Current Report Filing (8-k)
May 07 2021 - 4:04PM
Edgar (US Regulatory)
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): May 3, 2021
LEGACY
EDUCATION ALLIANCE, INC.
(Exact
name of registrant as specified in its charter)
Nevada
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000-55790
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39-2079974
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(IRS
Employer
Identification
No.)
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1490
N.E. Pine Island Road, Suite 5D
Cape
Coral, Florida
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33909
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(Address of principal executive
offices)
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(Zip Code)
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Registrant’s
telephone number, including area code: (239) 542-0643
N/A
(Former
name or former address, if changed since last report.)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see General Instruction A.2. below):
☐
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Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)
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☐
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Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))
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☐
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Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))
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Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
3.02 Unregistered Sales of Equity Securities.
As previously disclosed,
on March 8, 2021 Legacy Education Alliance, Inc., a Nevada corporation (the “Company”) issued a Senior Secured Convertible
Debenture (“Debenture”) to Legacy Tech Partners, LLC (“LTP”), a Delaware limited liability company, under
which LTP loaned the Company the principal sum of $375,000 (the “Initial Loan.” The Initial Loan 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 Initial Loan 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”). 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.
On
May 4, 2021 LTP exercised its conversion rights with respect to $330,000 of the outstanding principal of the Initial Loan at the Conversion
Price resulting in the issuance of 6,600,000 shares of Common Stock to LTP.
Item
5.02(d) Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
On
May 3, 2021, the Board of Directors set the number of director seats on the Company’s Board of Directors at four (4) and appointed
Barry M. Kostiner, 49, to the Board.
Prior
to his involvement with the Company, Mr. Kostiner was the CFO of Ameri Holdings Inc. (Nasdaq: AMRH) from October 2018 through December
2020. Since January 2021, Mr. Kostiner has been a consultant to Enveric Biosciences (Nasdaq: ENVB), an evidence-based cannabinoid pharma
company focused on palliative therapies for cancer patients. Prior to his position at AMRH, Mr. Kostiner was a consultant to a healthcare
facility operator, Cypress Skilled Nursing, from May 16, 2020 through October 18, 2020 and Linkay Technologies from May 17, 2020 through
Oct 18, 2020 an artificial intelligence incubator with a portfolio of intellectual property focused on AI and LiDAR / geospatial technology,
with research staff in India and New York. Mr. Kostiner’s 20-year career in energy includes eight years at Goldman Sachs and Merrill
Lynch and their affiliates, with a focus on energy trading and portfolio management, as well as serving as the CEO of an oil & gas
SPAC (Nasdaq: PGRI) from 2007 through 2009. Mr. Kostiner earned an S.B. in Electrical Engineering and an S.M. in Operations Research
from MIT. His thesis on the mathematics of electric industry deregulation was sponsored by Harvard’s Kennedy School of Government.
Mr.
Kostiner is President of, and holds a 25% membership interest in, Legacy Tech Partners, LLC, a Delaware limited liability company
(“LTP”). On March 8, 2021, the Company issued a Senior Secured Convertible Debenture (“Debenture”) in the
principal amount of $375,000 to LTP. The 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 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 (“Conversion Price”). On May 4, 2021, LTP exercised its conversion rights with respect to $330,000 of the outstanding
principal at the Conversion Price resulting in the issuance of 6,600,000 shares of Common Stock to LTP.
Prior
to his appointment to the Board, Mr. Kostiner has been also employed by Elite Legacy Education, Inc., a subsidiary of the Company, as
Manager, Capital Markets since March 9, 2021 at an annual base salary of $120,000. In addition, Mr. Kostiner is entitled to participate
in any (i) annual or long-term bonus or incentive plans maintained by the Company, (ii) stock option, stock ownership, stock incentive
or other equity-based compensation plans maintained by the Company and (iii) in all compensation or employee benefit plans or programs,
and all benefits or perquisites, for which any member of the Company’s senior management is eligible under any existing or future
Company plan or program. Mr. Kostiner’s employment may be terminated by either party at any time. If Mr. Kostiner’s employment
is terminated (i) other than for cause or (ii) upon Mr. Kostiner’s death, permanent disability, or voluntary resignation, Mr. Kostiner
will be entitled to receive (i) any unearned and unpaid base salary and annual incentive compensation that has accrued but is paid as
of the date of termination, (ii) a pro rata portion of any annual incentive compensation that Mr. Kostiner would have been entitled to
receive and, (iii) a separation benefit in an amount equal to twenty-six (26) weeks of base salary payable in biweekly installments.
If Mr. Kostiner’s employment is terminated other than for cause or due to his voluntary resignation within 18 months of a “change
in control” event, he will be entitled to receive (i) any unearned and unpaid base salary and annual incentive compensation that
has accrued but is paid as of the date of termination, (ii) a separation benefit in an amount equal to one year of base salary payable
in lump sum. Mr. Kostiner’s entitlement to receive any separation benefit described in this paragraph is conditioned on Mr. Kostiner
executing a general release satisfactory to the Company.
Item
8.01 Other Events
Debenture,
Warrant and Guaranty Agreements; 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 $25,000 to Michel Botbol, the Company’s
Chairman and Chief Executive Officer. The Subordinated 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 May 4, 2022. The Subordinated 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 (“Conversion Price”). Together with each Conversion Share, a warrant will be issued with a
strike price of $0.05 per share and an expiration date of May 4, 2026 (the “Warrants”). Mr. Botbol also has 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 entered into Guaranties in favor of Botbol under which
such subsidiaries will guarantee the Company’s obligations under the Subordinated Debenture and grant Botbol a lien on all
assets of such subsidiaries subject to the lien held by LTP. The use of proceeds from the Subordinated Debenture will be to extinguish
liabilities of the Company and to fund working capital, general corporate purposes and the development of administrative functions.
The
Warrants will not be listed for trading on any national securities exchange. The Warrants and the shares issuable upon conversion
of the Subordinated 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.
The
foregoing descriptions of the material terms of the Subordinated Debenture, Guaranty Agreements and Warrants do not purport to
be complete and are qualified in their entirety by reference to the full text of the Subordinated Debenture, the form of Guaranty
Agreement and the form of Warrant, copies of which are filed herewith as Exhibits 10.1, 10.2 and 10.3, respectively, and are incorporated
herein by reference.
On
May 4, 2021, Michel Botbol exercised his conversion rights with respect to the entire $25,000 of outstanding principal under the
at the Conversion Price resulting in the issuance of 500,000 shares of Common Stock to him.
Item
9.01. Financial Statements and Exhibits.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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LEGACY EDUCATION
ALLIANCE, INC.
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Date: May 7, 2021
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By:
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/s/
Michel Botbol
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Name:
Michel Botbol
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Title: Chief Executive
Officer
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4
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