LEGACY EDUCATION ALLIANCE, INC. : Creation of Direct Financial Obligation or Obligation Under Off-Balance Sheet Arrangement of Registrant, Disclosure of FD Settlement, Financial Statements and Exhibits (Form 8-K)

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under a

Off-balance sheet arrangement of a registrant

On July 8, 2022, Legacy Education Alliance, Inc. (the “Company”) borrowed
$100,000 (the “Loan”) of ABCImpact I, LLCa Delaware with limited liability (the “Lender”), evidenced by a 10% convertible debenture (the “Debenture”). Under the terms of the debenture, the lender has the ability to lend up to $4,850,000 to the society.

The lender is a newly incorporated entity in which a subsidiary of Barry Kostiner, Chief Executive Officer and Sole Director of the Company, holds a passive non-controlling interest. The lender has previously lent $50,000 to the Company pursuant to a convertible debenture substantially similar to the Debenture.

The maturity date of the debenture is the earliest of 12 months following the date of issue and the date of a liquidity event (as defined in the debenture), and is the date on which principal and interest will be due and payable. The debenture bears interest at a fixed rate of 10% per annum. Any overdue accrued and unpaid interest will incur a late charge at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law, which will accrue daily from the date on which such interest are due until the date of effective payment in full.

The Company intends to use the net proceeds of the loan for general corporate purposes and working capital.

Principal and interest then outstanding and unpaid will be converted into common shares of the Company and an equal number of common share purchase warrants at the option of the lender, at a conversion price per share of $0.05, subject to adjustment (including pursuant to certain dilutive issues) in accordance with the terms of the Debenture. The debenture is subject to a beneficial ownership limit of 4.99% (or 9.99% at the option of the lender).

The Company may not prepay the Security without the prior written consent of the Lender.

The note contains typical default events for a transaction such as a loan. If an Event of Default occurs, the principal amount outstanding under the Debenture, plus accrued but unpaid interest, liquidated damages and other amounts due up to the date of acceleration, will become, at the Lender’s option, immediately due and payable in cash on the mandatory due date. Default amount. “Mandatory Default Amount” means the sum of (a) the greater of (i) the principal amount outstanding of the Debenture, plus all accrued and unpaid interest, divided by the conversion price on the date on which the amount Mandatory Default is either (A) demanded or otherwise due or (B) paid in full, whichever is lower, multiplied by the VWAP (as defined in the Debenture) on the date on which the Default Amount is either (x) demanded or otherwise due or (y) paid in full, whichever is greater VWAP, or (ii) 130% of the unpaid principal amount of the debenture plus 100% of accrued and unpaid interest thereon. ci, and (b) all other amounts, costs, expenses and damages due in respect of the Debenture.

The warrant has an exercise price per share of $0.05, subject to adjustment (including by virtue of certain dilutive issues) in accordance with the terms of the Warrant. The exercise period of the Warrant is five years from the date of issue.

Exercise of the Warrant is subject to a beneficial ownership limit of 4.99% (or 9.99%) of the number of common shares outstanding immediately after giving effect to such exercise.

The shares underlying the Debenture and the Warrants carry “add-on” registration rights.

The foregoing is a brief description of the Debenture and Warrant, and is qualified in its entirety by reference to the full text of the Debenture and Warrant, copies of which are included in Exhibit 10.1 to this Current Report on Form 8-K, each of which is incorporated herein by reference.

Section 7.01 Disclosure of FD Rules.

On July 14, 2022the Company has issued a press release to announce that it has released a presentation highlighting its focus on impact investing, including a proposed investment in Monarch Health Inc.

The Press Release and Presentation, which are provided as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K, are incorporated herein by reference. The contents of this Section 7.01 and Exhibits 99.1 and 99.2 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the obligations of this Section. This report will not be taken as an admission as to the materiality of any information in this point 7.01 (including exhibits 99.1 and 99.2).

Item 9.01 Financial statements and supporting documents.


Exhibit   Description
99.1        Press Release
99.2        Company Presentation
104       Cover Page Interactive Data File (embedded within the Inline XBRL
          document)

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