LeapRate Exclusive… LeapRate has learned from regulatory filings that binary options brokerage group EZTD Inc (OTCMKTS:EZTD), has received an $11 million investment commitment from alternative investment firm Yorkville Advisors Global, LLC.
EZTD operates binary options brands EZTrader (at website eztrader.com), Global Option (globaloption.com) and EZinvest (ezinvest.com). EZTD has sustained large losses this year totaling more than $11 million in the first nine months of 2016, leading the company to continually need to raise more money to remain in business.
Yorkville Advisors, based in Mountainside, NJ and run by hedge fund manager Mark Angelo, specializes in PIPES, or ‘private investment in public equity’. The once high-flying Yorkville Advisors was charged with fraud in 2012 by the SEC. According to the SEC, Yorkville exaggerated the reported returns of hedge funds they managed in order to hide losses and increase the fees collected from investors.
EZTrader itself has had problems with the SEC, recently paying a $1.7 million fine for misleading investors about binary options profitability
How is the investment structured?
Yorkville Advisors, via its Cayman Islands affiliate YAII PN, Ltd., has entered into a three-year Standby Equity Distribution Agreement with EZTrader for the sale of up to $10 million of EZTD common stock. This will allow EZTrader to sell from time to time during the next three years, at its discretion, newly-issued shares of its common stock to Yorkville at a discount to market of 2%.
EZTrader has agreed to file a registration statement on Form S-1 within 60 days of the execution of the agreement. In addition, EZTrader will pay Yorkville a commitment fee equal to $100,000 of the company’s common stock on the one year anniversary of the agreement.
EZTrader will also borrow $1 million from Yorkville via a Notes sale, bringing the total investment commitment to $11 million. Yorkville will purchase $1 million of Notes from EZTD, with $500,000 being issued on November 21, 2016 and a second tranche of $500,000 to be issued upon the filing of the aforementioned Registration Statement, among other requirements. The Notes pay 8% interest.
EZTrader is not obligated to utilize any of the $10 million available under the agreement. There are no minimum commitments or minimum use penalties. The total amount of money that ultimately can be raised by EZTrader under the agreement over the three year term will depend on the market price for the company’s common stock and the number of shares actually sold.
The agreement does not impose any restrictions on EZTrader’s operating activities. During the term of the agreement, Yorkville is prohibited from engaging in any short selling or hedging transactions related to the EZTD common stock.