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Legacy Education Alliance (LEAI) Risk Analysis

Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning. Legacy Education Alliance disclosed 30 risk factors in its most recent earnings report. Legacy Education Alliance reported the most risks in the “Finance & Corporate” category.

Risk Overview Q4, 2023

Source: the company's latest filing for the period ended Dec 31, 2023, filed Jul 09, 2024

Risk Distribution
30Risks
Sector Avg.Finance & CorporateTech & InnovationLegal & RegulatoryProductionAbility to SellMacro & Political
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Risk Change Over Time

Legacy Education Alliance disclosed risks per quarterNo. of Risks30Q3Q4Q12023Q2Q4Showing: Q4, 2023
Risks removedRisks addedRisks changedLegacy Education Alliance Risk Factors
Risk Changed (1)
  • Litigation & Legal Liabilities - Risk 1
    We do not have an auditor to review or audit our financial statements, which could prevent us from raising capital and could result in amendments or restatements to our financial statements.

    On August 28, 2023, the Company received a letter from the Securities and Exchange Commission informing the Company that the Public Company Accounting Oversight Board (the "PCAOB") revoked the registration of RAM Associates & Company LLC ("RAM"), the Company's then independent registered public accounting firm. In connection with the PCAOB's determination to revoke RAM's registration, the Company's Board of Directors formally dismissed RAM as the Company's independent registered public accounting firm, effective immediately. The Company has not yet identified a replacement auditor. Consequently, the Company has not had any of its financial statements reviewed or audited since the date of dismissal. The Company can give no assurance that the unaudited and unreviewed financial statements filed by the Company since the termination date will not have material changes or require restatements, as, if and when it retains a replacement independent registered public accounting firm. Any such changes or restatements could have a material adverse effect on our stock price. Additionally, the Company's failure to have audited financial statements for its fiscal years and reviewed financial statements for its fiscal quarters, means the Company is not in compliance with the disclosure requirements under the Securities Exchange Act of 1934, and prevents the Company from registering its securities for offers and sales under the Securities Act of 1933, as amended, thus making it more difficult to raise capital. Such failure could also result in the Company's common stock being removed from trading on the OTC Market or demoted to a lower level of the OTC Markets, which could adversely affect the Company's stock price and liquidity. In the event the Company is not able to raise sufficient capital, the Company may not be in a position to ever retain a replacement independent registered public accounting firm.

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Risk Highlights Q4, 2023

Main Risk Category
Finance & Corporate
With 12 Risks
Number of Disclosed Risks
30
No changes from last report
S&P 500 Average: 32
Recent Changes
1Risks added
1Risks removed
1Risks changed
Since Dec 2023
Number of Risk Changed
1
+1
From last report
S&P 500 Average: 1

Risk Word Cloud

we are highly dependent on our senior management, high performing sales speakers and course trainers, and if we are not able to retain them or to recruit and retain additional qualified personnel, our business could suffer.high performing sales speakerslaws and regulations can affect the operation of our business and may limit our ability to operate in certain jurisdictions.limit our ability to operatewe do not currently have enough authorized shares of common stock under our charter to meet all of our potential obligations to third parties.authorized shares of common stockthe termination of our license agreement to rich dad education brand has materially adversely impacted our business, financial condition and results of operations, given the high concentration of sales from course offerings under rich dad education brand.materially adversely impacted our businesswe may issue additional shares of common or preferred stock that subordinate your rights and dilute your equity interests.issue additional shares of commonbeing an sec reporting company imposes costs and compliance risks.sec reporting company imposes costsour cash flows from operations have not been restored to pre-pandemic sales. if this trend were to continue in the future, it could impair our ability to fund our working capital needs and adversely affect our financial condition.restored to pre-pandemic salesthe termination of any of our merchant processor agreements and/or material changes to the terms and conditions of these agreements would materially adversely impact our business, financial condition and results of operations, given the high concentration of sales from course offerings procured by our customers using credit cards.materially adversely impact our businesswe are subject to penny stock regulations and restrictions, and you may have difficulty selling shares of our common stock.subject to penny stock regulationsfuture sales of our common stock in the public market could lower the price of our common stock, dilute your equity interests, and impair our ability to raise funds in future securities offerings.price of our common stock

Risk Factors Full Breakdown - Total Risks 30

Share Price & Shareholder Rights6 | 20.0%
  • Share Price & Shareholder Rights - Risk 1
    We may issue additional shares of common or preferred stock that subordinate your rights and dilute your equity interests.

    We need to raise investment capital for us to successfully execute our business strategy and it may be preferable or necessary to issue preferred stock to investors. Preferred stock may grant the holders certain preferential rights in voting, dividends, liquidation or other rights in preference over a company's common stock. The issuance by us of common or preferred stock could dilute both the equity interests and the earnings per share of existing holders of our Common Stock. Such dilution may be substantial, depending upon the number of shares issued. The newly authorized shares of preferred stock could also have voting rights superior to our Common Stock, and in such event, would have a dilutive effect on the voting power of our existing stockholders. Any issuance of common or preferred stock with voting rights could, under certain circumstances, have the effect of delaying or preventing a change in control of us by increasing the number of outstanding shares entitled to vote and by increasing the number of votes required to approve a change in control of us. Shares of voting or convertible common or preferred stock could be issued, or rights to purchase such shares could be issued, to render more difficult or discourage an attempt to obtain control of us by means of a tender offer, proxy contest, merger or otherwise. Such issuances could therefore deprive our stockholders of benefits that could result from such an attempt, such as the realization of a premium over the market price that such an attempt could cause. Moreover, the issuance of such shares of common or preferred stock to persons friendly to our Board of Directors could make it more difficult to remove incumbent managers and directors from office even if such change were to be favorable to stockholders generally.

  • Share Price & Shareholder Rights - Risk 2
    We do not currently have enough authorized shares of common stock under our charter to meet all of our potential obligations to third parties.

    Our Second Amended and Restated Articles of Incorporation provide for 200,000,000 authorized shares of our common stock. We currently have commitments to third parties, including pursuant to convertible debentures, warrants and options, to issue a number of shares in the aggregate that with the 49,239,875 shares currently outstanding, would result in us issuing more shares than what we have authorized. Accordingly, in order to meet all of such obligations, we will need to amend our charter to increase the authorized shares of our common stock. We can give no assurance that we will obtain the requisite affirmative vote of our shareholders to so amend our charter, in which case we may default under any such obligations to the extent we do not have the authorized shares to issue, which could adversely affect our financial condition and the market for our shares.

  • Share Price & Shareholder Rights - Risk 3
    Our Common Stock has a limited trading market, which could affect your ability to sell shares of our Common Stock and the price you may receive for our Common Stock.

    Our Common Stock is currently traded in the over-the-counter market and "bid" and "asked" quotations regularly appear on the OTCQB maintained by OTC Markets, Inc. under the symbol "LEAI". There is limited trading volume in our securities. We cannot predict the extent to which investors' interest in our Common Stock will provide an active and liquid trading market, which could depress the trading price of our Common Stock and could have a long-term adverse impact on our ability to raise capital in the future. We may be vulnerable to investors taking a "short position" in our Common Stock, which would likely have a depressing effect on the price of our Common Stock and add increased volatility to our trading market. The volatility of the market for our Common Stock could have a material adverse effect on our business, financial condition, and results of operations. There cannot be any guarantee that an active trading market for our securities will develop or, if such a market does develop, will be sustained. Accordingly, investors must be able to bear the financial risk of losing their entire investment in our Common Stock.

  • Share Price & Shareholder Rights - Risk 4
    Being an SEC reporting company imposes costs and compliance risks.

    Compliance with the periodic reporting requirements required by the SEC consumes a considerable amount of both internal, as well external, resources and represents a significant cost for us. Our management will be required to administer appropriate programs and policies in responding to increased legal, regulatory compliance, and reporting requirements, and any failure to do so could lead to the imposition of fines and penalties and harm our business. In addition, if we are unable to continue to devote adequate funding and the resources needed to maintain such compliance, while continuing our operations, we may be in non-compliance with applicable SEC rules or the securities laws, and be delisted from the OTCQB or other market we may be listed on, which would result in a decrease in or absence of liquidity in our Common Stock, and potentially subject us and our officers and directors to civil, criminal and/or administrative proceedings and cause us to voluntarily file for deregistration of our Common Stock with the Commission.

  • Share Price & Shareholder Rights - Risk 5
    Future sales of our Common Stock in the public market could lower the price of our Common Stock, dilute your equity interests, and impair our ability to raise funds in future securities offerings.

    We may decide to raise additional capital through the sale of our securities or through other instruments both of which could result in the issuance of additional shares of our Common Stock. The issuance by us of Common Stock could dilute both the equity interests and the earnings per share of existing holders of our Common Stock. Such dilution may be substantial, depending upon the number of shares issued. In addition, future issuances of a substantial number of shares of our Common Stock in the public market, or the perception that such sales may occur, could adversely affect the then prevailing market price of our Common Stock and could make it more difficult for us to raise funds in the future through the sale of our securities. In the event we raise capital through a private placement of our Common Stock and/or other securities convertible into shares of our Common Stock, such offering could dilute both the equity interests and the earnings per share of our stockholders. Such dilution may be substantial, depending upon the number of shares issued in any potential private placement.

  • Share Price & Shareholder Rights - Risk 6
    The market price of our Common Stock may be volatile and may be affected by market conditions beyond our control.

    The market for our Common Stock is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in our share price is attributable to a number of factors. First, our shares of Common Stock are sporadically and thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our stockholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of shares of our Common Stock are sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Second, we are a speculative or "risky" investment due to our limited operating history, and uncertainty of future market acceptance for our potential products. As a consequence of this enhanced risk, more risk-averse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer. Many of these factors are beyond our control and may decrease the market price of our Common Stock, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our Common Stock will be at any time, including as to whether our Common Stock will sustain its current market price, or as to what effect the sale of shares or the availability of Common Stock for sale at any time will have on the prevailing market price. The market price of our Common Stock is subject to significant fluctuations in response to, among other factors: - changes in our financial performance or a change in financial estimates or recommendations by securities analysts;         - announcements of innovations or new products or services by us or our competitors;         - the emergence of new competitors or success of our existing competitors;         - operating and market price performance of other companies that investors deem comparable;         - changes in our Board of Directors or management;         - sales or purchases of our Common Stock by insiders;         - commencement of, or involvement in, litigation;         - changes in governmental regulations;         - general economic conditions and slow or negative growth of related markets; and         - other risks related to our business as set forth above. In addition, if the market for stock in our industry, or the stock market in general, experience a loss of investor confidence, the market price of our Common Stock could decline for reasons unrelated to our business, financial condition, or results of operations. If any of the foregoing occurs, it could cause the price of our Common Stock to fall and may expose us to lawsuits that, even if unsuccessful, could be costly to defend and distract our Board of Directors and management.

See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky. The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment. They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result. It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process. Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”. Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report. According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing. You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector. Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements. A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below. 1. Financial & Corporate Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results. Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing. Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments. Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances. 2. Legal & Regulatory Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company. Regulation – risks related to compliance, GDPR, and new legislation. Environmental / Social – risks related to environmental regulation and to data privacy. Taxation & Government Incentives – risks related to taxation and changes in government incentives. 3. Production Costs – risks related to costs of production including commodity prices, future contracts, inventory. Supply Chain – risks related to the company’s suppliers. Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls. Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation. 4. Technology & Innovation Innovation / R&D – risks related to innovation and new product development. Technology – risks related to the company’s reliance on technology. Cyber Security – risks related to securing the company’s digital assets and from cyber attacks. Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying. 5. Ability to Sell Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers. Competition – risks related to the company’s competition including substitutes. Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration. Brand & Reputation – risks related to the company’s brand and reputation. 6. Macro & Political Economy & Political Environment – risks related to changes in economic and political conditions. Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19. International Operations – risks related to the global nature of the company. Capital Markets – risks related to exchange rates and trade, cryptocurrency.