Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 15, 2021 | |
Document Information Line Items | ||
Entity Registrant Name | LEGACY EDUCATION ALLIANCE, INC. | |
Trading Symbol | LEAI | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 33,262,697 | |
Amendment Flag | false | |
Entity Central Index Key | 0001561880 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Sep. 30, 2021 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-55790 | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 39-2079974 | |
Entity Address, Address Line One | 1490 N. E. Pine Island Rd | |
Entity Address, Address Line Two | Suite 5D | |
Entity Address, City or Town | Cape Coral | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 33909 | |
City Area Code | (239) | |
Local Phone Number | 542-0643 | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common Stock, par value $0.0001 | |
Security Exchange Name | NYSE |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 690 | $ 1,500 |
Restricted cash | 624 | 1,180 |
Deferred course expenses | 280 | 1,167 |
Prepaid expenses and other current assets | 511 | 1,578 |
Inventory | 1 | 10 |
Discontinued operations current assets | 820 | |
Total current assets | 2,106 | 6,255 |
Property and equipment, net | 4 | |
Right-of-use assets | 26 | 45 |
Other assets | 6 | 6 |
Discontinued operations-other assets | 33 | 34 |
Total assets | 2,171 | 6,344 |
Current liabilities: | ||
Accounts payable | 1,451 | 1,762 |
Royalties payable | 110 | 113 |
Accrued course expenses | 266 | 277 |
Accrued salaries, wages and benefits | 80 | 73 |
Operating lease liability, current portion | 26 | 25 |
Other accrued expenses | 3,164 | 3,888 |
Deferred revenue | 4,302 | 10,382 |
Short-term related party debt, net of unamortized debt discount of $26 | 20 | |
Current portion of long term-debt, net of unamortized debt discount of $0 | 1,018 | |
Discontinued operations-current liabilities | 9,809 | 11,286 |
Total current liabilities | 20,246 | 27,806 |
Long-term debt, net of current portion and net of unamortized debt discount of $492 | 1,908 | 1,900 |
Deferred tax liability, net | 1,513 | 134 |
Other long term liabilities | 120 | |
Operating lease liability, net of current portion | 20 | |
Total liabilities | 23,667 | 29,980 |
Commitments and contingencies (Note 13) | ||
Preferred stock, $0.0001 par value, 20,000,000 shares authorized, none issued | ||
Common stock, $0.0001 par value; 200,000,000 authorized; 33,262,697 and 23,279,197 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively | 3 | 2 |
Additional paid-in capital | 12,896 | 11,564 |
Cumulative foreign currency translation adjustment | 803 | 416 |
Accumulated deficit | (35,198) | (35,618) |
Total stockholders’ deficit | (21,496) | (23,636) |
Total liabilities and stockholders’ deficit | $ 2,171 | $ 6,344 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Unamortized debt discount (in Dollars) | $ 26 | $ 26 |
Net of unamortized debt discount (in Dollars) | 0 | 0 |
Unamortized debt discount (in Dollars) | $ 492 | $ 492 |
Preferred stock par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 33,262,697 | 23,279,197 |
Common stock, shares outstanding | 33,262,697 | 23,279,197 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Statement [Abstract] | ||||
Revenue | $ 1,379 | $ 7,439 | $ 7,361 | $ 21,564 |
Operating costs and expenses: | ||||
Direct course expenses | 675 | 1,234 | 1,899 | 5,077 |
Advertising and sales expenses | 729 | 64 | 1,343 | 1,977 |
Royalty expenses | 9 | 68 | ||
General and administrative expenses | 1,172 | 1,129 | 3,568 | 3,607 |
Total operating costs and expenses | 2,576 | 2,436 | 6,810 | 10,729 |
Income (loss) from operations | (1,197) | 5,003 | 551 | 10,835 |
Other income (expense): | ||||
Interest expense, net | (35) | (105) | (421) | (208) |
Other income (expense), net | 9 | (16) | 6 | (23) |
Gain on forgiveness of PPP Loan | 910 | 910 | ||
Total other income (expense), net | 884 | (121) | 495 | (231) |
Income (loss) from continuing operations before income taxes | (313) | 4,882 | 1,046 | 10,604 |
Income tax (expense) benefit | 118 | (926) | (797) | (1,921) |
Net income (loss) from continuing operations | (195) | 3,956 | 249 | 8,683 |
Income from discontinued operations | 733 | 171 | 2,842 | |
Net income from discontinued operations | 733 | 171 | 2,842 | |
Net income (loss) | $ (195) | $ 4,689 | $ 420 | $ 11,525 |
Basic earnings (loss) per common share - continuing operations (in Dollars per share) | $ (0.01) | $ 0.17 | $ 0.02 | $ 0.38 |
Basic earnings (loss) per common share - discontinued operations (in Dollars per share) | 0.03 | 0 | 0.12 | |
Basic earnings (loss) per common share (in Dollars per share) | (0.01) | 0.2 | 0.02 | 0.5 |
Diluted earnings (loss) per common share - continuing operations (in Dollars per share) | (0.01) | 0.17 | 0.01 | 0.37 |
Diluted earnings (loss) per common share - discontinued operations (in Dollars per share) | 0.03 | 0 | 0.12 | |
Diluted earnings (loss) per common share (in Dollars per share) | $ (0.01) | $ 0.2 | $ 0.01 | $ 0.49 |
Basic weighted average common shares outstanding (in Shares) | 33,064 | 23,138 | 26,373 | 23,046 |
Diluted weighted average common shares outstanding (in Shares) | 33,064 | 23,252 | 41,776 | 23,192 |
Comprehensive income: | ||||
Net income (loss) | $ (195) | $ 4,689 | $ 420 | $ 11,525 |
Foreign currency translation adjustments, net of tax of $0 | 336 | (704) | 387 | 524 |
Total comprehensive income | $ 141 | $ 3,985 | $ 807 | $ 12,049 |
Consolidated Statements of Op_2
Consolidated Statements of Operations and Comprehensive Income (Unaudited) (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Statement [Abstract] | ||||
Foreign currency translation adjustments, net of tax | $ 0 | $ 0 | $ 0 | $ 0 |
Consolidated Statements of Chan
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, 2019 | $ 2 | $ 11,552 | $ 710 | $ (51,627) | $ (39,363) |
Balance (in 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 (in 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 (in Shares) at Jun. 30, 2020 | 23,163 | ||||
Share-based compensation expense | 9 | 9 | |||
Issuance of common stock (in Shares) | 180 | ||||
Foreign currency translation adjustment, net of tax of $0 | (704) | (704) | |||
Net Income (loss) | 4,689 | 4,689 | |||
Balance at Sep. 30, 2020 | $ 2 | 11,575 | 1,234 | (40,102) | (27,291) |
Balance (in Shares) at Sep. 30, 2020 | 23,343 | ||||
Balance at Dec. 31, 2020 | $ 2 | 11,564 | 416 | (35,618) | (23,636) |
Balance (in Shares) at Dec. 31, 2020 | 23,279 | ||||
Beneficial conversion feature for senior secured convertible debenture | 375 | 375 | |||
Foreign currency translation adjustment, net of tax of $0 | 103 | 103 | |||
Net Income (loss) | 253 | 253 | |||
Balance at Mar. 31, 2021 | $ 2 | 11,939 | 519 | (35,365) | (22,905) |
Balance (in Shares) at Mar. 31, 2021 | 23,279 | ||||
Beneficial conversion feature for senior secured convertible debenture | 21 | 21 | |||
Share-based compensation expense | 31 | 31 | |||
Share-based compensation expense (in Shares) | 2,585 | ||||
Foreign currency translation adjustment, net of tax of $0 | (52) | (52) | |||
Net Income (loss) | 362 | 362 | |||
Balance at Jun. 30, 2021 | $ 3 | 12,345 | 467 | (35,003) | (22,188) |
Balance (in Shares) at Jun. 30, 2021 | 32,948 | ||||
Common stock and warrants issued for notes payable to related party from conversion of senior secured convertible debt – related party debt discount | $ 1 | 354 | 355 | ||
Common stock and warrants issued for notes payable to related party from conversion of senior secured convertible debt – related party debt discount (in Shares) | 7,084 | ||||
Beneficial conversion feature for senior secured convertible debenture | 500 | 500 | |||
Share-based compensation expense | 51 | 51 | |||
Share-based compensation expense (in Shares) | 315 | ||||
Foreign currency translation adjustment, net of tax of $0 | 336 | 336 | |||
Net Income (loss) | (195) | (195) | |||
Balance at Sep. 30, 2021 | $ 3 | $ 12,896 | $ 803 | $ (35,198) | $ (21,496) |
Balance (in Shares) at Sep. 30, 2021 | 33,263 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders’ Deficit (Unaudited) (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | |||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | |
Statement of Stockholders' Equity [Abstract] | ||||
Foreign currency translation adjustment, net of tax | $ 0 | $ 0 | $ 0 | $ 0 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 420 | $ 11,525 |
Less net income from discontinued operations | 171 | 2,842 |
Net income from continuing operations | 249 | 8,683 |
Depreciation and amortization | 4 | 47 |
Non-cash lease expense | 20 | 22 |
Gain on the sale of fixed assets and investment property | (33) | |
Share-based compensation | 82 | 23 |
Amortization of debt discount | 376 | |
Gain on debt extinguishment (PPP loan forgiveness) | (910) | |
Deferred income taxes | 1,469 | (476) |
Deferred course expenses | 875 | 3,086 |
Prepaid expenses and other receivable | 481 | 8,603 |
Inventory | 9 | 33 |
Other assets | 24 | |
Accounts payable-trade | (412) | 166 |
Royalties payable | (11) | (15) |
Accrued course expenses | (10) | (187) |
Accrued salaries, wages and benefits | 8 | (379) |
Operating lease liability | (20) | (15) |
Other accrued expenses | (449) | (6,449) |
Deferred revenue | (5,990) | (18,253) |
Net cash used in operating activities - continuing operations | (4,229) | (5,120) |
Net cash (used in) provided by operating activities - discontinued operations | (41) | 43 |
Net cash used in operating activities | (4,270) | (5,077) |
Proceeds from sale of investment property | 370 | |
Net cash provided by investing activities - continuing operations | 370 | |
Net cash used in investing activities - discontinued operations | ||
Net cash provided by investing activities | 370 | |
Principal payments on debt | (8) | (500) |
Proceeds from issuance of debt | 2,900 | |
Proceeds from borrowing Paycheck Protection Program loan | 1,900 | |
Proceeds from debentures including related parties | 900 | |
Net cash provided by financing activities - continuing operations | 2,792 | 2,400 |
Net cash provided by financing activities - discontinued operations | ||
Net cash provided by financing activities | 2,792 | 2,400 |
Effect of exchange rate differences on cash | 98 | (771) |
Net decrease in cash and cash equivalents and restricted cash | (1,380) | (3,078) |
Cash and cash equivalents and restricted cash, beginning of period, including cash in discontinued operations | 2,694 | 6,228 |
Cash and cash equivalents and restricted cash, end of period | 1,314 | 3,150 |
Supplemental disclosures: | ||
Cash paid during the period for interest | 107 | |
Cash received the period for income taxes, net of payments | (85) | |
Supplemental disclosure of non-cash activity: | ||
Supplemental non-cash amounts of lease liabilities arising from obtaining right-of-use assets/(decrease) of lease liability due to cancellation of leases | (34) | |
Common stock and warrants issued from conversion of senior convertible debenture – related party | 355 | |
Initial recognition of beneficial conversion feature for senior secured convertible debt | 896 | |
Note payable issued for insurance policy financing | $ 26 |
General
General | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
General | Note 1 - General 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, forums, telephone mentoring, one-on-one mentoring, coaching and e-learning. During the nine months ended September 30, 2021, we marketed our products and services under our Building Wealth with Legacy TM Building Wealth with Legacy TM Homemade Investor by Tarek El Moussa TM 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 courses expire, both of which could be several quarters after the student purchases a program and pays the fee. We recognize revenue immediately when we sell (i) our proprietary products delivered at time of sale and (ii) products fulfilled by third parties. 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 three days in length, on site or remotely, although we temporarily suspended providing on-site mentorships as a result of the COVID-19 pandemic) 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, for example, through his or her first real estate transaction. During the third quarter of 2021, we resumed providing on-site mentorships on a limited basis. We were founded in 1996, and through a reverse merger, became a publicly-held company in November 2014. 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. In March 2020, as a result of the COVID-19 pandemic, and the resulting worldwide restrictions on travel and social distancing, we temporarily ceased conducting live sales and fulfillment and furloughed substantially all of our employees. We resumed online operations in July 2020, and live operations on a limited basis in November 2020. The Company expects to conduct additional live events as lockdown restrictions continue to ease and hopes to return to a normal schedule over the coming months. The Company will continue following strict safety protocols at the live events. 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 of such activities will have on our financial performance. We are not able to fully quantify the impact that these factors will have on our financial results, but expect developments related to COVID-19 to continue to affect the Company’s financial performance in 2021 and beyond. Our operations are managed through three operating segments: (i) North America, (ii) United Kingdom, and (iii) Other Foreign Markets. Since January 1, 2020, we have operated under two brands: ● Building Wealth with Legacy TM Building Wealth with Legacy TM ● Homemade Investor by Tarek El Moussa TM Homemade Investor by Tarek El Moussa TM Building Wealth with Legacy TM 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 accompanying unaudited 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, 2020 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 Consolidated Statements of Operations and Comprehensive income 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 nine months ended September 30, 2021, 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. 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. On September 30, 2021, and December 31, 2020, 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 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 consolidated balance sheet. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts in the consolidated cash flow statements: September 30, December 31, 2021 2020 (in thousands) Cash and cash equivalents $ 690 $ 1,500 Restricted cash 624 1,180 Total cash, cash equivalents, and restricted cash shown in the cash flow statement $ 1,314 $ 2,680 Convertible Instruments The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging Activities” Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt. Stock Warrants. The Company accounts for stock warrants as equity in accordance with ASC 480 – Distinguishing Liabilities from Equity ASC 815 – Derivatives and Hedging 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 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 includes 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 | 9 Months Ended |
Sep. 30, 2021 | |
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. Recently Issued Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06 – Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) – Accounting for Convertible Instruments Contracts in an Entity’s Own Equity In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The application of this guidance will not have a material impact on our financial statements. In 2019, the FASB issued ASU No. 2019-12, “Income Taxes: Simplifying the Accounting for Income Taxes.” This standard simplifies the accounting and disclosure requirements for income taxes by clarifying existing guidance to improve consistency in application of ASC 740. This standard also removed the requirement to calculate income tax expense for the stand-alone financial statements of wholly owned subsidiaries. The guidance will be effective for fiscal years and interim periods beginning after December 15, 2020. Different components of the guidance require retrospective, modified retrospective or prospective adoption, and early adoption is permitted. We adopted this guidance in the first quarter of 2021, and the impact on our financial statements was not material. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2021 | |
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 $51.0 thousand and $9.0 thousand for the three months ended September 30, 2021 and 2020, respectively, and $82.0 and $23.0 thousand for the nine months ended September 30, 2021 and 2020, respectively, which are reported as a separate line item in the consolidated statements of changes in stockholders’ deficit. On April 20, 2021, pursuant to the 2015 Incentive Plan, we awarded a total of 945,000 shares of restricted stock to senior management, which are subject to a two-year or three-year cliff vesting, a total of 790,000 shares of restricted stock to key employees, which are subject to a three-year cliff vesting, and a total of 550,000 shares of restricted stock to the independent members of the Board of Directors, which are subject to a two-year cliff vesting. We also granted 300,000 shares of restricted stock to external consultants, which were fully vested at the grant date. The grant date price per share was $0.0631 for a total grant date fair value of $163.1 thousand. On August 27, 2021, we granted 315,000 shares of restricted stock to external consultants, which were fully vested at the grant date. The grant date price per share was $0.10 for a total grant date fair value of $31.5 thousand. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Note 4 - Discontinued Operations On January 27, 2021, Legacy Education Alliance Australia PTY Limited (“LEA Australia”), a wholly owned subsidiary of Legacy Education Alliance, Inc. (“LEAI”), appointed Brent Leigh Morgan and Christopher Stephen Bergin, both of the firm of Rodgers Reidy, 326 William Street, Melbourne VIC 3000 Australia, as Joint and Several Liquidators of LEA Australia, to supervise a Creditors Voluntary Liquidation of LEA Australia. Subject to the approval of the creditors of LEA Australia at a meeting held on February 23, 2021, AEDT (February 22, 2021, EST), the Joint Liquidators will wind down the business of LEA Australia and make distributions, if any, to its creditors in accordance with the applicable provisions of the Australian Corporations Act of 2001. The first meeting of creditors of LEA Australia was held on February 24, 2021, (AEDT), at which no resolutions were proposed by the creditors, no nominations for a Committee of Inspection were made, and no alternative liquidator was proposed. On March 2, 2021, Legacy Education Alliance Holdings, Inc. the sole shareholder of Legacy Education Alliance Hong Kong Limited (“LEA Hong Kong”), a subsidiary of the Company, adopted a resolution to wind up voluntarily the affairs of LEA Hong Kong and to appoint Cosimo Borrelli and Li Chung Ngai (also known as Anson Li), both of Borrelli Walsh Limited, Level 17, Tower 1, Admiralty Centre, 18 Harcourt Road, Hong Kong as Joint and Several Liquidators of LEA Hong Kong. At a meeting of the creditors of LEA Hong Kong held on March 2, 2021, the creditors similarly approved the voluntary winding up of LEA Hong Kong and the appointment of Cosimo Borrelli and Li Chung Ngai (also known as Anson Li), as Joint and Several Liquidators. The Joint and Several Liquidators will wind up the business of LEA Hong Kong and make distributions, if any, to its creditors in accordance with the applicable provisions of the Companies (Winding Up and Miscellaneous Provisions) Ordinance of Hong Kong. On March 7, 2021, Tigrent Learning Canada Inc. (“Tigrent Canada”), a wholly owned subsidiary of Legacy Education Alliance, Inc., filed an assignment in bankruptcy under section 49 of the Canada Bankruptcy and Insolvency Act (the “Act”) in the Office of the Superintendent of Bankruptcy Canada, District of Ontario, Division of Toronto, Court No. 31-2718213. Also on March 7, 2021, A. Farber & Partners was appointed trustee of the estate of Tigrent Canada. The trustee will wind down the business of Tigrent Canada and make distributions, if any, to its creditors in accordance with the applicable provisions of the Act. At the First Meeting of Creditors held on March 23, 2021, the creditors of Tigrent Canada approved the appointment of A. Farber & Partners as trustee of the estate of Tigrent Canada. 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 did 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. The impact of this transaction is reflected as a discontinued operation in the consolidated financial statements. The major classes of assets and liabilities of the entities classified as discontinued operations were as follows: September 30, December 31, 2021 2020 (in thousands) Major classes of assets Cash and cash equivalents $ — $ 14 Deferred course expenses — 806 Discontinued operations-current assets — 820 Other assets 33 34 Total major classes of assets - discontinued operations $ 33 $ 854 Major classes of liabilities Accounts payable $ 3,627 $ 3,698 Accrued course expenses 585 593 Other accrued expenses 437 1,582 Deferred revenue 5,160 5,413 Total major classes of liabilities - discontinued operations $ 9,809 $ 11,286 The financial results of the discontinued operations are as follows: Three Months Ended Nine Months Ended 2021 2020 2021 2020 (in thousands) Revenue $ — $ 1,742 $ 40 $ 5,522 Total operating costs and expenses — 764 907 2,436 (Loss) income from discontinued operations — 978 (867 ) 3,086 Other expense, net — 3 (80 ) 4 Income tax benefit (expense) — (248 ) 1,118 (248 ) Net income from discontinued operations $ — $ 733 $ 171 $ 2,842 |
Earnings Per Share (_EPS_)
Earnings Per Share (“EPS”) | 9 Months Ended |
Sep. 30, 2021 | |
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 stock options and warrants, and the if-converted method for convertible notes. Under the if-converted method, the convertible notes are assumed to have been converted at the beginning of the period or at time of issuance, if later, and the resulting common shares are included in the denominator. 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. 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 2,328,043 and 114,282 for the three months ended September 30, 2021, and 2020, respectively, and 1,438,505 and 146,109 for the nine months ended September 30, 2021, and 2020, respectively. Weighted average unvested restricted stock awards outstanding for the three months ended September 30, 2021 were not included in the computation of our diluted EPS, as inclusion would have been anti-dilutive, however for the three months ended September 30, 2020 and nine months ended September 30, 2021 and 2020, they were included as they would have been dilutive. The calculations of basic and diluted EPS are as follows: Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Weighted Weighted Average Loss Average Earnings Net Shares Per Net Shares Per Loss Outstanding Share Income Outstanding Share (in thousands, except per share data) (in thousands, except per share data) Basic: As reported $ (195 ) 33,064 $ 4,689 23,252 Amounts allocated to unvested restricted shares — — (23 ) (114 ) Amounts available to common stockholders $ (195 ) 33,064 $ (0.01 ) $ 4,666 23,138 $ 0.20 Diluted: Amounts allocated to unvested restricted shares — — 23 114 Amounts reallocated to unvested restricted shares — — (23 ) — Amounts available to stockholders and assumed conversions $ (195 ) 33,064 $ (0.01 ) $ 4,666 23,252 $ 0.20 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 Weighted Weighted Average Earnings Average Earnings Net Shares Per Net Shares Per Income Outstanding Share Income Outstanding Share (in thousands, except per share data) (in thousands, except per share data) Basic: As reported $ 420 27,812 $ 11,525 23,192 Amounts allocated to unvested restricted shares and warrants (22 ) (1,439 ) (73 ) (146 ) Amounts available to common stockholders $ 398 26,373 $ 0.02 $ 11,452 23,046 $ 0.50 Diluted: Amounts allocated to unvested restricted shares 23 1,439 73 146 Stock warrants — 3,964 — — Incremental shares to be issued for convertible note 31 10,000 — — Amounts reallocated to unvested restricted shares (23 ) — (73 ) — Amounts available to stockholders and assumed conversions $ 429 41,776 $ 0.01 $ 11,452 23,192 $ 0.49 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2021 | |
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). As of September 30, 2021 and December 31, 2020, the Company does not have any financial assets or liabilities measured and recorded at fair value on its consolidated balance sheet on a recurring basis. Financial Instruments. |
Short-Term and Long-Term Debt
Short-Term and Long-Term Debt | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Short-Term and Long-Term Debt | Note 7 - Short-Term and Long-Term Debt (in thousands) As of As of Senior Secured Convertible Debenture $ 500 $ — Debt Discount (492 ) — Senior Secured Convertible Debenture, net 8 — Paycheck Protection Program loan 1,000 1,900 Paycheck Protection Program loan 2 1,900 — IPFS Insurance Premium Note Payable 18 — Total debt, net of debt discount 2,926 1,900 Less current portion of long-term debt (1,018 ) — Total long-term debt, net of current portion $ 1,908 $ 1,900 Short-term related party debt: (in thousands) As of As of Senior Secured Convertible Debenture - related party $ 47 $ — Debt Discount-related party (27 ) Senior Secured Convertible Debenture - related party, net $ 20 $ — The following is a summary of scheduled debt maturities by year (in thousands): 2021 $ 9 2022 1,029 2023 — 2024 — 2025 — Thereafter 1,908 Total debt, net of debt discount $ 2,946 First Draw Paycheck Protection Program Note Agreement. On April 27, 2020, Elite Legacy Education, Inc. (“ELE”), a subsidiary of the Company, entered into a Promissory Note in favor of Pacific Premier Bank (“PPBI”), the lender, through the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) established pursuant to the CARES Act. The unsecured loan (the “First Draw PPP Loan”) proceeds were in the amount of $1,899,832. The First Draw PPP Loan 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. In March 2021, ELE was notified that PPBI sold substantially all of its PPP loans, including ELE’s loan, to The Loan Source, Inc. (“TLS”), which, together with its servicing partner, ACAP SME, LLC, took over the forgiveness and ongoing servicing process for ELE’s PPP loan. On August 4, 2021, ELE received notice from TLS that its First Draw PPP Loan had been partially forgiven in the amount of $900 thousand in principal and $11 thousand in interest. The remaining outstanding principal balance of $1,000 thousand is due on April 24, 2022. The accrued interest of $1.7 thousand through September 30, 2021, is due monthly beginning October 2021. Senior Secured Convertible Debenture and Exercise of Conversion Rights. On March 8, 2021, the Company issued a $375 thousand Senior Secured Convertible Debenture (“LTP Debenture”) to Legacy Tech Partners, LLC (“LTP”), a related party. The LTP Debenture accrues interest at a rate of 10% and is due on the earlier of the occurrence of certain liquidity events with respect to the Company and March 8, 2022. The LTP Debenture may be converted at any time after the issue date into shares of the Company’s Common Stock (the “Conversion Shares”) at a price equal to $0.05 per share. Together with each Conversion Share, a warrant will be issued with a strike price of $0.05 per share and an expiration date of March 8, 2026 (the “Warrants”). Under the term of the original LTP Debenture, LTP had an obligation to lend the Company an additional $625 thousand under the same terms prior to March 31, 2022, and an option to fund an additional $4 million under the same terms prior to March 8, 2024. LTP also has the option to extend the maturity date of each loan it makes to the Company, including the initial loan of $375 thousand for a term not to exceed four years from the original maturity date of that loan. Net proceeds were $314 thousand after legal fees of $61 thousand, which are included in our consolidated statement of operations for the nine months ended September 30, 2021. The LTP Debenture is secured by a lien on all the Company’s assets. The Company’s U.S. subsidiaries entered into Guaranties on March 9, 2021 in favor of LTP under which such subsidiaries guaranteed the Company’s obligations under the LTP Debenture and granted LTP a lien on all assets of such subsidiaries. The proceeds from the LTP Debenture were used to extinguish liabilities of the Company and to fund the development of the Education Technology (EdTech) business. The Warrants will not be listed for trading on any national securities exchange. The Warrants and the shares issuable upon conversion of the LTP Debenture are not being registered under the Securities Act of 1933, as amended (the “Securities Act”). The aggregate number of shares issuable upon conversion of the LTP Debenture and upon the exercise of the Warrants may not exceed 19.9% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares upon conversion of the Debenture and the exercise of the Warrants. At the Annual Meeting of Stockholders of the Company held on July 2, 2021, the stockholders approved the future issuance of shares to LTP upon conversion under the LTP Debenture in excess of the 19.9% limitation, but no such shares have been issued. On May 4, 2021, LTP exercised its conversion rights with respect to $330 thousand of the outstanding principal at the Conversion Price resulting in the issuance of 6.6 million shares of Common Stock to LTP. In addition, an equal number of warrants were issued on June 11, 2021 (see Note 8 – “Stock Warrants” On August 27, 2021, the Company amended the terms of the LTP Debenture to reduce LTP’s maximum funding obligation from $1 million to $675 thousand and to require LTP to fund the remaining principal balance of $300 thousand no later than October 15, 2021. On October 15, 2021, the Company received $100 thousand of the remaining $300 thousand funding obligation of LTP. On October 27, 2021, LTP funded the remaining funding obligation of $200 thousand. Second Draw Paycheck Protection Program Note Agreement. On April 20, 2021, Elite Legacy Education, Inc (ELE), a wholly-owned subsidiary of the Company, closed on an unsecured Paycheck Protection Program Note agreement (the “Promissory Note”) to borrow $1,899,832 from Cross River Bank, the lender, pursuant to the Paycheck Protection Program (“PPP”), originally created under the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, and extended to “Second Draw” PPP loans as described below. The PPP is intended to provide loans to qualified businesses to cover payroll and certain other identified costs. Funds from the loan may only be used for certain purposes, including payroll, benefits, rent, utilities, and certain covered operating expenses. All or a portion of the loan may be forgivable, as provided by the terms of the PPP. The Second Draw PPP Loan has an interest rate of 1.0% per annum and a term of 60 months. Payments will be deferred in accordance with the CARES Act, as modified by the Paycheck Protection Program Flexibility Act of 2020; however, interest will accrue during the deferral period. If all or any portion of the loan is not forgiven in accordance with the terms of the program, ELE will be obligated to make monthly payments of principal and interest in amounts to be calculated after the amount of loan forgiveness, if any, is determined to repay the balance of the loan in full prior to maturity. The Promissory Note contains customary events of default relating to, among other things, payment defaults and breaches of representations. ELE may prepay the loan at any time prior to maturity with no prepayment penalties. The principal balance amounted to $1.9 million, as of September 30, 2021. Debenture, Warrant and Guaranty Agreements, and Exercise of Conversion Rights. On May 4, 2021, Legacy Education Alliance, Inc., a Nevada corporation (the “Company”), issued a 10% Subordinated Secured Convertible Debenture (“Subordinated Debenture”) in the principal amount of $25 thousand to Michel Botbol, the Company’s Chairman and Chief Executive Officer. The Subordinated Debenture called for interest at a rate of 10% and would have been due on the earlier of the occurrence of certain liquidity events with respect to the Company and May 4, 2022. The Subordinated Debenture was convertible at any time after the issuance date into shares of the Company’s Common Stock (the “Conversion Shares”) at a price equal to $0.05 per share (“Conversion Price”). Together with each Conversion Share, a warrant would be issued with a strike price of $0.05 per share and an expiration date of May 4, 2026 (the “Warrants”). Mr. Botbol also had the option to extend the maturity date of the loan for a term not to exceed four years from the original maturity date of that loan. The Subordinated Debenture is secured by a lien on all the Company’s assets subordinated to the lien granted to Legacy Tech Partners, LLC (“LTP”). The Company’s U.S. subsidiaries are required to enter into Guaranties in favor of Botbol under which such subsidiaries guaranteed the Company’s obligations under the Debenture and granted Botbol a lien on all assets of such subsidiaries subject to the lien held by LTP. The use of proceeds from the Debenture was to extinguish liabilities of the Company and to fund working capital, general corporate purposes and the development of administrative functions. The aggregate number of shares issuable upon conversion of the Debenture and upon the exercise of the Warrants may not exceed 19.9% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares upon conversion of the Debenture and the exercise of the Warrants. On May 4, 2021, Mr. Botbol exercised his conversion rights with respect to the entire $25 thousand of outstanding principal at the Conversion Price resulting in the issuance of 500 thousand shares of Common Stock to him. In addition, an equal number of warrants were issued on May 4, 2021 (see Note 8 – “Stock Warrants” Senior Secured Convertible Debenture, Advisory Agreement, and Intercreditor Agreement On August 27, 2021, the Company issued a $500 thousand Senior Secured Convertible Debenture (GLD “Debenture”) to GLD Legacy Holdings, LLC, (GLD). The GLD Debenture accrues interest at a rate of 10% and is due on the earlier of the occurrence of certain liquidity events with respect to the Company or August 27, 2026. The GLD Debenture may be converted at any time after the issue date into shares of the Company’s Common Stock (the “Conversion Shares”) at a price equal to $0.05 per share. Together with each Conversion Share, a warrant will be issued with a strike price of $0.05 per share and an expiration date of August 27, 2026 (the “Warrants”). The cash receipt date, August 27, 2021, was used for the market value of stock on measurement date, at $0.10 per common share, resulting in the recognition of debt discount and additional paid-in capital of $500 thousand, respectively, within the consolidated balance sheet for the nine-months ended September 30, 2021, which represents the intrinsic value of the conversion option. The Company evaluated the convertible debenture under ASC 470-20 and recognized a debt discount of $500 thousand related to the beneficial conversion feature during the nine months ended September 30, 2021, with a corresponding credit to additional paid-in capital. The related amortization of the debt discount to interest expense for the nine-month ended September 30, 2021, amounted to $8.3 thousand. Net proceeds were $485.2 thousand after legal fees and transaction expenses of $14.8 thousand, which are included in our consolidated statement of operations for the nine months ended September 30, 2021. GLD has an option to lend the Company an additional $500 thousand under the same terms prior to December 31, 2023. The GLD Debenture is secured by a lien on all the Company’s assets. The Company’s U.S. subsidiaries entered into Guaranties on August 27, 2021, in favor of GLD under which such subsidiaries guaranteed the Company’s obligations under the GLD Debenture and granted GLD a lien on all assets of such subsidiaries. The proceeds from the GLD Debenture were used for working capital for the development of the Company’s Legacy EdTech business and for working capital for the operation of the Company’s seminar business. The Warrants will not be listed for trading on any national securities exchange. The Warrants and the shares issuable upon conversion of the Debenture are not being registered under the Securities Act of 1933, as amended (the “Securities Act”). The aggregate number of shares issuable upon conversion of the Debenture and upon the exercise of the Warrants may not exceed 19.9% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares upon conversion of the Debenture and the exercise of the Warrants. Under the terms of the GLD Debenture, and until all of the obligations of the Company under the GLD Debenture have been paid in full, GLD may appoint one member to the Board of Directors of the Company, subject to the review and approval of the GLD appointed candidate by the Nominating and Governance Committee of the Company. In lieu of cash compensation, the GLD appointed director will receive a grant of 150,000 restricted shares of Common Stock of the Company upon appointment to the Board. Pursuant to the terms of the GLD Debenture, on August 27, 2021, the Company entered into an Advisory Services Agreement with GLD Advisory Services, LLC, (GLDAS) an affiliate of GLD. GLDAS will provide the Company and its subsidiaries with business, finance and organizational strategy, advisory, consulting and other services related to the business of the Company. In lieu of cash compensation, on the effective date of the agreement, August 27, 2021, GLDAS received fully vested 315,000 shares of Common Stock of the Company and will receive 315,000 shares of Common Stock thereafter on each anniversary until the GLD debenture has been repaid in full. On August 27, 2021, in connection with the GLD Debenture, the Company entered into an Intercreditor Agreement with GLD, LTP, and Barry Kostiner, a related party. LTP and GLD agreed that LTP’s and GLD’s respective rights under the LTP Debenture and GLD Debenture would rank equally and ratably in all respects to one another including, without limitation, rights in collateral, right and priority of payment and repayment of principal, interest, and all fees and other amounts. The Intercreditor Agreement also appoints Barry Kostiner as Servicing Agent to act on behalf of all GLD and LTP, subject to the terms of the agreement, with respect to (a) enforcing GLD’s and LTP’s rights and remedies, and the Company’s obligations, under the Debentures. IPFS Premium Finance Agreement On July 30, 2021, the Company entered into a premium finance agreement for insurance coverage in the amount of $26 thousand at an interest rate of 5.55% for 10 months. The balance remaining as of September 30, 2021, is $18 thousand. |
Stock Warrants
Stock Warrants | 9 Months Ended |
Sep. 30, 2021 | |
Warrants Disclosure [Abstract] | |
Stock Warrants | Note 8 - Stock Warrants On May 4, 2021, the Company issued 500,000 warrants to M. Botbol, a related party, in connection with conversion of a 10% subordinated convertible debenture in the amount of $25,000 (see Note 7 – “Short-Term and Long-Term Debt” On June 11, 2021, the Company issued 6,583,500 warrants to Legacy Tech Partners, LLC (LTP), a related party, in connection with conversion of a 10% subordinated convertible debenture in the amount of $330,000 of outstanding principal (see Note 7 – “Short-Term and Long-Term Debt” A summary of the warrant activities for the nine months ended September 30, 2021, is as follows: Warrants Outstanding Number of Weighted Weighted Aggregate 1 Balance as of January 1, 2021 - - - - Granted 7,083,500 $ 0.05 - - Balance as of September 30, 2021 7,083,500 $ 0.05 4.5 270 Exercisable as of September 30, 2021 7,083,500 $ 0.05 4.5 270 1 The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.0881 for our common stock on September 30, 2021. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 9 - 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 2020 and 2021. We recorded income tax benefit of $0.1 million and income tax expense of $1.00 million for the three months ended September 30, 2021 and 2020, respectively. We recorded income tax expense of $0.8 million and $1.9 million for the nine months ended September 30, 2021 and 2020 respectively. Our effective tax rate was 37.7% and 19.5% for the three months ended September 30, 2021 and 2020 and 76.2% and 18.1% for the nine months ended September 30, 2021 and 2020, respectively. Our effective tax rates differed from the U.S. statutory corporate tax rate of 26% primarily because of our reduced operations while also recognizing revenues from the expiration of student contracts. 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 September 30, 2021 and December 31, 2020, we retained a valuation allowance of $3.4 million and $3.6 million, respectively, for a certain number of our international subsidiaries. During the nine months ended September 30, 2021 and 2020, there were no material changes in uncertain tax positions. We do not expect any significant changes to unrecognized tax benefits in this and next year. We estimate $0.0 million and $0.3 million of the unrecognized tax benefits, which if recognized, would impact the effective tax rate at September 30, 2021 and December 31, 2020, 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 consolidated statements of operations and comprehensive income. Our federal income tax returns for the years subsequent to 2018 are subject to examination by the Internal Revenue Service. Our state tax returns for all years after 2018 or 2017, 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 2014 are subject to examination. |
Concentration Risk
Concentration Risk | 9 Months Ended |
Sep. 30, 2021 | |
Risks and Uncertainties [Abstract] | |
Concentration Risk | Note 10 - 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 September 30, 2021 and December 31, 2020, including foreign subsidiaries, without FDIC coverage were $0.0 million and $0.8 million, respectively. Revenue. A significant portion of our revenue was derived from the Rich Dad brands, as a result of contracts with students entered into prior to the expiration, in 2019, of our License Agreement with Rich Dad Operating Company, LLC. For the three months ended September 30, 2021 and 2020, Rich Dad brands provided 53.8% and 78.4% of our revenue. For the nine months ended September 30, 2021 and 2020, Rich Dad brands provided 58.9% and 77.4% of our revenue. In addition, we have operations in North America, United Kingdom and Other foreign markets (see Note 11 — 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 | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | Note 11 - 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 Nine Months Ended As a percentage of total revenue 2021 2020 2021 2020 North America 100.0 % 97.0 % 63.5 % 96.7 % U.K. — % 0.6 % 36.5 % 1.1 % Other foreign markets — % 2.4 % — % 2.2 % Total consolidated revenue 100.0 % 100.0 % 100.0 % 100.0 % Operating results for the segments are as follows: Three Months Ended Nine Months Ended 2021 2020 2021 2020 Segment revenue (In thousands) (In thousands) North America $ 1,379 $ 7,211 $ 4,672 $ 20,851 U.K. — 47 2,689 245 Other foreign markets — 181 — 468 Total consolidated revenue $ 1,379 $ 7,439 $ 7,361 $ 21,564 Three Months Ended Nine Months Ended 2021 2020 2021 2020 Segment gross profit contribution * (In thousands) (In thousands) North America $ (16 ) $ 5,951 $ 1,919 $ 13,625 U.K. (10 ) 13 2,199 312 Other foreign markets 1 168 1 505 Total consolidated gross profit $ (25 ) $ 6,132 $ 4,119 $ 14,442 * Segment gross profit is calculated as revenue less direct course expenses, advertising and sales expenses and royalty expenses. Three Months Ended Nine Months Ended 2021 2020 2021 2020 Depreciation and amortization expenses (In thousands) (In thousands) North America $ — $ 8 $ 2 $ 36 U.K. — 4 2 11 Other foreign markets — (1 ) — — Total consolidated depreciation and amortization expenses $ — $ 11 $ 4 $ 47 September 30, December 31, 2021 2020 Segment identifiable assets (In thousands) North America $ 1,774 $ 3,834 U.K. 125 1,266 Other foreign markets 183 192 Total consolidated identifiable assets $ 2,082 $ 5,292 |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2021 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | Note 12 - 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 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 September 30, 2021, we have deferred revenue of $4.3 million related to contractual commitments with customers where the performance obligation will be satisfied over time, which ranges from six to twenty-four months. The revenue associated with these performance obligations is recognized as the obligation is satisfied. As of September 30, 2021, we maintain a reserve for breakage of $2.0 million for the fulfillment of our obligation to students whose contracts expired during our COVID-19 60-day operational hiatus during Q2 2020 (see Note 1 – “ General The following tables disaggregate our segment revenue by revenue source: Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 North U.K. Other Total North U.K. Other Total (In thousands) (In thousands) Revenue Type: Seminars $ 1,272 $ — $ — $ 1,272 $ 6,783 $ 47 $ 141 $ 6,971 Products 107 — — 107 70 — — 70 Coaching and Mentoring — — — — 7 — 3 10 Online and Subscription — — — — 351 — 37 388 Other — — — — — — — — Total revenue $ 1,379 $ — $ — $ 1,379 $ 7,211 $ 47 $ 181 $ 7,439 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 North U.K. Other Total North U.K. Other Total (In thousands) (In thousands) Revenue Type: Seminars $ 4,300 $ 880 $ — $ 5,180 $ 17,940 $ 245 $ 425 $ 18,610 Products 198 — — 198 464 — — 464 Coaching and Mentoring — — — — 1,050 — 3 1,053 Online and Subscription 11 — — 11 1,281 — 40 1,321 Other 163 1,809 — 1,972 116 — — 116 Total revenue $ 4,672 $ 2,689 $ — $ 7,361 $ 20,851 $ 245 $ 468 $ 21,564 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 13 - Commitments and Contingencies Licensing agreements We are committed to pay royalties for the usage of certain brands, as governed by various licensing agreements, including T&B Seminars, Inc., and Rich Dad. Total royalty expenses included in our Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2020 were $9.0 thousand and $68.0 thousand, respectively. There were no royalty expenses recorded for the three and nine months ended September 30, 2021. 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 September 30, 2021 and December 31, 2020, were $0.6 million and $1.2 million, respectively. These balances are included on the 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 September 30, 2021 and December 31, 2020, 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 Other Legal Proceedings. In the Matter of Elite Legacy Education UK Ltd., Proposal for a Company Voluntary Arrangement |
Leases
Leases | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Leases | Note 14 - 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 non-lease 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 September 30, 2021 and December 31, 2020 The table below presents the lease related assets and liabilities recorded on the Company’s Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020: Classification on the Balance Sheet September 30, December 31, (in thousands) Operating lease right of use assets $ 26 $ 45 Total lease assets $ 26 $ 45 Current operating lease liabilities $ 26 $ 25 Long-term operating lease liabilities $ — $ 20 Total lease liabilities $ 26 $ 45 Lease cost for the three and nine months ended September 30, 2021 and 2020 The table below presents the lease related costs recorded on the Company’s Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020: Three Months Ended Nine Months Ended Classification 2021 2020 2021 2020 (in thousands) (in thousands) General and administrative expenses $ 7 $ 12 $ 20 $ 22 Total lease cost $ 7 $ 12 $ 20 $ 22 Other Information The table below presents supplemental cash flow information related to leases for the nine months ended September 30, 2021 and 2020: Nine Months Ended 2021 2020 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 20 $ 15 Supplemental non-cash amounts of lease liabilities arising from obtaining right-of-use assets/(decrease) of lease liability due to cancellation of leases — (34 ) 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 September 30, 2021 and December 31, 2020: September 30, December 31, Weighted average remaining lease term - operating leases 1.00 years 1.75 years Weighted average discount rate - operating leases 12.00 % 12.00 % There are no lease arrangements where the Company is the lessor. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 15 - Subsequent Events On October 15, 2021, the Company entered into a Stock Purchase and Option Agreement (“the Purchase Agreement”) with NCW, LLC, a Wyoming limited liability company, pursuant to which, subject to certain conditions, (i) NCW purchased 20 million shares of common stock of the Company (“Purchase Shares”) for a total aggregate price of $2,000 and (ii) in exchange for an aggregate purchase price of $12 thousand, an option to purchase, from time to time, up to an additional 120 million shares of common stock of the Company (“Option Shares”) for a price per share of $0.05833, as may be adjusted from time to time pursuant to the Purchase Agreement. NCW’s option to purchase additional shares under the Purchase Agreement shall expire on October 15, 2023. The Option Price is subject to adjustment upon the occurrence of certain events as described in the Purchase Agreement. Because the Purchase Agreement was approved by the Company’s Board of Directors prior to NCW acquiring any of the Purchase Shares or Option Shares, NCW is not an Acquiring Person under the Rights Agreement between the Company and Broadridge Corporate Issuer Solutions, Inc. The obligations of the Company to consummate the transaction shall be conditioned upon the receipt by the Company from LTP under the amended terms of the 10% Senior Secured Convertible note dated March 8, 2021 as follows: (i) $100 thousand not later than October 15, 2021 and (ii) $100 thousand not later than November 15, 2021 and (iii) $100 thousand not later than December 15, 2021. LTP timely funded the first $100 thousand installment on October 15, 2021. On October 27, 2021, LTP funded the remaining two installments of $200 thousand. The proposed issuances of the Purchase Shares and Option Shares have not been listed for trading on any national securities exchange and have not been registered under the Securities and Exchange Act of 1933. On November 4, 2021, Cary Sucoff, a member of the Board of Directors (the “Board”) of the Company and of its Nominating & Corporate Governance Committee (Chair) and its Audit Committee, resigned as a Board member, effective immediately. Mr. Sucoff’s resignation is not related to any disagreement with the Company’s operations, policies, or practices. Effective November 4, 2021, the Company amended the terms of the 315,000 restricted common shares granted to Mr. Sucoff, so that all of such shares are fully vested. On November 4, 2021, Peter W. Harper, a member of the board and of its Audit Committee (Chair) and its Compensation Committee, resigned as a Board member, effective immediately. Mr. Harper’s resignation is not related to any disagreement with the Company’s operations, policies, or practices. Effective November 4, 2021, the Company amended the terms of the 315,000 restricted common shares granted to Mr. Harper, so that all of such shares are fully vested. On November 4, 2021, James E. May, the General Counsel and Secretary of the company and its subsidiaries, resigned from all such roles effective immediately. On November 8, 2021, Vanessa Guzmán-Clark, the Vice President and Chief Financial Officer of the Company, resigned from all such roles effective immediately. Mr. Barry Kostiner, a member of the Board and Manager of Capital Markets, will assume the interim role of principal financial and accounting officer of the Company. Mr. Kostiner shall be appointed Secretary of the Company. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
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, forums, telephone mentoring, one-on-one mentoring, coaching and e-learning. During the nine months ended September 30, 2021, we marketed our products and services under our Building Wealth with Legacy TM Building Wealth with Legacy TM Homemade Investor by Tarek El Moussa TM 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 courses expire, both of which could be several quarters after the student purchases a program and pays the fee. We recognize revenue immediately when we sell (i) our proprietary products delivered at time of sale and (ii) products fulfilled by third parties. 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 three days in length, on site or remotely, although we temporarily suspended providing on-site mentorships as a result of the COVID-19 pandemic) 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, for example, through his or her first real estate transaction. During the third quarter of 2021, we resumed providing on-site mentorships on a limited basis. We were founded in 1996, and through a reverse merger, became a publicly-held company in November 2014. 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. In March 2020, as a result of the COVID-19 pandemic, and the resulting worldwide restrictions on travel and social distancing, we temporarily ceased conducting live sales and fulfillment and furloughed substantially all of our employees. We resumed online operations in July 2020, and live operations on a limited basis in November 2020. The Company expects to conduct additional live events as lockdown restrictions continue to ease and hopes to return to a normal schedule over the coming months. The Company will continue following strict safety protocols at the live events. 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 of such activities will have on our financial performance. We are not able to fully quantify the impact that these factors will have on our financial results, but expect developments related to COVID-19 to continue to affect the Company’s financial performance in 2021 and beyond. Our operations are managed through three operating segments: (i) North America, (ii) United Kingdom, and (iii) Other Foreign Markets. Since January 1, 2020, we have operated under two brands: ● Building Wealth with Legacy TM Building Wealth with Legacy TM ● Homemade Investor by Tarek El Moussa TM Homemade Investor by Tarek El Moussa TM Building Wealth with Legacy TM |
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 accompanying unaudited 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, 2020 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 Consolidated Statements of Operations and Comprehensive income 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 nine months ended September 30, 2021, 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. |
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. On September 30, 2021, and December 31, 2020, 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 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 consolidated balance sheet. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts in the consolidated cash flow statements: September 30, December 31, 2021 2020 (in thousands) Cash and cash equivalents $ 690 $ 1,500 Restricted cash 624 1,180 Total cash, cash equivalents, and restricted cash shown in the cash flow statement $ 1,314 $ 2,680 |
Convertible Instruments | Convertible Instruments The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging Activities” Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt. |
Stock Warrants | Stock Warrants. The Company accounts for stock warrants as equity in accordance with ASC 480 – Distinguishing Liabilities from Equity ASC 815 – Derivatives and Hedging |
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 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 includes 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) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Schedule of reconciliation of cash, cash equivalents, and restricted cash | September 30, December 31, 2021 2020 (in thousands) Cash and cash equivalents $ 690 $ 1,500 Restricted cash 624 1,180 Total cash, cash equivalents, and restricted cash shown in the cash flow statement $ 1,314 $ 2,680 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of assets and liabilities | September 30, December 31, 2021 2020 (in thousands) Major classes of assets Cash and cash equivalents $ — $ 14 Deferred course expenses — 806 Discontinued operations-current assets — 820 Other assets 33 34 Total major classes of assets - discontinued operations $ 33 $ 854 Major classes of liabilities Accounts payable $ 3,627 $ 3,698 Accrued course expenses 585 593 Other accrued expenses 437 1,582 Deferred revenue 5,160 5,413 Total major classes of liabilities - discontinued operations $ 9,809 $ 11,286 |
Schedule of discontinued operations income statement | Three Months Ended Nine Months Ended 2021 2020 2021 2020 (in thousands) Revenue $ — $ 1,742 $ 40 $ 5,522 Total operating costs and expenses — 764 907 2,436 (Loss) income from discontinued operations — 978 (867 ) 3,086 Other expense, net — 3 (80 ) 4 Income tax benefit (expense) — (248 ) 1,118 (248 ) Net income from discontinued operations $ — $ 733 $ 171 $ 2,842 |
Earnings Per Share (_EPS_) (Tab
Earnings Per Share (“EPS”) (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of calculations of basic and diluted EPS | Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Weighted Weighted Average Loss Average Earnings Net Shares Per Net Shares Per Loss Outstanding Share Income Outstanding Share (in thousands, except per share data) (in thousands, except per share data) Basic: As reported $ (195 ) 33,064 $ 4,689 23,252 Amounts allocated to unvested restricted shares — — (23 ) (114 ) Amounts available to common stockholders $ (195 ) 33,064 $ (0.01 ) $ 4,666 23,138 $ 0.20 Diluted: Amounts allocated to unvested restricted shares — — 23 114 Amounts reallocated to unvested restricted shares — — (23 ) — Amounts available to stockholders and assumed conversions $ (195 ) 33,064 $ (0.01 ) $ 4,666 23,252 $ 0.20 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 Weighted Weighted Average Earnings Average Earnings Net Shares Per Net Shares Per Income Outstanding Share Income Outstanding Share (in thousands, except per share data) (in thousands, except per share data) Basic: As reported $ 420 27,812 $ 11,525 23,192 Amounts allocated to unvested restricted shares and warrants (22 ) (1,439 ) (73 ) (146 ) Amounts available to common stockholders $ 398 26,373 $ 0.02 $ 11,452 23,046 $ 0.50 Diluted: Amounts allocated to unvested restricted shares 23 1,439 73 146 Stock warrants — 3,964 — — Incremental shares to be issued for convertible note 31 10,000 — — Amounts reallocated to unvested restricted shares (23 ) — (73 ) — Amounts available to stockholders and assumed conversions $ 429 41,776 $ 0.01 $ 11,452 23,192 $ 0.49 |
Short-Term and Long-Term Debt (
Short-Term and Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of short-term and long-term debt | (in thousands) As of As of Senior Secured Convertible Debenture $ 500 $ — Debt Discount (492 ) — Senior Secured Convertible Debenture, net 8 — Paycheck Protection Program loan 1,000 1,900 Paycheck Protection Program loan 2 1,900 — IPFS Insurance Premium Note Payable 18 — Total debt, net of debt discount 2,926 1,900 Less current portion of long-term debt (1,018 ) — Total long-term debt, net of current portion $ 1,908 $ 1,900 |
Schedule short-term related party debt | (in thousands) As of As of Senior Secured Convertible Debenture - related party $ 47 $ — Debt Discount-related party (27 ) Senior Secured Convertible Debenture - related party, net $ 20 $ — |
Schedule of debt maturities | 2021 $ 9 2022 1,029 2023 — 2024 — 2025 — Thereafter 1,908 Total debt, net of debt discount $ 2,946 |
Stock Warrants (Tables)
Stock Warrants (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Warrants Disclosure [Abstract] | |
Schedule of summary of the warrant activity | Warrants Outstanding Number of Weighted Weighted Aggregate 1 Balance as of January 1, 2021 - - - - Granted 7,083,500 $ 0.05 - - Balance as of September 30, 2021 7,083,500 $ 0.05 4.5 270 Exercisable as of September 30, 2021 7,083,500 $ 0.05 4.5 270 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Schedule of total revenue attributable to each segment | Three Months Ended Nine Months Ended As a percentage of total revenue 2021 2020 2021 2020 North America 100.0 % 97.0 % 63.5 % 96.7 % U.K. — % 0.6 % 36.5 % 1.1 % Other foreign markets — % 2.4 % — % 2.2 % Total consolidated revenue 100.0 % 100.0 % 100.0 % 100.0 % |
Schedule of operating results for the segments | Three Months Ended Nine Months Ended 2021 2020 2021 2020 Segment revenue (In thousands) (In thousands) North America $ 1,379 $ 7,211 $ 4,672 $ 20,851 U.K. — 47 2,689 245 Other foreign markets — 181 — 468 Total consolidated revenue $ 1,379 $ 7,439 $ 7,361 $ 21,564 Three Months Ended Nine Months Ended 2021 2020 2021 2020 Segment gross profit contribution * (In thousands) (In thousands) North America $ (16 ) $ 5,951 $ 1,919 $ 13,625 U.K. (10 ) 13 2,199 312 Other foreign markets 1 168 1 505 Total consolidated gross profit $ (25 ) $ 6,132 $ 4,119 $ 14,442 |
Schedule of operating results for the segments | Three Months Ended Nine Months Ended 2021 2020 2021 2020 Depreciation and amortization expenses (In thousands) (In thousands) North America $ — $ 8 $ 2 $ 36 U.K. — 4 2 11 Other foreign markets — (1 ) — — Total consolidated depreciation and amortization expenses $ — $ 11 $ 4 $ 47 |
Schedule of segment identifiable assets | September 30, December 31, 2021 2020 Segment identifiable assets (In thousands) North America $ 1,774 $ 3,834 U.K. 125 1,266 Other foreign markets 183 192 Total consolidated identifiable assets $ 2,082 $ 5,292 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Revenue Recognition [Abstract] | |
Schedule of segment revenue | Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 North U.K. Other Total North U.K. Other Total (In thousands) (In thousands) Revenue Type: Seminars $ 1,272 $ — $ — $ 1,272 $ 6,783 $ 47 $ 141 $ 6,971 Products 107 — — 107 70 — — 70 Coaching and Mentoring — — — — 7 — 3 10 Online and Subscription — — — — 351 — 37 388 Other — — — — — — — — Total revenue $ 1,379 $ — $ — $ 1,379 $ 7,211 $ 47 $ 181 $ 7,439 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 North U.K. Other Total North U.K. Other Total (In thousands) (In thousands) Revenue Type: Seminars $ 4,300 $ 880 $ — $ 5,180 $ 17,940 $ 245 $ 425 $ 18,610 Products 198 — — 198 464 — — 464 Coaching and Mentoring — — — — 1,050 — 3 1,053 Online and Subscription 11 — — 11 1,281 — 40 1,321 Other 163 1,809 — 1,972 116 — — 116 Total revenue $ 4,672 $ 2,689 $ — $ 7,361 $ 20,851 $ 245 $ 468 $ 21,564 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Schedule of lease related assets and liabilities | Classification on the Balance Sheet September 30, December 31, (in thousands) Operating lease right of use assets $ 26 $ 45 Total lease assets $ 26 $ 45 Current operating lease liabilities $ 26 $ 25 Long-term operating lease liabilities $ — $ 20 Total lease liabilities $ 26 $ 45 |
Schedule of operating lease cost | Three Months Ended Nine Months Ended Classification 2021 2020 2021 2020 (in thousands) (in thousands) General and administrative expenses $ 7 $ 12 $ 20 $ 22 Total lease cost $ 7 $ 12 $ 20 $ 22 |
Schedule of cash flow information related to leases | Nine Months Ended 2021 2020 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 20 $ 15 Supplemental non-cash amounts of lease liabilities arising from obtaining right-of-use assets/(decrease) of lease liability due to cancellation of leases — (34 ) |
Schedule of weighted average remaining lease terms and weighted average discount rates | September 30, December 31, Weighted average remaining lease term - operating leases 1.00 years 1.75 years Weighted average discount rate - operating leases 12.00 % 12.00 % |
General (Details)
General (Details) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Number of operating segments | 3 |
General (Details) - Schedule of
General (Details) - Schedule of reconciliation of cash, cash equivalents, and restricted cash - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Schedule of reconciliation of cash, cash equivalents, and restricted cash [Abstract] | ||
Cash and cash equivalents | $ 690 | $ 1,500 |
Restricted cash | 624 | 1,180 |
Total cash, cash equivalents, and restricted cash shown in the cash flow statement | $ 1,314 | $ 2,680 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Aug. 27, 2021 | Apr. 20, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Share-Based Compensation (Details) [Line Items] | ||||||
Share-based compensation expenses related to restricted stock grants | $ 51,000 | $ 9,000 | $ 82,000 | $ 23,000 | ||
Number of shares issued (in Shares) | 315,000 | 300,000 | ||||
Grant date price per fair value (in Dollars per share) | $ 0.1 | $ 0.0631 | ||||
Grant date fair value | $ 31,500 | $ 163,100 | ||||
Restricted Stock [Member] | ||||||
Share-Based Compensation (Details) [Line Items] | ||||||
Number of shares issued (in Shares) | 790,000 | |||||
2015 Incentive Plan [Member] | ||||||
Share-Based Compensation (Details) [Line Items] | ||||||
Number of shares issued (in Shares) | 945,000 | |||||
Board of Directors [Member] | ||||||
Share-Based Compensation (Details) [Line Items] | ||||||
Number of shares issued (in Shares) | 550,000 |
Discontinued Operations (Detail
Discontinued Operations (Details) | 9 Months Ended |
Sep. 30, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued operations, description | On November 26, 2019, Legacy UK’s assets and deferred revenues sold for £300 thousand (British pounds) to Mayflower Alliance LTD. |
Discontinued Operations (Deta_2
Discontinued Operations (Details) - Schedule of assets and liabilities - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Major classes of assets | ||
Cash and cash equivalents | $ 14 | |
Deferred course expenses | 806 | |
Discontinued operations-current assets | 820 | |
Other assets | 33 | 34 |
Total major classes of assets - discontinued operations | 33 | 854 |
Major classes of liabilities | ||
Accounts payable | 1,451 | 1,762 |
Discontinued Operations [Member] | ||
Major classes of liabilities | ||
Accounts payable | 3,627 | 3,698 |
Accrued course expenses | 585 | 593 |
Other accrued expenses | 437 | 1,582 |
Deferred revenue | 5,160 | 5,413 |
Total major classes of liabilities - discontinued operations | $ 9,809 | $ 11,286 |
Discontinued Operations (Deta_3
Discontinued Operations (Details) - Schedule of discontinued operations income statement - Discontinued Operations [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Discontinued Operations (Details) - Schedule of discontinued operations income statement [Line Items] | ||||
Revenue | $ 1,742 | $ 40 | $ 5,522 | |
Total operating costs and expenses | 764 | 907 | 2,436 | |
(Loss) income from discontinued operations | 978 | (867) | 3,086 | |
Other expense, net | 3 | (80) | 4 | |
Income tax benefit | (248) | 1,118 | (248) | |
Net income from discontinued operations | $ 733 | $ 171 | $ 2,842 |
Earnings Per Share (_EPS_) (Det
Earnings Per Share (“EPS”) (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Earnings Per Share [Abstract] | ||||
Weighted average unvested restricted stock awards outstanding | 2,328,043 | 114,282 | 1,438,505 | 146,109 |
Earnings Per Share (_EPS_) (D_2
Earnings Per Share (“EPS”) (Details) - Schedule of calculations of basic and diluted EPS - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Schedule of calculations of basic and diluted EPS [Abstract] | ||||
As reported, Net Income (in Dollars) | $ (195) | $ 4,689 | $ 420 | $ 11,525 |
As reported, Weighted Average Shares Outstanding | 33,064 | 23,252 | 27,812 | 23,192 |
Amounts allocated to unvested restricted shares, Net Income (in Dollars) | $ (23) | $ (22) | $ (73) | |
Amounts allocated to unvested restricted shares, Weighted Average Shares Outstanding | (114) | (1,439) | (146) | |
Amounts available to common stockholders, Net Income (in Dollars) | $ (195) | $ 4,666 | $ 398 | $ 11,452 |
Amounts available to common stockholders, Weighted Average Shares | 33,064 | 23,138 | 26,373 | 23,046 |
Amounts available to common stockholders, Earnings Per Share (in Dollars per share) | $ (0.01) | $ 0.2 | $ 0.02 | $ 0.5 |
Amounts allocated to unvested restricted shares, Net Income (in Dollars) | $ 23 | $ 23 | $ 73 | |
Amounts allocated to unvested restricted shares, Weighted Average Shares Outstanding | 114 | 1,439 | 146 | |
Stock warrants, Net Income (in Dollars) | ||||
Stock warrants, Weighted Average Shares Outstanding | 3,964 | |||
Incremental shares to be issued for convertible note, Net Income | 31 | |||
Incremental shares to be issued for convertible note, Weighted Average Shares Outstanding | 10,000 | |||
Amounts reallocated to unvested restricted shares, Net Income (in Dollars) | $ (23) | $ (23) | $ (73) | |
Amounts allocated to unvested restricted shares, Weighted Average Shares Outstanding | ||||
Amounts available to stockholders and assumed conversions, Net Income (in Dollars) | $ (195) | $ 4,666 | $ 429 | $ 11,452 |
Amounts available to stockholders and assumed conversions, Weighted Average Shares Outstanding | 33,064 | 23,252 | 41,776 | 23,192 |
Amounts available to stockholders and assumed conversions, Earnings Per Share (in Dollars per share) | $ (0.01) | $ 0.2 | $ 0.01 | $ 0.49 |
Short-Term and Long-Term Debt_2
Short-Term and Long-Term Debt (Details) - USD ($) | Oct. 15, 2021 | Jul. 02, 2021 | May 04, 2021 | Mar. 10, 2021 | Mar. 08, 2021 | Apr. 24, 2022 | Aug. 27, 2021 | Apr. 27, 2020 | Jun. 30, 2021 | Sep. 30, 2021 | Oct. 27, 2021 | Aug. 04, 2021 | Apr. 20, 2021 |
Short-Term and Long-Term Debt (Details) [Line Items] | |||||||||||||
Proceeds from unsecured loan | $ 1,899,832 | $ 485,200 | |||||||||||
Debt interest fixed rate | 1.00% | ||||||||||||
Principal amount | $ 25,000 | $ 900,000 | |||||||||||
Interest amount | $ 11,000 | ||||||||||||
Remaining outstanding principal balance | $ 300,000 | $ 300,000 | |||||||||||
Amount of accrued interest | $ 26,000 | ||||||||||||
Convertible Debt | $ 375,000 | $ 500,000 | |||||||||||
Convertible percentage | 10.00% | ||||||||||||
Price equal per share (in Dollars per share) | $ 0.05 | $ 0.05 | $ 0.05 | ||||||||||
Warrant issued strike price (in Dollars per share) | $ 0.05 | $ 0.05 | $ 0.05 | ||||||||||
Additional amount | $ 625,000 | $ 500,000 | $ 500,000 | ||||||||||
Funds an additional terms | $ 4,000,000 | ||||||||||||
Loan proceeds | 375,000 | ||||||||||||
Net proceeds | $ 100,000 | 314,000 | |||||||||||
Legal fee | 61,000 | ||||||||||||
Wattant exceed of shares | 19.90% | 19.90% | 19.90% | ||||||||||
Percentage of debenture excess limitation | 19.90% | ||||||||||||
Conversion rights | $ 330,000 | ||||||||||||
Conversion shares amount | 6,600,000 | ||||||||||||
Market value of stock per common share (in Dollars per share) | $ 0.155 | ||||||||||||
Debt discount and additional paid-in capital | $ 375,000 | ||||||||||||
Debt discount related to beneficial conversion feature | $ 21,000 | 375,000 | |||||||||||
Remaining funding obligation | 18,000 | $ 200,000 | |||||||||||
Borrowed amount | $ 1,899,832 | ||||||||||||
Interest rate | 10.00% | 5.55% | 1.00% | ||||||||||
Principal balance amounted | 1.9 | ||||||||||||
Convertible debenture percentage | 10.00% | ||||||||||||
Interest rate percentage | 10.00% | ||||||||||||
Outstanding principal | $ 25,000 | ||||||||||||
Issuance shares (in Shares) | 500,000 | ||||||||||||
Market value price per share (in Dollars per share) | $ 0.1 | ||||||||||||
Debt discount | 500,000 | ||||||||||||
Amount of interest expense | 8,300 | ||||||||||||
Legal fees and transaction expenses | 14,800 | ||||||||||||
Restricted shares of Common Stock (in Shares) | 150,000 | ||||||||||||
Received shares (in Shares) | 315,000 | ||||||||||||
Common Stock thereafter (in Shares) | 315,000 | ||||||||||||
Subsequent Event [Member] | |||||||||||||
Short-Term and Long-Term Debt (Details) [Line Items] | |||||||||||||
Remaining outstanding principal balance | $ 1,000,000 | ||||||||||||
Amount of accrued interest | $ 1,700 | ||||||||||||
Minimum [Member] | |||||||||||||
Short-Term and Long-Term Debt (Details) [Line Items] | |||||||||||||
Principal amount | $ 1,000,000 | ||||||||||||
Maximum [Member] | |||||||||||||
Short-Term and Long-Term Debt (Details) [Line Items] | |||||||||||||
Principal amount | $ 675,000 | ||||||||||||
Senior Secured Convertible Debenture and Exercise of Conversion Rights [Member] | |||||||||||||
Short-Term and Long-Term Debt (Details) [Line Items] | |||||||||||||
Amortized debt discount | $ 347,500 |
Short-Term and Long-Term Debt_3
Short-Term and Long-Term Debt (Details) - Schedule of short-term and long-term debt - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Schedule of short-term and long-term debt [Abstract] | ||
Senior Secured Convertible Debenture | $ 500 | |
Debt Discount | (492) | |
Senior Secured Convertible Debenture, net | 8 | |
Paycheck Protection Program loan | 1,000 | 1,900 |
Paycheck Protection Program loan 2 | 1,900 | |
IPFS Insurance Premium Note Payable | 18 | |
Total debt , net of debt discount | 2,926 | 1,900 |
Less current portion of long-term debt | (1,018) | |
Total long-term debt, net of current portion | $ 1,908 | $ 1,900 |
Short-Term and Long-Term Debt_4
Short-Term and Long-Term Debt (Details) - Schedule short-term related party debt - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Schedule short-term related party debt [Abstract] | ||
Senior Secured Convertible Debenture - related party | $ 47 | |
Debt Discount-related party | (27) | |
Senior Secured Convertible Debenture - related party, net | $ 20 |
Short-Term and Long-Term Debt_5
Short-Term and Long-Term Debt (Details) - Schedule of debt maturities $ in Thousands | Sep. 30, 2021USD ($) |
Schedule of debt maturities [Abstract] | |
2021 | $ 9 |
2022 | 1,029 |
2023 | |
2024 | |
2025 | |
Thereafter | 1,908 |
Total debt, net of debt discount | $ 2,946 |
Stock Warrants (Details)
Stock Warrants (Details) - USD ($) | Jun. 11, 2021 | May 04, 2021 | Sep. 30, 2021 |
M. Botbol [Member] | |||
Stock Warrants (Details) [Line Items] | |||
Warrants issued (in Shares) | 500,000 | ||
Warrants conversion percentage | 10.00% | ||
Subordinated convertible debenture amount (in Dollars) | $ 25,000 | ||
Common stock exercise price per share | $ 0.05 | ||
Legacy Tech Partners, LLC (LTP) [Member] | |||
Stock Warrants (Details) [Line Items] | |||
Warrants issued (in Shares) | 6,583,500 | ||
Warrants conversion percentage | 10.00% | ||
Subordinated convertible debenture amount (in Dollars) | $ 330,000 | ||
Common stock exercise price per share | $ 0.05 | ||
Commons stock closing stock price per share | $ 0.0881 |
Stock Warrants (Details) - Sche
Stock Warrants (Details) - Schedule of summary of the warrant activity $ / shares in Units, $ in Thousands | 9 Months Ended |
Sep. 30, 2021USD ($)$ / sharesshares | |
Schedule of summary of the warrant activity [Abstract] | |
Number of Shares, beginning | shares | |
Weighted Average Exercise Price, beginning | $ / shares | |
Weighted Average Remaining Contractual Term in Years, beginning | |
Aggregate Intrinsic Value, beginning | $ | |
Number of Shares, Granted | shares | 7,083,500 |
Weighted Average Exercise Price, Granted | $ / shares | $ 0.05 |
Aggregate Intrinsic Value, Granted | $ | |
Number of Shares, ending | shares | 7,083,500 |
Weighted Average Exercise Price, ending | $ / shares | $ 0.05 |
Weighted Average Remaining Contractual Term in Years, ending | 4 years 6 months |
Aggregate Intrinsic Value, ending | $ | $ 270 |
Number of Shares, Exercisable | shares | 7,083,500 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 0.05 |
Weighted Average Remaining Contractual Term in Years, Exercisable | 4 years 6 months |
Aggregate Intrinsic Value, Exercisable | $ | $ 270 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Income Taxes (Details) [Line Items] | |||||
Income tax (benefit) expense | $ 100,000 | $ 1,000,000 | $ 800,000 | $ 1,900,000 | |
Effective tax rates | 37.70% | 19.50% | 76.20% | 18.10% | |
U.S. statutory corporate tax rate | 26.00% | ||||
Valuation allowances | $ 3,400,000 | $ 3,400,000 | $ 3,600,000 | ||
Unrecognized tax benefits | $ 0 | $ 0 | $ 300,000 | ||
Maximum [Member] | |||||
Income Taxes (Details) [Line Items] | |||||
Taxable income, percentage | 100.00% | ||||
Minimum [Member] | |||||
Income Taxes (Details) [Line Items] | |||||
Taxable income, percentage | 80.00% | ||||
Income Taxes [Member] | |||||
Income Taxes (Details) [Line Items] | |||||
Income tax net benefit | $ 88,000 |
Concentration Risk (Details)
Concentration Risk (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Concentration Risk (Details) [Line Items] | |||||
Cash balances without FDIC (in Dollars) | $ 0 | $ 0 | $ 0.8 | ||
Rich Dad brands [Member] | License Agreement [Member] | |||||
Concentration Risk (Details) [Line Items] | |||||
Percentage of revenue | 53.80% | 78.40% | 58.90% | 77.40% |
Segment Information (Details) -
Segment Information (Details) - Schedule of total revenue attributable to each segment | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Total consolidated revenue | 100.00% | 100.00% | 100.00% | 100.00% |
North America [Member] | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Total consolidated revenue | 100.00% | 97.00% | 63.50% | 96.70% |
U.K. [Member] | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Total consolidated revenue | 0.60% | 36.50% | 1.10% | |
Other foreign markets [Member] | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Total consolidated revenue | 2.40% | 2.20% |
Segment Information (Details)_2
Segment Information (Details) - Schedule of operating results for the segments - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||||
Total consolidated revenue | $ 1,379 | $ 7,439 | $ 7,361 | $ 21,564 | |
Total consolidated gross profit | [1] | (25) | 6,132 | 4,119 | 14,442 |
North America [Member] | |||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||||
Total consolidated revenue | 1,379 | 7,211 | 4,672 | 20,851 | |
Total consolidated gross profit | [1] | (16) | 5,951 | 1,919 | 13,625 |
U.K. [Member] | |||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||||
Total consolidated revenue | 47 | 2,689 | 245 | ||
Total consolidated gross profit | [1] | (10) | 13 | 2,199 | 312 |
Other Foreign Markets [Member] | |||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||||
Total consolidated revenue | 181 | 468 | |||
Total consolidated gross profit | [1] | $ 1 | $ 168 | $ 1 | $ 505 |
[1] | Segment gross profit is calculated as revenue less direct course expenses, advertising and sales expenses and royalty expenses. |
Segment Information (Details)_3
Segment Information (Details) - Schedule of depreciation and amortization expenses - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated depreciation and amortization expenses | $ 11 | $ 4 | $ 47 | |
North America [Member] | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated depreciation and amortization expenses | 8 | 2 | 36 | |
U.K. [Member] | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated depreciation and amortization expenses | 4 | 2 | 11 | |
Other foreign markets [Member] | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated depreciation and amortization expenses | $ (1) |
Segment Information (Details)_4
Segment Information (Details) - Schedule of segment identifiable assets - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total consolidated identifiable assets | $ 2,082 | $ 5,292 |
North America [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total consolidated identifiable assets | 1,774 | 3,834 |
U.K. [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total consolidated identifiable assets | 125 | 1,266 |
Other foreign markets [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total consolidated identifiable assets | $ 183 | $ 192 |
Revenue Recognition (Details)
Revenue Recognition (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Revenue Recognition [Abstract] | |
Deferred revenue | $ 4.3 |
Reserve description | As of September 30, 2021, we maintain a reserve for breakage of $2.0 million for the fulfillment of our obligation to students whose contracts expired during our COVID-19 60-day operational hiatus during Q2 2020 (see Note 1 – “General”). |
Revenue Recognition (Details) -
Revenue Recognition (Details) - Schedule of segment revenue - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenue Type: | ||||
Total revenue | $ 1,379 | $ 7,439 | $ 7,361 | $ 21,564 |
Seminars [Member] | ||||
Revenue Type: | ||||
Total revenue | 1,272 | 6,971 | 5,180 | 18,610 |
Products [Member] | ||||
Revenue Type: | ||||
Total revenue | 107 | 70 | 198 | 464 |
Coaching and Mentoring [Member | ||||
Revenue Type: | ||||
Total revenue | 10 | 1,053 | ||
Online and Subscription [Member] | ||||
Revenue Type: | ||||
Total revenue | 388 | 11 | 1,321 | |
Other [Member] | ||||
Revenue Type: | ||||
Total revenue | 1,972 | 116 | ||
North America [Member] | ||||
Revenue Type: | ||||
Total revenue | 1,379 | 7,211 | 4,672 | 20,851 |
North America [Member] | Seminars [Member] | ||||
Revenue Type: | ||||
Total revenue | 1,272 | 6,783 | 4,300 | 17,940 |
North America [Member] | Products [Member] | ||||
Revenue Type: | ||||
Total revenue | 107 | 70 | 198 | 464 |
North America [Member] | Coaching and Mentoring [Member | ||||
Revenue Type: | ||||
Total revenue | 7 | 1,050 | ||
North America [Member] | Online and Subscription [Member] | ||||
Revenue Type: | ||||
Total revenue | 351 | 11 | 1,281 | |
North America [Member] | Other [Member] | ||||
Revenue Type: | ||||
Total revenue | 163 | 116 | ||
U.K. [Member] | ||||
Revenue Type: | ||||
Total revenue | 47 | 2,689 | 245 | |
U.K. [Member] | Seminars [Member] | ||||
Revenue Type: | ||||
Total revenue | 47 | 880 | 245 | |
U.K. [Member] | Products [Member] | ||||
Revenue Type: | ||||
Total revenue | ||||
U.K. [Member] | Coaching and Mentoring [Member | ||||
Revenue Type: | ||||
Total revenue | ||||
U.K. [Member] | Online and Subscription [Member] | ||||
Revenue Type: | ||||
Total revenue | ||||
U.K. [Member] | Other [Member] | ||||
Revenue Type: | ||||
Total revenue | 1,809 | |||
Other Foreign Markets [Member] | ||||
Revenue Type: | ||||
Total revenue | 181 | 468 | ||
Other Foreign Markets [Member] | Seminars [Member] | ||||
Revenue Type: | ||||
Total revenue | 141 | 425 | ||
Other Foreign Markets [Member] | Products [Member] | ||||
Revenue Type: | ||||
Total revenue | ||||
Other Foreign Markets [Member] | Coaching and Mentoring [Member | ||||
Revenue Type: | ||||
Total revenue | 3 | 3 | ||
Other Foreign Markets [Member] | Online and Subscription [Member] | ||||
Revenue Type: | ||||
Total revenue | 37 | 40 | ||
Other Foreign Markets [Member] | Other [Member] | ||||
Revenue Type: | ||||
Total revenue |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 1 Months Ended | 9 Months Ended | ||||||
Dec. 08, 2020USD ($) | Jul. 24, 2020GBP (£) | Mar. 18, 2020GBP (£) | Sep. 30, 2021USD ($) | May 19, 2021USD ($) | Feb. 18, 2021USD ($) | Dec. 31, 2020USD ($) | Nov. 26, 2019GBP (£) | |
Commitments and Contingencies (Details) [Line Items] | ||||||||
Commitments and contingencies, Description | Total royalty expenses included in our Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2020 were $9.0 thousand and $68.0 thousand, respectively. | |||||||
Deposits held by credit card processors | $ 600,000 | $ 1,200,000 | ||||||
Construction Payable | 400,000 | $ 60,000 | $ 100,000 | |||||
Total settlement | $ 220,000 | |||||||
Payment for administrative fees | $ 390,600 | |||||||
Property investment | 363,000 | |||||||
Contribution of property | $ 924,000 | |||||||
Late payment interest (in Pounds) | £ | £ 392,761.7 | £ 461,459.7 | ||||||
Late payment interest (in Pounds) | £ | £ 68,698 | |||||||
Mayflower Alliance LTD [Member] | ||||||||
Commitments and Contingencies (Details) [Line Items] | ||||||||
Deferred revenue (in Pounds) | £ | £ 300,000 |
Leases (Details)
Leases (Details) | Sep. 30, 2021 |
Minimum [Member] | |
Leases (Details) [Line Items] | |
Operating leases, term | 1 year |
Maximum [Member] | |
Leases (Details) [Line Items] | |
Operating leases, term | 3 years |
Leases (Details) - Schedule of
Leases (Details) - Schedule of lease related assets and liabilities - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Schedule of lease related assets and liabilities [Abstract] | ||
Operating lease right of use assets | $ 26 | $ 45 |
Total lease assets | 26 | 45 |
Current operating lease liabilities | 26 | 25 |
Long-term operating lease liabilities | 20 | |
Total lease liabilities | $ 26 | $ 45 |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of operating lease cost - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Schedule of operating lease cost [Abstract] | ||||
General and administrative expenses | $ 7 | $ 12 | $ 20 | $ 22 |
Total lease cost | $ 7 | $ 12 | $ 20 | $ 22 |
Leases (Details) - Schedule o_3
Leases (Details) - Schedule of cash flow information related to leases - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows for operating leases | $ 20 | $ 15 |
Supplemental non-cash amounts of lease liabilities arising from obtaining right-of-use assets/(decrease) of lease liability due to cancellation of leases | $ (34) |
Leases (Details) - Schedule o_4
Leases (Details) - Schedule of weighted average remaining lease terms and weighted average discount rates | Sep. 30, 2021 | Dec. 31, 2020 |
Schedule of weighted average remaining lease terms and weighted average discount rates [Abstract] | ||
Weighted average remaining lease term - operating leases | 1 year | 1 year 9 months |
Weighted average discount rate - operating leases | 12.00% | 12.00% |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] - USD ($) $ / shares in Units, $ in Thousands | Nov. 04, 2021 | Oct. 15, 2021 | Oct. 27, 2021 |
Subsequent Events (Details) [Line Items] | |||
Installments amount | $ 200 | ||
Restricted common shares (in Shares) | 315,000 | ||
NCW, LLC [Member] | |||
Subsequent Events (Details) [Line Items] | |||
Purchase of common stock shares (in Shares) | 20,000,000 | ||
Aggregate price | $ 2,000 | ||
Additional common stock shares purchase | $ 120,000 | ||
Price per share (in Dollars per share) | $ 0.05833 | ||
Senior secured convertible note, percentage | 10.00% | ||
Subsequent event description | (i) $100 thousand not later than October 15, 2021 and (ii) $100 thousand not later than November 15, 2021 and (iii) $100 thousand not later than December 15, 2021. LTP timely funded the first $100 thousand installment on October 15, 2021. | ||
NCW, LLC [Member] | Option [Member] | |||
Subsequent Events (Details) [Line Items] | |||
Aggregate price | $ 12 |