Legacy Education Alliance, Inc. Announces Fiscal First Quarter 2019 Results

  • Revenue of $24.6 Million for the first quarter ended March 31,
    2019, a decrease of $1.2 Million or 4.7% YoY
  • UK and Other Foreign Market Segments Combine for Revenue of $9.6
    Million
  • Cash Sales Increase to $28.1 Million, up $0.5 Million or 1.8% YoY
  • Net loss and loss per share in Q1 2019 of $0.1 million or $0.00 per
    share compared to Q1 2018, improved $0.8 million or 88.9%
  • Operating Cash Flows and Liquidity Improve to $3.5 Million, an
    increase of $2.1 Million or 145% YoY

Company to hold Conference Call on Monday, May 20, 2019

CAPE CORAL, Fla.–(BUSINESS WIRE)–Legacy Education Alliance, Inc. (OTCQB: LEAI) (www.legacyeducationalliance.com),
a leading international 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, today announced financial results for the
first quarter ended March 31, 2019.

First Quarter 2019 Overview

  • Net loss was $0.1 million or ($0.00) per basic and diluted common
    share for the three months ended March 31, 2019 compared to a net loss
    of $0.9 million or ($0.04) per basic and diluted common share for the
    three months ended March 31, 2018, a decrease in net loss of $0.8
    million or $0.4 per basic and diluted common share.
  • Revenue was $24.6 million for the three months ended March 31, 2019
    compared to $25.8 million for the three months ended March 31, 2018, a
    decrease of $1.2 million or 4.7%.
  • Combined UK and Other Foreign Market Segments revenue was $9.6 million
    for the three months ended March 31, 2019 compared to $9.8 million for
    the three months ended March 31, 2018, a decrease of $0.2 million or
    2%.
  • Cash sales were $28.1 million for the three months ended March 31,
    2019 compared to $27.6 million for the three months ended March 31,
    2018, an increase of $0.5 million or 1.8%.
  • Total operating costs and expenses were $24.6 million for the three
    months ended March 31, 2019 compared to $26.2 million for the three
    months ended March 31, 2018, a decrease of $1.6 million or 6.1%.
  • Net cash provided by operating activities was $3.5 million in the
    three months ended March 31, 2019 compared to net cash provided by
    operating activities of $1.4 million in the three months ended March
    31, 2018, representing a period-over-period increase of $2.1 million
    or 145%.

“We are pleased that the actions we undertook in 2018 to reduce costs
and improve liquidity are having a positive effect on our financial
performance, as evidenced by our increased cash sales and reduced
operating expenses compared to the same period in 2018,” said James May,
Interim Chief Executive Officer. “We are working to build on the
momentum begun in this quarter where we experienced a sequential revenue
increase of 24% over the $19.9 million in Q4 2018 and a significant
improvement in operating cash flows both from the end of 2018 and in Q1
2019 over Q1 2018.”

FIRST QUARTER 2019 VERSUS FIRST QUARTER 2018 RESULTS

Revenue was $24.6 million for the three months ended March 31, 2019
compared to $25.8 million for the three months ended March 31, 2018.
Revenue decreased $1.2 million or 4.7% during the three months ended
March 31, 2019 compared to the same period in 2018. The decrease in
revenue was due to decreased fulfillment of $3.1 million or 14.3%,
partially offset by an increase in revenue from expired contracts of
$1.9 million or 45.8%.

Total operating costs and expenses were $24.6 million for the three
months ended March 31, 2019 compared to $26.2 million for the three
months ended March 31, 2018, a decrease of $1.6 million or 6.1%. The
decrease was primarily due to a $1.5 million decrease in direct course
expenses, a $0.2 million decrease in advertising and sales expenses, a
$0.1 million decrease in general and administrative expenses, partially
offset by a $0.2 million increase in royalty expenses.

Net loss was $0.1 million or ($0.00) per basic and diluted common share
for the three months ended March 31, 2019 compared to a net loss of $0.9
million or ($0.04) per basic and diluted common share for the three
months ended March 31, 2018, a decrease in net loss of $0.8 million or
$0.4 per basic and diluted common share.

CASH FLOW AND CAPITAL STRUCTURE

Net cash provided by operating activities was $3.5 million in the three
months ended March 31, 2019 compared to net cash provided by operating
activities of $1.4 million in the three months ended March 31, 2018,
representing a period-over-period increase of $2.1 million or 145%. This
increase was primarily the result of increased earnings, and an increase
in current liabilities for deferred revenue, partially offset by a
decrease in accounts payable.

Our consolidated capital structure as of March 31, 2019 and December 31,
2017 was 100.0% equity.

CONFERENCE CALL

Management will host a conference call on Monday, May 20, 2019 at 4:30
p.m. ET to discuss its financial results for the first quarter ended
March 31, 2019 and provide a corporate update. To listen to the
conference call, interested parties within the U.S. should dial
1-800-289-0438 or 1-323-794-2570 for international calls, approximately
10 minutes prior to the scheduled start time. Conference ID: 6545440.
The conference call will also be available through a live webcast, which
can be accessed at: http://public.viavid.com/index.php?id=134667
or through the company’s website at http://ir.legacyeducationalliance.com/ir-calendar.

Management will answer pre-submitted questions gathered prior to the
earnings conference call in the Question and Answer period of the call.
Interested parties may submit questions for Management’s consideration
prior to the call by submitting them in writing to Legacy Education
Alliance Investor Relations at scottg@coreir.com.

A replay of the call will be available approximately one hour after the
conclusion of the call through June 3, 2019. The number for the replay
is (844) 512-2921 (US), or (412) 317-6671 for international calls; the
passcode for the replay is 6545440.

About Legacy Education Alliance Inc.

Legacy Education Alliance, Inc. (http://www.legacyeducationalliance.com)
is a leading international 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. Legacy Education Alliance was founded in
1996, today we are a global company with approximately 165 full-time
employees that has cumulatively served more than two million students
from more than 150 countries and territories over the course of our
operating history.

We offer our training through a variety of brands including Rich Dad®
Education; Rich Dad® Stock Education; Making Money from Property with
Martin Roberts™; Brick Buy Brick™; Building Wealth; Robbie Fowler
Property Academy™; Women in Wealth™; Perform in Property™, and Teach Me
to Trade™. For more information, please visit our website at www.legacyeducationalliance.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) (which Sections were adopted as part of the Private
Securities Litigation Reform Act of 1995). Statements preceded by,
followed by or that otherwise include the words “believe,” “anticipate,”
“estimate,” “expect,” “intend,” “plan,” “project,” “prospects,”
“outlook,” and similar words or expressions, or future or conditional
verbs such as “will,” “should,” “would,” “may,” and “could” are
generally forward-looking in nature and not historical facts. These
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the Company’s actual
results, performance or achievements to be materially different from any
anticipated results, performance or achievements. The Company disclaims
any intention to, and undertakes no obligation to, revise any
forward-looking statements, whether as a result of new information, a
future event, or otherwise. For additional risks and uncertainties that
could impact the Company’s forward-looking statements, please see the
Company’s Annual Report on Form 10-K (including but not limited to the
discussion under “Risk Factors” therein) filed with the SEC on April 15,
2019 and which may be viewed at http://www.sec.gov.

 
LEGACY EDUCATION ALLIANCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share data)
 
  March 31,     December 31,
2019 2018
ASSETS
Current assets:
Cash and cash equivalents $ 3,979 $ 1,557
Restricted cash 6,761 5,080
Deferred course expenses 8,972 8,547
Prepaid expenses and other current assets 3,514 3,132
Inventory   83   89
Total current assets 23,309 18,405
Property and equipment, net 1,734 1,880
Right-of-use assets 1,399
Deferred tax asset, net 182 97
Other assets   252   178
Total assets $ 26,876 $ 20,560
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable $ 5,300 $ 4,962
Royalties payable 395 210
Accrued course expenses 2,474 1,483
Accrued salaries, wages and benefits 516 748
Operating lease liability 802
Other accrued expenses 3,697 2,614
Long-term debt, current portion 891 512
Deferred revenue, current portion   60,003   57,353
Total current liabilities 74,078 67,882
Long-term debt, net of current portion 8
Operating lease liability, net of current portion 597
Other liabilities   1,331   1,331
Total liabilities   76,006   69,221

Commitments and contingencies

Stockholders’ deficit:
Preferred stock, $0.0001 par value, 20,000,000 shares authorized,
none issued
Common stock, $0.0001 par value; 200,000,000 authorized; 23,107,852
and 23,120,852 shares issued and outstanding as of March 31, 2019
and December 31, 2018, respectively
2 2
Additional paid-in capital 11,498 11,470
Cumulative foreign currency translation adjustment 1,052 1,444
Accumulated deficit   (61,682 )   (61,577 )
Total stockholders’ deficit   (49,130 )   (48,661 )
Total liabilities and stockholders’ deficit $ 26,876 $ 20,560
 
 
LEGACY EDUCATION ALLIANCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
(Unaudited)
(In thousands, except per share data)
 
 

Three Months Ended
March 31,

2019   2018
Revenue $ 24,576 $ 25,755
Operating costs and expenses:
Direct course expenses 13,081 14,614
Advertising and sales expenses 5,438 5,572
Royalty expenses 1,360 1,156
General and administrative expenses   4,695   4,848
Total operating costs and expenses   24,574   26,190
Income/(loss) from operations   2   (435 )
Other income (expense):
Interest expense (41 ) (4 )
Other income (expense), net   (126 )   (21 )
Total other income (expense), net   (167 )   (25 )
Loss before income taxes (165 ) (460 )
Income tax (expense) benefit   60   (397 )
Net loss $ (105 ) $ (857 )
 
Basic loss per common share $ (0.00 ) $ (0.04 )
Diluted loss per common share $ (0.00 ) $ (0.04 )
 
Basic weighted average common shares outstanding 23,117 23,008
Diluted weighted average common shares outstanding 23,117 23,008
 
Comprehensive loss:
Net loss $ (105 ) $ (857 )
Foreign currency translation adjustments, net of tax of $0   (392 )   (421 )
Total comprehensive loss $ (497 ) $ (1,278 )
 
 
LEGACY EDUCATION ALLIANCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
DEFICIT
(Unaudited)
(In thousands)
 
  Common stock    

Additional
paid-in

   

Cumulative
foreign
currency
translation

  Accumulated  

Total
stockholders’

Shares Amount capital adjustment deficit deficit
Balance at December 31, 2017   23,008 $ 2 $ 11,299 $ (445 ) $ (51,621 ) $ (40,765 )
Share-based compensation expense   57 57
Foreign currency translation adjustment, net of tax of $0 (421 ) (421 )
Net Loss           (857 )   (857 )
Balance at March 31, 2018   23,008 $ 2 $ 11,356 $ (866 ) $ (52,478 ) $ (41,986 )
 
Additional

Cumulative
foreign
currency

Total
Common stock paid-in translation Accumulated stockholders’
Shares   Amount capital adjustment deficit deficit
Balance at December 31, 2018   23,121

$

2 $ 11,470 $ 1,444 $ (61,577 ) $ (48,661 )
Share-based compensation expense 28 28
Cancellation of common stock (13 )
Foreign currency translation adjustment, net of tax of $0 (392 ) (392 )
Net Loss           (105 )   (105 )
Balance at March 31, 2019   23,108

$

2 $ 11,498 $ 1,052 $ (61,682 ) $ (49,130 )
 
 
LEGACY EDUCATION ALLIANCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
 

Three Months Ended
March 31,

2019   2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (105 ) $ (857 )
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 42 29
Gain on the sale of fixed assets (10 )
Gain on change in fair value of derivatives (22 )
Share-based compensation 28 57
Deferred income taxes (83 ) (69 )
Changes in operating assets and liabilities:
Deferred course expenses (364 ) (121 )
Prepaid expenses and other receivable (375 ) 148
Inventory 7 (15 )
Other assets (84 ) (3 )
Accounts payable-trade 273 1,074
Royalties payable 184 167
Accrued course expenses 984 273
Accrued salaries, wages and benefits (236 ) 468
Other accrued expenses 1,051 1,253
Deferred revenue   2,226   (937 )
Net cash provided by operating activities   3,538   1,445
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment, net   136   (29 )
Net cash provided by (used in) investing activities   136   (29 )
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on debt (8 ) (3 )
Proceeds from issuance of debt   395  
Net cash provided by (used in) financing activities   387   (3 )
Effect of exchange rate differences on cash   42   (28 )
Net increase in cash and cash equivalents and restricted cash   4,103   1,385
Cash and cash equivalents and restricted cash, beginning of period $ 6,637 $ 8,904
Cash and cash equivalents and restricted cash, end of period $ 10,740 $ 10,289
 
Supplemental disclosures:
Cash paid during the period for interest $ 42 $ 4
Cash paid during the period for income taxes, net of refunds received $ 12 $ 40

Contacts

Investor Contact:
CORE IR
Scott Gordon
516 222 2560
scottg@coreir.com

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