EZTD Inc., the group managing the binary options brands EZTrader.com, EZinvest.com, and EZInvest-sec.jp, has raised fresh capital from Yorkville Advisors Global, the alternative investment firm that has committed to injecting $11 million into EZTD’s operations back in November 2011.
According to its latest filing with the U.S. Securities and Exchange Commission (SEC), Compagnie Financiere St. Exupery, an affiliate of private hedge fund Yorkville Advisors Global LLC, has entered into a binding term sheet dated December 29, 2016 for the purchase of 500,000 shares of the EZTD’s common stocks, valued at $3,000,000.
The investment is in two stages: upon execution of the first tranche agreement, Yorkville paid $800,000 for acquiring 133,333 of EZTD’s shares, and it will pay for the remaining 366,667 shares, valued at $2,200,000, upon the execution of a share purchase agreement which is subject to the satisfaction of certain specified conditions.
Pursuant to the SEC’s filing, the aforementioned conditions include the obligation of EZTD’s existing debt holders to convert their convertible debt into common shares using conversion prices ranging from $5.7234 to $7.00 per share. In addition, Yorkville has the right to designate two directors to the EZTD board of directors and to each its subsidiaries’ boards.
The most interesting part in the agreement concerns commitments made by directors of the company, namely its CEO Shimon Citron. Mr. Citron will terminate all current agreements and forfeit any credits toward the company, excluding minor credits due to his employment in 2013, and a consulting agreement with Citron Investments Ltd., in 2008.
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Furthermore, Mr. Citron will continue as CEO of EZTD but only with receiving a monthly salary of $21,150, plus a bonus of 5% of the annual net income. He will also be required to acquire the shares of Winner Option Ltd. and Winner Option Ltd, as well as investing at least $500,000 in EZTD at a price of $6.00 per share by June 30, 2017.
The embattled binary options brokerages operator suffered from serious regulatory and operational drawbacks in 2016. Back in December, EZTD had its Chief Financial Officer (CFO) Itai Loewenstein leave the group. The circumstances surrounding his departure were unclear, especially considering his less than one-year stint at EZTD.
A few weeks earlier, the US Securities and Exchange Commission (SEC) ordered EZTD to pay a fine of $200,000 and return about $1.5 million of revenue generated from more than 4,000 Americans who lost their investment through its financial products between 2011 and 2014.
Finance Magnates reported on EZTD in August 2016 when the firm announced that its financials deteriorated materially on a year-on-year basis. The decline in revenues was mainly attributed to a significant increase in withdrawals by customers as a result of new regulations imposed by the Cypriot regulator.
EZTD has accumulated more than $11.5 million in losses in the first 9 months of 2016. For Q2 2016, the net loss at EZTrader’s parent increased almost threefold to $4.935 million compared to a net loss of $1.285 million in 2015.
Across a half year interval, the net loss for H1 2016 also reported a 227 percent increase YoY, coming in at $8.307 million compared to $2.537 million in H1 2015.