evaluating all of the positive and negative evidence, a conclusion
is made that it is more likely than not that some portion or all of the net deferred tax assets will not be recovered, a valuation allowance
is provided by a charge to tax expense to reserve the portion of the deferred tax assets which are not expected to be realized. Given
previous recurring losses, the Company cannot conclude that it is more likely than not that such assets will be realized, therefore a
full valuation allowance has been recorded during the three months ended December 31, 2021.
8
The Company reviews its filing
positions for all open tax years in all U.S. federal and state jurisdictions where the Company is required to file.
When there are uncertainties related
to potential income tax benefits, in order to qualify for recognition, the position the Company takes has to have at least a "more
likely than not" chance of being sustained (based on the position's technical merits) upon challenge by the respective authorities.
The term "more likely than not" means a likelihood of more than 50 percent. Otherwise, the Company may not recognize any of
the potential tax benefit associated with the position. The Company recognizes a benefit for a tax position that meets the "more
likely than not" criterion at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon its
effective resolution. Unrecognized tax benefits involve management's judgment regarding the likelihood of the benefit being sustained
with the ultimate realization being dependent on generating sufficient taxable income in future years. The final resolution of uncertain
tax positions could result in adjustments to recorded amounts and may affect our results of operations, financial position and cash flows.
The Company's policy is to
recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties
at December 31, 2021 and September 30, 2021 and has not recognized interest and/or penalties during the three months ended December 31,
2021, since there are no material unrecognized tax benefits. Management believes no material change to the amount of unrecognized tax
benefits will occur within the next twelve months.
The tax years subject to examination
by major tax jurisdictions include the years 2015 and forward by the U.S. Internal Revenue Service.
Net earnings (loss) per share
Basic earnings per share are computed
by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per
share reflect the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted
during the period. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation.
Stock-based compensation
The Company accounts for employee
stock awards for services based on the grant date fair value of the instrument issued, and those issued to non-employees are recorded
based on the grant date fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably
measurable. Stock awards are expensed over the service period.
During the three months ended December
31, 2021, the Company issued
20,000
shares for stock-based compensation valued at $
3,200
, based on the market value of the Company shares
on the grant date, and issued
155,103
shares upon the cashless exercise of
294,778
stock options.
Reclassifications
Certain prior year amounts have
been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of
operations.
Recent accounting pronouncements
All newly issued accounting pronouncements,
but not yet effective, have been deemed either immaterial or not applicable.
9
(2)
Notes and Other Receivables
At December 31, 2021 and September
30, 2021, the Company held certain notes receivable totaling approximately $
6,000
and $
6,000
, respectively, net of allowances, for extended
payment terms of franchise fees. The notes receivable bear interest of
4
% per annum with monthly payments, payable within four years.
The Company analyzes the collectability of all receivables and reserves accordingly.
(3)
Commitments and Contingencies
Litigation
The Company is subject to litigation
claims arising in the ordinary course of business. The Company believes that it has adequately accrued for legal matters in accordance
with the requirements of GAAP. The Company records litigation accruals for legal matters which are both probable and estimable and for
related legal costs as incurred. The Company does not reduce these liabilities for potential insurance or third-party recoveries.
On February 24, 2017, franchisee,
Team Kasa, LLC, along with its three owners, filed suit in the Eastern District of New York (Case No. 2:17-cv-01074) against former CEO
Brian Pappas and Franventures, as well as four other defendants seeking damages under the New York Franchise Sales Act. The same Plaintiffs
also initiated an arbitration proceeding against the Company on the same issues (American Arbitration Association, Case No. 01-17-0001-1968),
alleging the Company is jointly and severally liable for damages resulting from the allegations against Mr. Pappas and Franventures. The
Company is contesting the allegations and its liability for any damages in the arbitration case. Both cases have been held in abeyance
as the parties seek a resolution.
Lease
On October 21, 2021, the Company
leased approximately 2,480 square feet of office space at 1637 S. Main Street, Milpitas, CA 94035 for its corporate offices. The lease
has a term of two years and one month. The Company is obligated to pay base rent of $
4,588
per month in the first year, $
4,726
per month
in the second year, and $
4,867
per month in the last month, plus a pro rata share of common area expenses. On November 1, 2021, the Company
relocated its corporate offices to the Milpitas, California location.
(4)
Related Party Transactions
Christopher Rego has been a director since February
5, 2020, and our Chief Executive Officer since May 1, 2020. Prior to his appointment, Mr. Rego purchased an active franchise in California.
During the three months ended December 31, 2021 the Company recognized royalty revenue from the franchise of $
1,688
and recognized marketing
fee revenue from the franchise of $
0
. Total payments made by the franchisee were $
1,125
As of December 31, 2021 and September 30, 2021
the accounts receivable balance with the franchisee was $
1,210
and $
1,897
, respectively and the franchisee had deferred revenue balances
of $
0
.
John Simento has been a director of the Company since
May 19, 2020. Prior to Mr. Rego's and Mr. Simento's appointments with the Company, they purchased a Company franchise in the
United Arab Emirates (the "UAE"). The Company filed an arbitration complaint against them in December 2019 regarding issues
related to opening the franchise. The complaint was resolved by a Settlement Agreement dated February 5, 2020. Under the Settlement Agreement,
the Company forgave all back royalty fees through July 2019, equaling $
18,825
, and agreed to defer all other fees until the franchise
was able to obtain a business license to operate in the UAE., which is currently delayed due to the Coronavirus pandemic. The franchise
is currently non-operational as a result of an inability to obtain the issuance of a business license from the UAE due to the Coronavirus
pandemic. If the franchise is not able to procure the necessary authorizations to operate, the franchisees would not owe any franchise
fees. As a consequence, we have not realized any revenue from the franchise and no payments have been received on outstanding balances.
As of December 31, 2021 and September 30, 2021 the accounts receivable balance with the franchise was $
10,613
and the Company had allowed
for $
10,613
, for net AR balances of $
0
.
Mr. Rego is also the CEO of Teknowland, a software development
company, with which the Company entered into an agreement on March 10, 2020 to perform development and maintenance services in relation
to the Company's franchise management software. The term of the agreement was six months, subject to auto-renewal until Teknowland
had completed its obligations under the agreement, but subject to each party's right to terminate the agreement at any time on 30
days' notice. Under the agreement, the Company was obligated to pay Teknowland a fee of $
12,900
per month for development and maintenance
services. Starting in November 2020, the Company and Teknowland orally agreed to reduce the monthly amount that the Company was obligated
to pay to $
3,000
per month
.
10
During the year ended September 30, 2020, the Company
and Mr. Rego orally agreed that Mr. Rego and Teknowland would develop an eLearning program to enable the Company to offer educational
programs over the internet. No agreement was reached regarding whether the Company or Teknowland would own the eLearning program, or the
terms under which the Company would be entitled to use the program on a long-term basis, whether as owner or licensee.
The Company orally
agreed to pay Teknowland $10,000 per month for five months for hosting and content costs incurred by Teknowland
. After testing the program,
the Company's board decided in December 2020 not to pursue the E-Learning program.
Beginning in January 2021, Teknowland began hosting
the Company's website at a cost of $
5,000
per month pursuant to an oral agreement.
On February 12, 2021, the Company, Chris Rego and Teknowland
entered into an agreement under which the parties mutually agreed to terminate the March 10, 2020 agreement to develop and maintain the
Company's franchise management system, and the oral agreement under which Teknowland hosted the Company's website. In both
cases, the Company has engaged an independent firm to provide the services. Under the same agreement, the Company agreed to transfer and
assign to Teknowland all of the Company's rights in the E-Learning program developed by Teknowland for the Company. The Company
evaluated the E-Learning program on a trial basis, and elected not to pursue it as a line of business. The Company agreed to pay Teknowland
$
50,000
to pay all invoices associated with the two agreements and the E-Learning program, of which $
20,000
was payable at execution of
the agreement, $
20,000
was payable 30 days later and $
10,000
was payable 60 days later. As of September 30, 2021 the entire amount had
been paid.
On December 7, 2021, the
Company entered into a Sale Agreement with StroomX, LLC (the "Purchaser"), under which the Company agreed to sell all of
the Company's subsidiaries (the "Learning Subsidiaries") involved in its learning business (the "Learning
Business"), as well as any assets of the Learning Business that are not owned by the Learning Subsidiaries, to the Purchaser.
In connection with the sale, the Purchaser agreed to pay the Company in cash or stock of the Company at the Purchaser's
election, assume all liabilities of the Learning Business, and to indemnify and hold the Company harmless from any such liabilities.
The Purchaser is controlled by Christopher Rego. As of the date of this filing the closing of the sale had not yet occurred.
(5)
Acquisition of Assets
On December 7, 2021, the Company,
DriveItAway, Inc., a Delaware corporation ("DIA"), and the existing shareholders of DIA executed an Agreement and Plan of
Share Exchange (the "Share Exchange Agreement"), under which the Company would acquire all of the issued and outstanding common
stock of DIA by issuing one share of Series A Convertible Preferred Stock (the "Series A Preferred") of the Company for each
outstanding share of DIA common stock (the "Share Exchange"). As a result of the Share Exchange, DIA will become a wholly-owned
subsidiary of the Company. Each share of Series A Preferred will be convertible into that number of shares of common stock of the Company
which would entitle the Series A Preferred holders to 85% of the Company's common stock, determined on a fully-diluted basis, but
prior to any shares issued or issuable as a result of the Financing (as defined below). The exact conversion rate of the Series A Preferred
will be determined at closing of the Share Exchange. In addition, each share of Series A Preferred will be entitled to dividends and voting
rights on an "as converted" basis with the common stockholders. Upon closing of the Share Exchange, all of the existing members
of the board of directors (the "Board") of the Company have agreed to resign, and John Possumato, Adam Potash and Paul Patrizio
will be appointed to the Company's Board. Upon closing of the Share Exchange, Christopher Rego and Rod Whiton have agreed to resign
as officers, and upon their resignation John Possumato will be appointed chief executive officer and Adam Potash will be appointed chief
operating officer. Mike Elkin has agreed to remain as chief financial officer of the Company. Closing of the Share Exchange Agreement
is subject to a number of conditions, and is expected to occur during 2022, provided that the closing conditions are satisfied or waived.
DIA is the first national dealer
focused mobility platform that enables car dealers to sell more vehicles in a seamless way through eCommerce, with its exclusive "Pay
as You Go" app-based subscription program. DIA provides a comprehensive turn-key, solutions driven program with proprietary mobile
technology and driver app, insurance coverages and training to get dealerships up and running quickly and profitably in emerging online
sales opportunities. The company is planning to soon to expand its easy and transparent consumer app 'subscription to ownership'
platform to enable entry level consumers to drive and acquire new electric vehicles.
(6)
Subsequent Events
On April 28, 2020, the Company
was granted a loan (the "Loan") from First Bank of the Lake in aggregate amount of $
119,980
, pursuant to the Paycheck Protection
Program (the "PPP") under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The Loan, which was in the
form of a Note dated April 24, 2020 issued by the Company, matures on April 23, 2022 and bears interest at a rate of 1% per annum, payable
monthly commencing on October 23, 2020. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties.
Funds from the Loan may only be used for payroll costs, cost used to continue group health care benefits, mortgage payments, rent, utilities
and interest on other debt obligations incurred before February 15, 2020. The Company used the entire Loan amount for qualifying expenses.
Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES
Act. The Company used the entire loan amount for qualifying expenses therefore, on January 25, 2022, the PPP Loan was forgiven by
the SBA.
The Company performed a review
of events subsequent to the balance sheet date through the date the financial statements were issued and determined that there were no
additional events requiring recognition or disclosure in the financial statements.
11
Item 2. Management's Discussion and Analysis of Financial Condition
and Plan of Operation
Overview
Creative Learning Corporation,
operating under the trade names of Bricks 4 Kidz® and Sew Fun Studios®, offers educational and enrichment programs to children
ages 3 to 13+ through its franchisees (the "
Learning Business
"). The Company's business model is to sell franchise
territories and collect a one-time franchise fee and subsequent monthly royalty fees from each territory. Through the Company's
franchise business model, which includes a proprietary curriculum and marketing strategy plus a proprietary franchise management tool,
the Company provides a wide variety of programs designed to enhance students' problem solving and critical thinking skills. BFK
had 274 global Bricks 4 Kidz® and Sew Fun Studios® franchise territories, 28 Bricks 4 Kidz® master franchises, and 134 Bricks
4 Kidz® sub-franchises operating in 39 countries.
As a result of challenges faced
by our Learning Business, in December 2021, our board elected to change the business focus of the Company by entering into the Share Exchange
Agreement to acquire DriveItAway, Inc. and a separate agreement to dispose of our Learning Business if the acquisition of DIA closes.."
As a result, the following description of our operating results and liquidity may not be representative of our future operating results
and liquidity.
Three Months ended December 31, 2021 and 2020
Revenues were $373,990 during the
three months ended December 31, 2021, as compared to $757,008 during the three months ended December 31, 2020. The drop in gross revenues
in 2021 as compared to 2020 is mainly attributable to a decrease of approximately $143,000 in royalty fees and a decrease of approximately
$238,000 in initial franchise fees.
Initial franchise fees were $150,905
during the three months ended December 31, 2021, as compared to $389,004 during the three months ended December 31, 2020, a decline of
$238,099. The decrease in initial franchise fees during the three months ended December 31, 2021 was primarily due to fewer new franchise
sales due to the COVID-19 pandemic, as well as fewer terminations of existing franchises, which results in the acceleration of deferred
franchise revenues.
Royalty fee revenues were $189,147
during the three months ended December 31, 2021 as compared to $331,892 during the three months ended December 31, 2020, a decline of
$142,745. Royalty fee revenues decreased as compared to the comparative periods due to the offboarding of franchisees during the year
ended September 30, 2021, and the three months ended December 31, 2021, which resulted in fewer franchisees being charged royalties in
the current period versus the same period of the prior fiscal year. In addition, royalty fee revenues were lower because of the interruption
of normal operation at many franchises because of the COVID-19 pandemic.
Marketing fund revenues were $0
during the three months ended December 31, 2021, as compared to $0 during the three months ended December 31, 2020. The Company had no
marketing fund revenue in the current period due to the impact of COVID-19. In particular, due to the impact of the COVID-19 pandemic
on the business of our franchisees, we voluntarily elected to cease charging our franchises for marketing fees in March 2020. The Company
expects to resume charging franchisees for marketing when they are able to return to normal operations following the COVID-19 pandemic.
Technology fees were $33,938 during
the three months ended December 31, 2021, as compared to $36,112 during the three months ended December 31, 2020. Technology fees decreased
during the three months ended December 31, 2021 over the comparative prior period due to the impact of the COVID-19 on our franchisees'
operations.
Operating expenses were $386,059
during the three months ended December 31, 2021, as compared to $535,487 during the three months ended December 31, 2020. Operating expenses
declined in 2021 as compared to 2020 primarily due to lower franchise commission expense, professional fees and bad debt. Franchise commissions
decreased as a result of the offboarding of franchisees in the prior year, which triggered the recognition of prepaid commissions into
expense in the prior year. Professional fees decreased due to settlement of litigation cases in the prior year . Bad debt expense decreased
due to fewer charge-offs of bad debt as compared to the prior year.
Net income (loss) for the three
months ended December 31, 2021 was $(12,372) as compared to $223,467 in the three months ended December 31, 2020. The net loss in the
three months ended December 31, 2021 as compared to the net income in the three months ended December 31, 2020 was a result of lower revenues
partially offset by lower expenses as discussed in detail above.
12
Liquidity and Capital Resources
The Company's primary source
of liquidity is cash generated through operations. As of December 31, 2021, the Company had approximately $279,000 of unrestricted cash,
and used cash flow from operations of approximately $72,000 in the three months ended December 31, 2021  . The Company believes
it has sufficient cash on hand to cover expenses for the next 12 months, provided the Company operates only the Learning Business for
the next 12 months. However, the Company has entered into agreements to acquire DIA and dispose of the Learning Business, and if those
agreements are consummated the Company's liquidity will be determined in reference to DIA's profitability and capital needs
instead.
The Company is dependent upon both
franchise sales and royalty fees to continue current business operations and liquidity.
The recent COVID-19 outbreak has
been declared a pandemic by the World Health Organization, has spread to the United States and many other parts of the world and has adversely
affected our business operations, employee availability, financial condition, liquidity and cash flow and the length of such impacts are
uncertain.  The outbreak of the COVID-19 continues to grow both in the United States and globally, and related government and private
sector responsive actions have and will continue to adversely affect our business operations. It is impossible to predict the effect and
ultimate impact of the COVID-19 pandemic as the situation is rapidly evolving.
The spread of COVID-19 has caused
public health officials to recommend precautions to mitigate the spread of the virus, including warning against congregating in heavily
populated areas without masks, vaccinations and testing, such as malls and shopping centers. Among the precautions was the cessation of
in-person learning at a substantial portion of the schools in the United States, which has adversely impacted our royalty revenue from
franchisees and our ability to sell new franchises. There is significant uncertainty around the breadth and duration of these school closures
and other business disruptions related to COVID-19, as well as its impact on the U.S. and global economy. Many public schools resumed
some or all in person learning in the Fall of 2021, but many have since reverted back to remote learning with the advent of the Omicron
strain of COVID-19 in December 2021. The extent to which COVID-19 impacts our results will depend on future developments, which are highly
uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions taken
to contain it or treat its impact. We have asked some of our corporate employees whose jobs allow them to work remotely to do so a few
days a week for the foreseeable future. Such precautionary measures could create operational challenges, as we adjust to a remote workforce,
which could adversely impact our business.
Cash funds are used for ongoing
operating expenses, the purchase of equipment, and software development.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable to us as a smaller
reporting company.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls
and Procedures
As of the end of the period covered
by this report (the "Evaluation Date"), we carried out an evaluation regarding the three months ended December 31, 2021, under
the supervision and with the participation of our management, including our President and Chief Financial Officer, of the effectiveness
of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Based upon this evaluation, our management concluded that, as of the Evaluation Date, our
disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed in the
reports that are filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified
by the Securities and Exchange Commission's rules and forms and that our disclosure controls and procedures are designed to ensure
that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated
to our management, as appropriate, to allow timely decisions regarding required disclosure.
13
Because of the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance that the Company's disclosure controls and procedures
will detect or uncover every situation involving the failure of persons within the Company to disclose material information otherwise
required to be set forth in the Company's periodic reports.
Changes in Internal Control
Over Financial Reporting
The Company's management
is also responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles.
The Company continues to have the
following material weaknesses in internal control:
●
We have not established and/or maintained adequately designed internal controls in order to prevent or detect and correct material misstatements to the financial statements, including internal controls related to complex or nonroutine transactions.
●
We lack the necessary accounting resources with sufficient SEC reporting experience, US GAAP knowledge and accounting experience.
Management believes that despite
our material weaknesses, our consolidated financial statements for the quarter ended December 31, 2021 are fairly stated, in all material
respects, in accordance with GAAP.
14
PART II
Item 1. Legal Proceedings
The
discussion of pending legal matters included in Item 3 of the Company's Annual Report on Form 10-K for the fiscal year ended September
30, 2021 is incorporated herein by reference.
There have been no material changes
in legal proceedings since the filing of the Form 10-K.
Item 1A. Risk Factors
For information regarding factors
that could affect the Company's results of operations, financial condition and liquidity, see the risk factors discussed under Part
II, Item 1A of the Company's most recent annual report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None
15
Item 6. Exhibits
Exhibits
Exhibit No.
Exhibit
31.1
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.
31.2
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Act of 1934, as amended.
32.2
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CREATIVE LEARNING CORPORATION
Dated: February 22, 2022
By:
/s/ Mike Elkin
Mike Elkin
Chief Accounting Officer
(Principal Financial Officer)
CREATIVE LEARNING CORPORATION
Dated: February 22, 2022
By:
/s/ Rod K. Whiton
Rod K. Whiton
President
(Principal Executive Officer)
17