Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 14, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Legacy Education Alliance, Inc. | |
Entity Central Index Key | 0001561880 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Entity Current reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity shell Company | false | |
Entity Emerging Growth Company | false | |
Entity File Number | 000-55790 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | NV | |
Entity Common Stock, Shares Outstanding | 23,242,502 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 1,843 | $ 3,839 |
Restricted cash | 1,845 | 2,389 |
Deferred course expenses | 4,203 | 6,805 |
Prepaid expenses and other current assets | 1,370 | 2,074 |
Inventory | 46 | 47 |
Total current assets | 9,307 | 15,154 |
Property and equipment, net | 1,318 | 1,382 |
Right-of-use assets | 45 | 122 |
Deferred tax asset, net | 1,191 | 287 |
Other assets | 42 | 413 |
Total assets | 11,903 | 17,358 |
Current liabilities: | ||
Accounts payable | 2,139 | 2,311 |
Royalties payable | 133 | 150 |
Accrued course expenses | 150 | 576 |
Accrued salaries, wages and benefits | 162 | 459 |
Operating lease liability, current portion | 24 | 86 |
Other accrued expenses | 3,752 | 1,660 |
Short-term borrowings and current portion of long-term debt | 500 | 500 |
Deferred revenue | 30,216 | 46,453 |
Discontinued operations-current liabilities | 4,191 | 4,499 |
Total current liabilities | 41,267 | 56,694 |
Long-term debt, net of current portion | 1,900 | |
Operating lease liability, net of current portion | 21 | 27 |
Total liabilities | 43,188 | 56,721 |
Commitments and contingencies (Note 12) | ||
Stockholders’ deficit: | ||
Preferred stock, $0.0001 par value, 20,000,000 shares authorized, none issued | ||
Common stock, $0.0001 par value; 200,000,000 authorized; 23,162,502 and 23,162,502 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively | 2 | 2 |
Additional paid-in capital | 11,566 | 11,552 |
Cumulative foreign currency translation adjustment | 1,938 | 710 |
Accumulated deficit | (44,791) | (51,627) |
Total stockholders’ deficit | (31,285) | (39,363) |
Total liabilities and stockholders’ deficit | $ 11,903 | $ 17,358 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 23,162,502 | 23,162,502 |
Common stock, shares outstanding | 23,162,502 | 23,162,502 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenue | $ 7,785 | $ 19,497 | $ 17,905 | $ 39,955 |
Operating costs and expenses: | ||||
Direct course expenses | 1,528 | 10,240 | 5,060 | 20,718 |
Advertising and sales expenses | 4,545 | 1,799 | 9,322 | |
Royalty expenses | 3 | 891 | 49 | 1,910 |
General and administrative expenses | 1,282 | 4,249 | 3,057 | 8,341 |
Total operating costs and expenses | 2,813 | 19,925 | 9,965 | 40,291 |
Income/(loss) from operations | 4,972 | (428) | 7,940 | (336) |
Other income (expense): | ||||
Interest expense, net | (20) | (20) | (103) | (53) |
Other income (expense), net | (27) | 484 | (6) | 453 |
Total other income (expense), net | (47) | 464 | (109) | 400 |
Income from continuing operations before income taxes | 4,925 | 36 | 7,831 | 64 |
Income tax benefit/(expense) | (1,122) | (995) | 60 | |
Net income from continuing operations | 3,803 | 36 | 6,836 | 124 |
Net loss from discontinued operations | (311) | (504) | ||
Net income/(loss) | $ 3,803 | $ (275) | $ 6,836 | $ (380) |
Basic earnings per common share - continuing operations | $ 0.16 | $ 0 | $ 0.30 | $ 0 |
Basic loss per common share - discontinued operations | (0.01) | (0.02) | ||
Basic earnings/(loss) per common share | 0.16 | (0.01) | 0.30 | (0.02) |
Diluted earnings per common share - continuing operations | 0.16 | 0 | 0.29 | 0 |
Diluted loss per common share - discontinued operations | (0.01) | (0.02) | ||
Diluted earnings/(loss) per common share | $ 0.16 | $ (0.01) | $ 0.29 | $ (0.02) |
Basic weighted average common shares outstanding | 23,017 | 23,123 | 23,001 | 23,120 |
Diluted weighted average common shares outstanding | 23,163 | 23,123 | 23,163 | 23,120 |
Comprehensive income/(loss): | ||||
Net income/(loss) | $ 3,803 | $ (275) | $ 6,836 | $ (380) |
Foreign currency translation adjustments, net of tax of $0 | (682) | 341 | 1,228 | (51) |
Total comprehensive income/(loss) | $ 3,121 | $ 66 | $ 8,064 | $ (431) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Foreign currency translation adjustments, net of tax | $ 0 | $ 0 | $ 0 | $ 0 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) - USD ($) $ in Thousands | Common stock | Additional paid-in capital | Cumulative foreign currency translation adjustment | Accumulated deficit | Total |
Balance at Dec. 31, 2018 | $ 2 | $ 11,470 | $ 1,444 | $ (61,577) | $ (48,661) |
Balance, shares at Dec. 31, 2018 | 23,121 | ||||
Share-based compensation expense | $ 28 | $ 28 | |||
Cancellation of common stock | |||||
Cancellation of common stock, shares | (13) | ||||
Foreign currency translation adjustment, net of tax of $0 | $ (392) | $ (392) | |||
Net Income (Loss) | (105) | (105) | |||
Balance at Mar. 31, 2019 | $ 2 | 11,498 | 1,052 | (61,682) | (49,130) |
Balance, shares at Mar. 31, 2019 | 23,108 | ||||
Balance at Dec. 31, 2018 | $ 2 | 11,470 | 1,444 | (61,577) | (48,661) |
Balance, shares at Dec. 31, 2018 | 23,121 | ||||
Net Income (Loss) | (380) | ||||
Balance at Jun. 30, 2019 | $ 2 | 11,527 | 1,393 | (61,957) | (49,035) |
Balance, shares at Jun. 30, 2019 | 23,163 | ||||
Balance at Mar. 31, 2019 | $ 2 | 11,498 | 1,052 | (61,682) | (49,130) |
Balance, shares at Mar. 31, 2019 | 23,108 | ||||
Share-based compensation expense | 29 | 29 | |||
Issuance of common stock | |||||
Issuance of common stock, shares | 55 | ||||
Foreign currency translation adjustment, net of tax of $0 | 341 | (3,541) | |||
Net Income (Loss) | (275) | (275) | |||
Balance at Jun. 30, 2019 | $ 2 | 11,527 | 1,393 | (61,957) | (49,035) |
Balance, shares at Jun. 30, 2019 | 23,163 | ||||
Balance at Dec. 31, 2019 | $ 2 | 11,552 | 710 | (51,627) | (39,363) |
Balance, shares at Dec. 31, 2019 | 23,163 | ||||
Share-based compensation expense | 6 | 6 | |||
Foreign currency translation adjustment, net of tax of $0 | 1,910 | 1,910 | |||
Net Income (Loss) | 3,033 | 3,033 | |||
Balance at Mar. 31, 2020 | $ 2 | 11,558 | 2,620 | (48,594) | (34,414) |
Balance, shares at Mar. 31, 2020 | 23,163 | ||||
Balance at Dec. 31, 2019 | $ 2 | 11,552 | 710 | (51,627) | (39,363) |
Balance, shares at Dec. 31, 2019 | 23,163 | ||||
Net Income (Loss) | 6,836 | ||||
Balance at Jun. 30, 2020 | $ 2 | 11,566 | 1,938 | (44,791) | (31,285) |
Balance, shares at Jun. 30, 2020 | 23,163 | ||||
Balance at Mar. 31, 2020 | $ 2 | 11,558 | 2,620 | (48,594) | (34,414) |
Balance, shares at Mar. 31, 2020 | 23,163 | ||||
Share-based compensation expense | 8 | 8 | |||
Foreign currency translation adjustment, net of tax of $0 | (682) | (682) | |||
Net Income (Loss) | 3,803 | 3,803 | |||
Balance at Jun. 30, 2020 | $ 2 | $ 11,566 | $ 1,938 | $ (44,791) | $ (31,285) |
Balance, shares at Jun. 30, 2020 | 23,163 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||||
Foreign currency translation adjustments, net of tax | $ 0 | $ 0 | $ 0 | $ 0 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income/(loss) | $ 6,836 | $ (380) |
Less net loss from discontinued operations | (504) | |
Net income from continuing operations | 6,836 | 124 |
Adjustments to reconcile net income/(loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 42 | 93 |
Non-cash lease expense | 29 | 14 |
Gain on the sale of fixed assets and investment property | (33) | (40) |
Share-based compensation | 14 | 57 |
Deferred income taxes | (923) | (139) |
Changes in operating assets and liabilities: | ||
Deferred course expenses | 2,474 | (576) |
Prepaid expenses and other receivable | 641 | (19) |
Inventory | 1 | 8 |
Other assets | 10 | (61) |
Accounts payable-trade | (114) | (105) |
Royalties payable | (17) | 164 |
Accrued course expenses | (386) | 852 |
Accrued salaries, wages and benefits | (298) | (30) |
Operating lease liability | (28) | (14) |
Other accrued expenses | 2,910 | (727) |
Deferred revenue | (15,180) | 3,244 |
Net cash (used in) provided by operating activities - continuing operations | (4,022) | 2,845 |
Net cash provided by operating activities - discontinued operations | 732 | |
Net cash (used in) provided by operating activities | (4,022) | 3,577 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (13) | |
Proceeds from sales of investment property | 365 | |
Proceeds from sales of property and equipment | 165 | |
Net cash provided by investing activities - continuing operations | 365 | 152 |
Net cash provided by investing activities - discontinued operations | ||
Net cash provided by investing activities | 365 | 152 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Principal payments on debt | (18) | |
Proceeds from issuance of debt | 1,900 | |
Net cash provided by (used in) financing activities - continuing operations | 1,900 | (18) |
Net cash provided by financing activities - discontinued operations | 395 | |
Net cash provided by financing activities | 1,900 | 377 |
Effect of exchange rate differences on cash | (783) | 275 |
Net (decrease) increase in cash and cash equivalents and restricted cash | (2,540) | 4,381 |
Cash and cash equivalents and restricted cash, beginning of period | 6,228 | 6,637 |
Cash and cash equivalents and restricted cash, end of period | 3,688 | 11,018 |
Supplemental disclosures: | ||
Cash paid during the period for interest | 107 | 75 |
Cash paid during the period for income taxes, net of refunds received | $ (120) |
General
General | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | Note 1 - General Business Description. Business Description. We are a provider of practical, high-quality, and value-based educational training on the topics of personal finance, entrepreneurship, real estate, and financial markets investing strategies and techniques. Our programs are offered through a variety of formats and channels, including free workshops, basic trainings, symposiums, forums, telephone mentoring, one-on-one mentoring, coaching and e-learning. We market our products and services under two brands: Legacy Education TM TM Homemade Investor by Tarek El Moussa Our students pay for their courses in full up-front or through payment agreements with independent third parties. Under United States of America generally accepted accounting principles ("U.S. GAAP"), we recognize revenue upon the earlier of (i) when our students take their courses or (ii) the term for taking their course expires, both of which could be several quarters after the student purchases a program and pays the fee. We recognize revenue immediately when we sell our (i) proprietary products delivered at time of sale and (ii) third party products sales. Our symposiums and forums combine multiple advanced training courses in one location, allowing us to achieve certain economies of scale that reduce costs and improve margins while also accelerating U.S. GAAP revenue recognition, while at the same time, enhancing our students' experience, particularly, for example, through the opportunity to network with other students. We also provide a richer experience for our students through one-on-one mentoring (two to four days in length, on site or remotely) and telephone mentoring (10 to 16 weekly one-on-one or one-on-many telephone sessions). Mentoring involves a subject matter expert interacting with the student remotely or in person and guiding the student, for example, through his or her first real estate transaction, providing a real hands-on experience. Historically, our operations have relied heavily on our and our students' ability to travel and attend live events where large groups of people gather in local markets within each of the segments in which we operate. As a result of the COVID-19 coronavirus pandemic, and the resulting worldwide restrictions on travel and social distancing, we have temporarily ceased conducting live sales and fulfillment and furloughed substantially all of our employees. We have simplified our product offerings and restructured our compensation program with respect to both employees and independent contractors to reduce costs and improve margins. Currently, our sales operations are limited to online sales events selling into our suite of online, on-demand, and over-the-phone products. Our product fulfilment operations similarly are limited to online, on-demand, and over-the-phone activities. The ultimate impact from COVID-19 on the Company's operations and financial results during 2020 will depend on, among other things, the ultimate severity and scope of the pandemic, the pace at which governmental and private travel restrictions and public concerns about public gatherings will ease, the rate at which historically large increases in unemployment rates will decrease, if at all, and whether, and the speed with which the economy recovers. Our operations are managed through three operating segments: (i) North America, (ii) United Kingdom, and (iii) Other Foreign Markets. Basis of Presentation. The terms "Legacy Education Alliance, Inc.," the "Company," "we," "our," "us" or "Legacy" as used in this report refer collectively to Legacy Education Alliance, Inc., a Nevada corporation ("Legacy"), the registrant, which was formerly known as Priced In Corp., and, unless the context otherwise requires, together with its wholly-owned subsidiary, Legacy Education Alliance Holdings, Inc., a Colorado corporation, other operating subsidiaries and any predecessor of Legacy Education Alliance Holdings, Inc., including Tigrent Inc., a Colorado corporation. All intercompany balances and transactions have been eliminated in consolidation. As discussed in Note 4 "Discontinued Operations", the sale of Legacy Education Alliance International Ltd (Legacy UK) assets and deferred revenue is reflected as a discontinued operation in the condensed consolidated financial statements. The accompanying unaudited Condensed Consolidated Financial Statements presented in this report are for us and our consolidated subsidiaries, each of which is a wholly-owned subsidiary. 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 fiscal year ended December 31, 2019 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. Reclassification. We have reclassified certain amounts in our prior-period financial statements to conform to the current period's presentation. Significant Accounting Policies. Our significant accounting policies have been disclosed in Note 2 - Significant Accounting Policies Note 2 - New Accounting Pronouncements, - "Accounting Standards Adopted in the Current Period." Going Concern The accompanying consolidated financial statements and notes have been prepared assuming we will continue as a going concern. For the six months ended June 30, 2020 we had an accumulated deficit, a working capital deficit and a negative cash flow from operating activities. These circumstances raise substantial doubt as to our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate profits by expanding current operations as well as reducing our costs and increasing our operating margins, and to sustain adequate working capital to finance our operations. The failure to achieve the necessary levels of profitability and cash flows would be detrimental to us. The consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Use of Estimates. Conformity with GAAP requires the use of estimates and judgments that affect the reported amounts in our consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. GAAP requires us to make estimates and judgments in several areas, including, but not limited to, those related to deferred revenues, reserve for breakage, deferred costs, revenue recognition, commitments and contingencies, fair value of financial instruments, useful lives of property and equipment, right-of-use assets, and income taxes. These estimates are based on management's knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ materially from those estimates. As a result of the COVID-19 coronavirus pandemic, and the resulting worldwide restrictions on travel and social distancing, we have temporarily ceased conducting live sales and fulfillment and furloughed substantially all of our employees. The ultimate impact from COVID-19 on the Company's operations and financial results during 2020 will depend on, among other things, the ultimate severity and scope of the pandemic, the pace at which governmental and private travel restrictions and public concerns about public gatherings will ease, the rate at which historically large increases in unemployment rates will decrease, if at all, and whether, and the speed with which the economy recovers. We are not able to fully quantify the impact that these factors will have on our financial results during 2020 and beyond, but expect developments related to COVID-19 to materially affect the Company's financial performance in 2020. Cash and Cash Equivalents. We consider all highly liquid instruments with an original maturity of three months or less to be cash or cash equivalents. We continually monitor and evaluate our investment positions and the creditworthiness of the financial institutions with which we invest and maintain deposit accounts. When appropriate, we utilize Certificate of Deposit Account Registry Service (CDARS) to reduce banking risk for a portion of our cash in the United States. A CDAR consists of numerous individual investments, all below the FDIC limits, thus fully insuring that portion of our cash. At June 30, 2020 and December 31, 2019, we did not have a CDAR balance. Restricted Cash. Restricted cash balances consist primarily of funds on deposit with credit card and other payment processors. These balances do not have the benefit of federal deposit insurance and are subject to the financial risk of the parties holding these funds. Restricted cash balances held by credit card processors are unavailable to us unless, and for a period of time after, we discontinue the use of their services. Because a portion of these funds can be accessed and converted to unrestricted cash in less than one year in certain circumstances, that portion is considered a current asset. Restricted cash is included with cash and cash equivalents in our condensed consolidated statements of cash flows. Deposits with Credit Card Processors. The deposits with our credit card processors are held due to arrangements under which our credit card processors withhold credit card funds to cover charge backs in the event we are unable to honor our commitments. These deposits are included in restricted cash on our condensed consolidated balance sheet. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts in the condensed consolidated cash flow statements: June 30, December 31, (in thousands) 2020 2019 Cash and cash equivalents $ 1,843 $ 3,839 Restricted cash 1,845 2,389 Total cash, cash equivalents, and restricted cash shown in the cash flow statement $ 3,688 $ 6,228 Income Tax in Interim Periods. We conduct operations in separate legal entities in different jurisdictions. As a result, income tax amounts are reflected in these condensed consolidated financial statements for each of those jurisdictions. Tax laws and tax rates vary substantially in these jurisdictions and are subject to change based on the political and economic climate in those countries. We file our tax returns in accordance with our interpretations of each jurisdiction's tax laws. We record our tax provision or benefit on an interim basis using the estimated annual effective tax rate. This rate is applied to the current period ordinary income or loss to determine the income tax provision or benefit allocated to the interim period. We record our interim provision for income taxes by applying our estimated annual effective tax rate to our year-to-date pre-tax income and adjusting for discrete tax items recorded in the period. Deferred income taxes result from temporary differences between the reporting of amounts for financial statement purposes and income tax purposes. These differences relate primarily to different methods used for income tax reporting purposes, including for depreciation and amortization, warranty and vacation accruals, and deductions related to allowances for doubtful accounts receivable and inventory reserves. Our provision for income taxes included current federal and state income tax expense, as well as deferred federal and state income tax expense. 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. Discontinued Operations. ASC 205-20-45, "Presentation of Financial Statements Discontinued Operations" Discontinued Operations |
New Accounting Pronouncements
New Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
New Accounting Pronouncements | Note 2 - New Accounting Pronouncements Accounting Standards Adopted in the Current Period We have implemented all new accounting pronouncements that are in effect and that management believes would materially affect our financial statements. |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | Note 3 - Share-Based Compensation We account for share-based awards under the provisions of ASC 718, " Compensation—Stock Compensation Share-based compensation expenses related to our restricted stock grants were $8.0 thousand and $29.0 thousand for the three months ended June 30, 2020 and 2019, respectively, and $14.0 thousand and $57.0 thousand for the six months ended June 30, 2020 and 2019, respectively, which are reported as a separate line item in the condensed consolidated statements of changes in stockholders' deficit. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Note 4 - Discontinued Operations On October 28, 2019, four creditors of Legacy Education Alliance International Ltd. ("Legacy UK"), one of our UK subsidiaries, obtained an order from the High Court of Justice, Business and Property Courts of England and Wales (the "English Court") with respect to the business and affairs of Legacy UK. Pursuant to the Administration Order of November 15, 2019, from the English Court, the two individuals appointed as administrators engaged a third-party to market Legacy UK's business and assets for sale to one or more third parties. On November 26, 2019, Legacy UK's assets and deferred revenues sold for £300 thousand (British pounds) to Mayflower Alliance LTD. We will not receive any proceeds from the sale of Legacy UK. Further details, including the resolution of claims and liabilities, and other information regarding the administration may not be forthcoming for several months. We are considering our alternatives for future operations in the United Kingdom and are continuing to conduct business outside the United States through its other foreign subsidiaries in Canada, Hong Kong, Australia, and South Africa. The impact of this transaction is reflected as a discontinued operation in the condensed consolidated financial statements. The major classes of assets and liabilities of Legacy UK were as follows: June 30, December 31, (in thousands) 2020 2019 Major classes of liabilities Accounts payable 3,174 3,408 Accrued course expenses 533 472 Other accrued expenses 484 619 Total major classes of liabilities - discontinued operations $ 4,191 $ 4,499 The financial results of the discontinued operations are as follows: Three Months Ended Six Months Ended (in thousands) 2020 2019 2020 2019 Revenue $ — $ 4,201 $ — $ 8,319 Total operating costs and expenses — 4,326 — 8,534 Loss from discontinued operations — (125 ) — (215 ) Interest expense — (54 ) — (62 ) Other expense, net — (132 ) — (227 ) Net loss from discontinued operations $ — $ (311 ) $ — $ (504 ) |
Earnings Per Share (''EPS'')
Earnings Per Share (''EPS'') | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share ("EPS") | Note 5 - Earnings Per Share ("EPS") Basic EPS is computed by dividing net income (loss) 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. For periods in which we recognize losses, the calculation of diluted loss per share is the same as the calculation of basic loss per share. We excluded unvested restricted stock awards from the diluted weighted-average number of shares used in our diluted EPS calculation of 540,118 and 559,286 for the three and six months ended June 30, 2019 because we had a net loss in these periods. 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 146,244 and 540,118 for the three months ended June 30, 2020 and 2019, respectively, and 162,197 and 559,286 for the six months ended June 30, 2020 and 2019, respectively. The calculations of basic and diluted EPS are as follows: Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 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 $ 3,803 23,163 $ (275 ) 23,123 Amounts allocated to unvested restricted shares (24 ) (146 ) — — Amounts available to common stockholders $ 3,779 23,017 $ 0.16 $ (275 ) 23,123 $ (0.01 ) Diluted: Amounts allocated to unvested restricted shares 24 146 — — Non participating share units — — Amounts reallocated to unvested restricted shares (24 ) — — — Amounts available to stockholders and assumed conversions $ 3,779 23,163 $ 0.16 $ (275 ) 23,123 $ (0.01 ) Six Months Ended June 30, 2020 Six Months Ended June 30, 2019 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 $ 6,836 23,163 $ (380 ) 23,120 Amounts allocated to unvested restricted shares (48 ) (162 ) — — Amounts available to common stockholders $ 6,788 23,001 $ 0.30 $ (380 ) 23,120 $ (0.02 ) Diluted: Amounts allocated to unvested restricted shares 48 162 — — Non participating share units — — Amounts reallocated to unvested restricted shares (48 ) — — — Amounts available to stockholders and assumed conversions $ 6,788 23,163 $ 0.29 $ (380 ) 23,120 $ (0.02 ) |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 6 - 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). We did not have any financial liabilities or financial assets measured and recorded at fair value on our condensed consolidated balance sheets on a recurring basis as of June 30, 2020 and December 31, 2019. Financial Instruments. |
Short-Term and Long-Term Debt
Short-Term and Long-Term Debt | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Short-Term and Long-Term Debt | Note 7 – Short-Term and Long-Term Debt (in thousands) As of As of Promissory note $ 500 $ 500 Paycheck Protection Program loan 1,900 — Total debt 2,400 500 Less current portion of long-term debt (500 ) (500 ) Total long-term debt, net of current portion $ 1,900 $ - The following is a summary of scheduled debt maturities by year (in thousands): 2020 $ 500 2021 — 2022 1,900 Total debt $ 2,400 On September 13, 2018, we entered into a Promissory Note and Mortgage and Security Agreement pursuant to which we borrowed the principal amount of $500 thousand from USA ReGrowth Fund LLC. At closing, we received $459,269 in net proceeds after closing costs and other fees and costs. The Promissory Note, repayment of which was initially due on March 13, 2019, was issued in an aggregate principal amount of $500 thousand and bore interest at a fixed rate of 12% per annum during the initial 120 days of the term of the Promissory Note, and a fixed rate of 30% per annum until all amounts due under the Promissory Note are paid in full. Pursuant to the Mortgage and Security Agreement, repayment of the Promissory Note is secured by a first mortgage on the property located at 1612 East Cape Coral Parkway, Cape Coral, FL 33904 ("Corporate HQ"). On March 8, 2019, we executed an extension of the maturity date to September 13, 2019. During the initial 120 days of the extension period, the Promissory Note bore interest at a fixed rate of 12% per annum and a fixed rate of 30% per annum thereafter until all amounts due thereunder are paid. On September 13, 2019, we executed a second extension of the maturity date to March 13, 2020. During the initial 120 days of the second extension period, the Promissory Note bears a fixed rate of 12% per annum and a fixed rate of 30% per annum thereafter until all amounts due thereunder are paid. The extension matured on March 13, 2020, though the lender agreed to extend the maturity date until a new Promissory Note with a different lender was obtained on August 6, 2020, on which date the outstanding principal balance and interests were paid in full. See Note 14 " Subsequent Events On April 27, 2020, Elite Legacy Education, Inc., a subsidiary of the Company, entered into a Promissory Note in favor of Pacific Premier Bank, the lender, through the Small Business Administration ("SBA") Paycheck Protection Program ("PPP") established pursuant to the CARES Act. The unsecured loan (the "PPP Loan") proceeds were in the amount of $1,899,832, matures on April 24, 2022, bears interest at a fixed rate of 1% per annum, and is payable in 17 equal monthly payments of interest only and a final payment of the full principal plus interest for one month. Under the terms of the CARES Act, PPP Loan recipients can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payroll costs and mortgage interest, rent or utility costs and the maintenance of employee and compensation levels. The Company intends to use a significant portion of the PPP Loan proceeds for qualifying expenses, but no assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in part. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 8 - Income Taxes In response to liquidity issues that businesses are facing as a result of the recent novel coronavirus ("COVID-19") global pandemic, the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was signed into law on March 27, 2020 by the U.S. government. The CARES Act allows for Net Operating Losses (NOLs) to offset 100% of taxable income retroactive to 2019. Under prior rules, only 80% of taxable income could be offset by NOLs. As a result of the application of the CARES Act, our tax liability was positively impacted by a net benefit of $88.0 thousand. In addition, the CARES Act temporarily increases the deductible interest expense limitation for tax years beginning in 2019 and 2020. We recorded income tax expense of $1,122 thousand and no income tax expense or benefit for the three months ended June 30, 2020 and 2019, respectively. We recorded income tax expense of $995 thousand and an income tax benefit of $60 thousand for the six months ended June 30, 2020 and 2019, respectively. Our effective tax rate was 22.8% and 0.0% for the three months ended June 30, 2020 and 2019, and 12.8% and 13.6% for the six months ended June 30, 2020 and 2019, respectively. Our effective tax rates differed from the U.S. statutory corporate tax rate of 21% primarily because of a reversal of a valuation allowance across several jurisdictions. In the second quarter of 2020, we determined that a $922 thousand valuation allowance against U.S. and non U.S. deferred taxes was no longer required. The Company assessed the weight of all available positive and negative evidence and determined it was more likely than not that future earnings will be sufficient to realize the associated deferred tax assets. As of June 30, 2020 and December 31, 2019, we retained a valuation allowances of $3.7 million and $4.7 million, respectively. During the six months ended June 30, 2020 and 2019 there were no material changes in uncertain tax positions. We do not expect any significant changes to unrecognized tax benefits in the next year. We estimate $0.3 million and $0.3 million of the unrecognized tax benefits, which if recognized, would impact the effective tax rate at June 30, 2020 and December 31, 2019, respectively. 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. We are not currently under examination in any jurisdiction. In the event of any future tax assessments, we have elected to record the income taxes and any related interest and penalties as income tax expense on our condensed consolidated statements of operations and comprehensive income/(loss). Our federal income tax returns for the years subsequent to 2017 are subject to examination by the Internal Revenue Service. Our state tax returns for all years after 2017 or 2016, depending on each state's jurisdiction, are subject to examination. In addition, our Canadian tax returns and United Kingdom tax returns for all years after 2013 are subject to examination. |
Concentration Risk
Concentration Risk | 6 Months Ended |
Jun. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentration Risk | Note 9 - Concentration Risk Cash and cash equivalents We maintain deposits in banks in amounts that might exceed the federal deposit insurance available. Management believes the potential risk of loss on these cash and cash equivalents to be minimal. All cash balances as of June 30, 2020 and December 31, 2019, including foreign subsidiaries, without FDIC coverage were $1.0 million and $2.5 million, respectively. Revenue. A significant portion of our revenue was derived from the Rich Dad brands. For the three months ended June 30, 2020 and 2019, Rich Dad brands provided 89.8% and 83.4% of our revenue. For the six months ended June 30, 2020 and 2019, Rich Dad brands provided 78.8% and 83.9% of our revenue. In addition, we have operations in North America, United Kingdom and Other foreign markets (see Note 10 — Segment Information The License Agreement with Rich Dad Operating Company, LLC pursuant to which we licensed the Rich Dad Education brand expired on September 30, 2019. Notwithstanding the expiration of the License Agreement, the Company may continue to use Licensed Intellectual Property, as defined in the License Agreement, including, but not limited to, the Rich Dad trademark and stylized logo, for the purpose of honoring and fulfilling orders by its customers in existence as of the date of the expiration of the Agreement. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Note 10 - Segment Information We manage our business in three segments based on geographic location for which operating managers are responsible to the Chief Executive Officer. These segments include: (i) North America, (ii) United Kingdom, and (iii) Other Foreign Markets. Operating results, as reported below, are reviewed regularly by our Chief Executive 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 Six Months Ended As a percentage of total revenue 2020 2019 2020 2019 North America 68.9 % 71.7 % 77.6 % 72.5 % U.K. 1.8 % 3.6 % 2.3 % 6.0 % Other foreign markets 29.3 % 24.7 % 20.1 % 21.5 % Total consolidated revenue 100.0 % 100.0 % 100.0 % 100.0 % Operating results for the segments are as follows: Three Months Ended Six Months Ended 2020 2019 2020 2019 Segment revenue (In thousands) (In thousands) North America $ 5,366 $ 13,980 $ 13,903 $ 28,967 U.K. 138 697 410 2,383 Other foreign markets 2,281 4,820 3,592 8,605 Total consolidated revenue $ 7,785 $ 19,497 $ 17,905 $ 39,955 Three Months Ended Six Months Ended 2020 2019 2020 2019 Segment gross profit contribution * (In thousands) (In thousands) North America $ 3,888 $ 3,472 $ 7,794 $ 7,767 U.K. 222 (102 ) 446 275 Other foreign markets 2,144 451 2,757 (37 ) Total consolidated gross profit $ 6,254 $ 3,821 $ 10,997 $ 8,005 * Segment gross profit is calculated as revenue less direct course expenses, advertising and sales expenses and royalty expenses. Three Months Ended Six Months Ended 2020 2019 2020 2019 Depreciation and amortization expenses (In thousands) (In thousands) North America $ 14 $ 41 $ 28 $ 72 U.K. 3 18 7 19 Other foreign markets 3 1 7 2 Total consolidated depreciation and amortization expenses $ 20 $ 60 $ 42 $ 93 June 30, December 31, 2020 2019 Segment identifiable assets (In thousands) North America $ 5,614 $ 9,937 U.K. 3,686 4,135 Other foreign markets 2,603 3,286 Total consolidated identifiable assets $ 11,903 $ 17,358 |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2020 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Revenue Recognition | Note 11 - Revenue Recognition We recognize revenue when our customers obtain control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services, in accordance with implemented Topic 606 - an update to Topic 605. Revenue amounts presented in our condensed consolidated financial statements are recognized net of sales tax, value-added taxes, and other taxes. In the normal course of business, we recognize revenue based on the customers' attendance of the course, mentoring training, coaching session or delivery of the software, data or course materials on-line. After a customer contract expires, we record breakage revenue less a reserve for cases where we allow a customer to attend after expiration. As of June 30, 2020, we have deferred revenue of $28.0 million related to contractual commitments with customers where the performance obligation will be satisfied over time, which ranges from six to eighteen months. The revenue associated with these performance obligations is recognized as the obligation is satisfied. As of June 30, 2020, we maintain a reserve for breakage of $2.2 million for the fulfillment of our obligation to students whose contracts expired during our COVID-19 60-day operational hiatus during Q2 (see Note 1 " General The following tables disaggregate our segment revenue by revenue source: Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 Revenue Type: North America U.K. Other foreign markets Total Consolidated Revenue North America U.K. Other foreign markets Total Consolidated Revenue (In thousands) (In thousands) Seminars 4,909 138 2,251 7,298 8,532 452 1,990 10,974 Products — — — — 2,702 172 1,421 4,295 Coaching and Mentoring 85 — — 85 1,400 33 1,330 2,763 Online and Subscription 372 — 30 402 430 — 79 509 Other — — — — 916 40 — 956 Total revenue 5,366 138 2,281 7,785 13,980 697 4,820 19,497 Six Months Ended June 30, 2020 Six Months Ended June 30, 2019 Revenue Type: North America U.K. Other foreign markets Total Consolidated Revenue North America U.K. Other foreign markets Total Consolidated Revenue (In thousands) (In thousands) Seminars 11,064 410 3,264 14,738 16,885 1,679 4,160 22,724 Products 407 — — 407 5,484 535 1,801 7,820 Coaching and Mentoring 1,059 — 227 1,286 2,799 128 2,495 5,422 Online and Subscription 950 — 101 1,051 928 1 149 1,078 Other 423 — — 423 2,871 40 — 2,911 Total revenue 13,903 410 3,592 17,905 28,967 2,383 8,605 39,955 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 12 - Commitments and Contingencies Licensing agreements We are committed to pay royalties for the usage of certain brands, as governed by various licensing agreements, including Rich Dad, and Homemade Investor. Total royalty expenses included in our Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) were $0.0 million and $0.9 million for the three months ended June 30, 2020 and 2019, respectively, and $0.1 million and $1.9 million for the six months ended June 30, 2020 and 2019, respectively. Custodial and Counterparty Risk We are subject to custodial and other potential forms of counterparty risk in respect to a variety of contractual and operational matters. In the course of ongoing Company-wide risk assessment, management monitors our arrangements that involve potential counterparty risk, including the custodial risk associated with amounts prepaid to certain vendors and deposits with credit card and other payment processors. Deposits held by our credit card processors at June 30, 2020 and December 31, 2019, were $1.8 million and $2.3 million, respectively. These balances are included on the Condensed Consolidated Balance Sheets in restricted cash. While these balances reside in major financial institutions, they are only partially covered by federal deposit insurance and are subject to the financial risk of the parties holding these funds. When appropriate, we utilize Certificate of Deposit Account Registry Service (CDARS) to reduce banking risk for a portion of our cash in the United States. A CDAR consists of numerous individual investments, all below the FDIC limits, thus fully insuring that portion of our cash. At June 30, 2020 and December 31, 2019, we did not have a CDAR balance. Litigation. We and certain of our subsidiaries, from time to time, are parties to various legal proceedings, claims and disputes that have arisen in the ordinary course of business. These claims may involve significant amounts, some of which would not be covered by insurance. Tranquility Bay of Pine Island, LLC v. Tigrent, Inc., et al In the Matter of Legacy Education Alliance International, Ltd Discontinued Operations In the Matter of Elite Legacy Education UK Ltd. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Leases | Note 13 - Leases Right-of-Use Assets and Leases Obligations We lease office space and office equipment under non-cancelable operating leases, with terms typically ranging from one to three years, subject to certain renewal options as applicable. We consider those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of lease liabilities and right-of-use assets. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet. We determine whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinable implicit rate. Therefore, we must discount lease payments based on an estimate of its incremental borrowing rate. We do not separate lease and nonlease components of contracts. There are no material residual value guarantees associated with any of our leases. There are no significant restrictions or covenants included in our lease agreements other than those that are customary in such arrangements. Lease Position as of June 30, 2020 and December 31, 2019 The table below presents the lease related assets and liabilities recorded on the Company's Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019: June 30, December 31, (in thousands) Classification on the Balance Sheet 2020 2019 Assets Operating lease assets Operating lease right of use assets $ 45 $ 122 Total lease assets $ 45 $ 122 Liabilities Current liabilities: Operating lease liabilities Current operating lease liabilities $ 24 $ 86 Noncurrent liabilities: Operating lease liabilities Long-term operating lease liabilities $ 21 $ 27 Total lease liabilities $ 45 $ 113 Lease cost for the three and six months ended June 30, 2020 and 2019 The table below presents the lease related costs recorded on the Company's Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2020 and 2019: Three Months Ended Six Months Ended (in thousands) June 30, June 30, Lease cost Classification 2020 2019 2020 2019 Operating lease cost General and administrative expenses $ 6 $ 7 $ 29 $ 14 Total lease cost $ 6 $ 7 $ 29 $ 14 Other Information The table below presents supplemental cash flow information related to leases for the six months ended June 30, 2020 and 2019: Six Months Ended June 30, (in thousands) 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 28 $ 14 Supplemental non-cash amounts of lease liabilities arising from obtaining right-of-use assets/(decrease) of lease liability due to cancellation of leases $ (49 ) $ 75 Lease Terms and Discount Rates The table below presents certain information related to the weighted average remaining lease terms and weighted average discount rates for the Company's operating leases as of June 30, 2020 and December 31, 2019: June 30, December 31, 2020 2019 Weighted average remaining lease term - operating leases 1.82 years 1.67 years Weighted average discount rate - operating leases 12.00 % 12.00 % Undiscounted Cash Flows The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the operating lease liabilities recorded on the Condensed Consolidated Balance Sheet as of June 30, 2020: Amounts due in Operating Leases (in thousands) 2020 $ 14 2021 27 2022 9 Total minimum lease payments 50 Less: effect of discounting (5 ) Present value of future minimum lease payments 45 Less: current obligations under leases (24 ) Long-term lease obligations $ 21 There are no lease arrangements where the Company is the lessor. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 14 – Subsequent Events Impact from COVID-19 Coronavirus Historically, our operations have relied heavily on our and our students' ability to travel and attend live events where large groups of people gather in local markets within each of the segments in which we operate. On March 11, 2020, the World Health Organization (WHO) declared the COVID-19 outbreak as a pandemic. As a result of worldwide restrictions on travel and social distancing, in March 2020 we temporarily ceased conducting live sales and fulfillment and furloughed substantially all of our employees. We resumed sales operations in June 2020 with online sales events selling into our suite of online, on-demand, and over-the-phone products. We also resumed online, on-demand, and over-the-phone fulfillment activities in June 2020. These activities required the re-engagement by the Company of some furloughed employees and independent contractors. We have simplified our product offerings and restructured our compensation program with respect to both employees and independent contractors to reduce costs and improve margins, but there can be no assurances that the Company will be effective in selling its products and services, or what the impact such activities will have on our financial performance. The ultimate impact from COVID-19 on the Company's operations and financial results during 2020 will depend on, among other things, the ultimate severity and scope of the pandemic, the pace at which governmental and private travel restrictions and public concerns about public gatherings will ease, the rate at which historically large increases in unemployment rates will decrease, if at all, and whether, and the speed with which the economy recovers. We are not able to fully quantify the impact that these factors will have on our financial results during 2020 and beyond, but expect developments related to COVID-19 to materially affect the Company's financial performance in 2020. Entry Into Material Commercial Contract. On July 24, 2020 (the "Effective Date"), 1612 E. Cape Coral Parkway Holding Co., LLC (the Seller"), a subsidiary of the Company, entered into a Commercial Contract with Daniel Thom, as Trustee of Torstonbo Trust, a Florida revocable trust ("Buyer") for the sale of the real property and improvements located at 1612 E. Cape Coral Parkway, Cape Coral, Florida (the "Property"), subject to the terms and conditions of the Commercial Contract. The Property is currently used as the US headquarters of the Company and various of its subsidiaries. The aggregate purchase price for the Property is $2.5 million to be paid in cash at closing. The Property is encumbered by a mortgage with an outstanding principal amount of $0.5 million (see Note 7 " Short-Term and Long-Term Debt The material terms of the Commercial Contract include: (i) an initial deposit from the Buyer of $0.2 million, non-refundable to the Buyer (except as otherwise provided in the Commercial Contract) after the expiration of a 20-day due diligence period, which ended on August 13, 2020; (ii) a second deposit into escrow from the Buyer of $0.2 million within three (3) days after the expiration of the 20-day due diligence period; and (iii) a closing date thirty (30) days following the Effective Date. The Commercial Contract provides that subject to certain conditions to Closing contained in the Commercial Contract, including the obligation of Seller to deliver marketable title, the Seller will deliver the Property to the Buyer at closing in its current condition "as is" condition, ordinary wear and tear excepted and without warranty other than marketability of title. There is no financing contingency. The foregoing description of the Commercial Contract does not purport to be complete and is qualified in its entirety by reference to the text of such agreement. Promissory Note and Mortgage, Assignment of Rents and Security Agreement On August 6, 2020, 1612 E. Cape Coral Parkway Holding Co., LLC ("Borrower"), a Florida limited liability company and subsidiary of the Company entered into a Promissory Note and Mortgage, Assignment of Rents, and Security Agreement (collectively, the "Loan Documents") with Northern Equity Group, Inc., JKH Ventures, Inc., and Donald Ross, LLC (collectively "Lenders") pursuant to which Borrower borrowed the principal amount of $1 million. The Promissory Note requires monthly payments of interest only at a fixed rate of 12% per annum. Payment of unpaid principal and any accrued and unpaid interest is due on August 5, 2021. Pursuant to the Mortgage, Assignment of Rents and Security Agreement, repayment of the Promissory Note is secured by a first mortgage on the real property and improvements located at 1612 East Cape Coral Parkway, Cape Coral, FL. 33904 (the "Collateral"). At closing, we received $396,762 in net proceeds after closing costs and other fees and costs and after paying off the outstanding principal in the amount of $0.5 million, plus accrued interest, under a Promissory Note held by USA Regrowth Fund LLC. The Borrower may prepay any part of the loan at any time however any such prepayments made before February 6, 2021 will be subject to a prepayment fee unless such prepayment is made in connection with the sale of the Collateral to a bona fide third-party purchaser. The Loan Documents contain covenants usual and customary for loans of its type, including, the obligation to maintain, repair, and insure, and not to encumber the Collateral. |
General (Policies)
General (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Description | Business Description. Business Description. We are a provider of practical, high-quality, and value-based educational training on the topics of personal finance, entrepreneurship, real estate, and financial markets investing strategies and techniques. Our programs are offered through a variety of formats and channels, including free workshops, basic trainings, symposiums, forums, telephone mentoring, one-on-one mentoring, coaching and e-learning. We market our products and services under two brands: Legacy Education TM TM Homemade Investor by Tarek El Moussa Our students pay for their courses in full up-front or through payment agreements with independent third parties. Under United States of America generally accepted accounting principles ("U.S. GAAP"), we recognize revenue upon the earlier of (i) when our students take their courses or (ii) the term for taking their course expires, both of which could be several quarters after the student purchases a program and pays the fee. We recognize revenue immediately when we sell our (i) proprietary products delivered at time of sale and (ii) third party products sales. Our symposiums and forums combine multiple advanced training courses in one location, allowing us to achieve certain economies of scale that reduce costs and improve margins while also accelerating U.S. GAAP revenue recognition, while at the same time, enhancing our students' experience, particularly, for example, through the opportunity to network with other students. We also provide a richer experience for our students through one-on-one mentoring (two to four days in length, on site or remotely) and telephone mentoring (10 to 16 weekly one-on-one or one-on-many telephone sessions). Mentoring involves a subject matter expert interacting with the student remotely or in person and guiding the student, for example, through his or her first real estate transaction, providing a real hands-on experience. Historically, our operations have relied heavily on our and our students' ability to travel and attend live events where large groups of people gather in local markets within each of the segments in which we operate. As a result of the COVID-19 coronavirus pandemic, and the resulting worldwide restrictions on travel and social distancing, we have temporarily ceased conducting live sales and fulfillment and furloughed substantially all of our employees. We have simplified our product offerings and restructured our compensation program with respect to both employees and independent contractors to reduce costs and improve margins. Currently, our sales operations are limited to online sales events selling into our suite of online, on-demand, and over-the-phone products. Our product fulfilment operations similarly are limited to online, on-demand, and over-the-phone activities. The ultimate impact from COVID-19 on the Company's operations and financial results during 2020 will depend on, among other things, the ultimate severity and scope of the pandemic, the pace at which governmental and private travel restrictions and public concerns about public gatherings will ease, the rate at which historically large increases in unemployment rates will decrease, if at all, and whether, and the speed with which the economy recovers. Our operations are managed through three operating segments: (i) North America, (ii) United Kingdom, and (iii) Other Foreign Markets. |
Basis of Presentation | Basis of Presentation. The terms "Legacy Education Alliance, Inc.," the "Company," "we," "our," "us" or "Legacy" as used in this report refer collectively to Legacy Education Alliance, Inc., a Nevada corporation ("Legacy"), the registrant, which was formerly known as Priced In Corp., and, unless the context otherwise requires, together with its wholly-owned subsidiary, Legacy Education Alliance Holdings, Inc., a Colorado corporation, other operating subsidiaries and any predecessor of Legacy Education Alliance Holdings, Inc., including Tigrent Inc., a Colorado corporation. All intercompany balances and transactions have been eliminated in consolidation. As discussed in Note 4 "Discontinued Operations", the sale of Legacy Education Alliance International Ltd (Legacy UK) assets and deferred revenue is reflected as a discontinued operation in the condensed consolidated financial statements. The accompanying unaudited Condensed Consolidated Financial Statements presented in this report are for us and our consolidated subsidiaries, each of which is a wholly-owned subsidiary. 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 fiscal year ended December 31, 2019 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. |
Reclassification | Reclassification. We have reclassified certain amounts in our prior-period financial statements to conform to the current period's presentation. |
Significant Accounting Policies | Significant Accounting Policies. Our significant accounting policies have been disclosed in Note 2 - Significant Accounting Policies Note 2 - New Accounting Pronouncements, - "Accounting Standards Adopted in the Current Period." |
Going Concern | Going Concern The accompanying consolidated financial statements and notes have been prepared assuming we will continue as a going concern. For the six months ended June 30, 2020 we had an accumulated deficit, a working capital deficit and a negative cash flow from operating activities. These circumstances raise substantial doubt as to our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate profits by expanding current operations as well as reducing our costs and increasing our operating margins, and to sustain adequate working capital to finance our operations. The failure to achieve the necessary levels of profitability and cash flows would be detrimental to us. The consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. |
Use of Estimates | Use of Estimates. Conformity with GAAP requires the use of estimates and judgments that affect the reported amounts in our consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. GAAP requires us to make estimates and judgments in several areas, including, but not limited to, those related to deferred revenues, reserve for breakage, deferred costs, revenue recognition, commitments and contingencies, fair value of financial instruments, useful lives of property and equipment, right-of-use assets, and income taxes. These estimates are based on management's knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ materially from those estimates. As a result of the COVID-19 coronavirus pandemic, and the resulting worldwide restrictions on travel and social distancing, we have temporarily ceased conducting live sales and fulfillment and furloughed substantially all of our employees. The ultimate impact from COVID-19 on the Company's operations and financial results during 2020 will depend on, among other things, the ultimate severity and scope of the pandemic, the pace at which governmental and private travel restrictions and public concerns about public gatherings will ease, the rate at which historically large increases in unemployment rates will decrease, if at all, and whether, and the speed with which the economy recovers. We are not able to fully quantify the impact that these factors will have on our financial results during 2020 and beyond, but expect developments related to COVID-19 to materially affect the Company's financial performance in 2020. |
Cash and Cash Equivalents | Cash and Cash Equivalents. We consider all highly liquid instruments with an original maturity of three months or less to be cash or cash equivalents. We continually monitor and evaluate our investment positions and the creditworthiness of the financial institutions with which we invest and maintain deposit accounts. When appropriate, we utilize Certificate of Deposit Account Registry Service (CDARS) to reduce banking risk for a portion of our cash in the United States. A CDAR consists of numerous individual investments, all below the FDIC limits, thus fully insuring that portion of our cash. At June 30, 2020 and December 31, 2019, we did not have a CDAR balance. |
Restricted Cash | Restricted Cash. Restricted cash balances consist primarily of funds on deposit with credit card and other payment processors. These balances do not have the benefit of federal deposit insurance and are subject to the financial risk of the parties holding these funds. Restricted cash balances held by credit card processors are unavailable to us unless, and for a period of time after, we discontinue the use of their services. Because a portion of these funds can be accessed and converted to unrestricted cash in less than one year in certain circumstances, that portion is considered a current asset. Restricted cash is included with cash and cash equivalents in our condensed consolidated statements of cash flows. |
Deposits with Credit Card Processors | Deposits with Credit Card Processors. The deposits with our credit card processors are held due to arrangements under which our credit card processors withhold credit card funds to cover charge backs in the event we are unable to honor our commitments. These deposits are included in restricted cash on our condensed consolidated balance sheet. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts in the condensed consolidated cash flow statements: June 30, December 31, (in thousands) 2020 2019 Cash and cash equivalents $ 1,843 $ 3,839 Restricted cash 1,845 2,389 Total cash, cash equivalents, and restricted cash shown in the cash flow statement $ 3,688 $ 6,228 |
Income Tax in Interim Periods | Income Tax in Interim Periods. We conduct operations in separate legal entities in different jurisdictions. As a result, income tax amounts are reflected in these condensed consolidated financial statements for each of those jurisdictions. Tax laws and tax rates vary substantially in these jurisdictions and are subject to change based on the political and economic climate in those countries. We file our tax returns in accordance with our interpretations of each jurisdiction's tax laws. We record our tax provision or benefit on an interim basis using the estimated annual effective tax rate. This rate is applied to the current period ordinary income or loss to determine the income tax provision or benefit allocated to the interim period. We record our interim provision for income taxes by applying our estimated annual effective tax rate to our year-to-date pre-tax income and adjusting for discrete tax items recorded in the period. Deferred income taxes result from temporary differences between the reporting of amounts for financial statement purposes and income tax purposes. These differences relate primarily to different methods used for income tax reporting purposes, including for depreciation and amortization, warranty and vacation accruals, and deductions related to allowances for doubtful accounts receivable and inventory reserves. Our provision for income taxes included current federal and state income tax expense, as well as deferred federal and state income tax expense. 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. |
Discontinued Operations. | Discontinued Operations. ASC 205-20-45, "Presentation of Financial Statements Discontinued Operations" Discontinued Operations |
General (Tables)
General (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of reconciliation cash equivalents, and restricted cash | June 30, December 31, (in thousands) 2020 2019 Cash and cash equivalents $ 1,843 $ 3,839 Restricted cash 1,845 2,389 Total cash, cash equivalents, and restricted cash shown in the cash flow statement $ 3,688 $ 6,228 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of assets and liabilities | June 30, December 31, (in thousands) 2020 2019 Major classes of liabilities Accounts payable 3,174 3,408 Accrued course expenses 533 472 Other accrued expenses 484 619 Total major classes of liabilities - discontinued operations $ 4,191 $ 4,499 |
Schedule of discontinued operations income statement | Three Months Ended Six Months Ended (in thousands) 2020 2019 2020 2019 Revenue $ — $ 4,201 $ — $ 8,319 Total operating costs and expenses — 4,326 — 8,534 Loss from discontinued operations — (125 ) — (215 ) Interest expense — (54 ) — (62 ) Other expense, net — (132 ) — (227 ) Net loss from discontinued operations $ — $ (311 ) $ — $ (504 ) |
Earnings Per Share (''EPS'') (T
Earnings Per Share (''EPS'') (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of calculations of basic and diluted EPS | Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 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 $ 3,803 23,163 $ (275 ) 23,123 Amounts allocated to unvested restricted shares (24 ) (146 ) — — Amounts available to common stockholders $ 3,779 23,017 $ 0.16 $ (275 ) 23,123 $ (0.01 ) Diluted: Amounts allocated to unvested restricted shares 24 146 — — Non participating share units — — Amounts reallocated to unvested restricted shares (24 ) — — — Amounts available to stockholders and assumed conversions $ 3,779 23,163 $ 0.16 $ (275 ) 23,123 $ (0.01 ) Six Months Ended June 30, 2020 Six Months Ended June 30, 2019 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 $ 6,836 23,163 $ (380 ) 23,120 Amounts allocated to unvested restricted shares (48 ) (162 ) — — Amounts available to common stockholders $ 6,788 23,001 $ 0.30 $ (380 ) 23,120 $ (0.02 ) Diluted: Amounts allocated to unvested restricted shares 48 162 — — Non participating share units — — Amounts reallocated to unvested restricted shares (48 ) — — — Amounts available to stockholders and assumed conversions $ 6,788 23,163 $ 0.29 $ (380 ) 23,120 $ (0.02 ) |
Short-Term and Long-Term Debt (
Short-Term and Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Short-Term and Long-Term Debt | (in thousands) As of As of Promissory note $ 500 $ 500 Paycheck Protection Program loan 1,900 — Total debt 2,400 500 Less current portion of long-term debt (500 ) (500 ) Total long-term debt, net of current portion $ 1,900 $ - |
Schedule of debt maturities | 2020 $ 500 2021 — 2022 1,900 Total debt $ 2,400 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of percentage of total revenue | Three Months Ended Six Months Ended As a percentage of total revenue 2020 2019 2020 2019 North America 68.9 % 71.7 % 77.6 % 72.5 % U.K. 1.8 % 3.6 % 2.3 % 6.0 % Other foreign markets 29.3 % 24.7 % 20.1 % 21.5 % Total consolidated revenue 100.0 % 100.0 % 100.0 % 100.0 % |
Schedule of operating results for the segments | Three Months Ended Six Months Ended 2020 2019 2020 2019 Segment revenue (In thousands) (In thousands) North America $ 5,366 $ 13,980 $ 13,903 $ 28,967 U.K. 138 697 410 2,383 Other foreign markets 2,281 4,820 3,592 8,605 Total consolidated revenue $ 7,785 $ 19,497 $ 17,905 $ 39,955 Three Months Ended Six Months Ended 2020 2019 2020 2019 Segment gross profit contribution * (In thousands) (In thousands) North America $ 3,888 $ 3,472 $ 7,794 $ 7,767 U.K. 222 (102 ) 446 275 Other foreign markets 2,144 451 2,757 (37 ) Total consolidated gross profit $ 6,254 $ 3,821 $ 10,997 $ 8,005 * Segment gross profit is calculated as revenue less direct course expenses, advertising and sales expenses and royalty expenses. |
Schedule of depreciation and amortization expenses | Three Months Ended Six Months Ended 2020 2019 2020 2019 Depreciation and amortization expenses (In thousands) (In thousands) North America $ 14 $ 41 $ 28 $ 72 U.K. 3 18 7 19 Other foreign markets 3 1 7 2 Total consolidated depreciation and amortization expenses $ 20 $ 60 $ 42 $ 93 |
Schedule of segment identifiable assets | June 30, December 31, 2020 2019 Segment identifiable assets (In thousands) North America $ 5,614 $ 9,937 U.K. 3,686 4,135 Other foreign markets 2,603 3,286 Total consolidated identifiable assets $ 11,903 $ 17,358 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Schedule of segment revenue | Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 Revenue Type: North America U.K. Other foreign markets Total Consolidated Revenue North America U.K. Other foreign markets Total Consolidated Revenue (In thousands) (In thousands) Seminars 4,909 138 2,251 7,298 8,532 452 1,990 10,974 Products — — — — 2,702 172 1,421 4,295 Coaching and Mentoring 85 — — 85 1,400 33 1,330 2,763 Online and Subscription 372 — 30 402 430 — 79 509 Other — — — — 916 40 — 956 Total revenue 5,366 138 2,281 7,785 13,980 697 4,820 19,497 Six Months Ended June 30, 2020 Six Months Ended June 30, 2019 Revenue Type: North America U.K. Other foreign markets Total Consolidated Revenue North America U.K. Other foreign markets Total Consolidated Revenue (In thousands) (In thousands) Seminars 11,064 410 3,264 14,738 16,885 1,679 4,160 22,724 Products 407 — — 407 5,484 535 1,801 7,820 Coaching and Mentoring 1,059 — 227 1,286 2,799 128 2,495 5,422 Online and Subscription 950 — 101 1,051 928 1 149 1,078 Other 423 — — 423 2,871 40 — 2,911 Total revenue 13,903 410 3,592 17,905 28,967 2,383 8,605 39,955 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Schedule of lease related assets and liabilities | June 30, December 31, (in thousands) Classification on the Balance Sheet 2020 2019 Assets Operating lease assets Operating lease right of use assets $ 45 $ 122 Total lease assets $ 45 $ 122 Liabilities Current liabilities: Operating lease liabilities Current operating lease liabilities $ 24 $ 86 Noncurrent liabilities: Operating lease liabilities Long-term operating lease liabilities $ 21 $ 27 Total lease liabilities $ 45 $ 113 |
Schedule of operating lease cost | Three Months Ended Six Months Ended (in thousands) June 30, June 30, Lease cost Classification 2020 2019 2020 2019 Operating lease cost General and administrative expenses $ 6 $ 7 $ 29 $ 14 Total lease cost $ 6 $ 7 $ 29 $ 14 |
Schedule of cash flow information related to leases | Six Months Ended June 30, (in thousands) 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 28 $ 14 Supplemental non-cash amounts of lease liabilities arising from obtaining right-of-use assets/(decrease) of lease liability due to cancellation of leases $ (49 ) $ 75 |
Schedule of weighted average remaining lease terms | June 30, December 31, 2020 2019 Weighted average remaining lease term - operating leases 1.82 years 1.67 years Weighted average discount rate - operating leases 12.00 % 12.00 % |
Schedule of operating lease payments | Amounts due in Operating Leases (in thousands) 2020 $ 14 2021 27 2022 9 Total minimum lease payments 50 Less: effect of discounting (5 ) Present value of future minimum lease payments 45 Less: current obligations under leases (24 ) Long-term lease obligations $ 21 |
General (Details)
General (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 1,843 | $ 3,839 | ||
Restricted cash | 1,845 | 2,389 | ||
Total cash, cash equivalents, and restricted cash shown in the cash flow statement | $ 3,688 | $ 6,228 | $ 11,018 | $ 6,637 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Share-Based Compensation (Textual) | ||||
Share-based compensation expenses related to restricted stock grants | $ 8 | $ 29 | $ 14 | $ 57 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Major classes of liabilities | ||
Accounts payable | $ 2,139 | $ 2,311 |
Discontinued Operations [Member] | ||
Major classes of liabilities | ||
Accounts payable | 3,174 | 3,408 |
Accrued course expenses | 533 | 472 |
Other accrued expenses | 484 | 619 |
Total major classes of liabilities - discontinued operations | $ 4,191 | $ 4,499 |
Discontinued Operations (Deta_2
Discontinued Operations (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue | $ 7,785 | $ 19,497 | $ 17,905 | $ 39,955 |
Total operating costs and expenses | 2,813 | 19,925 | 9,965 | 40,291 |
Other expense, net | (27) | 484 | (6) | 453 |
Discontinued Operations [Member] | ||||
Revenue | 4,201 | 8,319 | ||
Total operating costs and expenses | 4,326 | 8,534 | ||
Loss from discontinued operations | (125) | (215) | ||
Interest expense | (54) | (62) | ||
Other expense, net | (132) | (227) | ||
Net loss from discontinued operations | $ (311) | $ (504) |
Discontinued Operations (Deta_3
Discontinued Operations (Details Textual) | 6 Months Ended |
Jun. 30, 2020 | |
Discontinued Operations (Textual) | |
Discontinued operations, description | On November 26, 2019, Legacy UK's assets and deferred revenues sold for £300 thousand (British pounds) to Mayflower Alliance LTD. |
Earnings Per Share (''EPS'') (D
Earnings Per Share (''EPS'') (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Basic: | ||||||
Net Income (Loss) | $ 3,803 | $ 3,033 | $ (275) | $ (105) | $ 6,836 | $ (380) |
Weighted Average Shares Outstanding | 23,017 | 23,123 | 23,001 | 23,120 | ||
Amounts allocated to unvested restricted shares, Net Income (loss) | $ (24) | $ (48) | ||||
Amounts allocated to unvested restricted shares, Weighted Average Shares Outstanding | (146) | (162) | ||||
Amounts available to common stockholders, Net Income (loss) | $ 3,779 | $ (275) | $ 6,788 | $ (380) | ||
Amounts available to common stockholders, Weighted Average Shares Outstanding | 23,017 | 23,123 | 23,001 | 23,120 | ||
Amounts available to common stockholders, Earnings Loss Per Share | $ 0.16 | $ (0.01) | $ 0.30 | $ (0.02) | ||
Diluted: | ||||||
Amounts allocated to unvested restricted shares, Net Income (loss) | $ 24 | $ 48 | ||||
Amounts allocated to unvested restricted shares, Weighted Average Shares Outstanding | 146 | 162 | ||||
Non participating share units, Weighted Average Shares Outstanding | ||||||
Amounts reallocated to unvested restricted shares, Net Income (loss) | $ (24) | $ (48) | ||||
Amounts reallocated to unvested restricted shares, Weighted Average Shares Outstanding | ||||||
Amounts available to stockholders and assumed conversions, Net Income (loss) | $ 3,779 | $ (275) | $ 6,788 | $ (380) | ||
Amounts available to stockholders and assumed conversions, Weighted Average Shares Outstanding | 23,163 | 23,123 | 23,163 | 23,120 | ||
Amounts available to stockholders and assumed conversions, Earnings Loss Per Share | $ 0.16 | $ (0.01) | $ 0.29 | $ (0.02) |
Earnings Per Share (''EPS'') _2
Earnings Per Share (''EPS'') (Details Textual) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Earnings Per Share (''EPS'') (Textual) | ||||
Weighted average unvested restricted stock awards outstanding | 146,244 | 540,118 | 162,197 | 559,286 |
Excluded unvested restricted stock awards from the diluted weighted-average number of shares used in our diluted EPS | 540,118 | 559,286 |
Short-Term and Long-Term Debt_2
Short-Term and Long-Term Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Disclosure [Abstract] | ||
Promissory note | $ 500 | $ 500 |
Paycheck Protection Program loan | 1,900 | |
Total debt | 2,400 | 500 |
Less current portion of long-term debt | (500) | (500) |
Total long-term debt, net of current portion | $ 1,900 |
Short-Term and Long-Term Debt_3
Short-Term and Long-Term Debt (Details 1) $ in Thousands | Jun. 30, 2020USD ($) |
Scheduled debt maturities | |
2020 | $ 500 |
2021 | |
2022 | 1,900 |
Total debt | $ 2,400 |
Short-Term and Long-Term Debt_4
Short-Term and Long-Term Debt (Details Textual) - USD ($) $ in Thousands | Sep. 13, 2019 | Mar. 08, 2019 | Sep. 13, 2018 | Apr. 27, 2020 |
Short-Term and Long-Term Debt (Textual) | ||||
Principal amount | $ 500 | |||
Debt interest fixed rate | 12.00% | 12.00% | ||
Promissory note fixed rate | 30.00% | 30.00% | ||
Proceeds repayment of debt | $ 459,269 | |||
Promissory amount due date | Mar. 13, 2020 | Sep. 13, 2019 | Mar. 13, 2019 | |
Loan proceeds | $ 1,899,832 | |||
Maturity date | Apr. 24, 2022 | |||
Bears interest rate | 1.00% | |||
Mortgage and Security Agreement [Member] | ||||
Short-Term and Long-Term Debt (Textual) | ||||
Principal amount | $ 500 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Income Taxes (Textual) | |||||
Income tax benefit (expense) | $ (1,122) | $ (995) | $ 60 | ||
Effective tax rates | 22.80% | 0.00% | 12.80% | 13.60% | |
U.S. statutory corporate tax rate | 21.00% | ||||
Valuation allowances | $ 3,700 | $ 3,700 | $ 4,700 | ||
Changes in valuation allowance | 922 | ||||
Unrecognized tax benefits | $ 300 | $ 300 | 300 | $ 300 | |
Income Taxes [Member] | |||||
Income Taxes (Textual) | |||||
Income tax benefit (expense) | $ 88 | ||||
Minimum [Member] | |||||
Income Taxes (Textual) | |||||
Taxable income, percentage | 80.00% | ||||
Maximum [Member] | |||||
Income Taxes (Textual) | |||||
Taxable income, percentage | 100.00% |
Concentration Risk (Details)
Concentration Risk (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Concentration Risk [Line Items] | |||||
Cash balances without FDIC | $ 1,000 | $ 1,000 | $ 2,500 | ||
Percentage of revenue | 100.00% | 100.00% | 100.00% | 100.00% | |
Rich Dad brands [Member] | |||||
Concentration Risk [Line Items] | |||||
Percentage of revenue | 89.80% | 83.40% | 78.80% | 83.90% |
Segment Information (Details)
Segment Information (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Total consolidated revenue | 100.00% | 100.00% | 100.00% | 100.00% |
North America [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated revenue | 68.90% | 71.70% | 77.60% | 72.50% |
U.K. [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated revenue | 1.80% | 3.60% | 2.30% | 6.00% |
Other foreign markets [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated revenue | 29.30% | 24.70% | 20.10% | 21.50% |
Segment Information (Details 1)
Segment Information (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | ||
Segment Reporting Information [Line Items] | |||||
Total consolidated revenue | $ 7,785 | $ 19,497 | $ 17,905 | $ 39,955 | |
Total consolidated gross profit | [1] | 6,254 | 3,821 | 10,997 | 8,005 |
North America [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total consolidated revenue | 5,366 | 13,980 | 13,903 | 28,967 | |
Total consolidated gross profit | [1] | 3,888 | 3,472 | 7,794 | 7,767 |
U.K. [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total consolidated revenue | 138 | 697 | 410 | 2,383 | |
Total consolidated gross profit | [1] | 222 | (102) | 446 | 275 |
Other foreign markets [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total consolidated revenue | 2,281 | 4,820 | 3,592 | 8,605 | |
Total consolidated gross profit | [1] | $ 2,144 | $ 451 | $ 2,757 | $ (37) |
[1] | Segment gross profit is calculated as revenue less direct course expenses, advertising and sales expenses and royalty expenses. |
Segment Information (Details 2)
Segment Information (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Total consolidated depreciation and amortization expenses | $ 20 | $ 60 | $ 42 | $ 93 |
North America [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated depreciation and amortization expenses | 14 | 41 | 28 | 72 |
U.K. [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated depreciation and amortization expenses | 3 | 18 | 7 | 19 |
Other foreign markets [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated depreciation and amortization expenses | $ 3 | $ 1 | $ 7 | $ 2 |
Segment Information (Details 3)
Segment Information (Details 3) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Segment Reporting Information [Line Items] | ||
Total consolidated identifiable assets | $ 11,903 | $ 17,358 |
North America [Member] | ||
Segment Reporting Information [Line Items] | ||
Total consolidated identifiable assets | 5,614 | 9,937 |
U.K. [Member] | ||
Segment Reporting Information [Line Items] | ||
Total consolidated identifiable assets | 3,686 | 4,135 |
Other foreign markets [Member] | ||
Segment Reporting Information [Line Items] | ||
Total consolidated identifiable assets | $ 2,603 | $ 3,286 |
Segment Information (Details Te
Segment Information (Details Textual) | 6 Months Ended |
Jun. 30, 2020Segments | |
Segment Information (Textual) | |
Number of operating segments | 3 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Total revenue | $ 7,785 | $ 19,497 | $ 17,905 | $ 39,955 |
Seminars [Member] | ||||
Total revenue | 7,298 | 10,974 | 14,738 | 22,724 |
Products [Member] | ||||
Total revenue | 4,295 | 407 | 7,820 | |
Coaching and Mentoring [Member | ||||
Total revenue | 85 | 2,763 | 1,286 | 5,422 |
Online and Subscription [Member] | ||||
Total revenue | 402 | 509 | 1,051 | 1,078 |
Other [Member] | ||||
Total revenue | 956 | 423 | 2,911 | |
North [Member] | ||||
Total revenue | 5,366 | 13,980 | 13,903 | 28,967 |
North [Member] | Seminars [Member] | ||||
Total revenue | 4,909 | 8,532 | 11,064 | 16,885 |
North [Member] | Products [Member] | ||||
Total revenue | 2,702 | 407 | 5,484 | |
North [Member] | Coaching and Mentoring [Member | ||||
Total revenue | 85 | 1,400 | 1,059 | 2,799 |
North [Member] | Online and Subscription [Member] | ||||
Total revenue | 372 | 430 | 950 | 928 |
North [Member] | Other [Member] | ||||
Total revenue | 916 | 423 | 2,871 | |
U.K. [Member] | ||||
Total revenue | 138 | 697 | 410 | 2,383 |
U.K. [Member] | Seminars [Member] | ||||
Total revenue | 138 | 452 | 410 | 1,679 |
U.K. [Member] | Products [Member] | ||||
Total revenue | 172 | 535 | ||
U.K. [Member] | Coaching and Mentoring [Member | ||||
Total revenue | 33 | 128 | ||
U.K. [Member] | Online and Subscription [Member] | ||||
Total revenue | 1 | |||
U.K. [Member] | Other [Member] | ||||
Total revenue | 40 | 40 | ||
Other foreign [Member] | ||||
Total revenue | 2,281 | 4,820 | 3,592 | 8,605 |
Other foreign [Member] | Seminars [Member] | ||||
Total revenue | 2,251 | 1,990 | 3,264 | 4,160 |
Other foreign [Member] | Products [Member] | ||||
Total revenue | 1,421 | 1,801 | ||
Other foreign [Member] | Coaching and Mentoring [Member | ||||
Total revenue | 1,330 | 227 | 2,495 | |
Other foreign [Member] | Online and Subscription [Member] | ||||
Total revenue | 30 | 79 | 101 | 149 |
Other foreign [Member] | Other [Member] | ||||
Total revenue |
Revenue Recognition (Details Te
Revenue Recognition (Details Textual) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue Recognition (Textual) | |
Reserve description | A reserve for breakage of $2.2 million for the fulfillment of our obligation to students whose contracts expired during our COVID-19 60-day operational hiatus during Q2 (see Note 1 "General"). |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Mar. 18, 2020 | Oct. 28, 2019 | Jun. 30, 2020 | Jul. 24, 2020 | Dec. 31, 2019 |
Commitments and Contingencies (Textual) | |||||
Deposits held by credit card processors | $ 1,800 | $ 2,300 | |||
Commitments and contingencies, Description | Total royalty expenses included in our Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) were $0.0 million and $0.9 million for the three months ended June 30, 2020 and 2019, respectively, and $0.1 million and $1.9 million for the six months ended June 30, 2020 and 2019, respectively. | ||||
Administration, description | The administrators engaged a third-party to market Legacy UK's business and assets for sale to one or more third parties. On November 26, 2019, Legacy UK's assets and deferred revenues sold for £300 thousand (British pounds) to Mayflower Alliance LTD. We will not receive any proceeds from the sale of Legacy UK. The Administrator has asserted claims against two of our other UK subsidiaries, LEAI Property Development UK Ltd. and LEAI Property Investment UK Ltd., in an aggregate amount totaling £622,166. We are currently negotiating a resolution of these claims, but there can be no assurances that an agreement will be reached or what the impact that any such agreement will have on our financial performance. Further details regarding the resolution of other claims and liabilities may not be known for several months. Because there are a number of intercompany relationships between the Company and Legacy UK, the financial impact of any future claims in relation to the administration and disposition of Legacy UK, outside of those included in the discontinued operations of Legacy UK (see Note 4 "Discontinued Operations"), is unknown to us at this time, as is the timing and other conditions and effects of the administrative process. | ||||
Winding-Up Petition, description | A Winding-Up Petition, CR-2020-001958, was filed in the High Court of Justice, Business and Property Courts of England and Wales (the "Court") against one of our UK subsidiaries, Elite Legacy Education UK Ltd. ("ELE UK"), by one its creditors ("Petitioner") pursuant to which the Petitioner was claiming a debt of £461,459.70 plus late payment interest and statutory compensation was due and owing. The Petitioner sought an order from the Court to wind up the affairs of ELE UK under the UK Insolvency Act of 1986. ELE UK has disputed the claim of the Petitioner and on June 11, 2020, ELE UK obtained a court order vacating the hearing on the Petition originally set for June 24, 2020. On July 24, 2020, the Court entered an order finding that there was a genuine dispute on substantial grounds with respect to £392,761.70 of the Petitioner's claim, and that only £68,698 plus late payment interest and statutory compensation was due and owing. The Court further restrained the Petitioner from advertising its Winding-Up Petition until August 14, 2020 and, provided, ELEUK pays the Petitioner the sums awarded under the Court's order, plus late payment interest and statutory compensation on or before August 14, 2020, the Petitioner's Winding-Up Petition would be dismissed. | ||||
EUR [Member] | Subsequent Event [Member] | |||||
Commitments and Contingencies (Textual) | |||||
Accounts Payable other current | $ 68,698 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Operating lease right of use assets | $ 45 | $ 122 |
Total lease assets | 45 | 122 |
Current liabilities: | ||
Current operating lease liabilities | 24 | 86 |
Noncurrent liabilities: | ||
Long-term operating lease liabilities | 21 | 27 |
Total lease liabilities | $ 45 | $ 113 |
Leases (Details 1)
Leases (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Leases [Abstract] | ||||
General and administrative expenses | $ 6 | $ 7 | $ 29 | $ 14 |
Total lease cost | $ 6 | $ 7 | $ 29 | $ 14 |
Leases (Details 2)
Leases (Details 2) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows for operating leases | $ 28 | $ 14 |
Supplemental non-cash amounts of lease liabilities arising from obtaining right-of-use assets/(decrease) of lease liability due to cancellation of leases | $ (49) | $ 75 |
Leases (Details 3)
Leases (Details 3) | Jun. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Weighted average remaining lease term - operating leases | 1 year 9 months 25 days | 1 year 8 months 2 days |
Weighted average discount rate - operating leases | 12.00% | 12.00% |
Leases (Details 4)
Leases (Details 4) $ in Thousands | Jun. 30, 2020USD ($) |
Leases [Abstract] | |
2020 | $ 14 |
2021 | 27 |
2022 | 9 |
Total minimum lease payments | 50 |
Less: effect of discounting | (5) |
Present value of future minimum lease payments | 45 |
Less: current obligations under leases | (24) |
Long-term lease obligations | $ 21 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | 1 Months Ended | ||
Aug. 06, 2020 | Jul. 24, 2020 | Sep. 13, 2018 | |
Subsequent Events (Textual) | |||
Principal amount | $ 500 | ||
Subsequent Event [Member] | |||
Subsequent Events (Textual) | |||
Cash paid | $ 2,500 | ||
Principal amount | $ 500 | ||
Commercial Contract, description | Cape Coral Parkway Holding Co., LLC ("Borrower"), a Florida limited liability company and subsidiary of the Company entered into a Promissory Note and Mortgage, Assignment of Rents, and Security Agreement (collectively, the "Loan Documents") with Northern Equity Group, Inc., JKH Ventures, Inc., and Donald Ross, LLC (collectively "Lenders") pursuant to which Borrower borrowed the principal amount of $1 million. The Promissory Note requires monthly payments of interest only at a fixed rate of 12% per annum. Payment of unpaid principal and any accrued and unpaid interest is due on August 5, 2021. Pursuant to the Mortgage, Assignment of Rents and Security Agreement, repayment of the Promissory Note is secured by a first mortgage on the real property and improvements located at 1612 East Cape Coral Parkway, Cape Coral, FL. 33904 (the "Collateral"). At closing, we received $396,762 in net proceeds after closing costs and other fees and costs and after paying off the outstanding principal in the amount of $0.5 million, plus accrued interest, under a Promissory Note held by USA Regrowth Fund LLC. | The material terms of the Commercial Contract include: (i) an initial deposit from the Buyer of $0.2 million, non-refundable to the Buyer (except as otherwise provided in the Commercial Contract) after the expiration of a 20-day due diligence period, which ended on August 13, 2020; (ii) a second deposit into escrow from the Buyer of $0.2 million within three (3) days after the expiration of the 20-day due diligence period; and (iii) a closing date thirty (30) days following the Effective Date. The Commercial Contract provides that subject to certain conditions to Closing contained in the Commercial Contract, including the obligation of Seller to deliver marketable title, the Seller will deliver the Property to the Buyer at closing in its current condition "as is" condition, ordinary wear and tear excepted and without warranty other than marketability of title. There is no financing contingency. The foregoing description of the Commercial Contract does not purport to be complete and is qualified in its entirety by reference to the text of such agreement. |