Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 10, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Legacy Education Alliance, Inc. | |
Entity Central Index Key | 1,561,880 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 22,630,927 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 3,669 | $ 4,881 |
Restricted cash | 3,373 | 2,946 |
Deferred course expenses | 9,075 | 9,211 |
Prepaid expenses and other current assets | 3,414 | 2,169 |
Inventory | 421 | 492 |
Total current assets | 19,952 | 19,699 |
Property and equipment, net | 1,151 | 1,226 |
Other assets | 241 | 200 |
Total assets | 21,344 | 21,125 |
Current liabilities: | ||
Accounts payable | 3,672 | 2,451 |
Royalties payable | 252 | 163 |
Accrued course expenses | 1,636 | 1,226 |
Accrued salaries, wages and benefits | 1,063 | 1,258 |
Other accrued expenses | 1,972 | 2,372 |
Long-term debt, current portion | 11 | 10 |
Deferred revenue, current portion | 54,104 | 60,698 |
Total current liabilities | 62,710 | 68,178 |
Long-term debt, net of current portion | 34 | 42 |
Deferred revenue, net of current portion | 323 | 71 |
Other liabilities | 45 | 45 |
Total liabilities | 63,112 | 68,336 |
Commitments and contingencies (Note 10) | ||
Stockholders' deficit: | ||
Preferred stock, $0.0001 par value, 20,000,000 shares authorized, none issued | ||
Common stock, $0.0001 par value, 200,000,000 shares authorized, 22,630,927 and 21,845,927 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively | 2 | 2 |
Additional paid-in capital | 11,022 | 10,905 |
Cumulative foreign currency translation adjustment | 4,220 | 1,680 |
Accumulated deficit | (57,012) | (59,798) |
Total stockholders' deficit | (41,768) | (47,211) |
Total liabilities and stockholders' deficit | $ 21,344 | $ 21,125 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 22,630,927 | 21,845,927 |
Common stock, shares outstanding | 22,630,927 | 21,845,927 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Statement [Abstract] | ||||
Revenue | $ 22,469 | $ 22,488 | $ 68,582 | $ 66,867 |
Operating costs and expenses: | ||||
Direct course expenses | 12,268 | 13,032 | 36,506 | 37,012 |
Advertising and sales expenses | 4,618 | 5,319 | 15,207 | 15,889 |
Royalty expenses | 1,208 | 1,268 | 3,251 | 4,103 |
General and administrative expenses | 3,595 | 4,070 | 11,339 | 12,901 |
Total operating costs and expenses | 21,689 | 23,689 | 66,303 | 69,905 |
Income (loss) from operations | 780 | (1,201) | 2,279 | (3,038) |
Other income (expense): | ||||
Interest income (expense), net | (1) | (1) | (3) | (5) |
Other income, net | 397 | 243 | 537 | 515 |
Total other income | 396 | 242 | 534 | 510 |
Income (loss) before income taxes | 1,176 | (959) | 2,813 | (2,528) |
Income tax expense | (8) | (8) | (27) | (29) |
Net income (loss) | $ 1,168 | $ (967) | $ 2,786 | $ (2,557) |
Basic earnings (loss) per common share | $ 0.05 | $ (0.04) | $ 0.13 | $ (0.12) |
Diluted earnings (loss) per common share | $ 0.05 | $ (0.04) | $ 0.12 | $ (0.12) |
Basic weighted average common shares outstanding | 21,184 | 21,407 | 21,035 | 20,938 |
Diluted weighted average common shares outstanding | 22,204 | 21,407 | 21,966 | 20,938 |
Comprehensive income (loss): | ||||
Net income (loss) | $ 1,168 | $ (967) | $ 2,786 | $ (2,557) |
Foreign currency translation adjustments | 581 | 811 | 2,540 | 695 |
Total comprehensive income (loss) | $ 1,749 | $ (156) | $ 5,326 | $ (1,862) |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Changes in Stockholders' Deficit (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($) shares in Thousands, $ in Thousands | Total | Common stock | Additional paid-in capital | Cumulative foreign currency translation adjustment | Accumulated deficit |
Balance at Dec. 31, 2015 | $ (47,211) | $ 2 | $ 10,905 | $ 1,680 | $ (59,798) |
Balance, shares at Dec. 31, 2015 | 21,846 | ||||
Issuance of common stock for services | |||||
Issuance of common stock for services, shares | 785 | ||||
Share-based compensation expense | $ 117 | $ 117 | |||
Share-based compensation expense, shares | |||||
Foreign currency translation adjustments | $ 2,540 | $ 2,540 | |||
Net Income | 2,786 | 2,786 | |||
Balance at Sep. 30, 2016 | $ (41,768) | $ 2 | $ 11,022 | $ 4,220 | $ (57,012) |
Balance, shares at Sep. 30, 2016 | 22,631 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) | $ 2,786 | $ (2,557) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 112 | 133 |
Gain on change in fair value of derivatives | (5) | (127) |
Share-based compensation | 117 | 23 |
Deferred income taxes | 2 | |
Changes in operating assets and liabilities: | ||
Restricted cash | (513) | (299) |
Deferred course expenses | (281) | (119) |
Prepaid expenses and other receivable | (1,313) | (733) |
Inventory | 53 | (19) |
Other assets | (4) | (19) |
Accounts payable-trade | 1,456 | 1,264 |
Royalties payable | 88 | 111 |
Accrued course expenses | 509 | 1,022 |
Accrued salaries, wages and benefits | (180) | 766 |
Other accrued expenses | (1,442) | 1,306 |
Deferred revenue | (3,389) | 2,771 |
Net cash provided by (used in) operating activities | (2,006) | 3,525 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (40) | (83) |
Net cash used in investing activities | (40) | (83) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Principal payments on debt | (7) | (7) |
Proceeds from private offering of securities | 459 | |
Net cash provided by (used in) financing activities | (7) | 452 |
Effect of exchange rate differences on cash | 841 | (1,024) |
Net increase (decrease) in cash and cash equivalents | (1,212) | 2,870 |
Cash and cash equivalents, beginning of period | 4,881 | 2,932 |
Cash and cash equivalents, end of period | 3,669 | 5,802 |
Supplemental disclosures: | ||
Cash paid during the period for interest | 6 | 5 |
Cash paid during the period for income taxes, net of refunds received | 32 | 34 |
Derivative liability from issuance of warrants | $ 164 |
General
General | 9 Months Ended |
Sep. 30, 2016 | |
General [Abstract] | |
General | Note 1 - General Business Description. Rich Dad Poor Dad. Martin Roberts, The Independent Woman, Women in Wealth, Brick Buy Brick and Elite Business Star Basis of Presentation. The accompanying unaudited condensed consolidated financial statements presented herein are for us and our consolidated subsidiaries, each of which is a wholly-owned subsidiary. The accompanying condensed consolidated balance sheet as of December 31, 2015 was derived from our audited consolidated financial statements and does not include all disclosures required under United States of America generally accepted accounting principles (“U.S. GAAP”), for annual financial statements. All significant intercompany transactions have been eliminated. These interim financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 and reflect all normal recurring adjustments that are, in the opinion of management, necessary to present fairly our results of operations and financial position. Amounts reported in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) are not necessarily indicative of amounts expected for the respective annual periods or any other interim period. Significant Accounting Policies. Note 2 - Significant Accounting Policies Use of Estimates. Income Tax in Interim Periods. Losses from jurisdictions for which no benefit can be realized and the income tax effects of unusual and infrequent items are excluded from the estimated annual effective tax rate. Valuation allowances are provided against the future tax benefits that arise from the losses in jurisdictions for which no benefit can be realized. The effects of unusual and infrequent items are recognized in the impacted interim period as discrete items. The estimated annual effective tax rate may be affected by nondeductible expenses and by our projected earnings mix by tax jurisdiction. Adjustments to the estimated annual effective income tax rate are recognized in the period during which such estimates are revised. We have established valuation allowances against our deferred tax assets, including net operating loss carryforwards and income tax credits. Valuation allowances take into consideration our expected ability to realize these deferred tax assets and reduce the value of such assets to the amount that is deemed more likely than not to be realizable. Our ability to realize these deferred tax assets is dependent on achieving our forecast of future taxable operating income over an extended period of time. We review our forecast in relation to actual results and expected trends on a quarterly basis. A change in our valuation allowance would impact our income tax expense/benefit and our stockholders’ deficit and could have a significant impact on our results of operations or financial condition in future periods. |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2016 | |
New Accounting Pronouncements [Abstract] | |
New Accounting Pronouncements | Note 2 - New Accounting Pronouncements Adoption of Accounting Standards We have implemented all new accounting pronouncements that are in effect and that management believes would materially affect our financial statements. New Accounting Standards In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No 2016-09 “Compensation – Stock compensation” (Topic 718) In February 2016, the FASB issued ASU No 2016-02 “Leases” (Topic 842) In January 2016, the FASB issued ASU No 2016-01,“ Recognition and Measurement of Financial Assets and Financial Liabilities”, Financial Instruments – Overall (Subtopic 825-10) |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2016 | |
Share-Based Compensation [Abstract] | |
Share-based compensation | Note 3 - Share-Based Compensation We account for share-based awards under the provisions of ASC 718, “ Compensation—Stock Compensation During the three months ended September 30, 2016 pursuant to the 2015 Incentive Plan we awarded 695,000 shares of restricted stock to our employees, which are subject to a three-year cliff vesting and 90,000 shares of restricted stock to members of the board of directors, which are subject to a two-year cliff vesting. The grant date price per share was $0.21 for a total grant date fair value of $164.9 thousand. See Note 6 - Share-Based Compensation |
Earnings Per Share ("EPS")
Earnings Per Share ("EPS") | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share ("EPS") [Abstract] | |
Earnings Per Share ("EPS") | Note 4 - Earnings Per Share (“EPS”) Basic EPS is computed by dividing net income by the basic weighted-average number of shares outstanding during the period. Diluted EPS is computed by dividing net income by the diluted weighted-average number of shares outstanding during the period and, accordingly, reflects the potential dilution that could occur if securities or other agreements to issue common stock, such as stock options, were exercised, settled or converted into common stock and were dilutive. The diluted weighted-average number of shares used in our diluted EPS calculation is determined using the treasury stock method. Unvested awards of share-based payments with rights to receive dividends or dividend equivalents, such as our restricted stock awards, are considered to be participating securities, and therefore, the two-class method is used for purposes of calculating EPS. Under the two-class method, a portion of net income is allocated to these participating securities and is excluded from the calculation of EPS allocated to common stock. Our restricted stock awards are subject to forfeiture and restrictions on transfer until vested and have identical voting, income and distribution rights to the unrestricted common shares outstanding. Our weighted average unvested restricted stock awards outstanding were 1,020,068 and 658,048 for the three months ended September 30, 2016 and 2015, respectively, and 930,674 and 221,760 for the nine months ended September 30, 2016 and 2015, respectively. The calculations of basic and diluted EPS are as follows: Three Months Ended Three Months Ended Net Income Weighted Earnings Per Share Net Loss Weighted Loss Per Share (in thousands, except per share data) (in thousands, except per share data) Basic: As reported $ 1,168 22,204 $ (967 ) 21,407 Amounts allocated to unvested restricted shares (53 ) (1,020 ) — — Amounts available to common stockholders $ 1,115 21,184 $ 0.05 $ (967 ) 21,407 $ (0.04 ) Diluted: Amounts allocated to unvested restricted shares 53 — — — Non participating share units 1,020 — Amounts reallocated to unvested restricted shares (55 ) — — — Amounts available to stockholders and assumed conversions $ 1,113 22,204 $ 0.05 $ (967 ) 21,407 $ (0.04 ) Nine Months Ended Nine Months Ended Net Income Weighted Earnings Per Share Net Loss Weighted Loss Per Share (in thousands, except per share data) (in thousands, except per share data) Basic: As reported $ 2,786 21,966 $ (2,557 ) 20,938 Amounts allocated to unvested restricted shares (115 ) (931 ) — — Amounts available to common stockholders $ 2,671 21,035 $ 0.13 $ (2,557 ) 20,938 $ (0.12 ) Diluted: Amounts allocated to unvested restricted shares 115 — — — Non participating share units 931 — Amounts reallocated to unvested restricted shares (120 ) — — — Amounts available to stockholders and assumed conversions $ 2,666 21,966 $ 0.12 $ (2,557 ) 20,938 $ (0.12 ) |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Note 5 - Fair Value Measurements ASC 820, “Fair Value Measurements and Disclosures” ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. In accordance with ASC 820, these two types of inputs have created the following fair value hierarchy: ● Level 1-Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets; ● Level 2-Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including: ● Quoted prices for similar assets or liabilities in active markets ● Quoted prices for identical or similar assets or liabilities in markets that are not active ● Inputs other than quoted prices that are observable for the asset or liability ● Inputs that are derived principally from or corroborated by observable market data by correlation or other means; and ● Level 3-Inputs that are unobservable and reflect our assumptions used in pricing the asset or liability based on the best information available under the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows). The following table presents the derivative financial instruments, our only financial liabilities measured and recorded at fair value on our condensed consolidated balance sheets on a recurring basis, and their level within the fair value hierarchy as of September 30, 2016 and December 31, 2015: Fair Value Measurements at Reporting Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) As of September 30, 2016 Warrant derivative liabilities $ 22,310 $ - $ - $ 22,310 As of December 31, 2015 Warrant derivative liabilities $ 27,266 $ - $ - $ 27,266 Financial Instruments. Financial instruments consist primarily of cash and cash equivalents, accounts payable, deferred course expenses, accrued expenses, deferred revenue, and debt. U.S. GAAP requires the disclosure of the fair value of financial instruments, including assets and liabilities recognized in the balance sheets. Management believes the carrying value of the other financial instruments recognized on the condensed consolidated balance sheet date, including receivables, payables and accrued liabilities approximate their fair value. |
Derivative Liability
Derivative Liability | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Liability [Abstract] | |
Derivative Liability | Note 6 - Derivative Liability In June 2015, we granted warrants to purchase 959,924 shares of the Company’s common stock through a private offering of units (“Units”). Each Unit included one share of Common Stock, par value $0.0001 per share, and a three-year Warrant to purchase one share of Common Stock at an initial exercise price per share equal to $0.75, subject to adjustment for certain corporate transactions such as a merger, stock-split or stock dividend. The initial exercise price of the Warrant of $0.75 per share shall be reduced to $0.55 per share if a registration statement is not filed within 60 days after the date of issue or not declared effective within 270 days after the date of issue, and, if the Company does not continue to be a reporting company under the Securities Exchange Act of 1934 during the two-year period after closing, the exercise price will be reduced to $0.01 per share. The exercise price of the Warrant of $0.55 per share has been triggered. Each Unit includes limited registration rights for the investors for the shares of Common Stock and the shares of Common Stock that would be issued upon the exercise of a Warrant ("Underlying Shares") when and if we register our shares of Common Stock in a different offering, subject to certain excluded registered offerings. The Company has also issued to the placement agent warrants to purchase our shares of Common Stock equal to 10% of the total shares sold in the offering, or 95,992 shares. Because these warrants have full reset adjustments that would preclude the instrument from being considered as index to the Company’s stock, it is subject to derivative liability treatment under ASC 815-40-15 Key assumptions used to determine the fair value of the warrants follows: At Issuance September 30, December 31, Market value of stock on measurement date $ 0.55 $ 0.25 $ 0.25 Risk-free interest rate 1.12 % 0.77 % 1.31 % Dividend yield 0 % 0 % 0 % Volatility factor 55 % 69.1 % 61.0 % Term 3 years 1.75 years 2.5 years As of September 30, 2016 and December 31, 2015, the fair value of the total warrants' derivative liability is $22,310 and $27,266, respectively, and recorded in other accrued expenses in the Condensed Consolidated Balance Sheets. We recognized a gain on the derivative liability of $2,133 and $126,575 for the three months ended September 30, 2016 and 2015, respectively, and $4,956 and $126,575 for the nine months ended September 30, 2016 and 2015, respectively, which is recorded in other income, net in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The following table summarizes the derivative liability included in other accrued expenses in the Condensed Consolidated Balance Sheets: Balance at December 31, 2015 $ 27,266 Gain on change of fair value (4,956 ) Balance at September 30, 2016 $ 22,310 The following table summarizes information about warrants outstanding as of September 30, 2016: Total # of warrants issued and outstanding 1,055,916 Weighted-average exercise price $ 0.55 Remaining life (in years) 1.75 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Taxes [Abstract] | |
Income Taxes | Note 7 - Income Taxes Income tax expense was $8.0 thousand and $8.0 thousand for the three months ended September 30, 2016 and 2015, respectively, and $27.0 thousand and $29.0 thousand for the nine months ended September 30, 2016 and 2015, respectively. Our effective tax rate was 0.7% and (0.8%) for the three months ended September 30, 2016 and 2015, respectively, and 1.0% and (1.1%) for the nine months ended September 30, 2016 and 2015, respectively. Our effective tax rates differed from the U.S. statutory corporate tax rate of 35.0% primarily because of the mix of pre-tax income or loss earned in certain jurisdictions and the change in our valuation allowance. We record a valuation allowance when it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. As of September 30, 2016 and December 31, 2015, a valuation allowance of $6.1 million and $7.2 million, respectively, has been provided against net operating loss carryforwards and other deferred tax assets. Our valuation allowance decreased by $1.1 million and $0.2 million for the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016 and December 31, 2015, we had total unrecognized tax benefits of $1.7 million, related to foreign and domestic tax positions. Of this amount, the Company estimates that $0.1 million, of the unrecognized tax benefits, if recognized, would impact the effective tax rate. A substantial portion of our liability for uncertain tax benefits is recorded as a reduction of net operating losses and tax credit carryforwards. During the nine months ended September 30, 2016 and 2015, we had no material changes in uncertain tax positions. We record interest and penalties related to unrecognized tax benefits within the provision for income taxes. We believe that no current tax positions that have resulted in unrecognized tax benefits will significantly increase or decrease within one year. We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. |
Concentration of Risk
Concentration of Risk | 9 Months Ended |
Sep. 30, 2016 | |
Concentration of Risk [Abstract] | |
Concentration of Risk | Note 8 - Concentration of Risk Cash and cash equivalents Revenue. Segment Information |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2016 | |
Segment Information [Abstract] | |
Segment Information | Note 9 - Segment Information We manage our business in four operating segments based on geographic location for which operating managers are responsible to the Chief Operations Officer. As such, operating results, as reported below, are reviewed regularly by our Chief Operating Officer, or Chief Operating Decision Maker (“CODM”) and other members of the executive team. The proportion of our total revenue attributable to each segment is as follows: Three Months Ended September 30, Nine Months Ended September 30, As a percentage of total revenue 2016 2015 2016 2015 U.S. 61.6 % 64.0 % 62.6 % 66.6 % Canada 3.9 % 6.0 % 4.2 % 7.0 % U.K. 20.0 % 22.2 % 20.4 % 20.1 % Other foreign markets 14.5 % 7.8 % 12.8 % 6.3 % Total consolidated revenue 100 % 100 % 100 % 100 % Operating results for the segments are as follows: Three Months Ended Nine Months Ended 2016 2015 2016 2015 Segment revenue (In thousands) (In thousands) United States $ 13,837 $ 14,400 $ 42,944 $ 44,521 Canada 884 1,340 2,900 4,698 U.K. 4,494 4,983 14,007 13,439 Other foreign markets 3,254 1,765 8,731 4,209 Total consolidated revenue $ 22,469 $ 22,488 $ 68,582 $ 66,867 Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Segment gross profit contribution * (In thousands) (In thousands) United States $ 3,882 $ 3,038 $ 11,007 $ 10,594 Canada 93 220 132 1,144 U.K. 761 754 2,774 1,441 Other foreign markets (361 ) (1,143 ) (295 ) (3,316 ) Total consolidated gross profit $ 4,375 $ 2,869 $ 13,618 $ 9,863 * Segment gross profit is calculated as revenue less direct course expenses, advertising and sales expenses and royalty expense. Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Depreciation and amortization expenses (In thousands) (In thousands) United States $ 28 $ 37 $ 94 $ 119 Canada 1 1 3 3 U.K. 5 7 15 11 Other foreign markets — — — — Total consolidated depreciation and amortization expenses $ 34 $ 45 $ 112 $ 133 September 30, December 31, 2016 2015 Segment identifiable assets (In thousands) United States $ 11,378 $ 13,537 Canada 939 846 U.K. 4,735 4,672 Other foreign markets 4,292 2,070 Total consolidated identifiable assets $ 21,344 $ 21,125 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 10 - Commitments and Contingencies Licensing agreements Custodial and Counterparty Risk Litigation. A substantial settlement payment or judgment in excess of our accruals could have a material adverse effect on our financial position, results of operations or cash flows. While the outcome of these proceedings cannot be predicted with certainty, we do not expect any of these existing matters, individually or in the aggregate, to have a material adverse effect upon our financial position, results of operations or cash flows. There have been no material changes to the legal proceedings disclosed in the litigation section of Note 15 - Commitments and Contingencies |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Event [Abstract] | |
Subsequent Event | Note 11 - Subsequent Event On October 11, 2016, our majority shareholder, Tigrent Inc. announced its plans to distribute substantially all of its holdings in Legacy to Tigrent shareholders . Approximately 16 million shares of our common stock will be distributed thereby increasing our public float significantly. We have evaluated significant events and transactions that occurred after the balance sheet date and determined that there were no other events or transactions that would require recognition or disclosure in our condensed consolidated financial statements for the period ended September 30, 2016. |
General (Policies)
General (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
General [Abstract] | |
Basis of Presentation | Basis of Presentation. The accompanying unaudited condensed consolidated financial statements presented herein are for us and our consolidated subsidiaries, each of which is a wholly-owned subsidiary. The accompanying condensed consolidated balance sheet as of December 31, 2015 was derived from our audited consolidated financial statements and does not include all disclosures required under United States of America generally accepted accounting principles (“U.S. GAAP”), for annual financial statements. All significant intercompany transactions have been eliminated. These interim financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 and reflect all normal recurring adjustments that are, in the opinion of management, necessary to present fairly our results of operations and financial position. Amounts reported in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) are not necessarily indicative of amounts expected for the respective annual periods or any other interim period. |
Significant Accounting Policies | Significant Accounting Policies. Note 2 - Significant Accounting Policies |
Use of Estimates | Use of Estimates. |
Income Tax in Interim Periods | Income Tax in Interim Periods. Losses from jurisdictions for which no benefit can be realized and the income tax effects of unusual and infrequent items are excluded from the estimated annual effective tax rate. Valuation allowances are provided against the future tax benefits that arise from the losses in jurisdictions for which no benefit can be realized. The effects of unusual and infrequent items are recognized in the impacted interim period as discrete items. The estimated annual effective tax rate may be affected by nondeductible expenses and by our projected earnings mix by tax jurisdiction. Adjustments to the estimated annual effective income tax rate are recognized in the period during which such estimates are revised. We have established valuation allowances against our deferred tax assets, including net operating loss carryforwards and income tax credits. Valuation allowances take into consideration our expected ability to realize these deferred tax assets and reduce the value of such assets to the amount that is deemed more likely than not to be realizable. Our ability to realize these deferred tax assets is dependent on achieving our forecast of future taxable operating income over an extended period of time. We review our forecast in relation to actual results and expected trends on a quarterly basis. A change in our valuation allowance would impact our income tax expense/benefit and our stockholders’ deficit and could have a significant impact on our results of operations or financial condition in future periods. |
Earnings Per Share ("EPS") (Tab
Earnings Per Share ("EPS") (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share ("EPS") [Abstract] | |
Schedule of calculations of basic and diluted earnings per share | Three Months Ended Three Months Ended Net Income Weighted Earnings Per Share Net Loss Weighted Loss Per Share (in thousands, except per share data) (in thousands, except per share data) Basic: As reported $ 1,168 22,204 $ (967 ) 21,407 Amounts allocated to unvested restricted shares (53 ) (1,020 ) — — Amounts available to common stockholders $ 1,115 21,184 $ 0.05 $ (967 ) 21,407 $ (0.04 ) Diluted: Amounts allocated to unvested restricted shares 53 — — — Non participating share units 1,020 — Amounts reallocated to unvested restricted shares (55 ) — — — Amounts available to stockholders and assumed conversions $ 1,113 22,204 $ 0.05 $ (967 ) 21,407 $ (0.04 ) Nine Months Ended Nine Months Ended Net Income Weighted Earnings Per Share Net Loss Weighted Loss Per Share (in thousands, except per share data) (in thousands, except per share data) Basic: As reported $ 2,786 21,966 $ (2,557 ) 20,938 Amounts allocated to unvested restricted shares (115 ) (931 ) — — Amounts available to common stockholders $ 2,671 21,035 $ 0.13 $ (2,557 ) 20,938 $ (0.12 ) Diluted: Amounts allocated to unvested restricted shares 115 — — — Non participating share units 931 — Amounts reallocated to unvested restricted shares (120 ) — — — Amounts available to stockholders and assumed conversions $ 2,666 21,966 $ 0.12 $ (2,557 ) 20,938 $ (0.12 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Measurements [Abstract] | |
Schedule of fair value measurements on recurring basis | Fair Value Measurements at Reporting Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) As of September 30, 2016 Warrant derivative liabilities $ 22,310 $ - $ - $ 22,310 As of December 31, 2015 Warrant derivative liabilities $ 27,266 $ - $ - $ 27,266 |
Derivative Liability (Tables)
Derivative Liability (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Liability [Abstract] | |
Schedule of fair value of the warrants | At Issuance September 30, December 31, Market value of stock on measurement date $ 0.55 $ 0.25 $ 0.25 Risk-free interest rate 1.12 % 0.77 % 1.31 % Dividend yield 0 % 0 % 0 % Volatility factor 55 % 69.1 % 61.0 % Term 3 years 1.75 years 2.5 years |
Schedule of derivative liability | Balance at December 31, 2015 $ 27,266 Gain on change of fair value (4,956 ) Balance at September 30, 2016 $ 22,310 |
Schedule of warrants outstanding | Total # of warrants issued and outstanding 1,055,916 Weighted-average exercise price $ 0.75 Remaining life (in years) 1.75 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Information [Abstract] | |
Schedule of percentage of total revenue | Three Months Ended September 30, Nine Months Ended September 30, As a percentage of total revenue 2016 2015 2016 2015 U.S. 61.6 % 64.0 % 62.6 % 66.6 % Canada 3.9 % 6.0 % 4.2 % 7.0 % U.K. 20.0 % 22.2 % 20.4 % 20.1 % Other foreign markets 14.5 % 7.8 % 12.8 % 6.3 % Total consolidated revenue 100 % 100 % 100 % 100 % |
Schedule of operating results for the segments | Three Months Ended Nine Months Ended 2016 2015 2016 2015 Segment revenue (In thousands) (In thousands) United States $ 13,837 $ 14,400 $ 42,944 $ 44,521 Canada 884 1,340 2,900 4,698 U.K. 4,494 4,983 14,007 13,439 Other foreign markets 3,254 1,765 8,731 4,209 Total consolidated revenue $ 22,469 $ 22,488 $ 68,582 $ 66,867 Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Segment gross profit contribution * (In thousands) (In thousands) United States $ 3,882 $ 3,038 $ 11,007 $ 10,594 Canada 93 220 132 1,144 U.K. 761 754 2,774 1,441 Other foreign markets (361 ) (1,143 ) (295 ) (3,316 ) Total consolidated gross profit $ 4,375 $ 2,869 $ 13,618 $ 9,863 * Segment gross profit is calculated as revenue less direct course expenses, advertising and sales expenses and royalty expense. |
Schedule of depreciation and amortization expenses | Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Depreciation and amortization expenses (In thousands) (In thousands) United States $ 28 $ 37 $ 94 $ 119 Canada 1 1 3 3 U.K. 5 7 15 11 Other foreign markets — — — — Total consolidated depreciation and amortization expenses $ 34 $ 45 $ 112 $ 133 |
Schedule of segment identifiable assets | September 30, December 31, 2016 2015 Segment identifiable assets (In thousands) United States $ 11,378 $ 13,537 Canada 939 846 U.K. 4,735 4,672 Other foreign markets 4,292 2,070 Total consolidated identifiable assets $ 21,344 $ 21,125 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Share-Based Compensation (Textual) | ||||
Share-based compensation expenses | $ 43,000 | $ 22,700 | $ 117,000 | $ 22,700 |
2015 Incentive Plan [Member] | Employees [Member] | ||||
Share-Based Compensation (Textual) | ||||
Shares of restricted stock awarded | 695,000 | |||
Shares of restricted stock awarded vesting period | 3 years | |||
2015 Incentive Plan [Member] | Board of Directors [Members] | ||||
Share-Based Compensation (Textual) | ||||
Shares of restricted stock awarded | 90,000 | |||
Shares of restricted stock awarded vesting period | 2 years |
Earnings Per Share ("EPS") (Det
Earnings Per Share ("EPS") (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Basic: | ||||
Net Income | $ 1,168 | $ (967) | $ 2,786 | $ (2,557) |
Weighted average shares outstanding | 21,184 | 21,407 | 21,035 | 20,938 |
Amounts allocated to unvested restricted shares, Net Income (Loss) | (53) | (115) | ||
Amounts allocated to unvested restricted shares, Weighted Average Shares Outstanding | (1,020) | (931) | ||
Amounts available to common stockholders, Net Income (Loss) | $ 1,115 | $ (967) | $ 2,671 | $ (2,557) |
Amounts available to common stockholders, Weighted Average Shares Outstanding | 21,184 | 21,407 | 21,035 | 20,938 |
Amounts available to common stockholders, Earnings Per Share | $ 0.05 | $ (0.04) | $ 0.13 | $ (0.12) |
Diluted: | ||||
Amounts allocated to unvested restricted shares, Dilluted | $ 53 | $ 115 | ||
Amounts allocated to unvested restricted shares, Weighted Average Shares Outstanding | ||||
Non participating share units, Diluted | ||||
Non participating share units, Weighted Average Shares Outstanding | 1,020 | 931 | ||
Amounts reallocated to unvested restricted shares, Diluted | $ (55) | $ (120) | ||
Amounts reallocated to unvested restricted shares, Weighted Average Shares Outstanding | ||||
Amounts available to stockholders and assumed conversions, Diluted | 1,113 | (967) | 2,666 | (2,557) |
Amounts available to stockholders and assumed conversions. Weighted Average Shares Outstanding | 22,204 | 21,407 | 21,966 | 20,938 |
Amounts available to stockholders and assumed conversions, Earnings Per Share | $ 0.05 | $ (0.04) | $ 0.12 | $ (0.12) |
Earnings Per Share ("EPS") (D25
Earnings Per Share ("EPS") (Details Textual) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Earnings Per Share (Textual) | ||||
Weighted average restricted stock awards outstanding shares | (1,020) | (931) |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Warrant derivative liabilities | $ 22,310 | $ 27,266 |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Warrant derivative liabilities | ||
Significant Other Observable Inputs (Level 2) [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Warrant derivative liabilities | ||
Significant Unobservable Inputs (Level 3) [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Warrant derivative liabilities | $ 22,310 | $ 27,266 |
Derivative Liability (Details)
Derivative Liability (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Market value of stock on measurement date | $ 0.25 | $ 0.25 |
Risk-free interest rate | 0.77% | 1.31% |
Dividend yield | 0.00% | 0.00% |
Volatility factor | 69.10% | 61.00% |
Term | 1 year 9 months | 2 years 6 months |
At Issuance [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Market value of stock on measurement date | $ 0.55 | |
Risk-free interest rate | 1.12% | |
Dividend yield | 0.00% | |
Volatility factor | 55.00% | |
Term | 3 years |
Derivative Liability (Details 1
Derivative Liability (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Derivative Liability [Abstract] | ||||
Balance at December 31, 2015 | $ 27,266 | |||
Gain on change of fair value | $ (2,133) | $ (126,575) | (4,956) | $ (126,575) |
Balance at September 30, 2016 | $ 22,310 | $ 22,310 |
Derivative Liability (Details 2
Derivative Liability (Details 2) | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Derivative Liability [Abstract] | |
Total # of warrants issued and outstanding | shares | 1,055,916 |
Weighted-average exercise price | $ / shares | $ 0.55 |
Remaining life (in years) | 1 year 9 months |
Derivative Liability (Details T
Derivative Liability (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Derivative Liability (Textual) | ||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Number of shares issued in private placement | 959,924 | |||||
Price per share | $ 0.01 | $ 0.01 | ||||
Exercise price of warrant | $ 0.55 | $ 0.75 | $ 0.75 | |||
Exercise price of warrant description | The initial exercise price of the Warrant of $0.75 per share shall be reduced to $0.55 per share if a registration statement is not filed within 60 days after the date of issue or not declared effective within 270 days after the date of issue | |||||
Private offering exercise price description | Each Unit included one share of Common Stock, par value $0.0001 per share, and a three-year Warrant to purchase one share of Common Stock at an initial exercise price per share equal to $0.75, subject to adjustment for certain corporate transactions such as a merger, stock-split or stock dividend. | |||||
Warrant's derivative liability fair value | $ 22,310 | $ 22,310 | $ 27,266 | |||
Placement agent warrants description | The Company has also issued to the placement agent warrants to purchase our shares of Common Stock equal to 10% of the total shares sold in the offering, or 95,992 shares. | |||||
Gain on derivative liability | $ 2,133 | $ 126,575 | $ 4,956 | $ 126,575 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Income Taxes (Textual) | |||||
Income tax expense (benefit) | $ 8 | $ 8 | $ 27 | $ 29 | |
Effective income tax rate | 0.70% | 0.80% | 1.00% | (1.10%) | |
Effective tax rates, U.S. statutory corporate tax rate | 35.00% | ||||
Deferred tax assets, valuation allowance | $ 6,100 | $ 6,100 | $ 7,200 | ||
Changes in valuation allowance | 1,100 | $ 200 | |||
Unrecognized tax benefits | 1,700 | 1,700 | 1,700 | ||
Unrecognized tax benefits that would impact effective tax rate | $ 100 | $ 100 | $ 100 |
Concentration of Risk (Details)
Concentration of Risk (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Concentration of Risk (Textual) | |||||
Cash balances without FDIC | $ 2.1 | $ 2.1 | $ 3.8 | ||
Rich Dad Brands [Member] | |||||
Concentration of Risk (Textual) | |||||
Percentage of revenue | 74.40% | 76.00% | 74.60% | 79.00% |
Segment Information (Details)
Segment Information (Details) - Revenue [Member] | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | ||||
Total consolidated revenue | 100.00% | 100.00% | 100.00% | 100.00% |
U.S. [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated revenue | 61.60% | 64.00% | 62.60% | 66.60% |
Canada [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated revenue | 3.90% | 6.00% | 4.20% | 7.00% |
U.K. [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated revenue | 20.00% | 22.20% | 20.40% | 20.10% |
Other foreign markets [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated revenue | 14.50% | 7.80% | 12.80% | 6.30% |
Segment Information (Details 1)
Segment Information (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Segment Reporting Information [Line Items] | |||||
Total consolidated revenue | $ 22,469 | $ 22,488 | $ 68,582 | $ 66,867 | |
Total consolidated gross profit | [1] | 4,375 | 2,869 | 13,618 | 9,863 |
United States [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total consolidated revenue | 13,837 | 14,400 | 42,944 | 44,521 | |
Total consolidated gross profit | [1] | 3,882 | 3,038 | 11,007 | 10,594 |
Canada [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total consolidated revenue | 884 | 1,340 | 2,900 | 4,698 | |
Total consolidated gross profit | [1] | 93 | 220 | 132 | 1,144 |
U.K. [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total consolidated revenue | 4,494 | 4,983 | 14,007 | 13,439 | |
Total consolidated gross profit | [1] | 761 | 754 | 2,774 | 1,441 |
Other foreign markets [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total consolidated revenue | 3,254 | 1,765 | 8,731 | 4,209 | |
Total consolidated gross profit | [1] | $ (361) | $ (1,143) | $ (295) | $ (3,316) |
[1] | Segment gross profit is calculated as revenue less direct course expenses, advertising and sales expenses and royalty expense. |
Segment Information (Details 2)
Segment Information (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | ||||
Total consolidated depreciation and amortization expenses | $ 34 | $ 45 | $ 112 | $ 133 |
United States [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated depreciation and amortization expenses | 28 | 37 | 94 | 119 |
Canada [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated depreciation and amortization expenses | 1 | 1 | 3 | 3 |
U.K. [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated depreciation and amortization expenses | 5 | 7 | 15 | 11 |
Other foreign markets [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated depreciation and amortization expenses |
Segment Information (Details 3)
Segment Information (Details 3) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Segment Reporting Information [Line Items] | ||
Total consolidated identifiable assets | $ 21,344 | $ 21,125 |
United States [Member] | ||
Segment Reporting Information [Line Items] | ||
Total consolidated identifiable assets | 11,378 | 13,537 |
Canada [Member] | ||
Segment Reporting Information [Line Items] | ||
Total consolidated identifiable assets | 939 | 846 |
U.K. [Member] | ||
Segment Reporting Information [Line Items] | ||
Total consolidated identifiable assets | 4,735 | 4,672 |
Other foreign markets [Member] | ||
Segment Reporting Information [Line Items] | ||
Total consolidated identifiable assets | $ 4,292 | $ 2,070 |
Segment Information (Details Te
Segment Information (Details Textual) | 9 Months Ended |
Sep. 30, 2016Segments | |
Segment Reporting (Textual) | |
Number of operating segments | 4 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Commitments and Contingencies [Abstract] | |||||
Royalty expenses | $ 1,208 | $ 1,268 | $ 3,251 | $ 4,103 | |
Deposits held by credit card processors | $ 3,300 | $ 3,300 | $ 2,900 |
Subsequent Event (Details)
Subsequent Event (Details) shares in Millions | Oct. 11, 2016shares |
Subsequent Event [Member] | |
Subsequent Event (Textual) | |
Common stock distributed | 16 |