LEGACY EDUCATION ALLIANCE, INC. INTRODUCTION
You should read the following discussion of our financial condition and results
of operations with our audited consolidated financial statements and related
notes thereto included in our Annual Report on Form 10-K for the fiscal year
ended
Business Overview
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 three months ended
Our students pay for their courses in full up-front or through payment
agreements with independent third parties. Under
We also provide a richer experience for our students through one-on-one mentoring (two to four days in length, on site or remotely and telephone mentoring (10 to 16 weekly one-on-one or one-on-many telephone sessions). Mentoring involves a subject matter expert interacting with the student remotely or in person and guiding the student, for example, through his or her first real estate transaction, providing a real hands-on experience.
We were founded in 1996, and through a reverse merger, became a publicly-held
company in
Historically, our operations have been managed through three operating segments:
(i)
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Since
?Building Wealth with Legacy TM: provides practical, high-quality and value-based educational training on the topics of personal finance, entrepreneurship, real estate, financial markets and investing strategies and techniques. This training program encompasses hands-on experience and the true spirit of investing from beginner to educated investor. In response to the limitations on travel and the social distancing protocols arising out of the Coronavirus pandemic, the Company began marketing its Legacy EducationTM products transitioning to brand nameBuilding Wealth with LegacyTM. During the three months endedMarch 31, 2022 , we marketed our products and services exclusively under this brand. ? Homemade Investor byTarek El MoussaTM introduces people to the investor mindset, real estate investing strategies, and ways to generate cash flow that are designed to help build a foundation of knowledge for their financial goals. Homemade Investor events offered nationwide free workshops, 3-day trainings and large stage events with Tarek presenting as the keynote speaker, all selling into our advanced training products. Recent Developments
Impact from COVID-19 Coronavirus.
Historically, our operations have relied heavily on our and our students'
ability to travel and attend live events where large groups of people gather in
local markets within each of the segments in which we operate. On
Results of Operations
Our financial results continue to be significantly impacted by the COVID-19 pandemic. Due to the severity and scope of the pandemic, the pace at which government and private travel restrictions and public concerns about public gathering will ease, the rate at which historically large increases of unemployment rates will decrease, and the speed with which the economy recovers are all factors that impacted our financial results. In addition, our financial results were impacted due to the winding down our Rich Dad brand and other matters as disclosed in the litigation section of Note 13 "Commitments and Contingencies" in the Notes to Consolidated Financial Statements.
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Our Results of Operations in 2022 and 2021 were as follows (dollars in
thousands):
Three Months Ended March 31,
2022 2021
Revenue $ 285 $ 2,620
Operating costs and expenses:
Direct course expenses 104 434
Advertising and sales expenses 88 58
General and administrative expenses 647 998
Total operating costs and expenses 839 1,490
Income (loss) from operations (554 ) 1,130
Other expense:
Interest expense, net (125 ) -
Other expense, net - (2 )
Total other expense, net (125 ) (2 )
Income (loss) from continuing operations before
income taxes (679 ) 1,128
Income tax (expense) benefit 136 (1,046 )
Net income (loss) from continuing operations (543 ) 82
Income from discontinued operations - 171
Net income from discontinued operations - 171
Net income (loss) $ (543 ) $ 253
Basic earnings (loss) per common share -
continuing operations $ (0.02 ) $ -
Basic earnings (loss) per common share -
discontinued operations - 0.01
Basic earnings (loss) per common share $ (0.02 ) $ 0.01
Diluted earnings (loss) per common share -
continuing operations $ (0.02 ) $ -
Diluted earnings (loss) per common share -
discontinued operations - 0.01
Diluted earnings (loss) per common share $ (0.02 ) $ 0.01
Basic weighted average common shares outstanding 33,918 23,187
Diluted weighted average common shares
outstanding 33,918 25,029
Comprehensive income:
Net income (loss) $ (543 ) $ 253
Foreign currency translation adjustments, net of
tax of $0 (144 ) 103
Total comprehensive income (loss) $ (687 ) $ 356
Our operating results are expressed as a percentage of revenue in the table
below:
Three Months Ended March 31,
2022 2021
100 % 100 %
Operating costs and expenses:
Direct course expenses 36.5 16.6
Advertising and sales expenses 30.9 2.2
General and administrative expenses 227.0 38.1
Total operating costs and expenses 294.4 56.9
Income (loss) from operations (194.4 ) 43.1
Other expense:
Interest expense, net (43.8 ) -
Other expense, net - (0.1 )
Gain on forgiveness of PPP Loan - -
Total other expense, net (43.8 ) (0.1 )
Income (loss) from continuing operations before
income taxes (238.2 ) 43.1
Income tax (expense) benefit 47.7 (39.9 )
Net income (loss) from continuing operations (190.5 ) 3.1
Income from discontinued operations - 6.5
Net income from discontinued operations - 6.5
Net income (loss) (190.5 )% 9.6 %
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Outlook
Cash sales were
We believe that cash sales remain an important metric when evaluating our
operating performance. Pursuant to
Due to the economic severity of COVID-19 pandemic on the Company's results of
operations, financial condition, and liquidity, live in-person events were
temporarily suspended in
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