Israel-based binary options and forex broker EZTD Inc. has filed with the US Securities and Exchange Commission (SEC) a Standby Equity Distribution Agreement it has signed with YA II PN Ltd. which allows the broker to receive up to $10 million in exchange for stocks. The two entities have also signed a Note Purchase Agreement under which YA II PN will acquire $1 million worth of notes from EZTD.
The documents werr filed with the US regulator on Monday, but were signed on 21 November.
Under the equity distribution deal, within a three-year period EZTD will issue and sell to YA II PN up to $10 million worth of common stocks, and each stock would have a par value of $0.03. The investor will acquire EZTD shares at a discount to market of 2.0%. In addition, the broker has agreed to issue YA II PN a commitment fee equal to $100,000 of its common stock on 21 November, 2017, or the one year anniversary of the date when the two parties signed the agreement.
During the commitment period, EZTD has the right to issue an Advance Notice in which to select what amount it desires to request from YA II PN and in what time, but the amount should not exceed the agreed-on cap. Note that the amount the broker received may be less than the asked one. Moreover, EZTD may not utilize this right.
Meanwhile, under the note purchase deal YA II PN will purchase $1 million of notes from EZTD, of which $500,000 worth of notes being issued on 21 November, 2016, and a second tranche of $500,000 of notes being issued upon the filing of a Registration Statement, among other requirements. The outstanding principal balance of the notes will bear an annual interest of 8% paid on a monthly basis.
EZTD, formerly EZ Trader, operates through several wholly-owned subsidiaries – Israel-based Win Global Markets Inc. (Israel) Ltd., Cyprus-registered WGM Services Ltd., Japan-based EZ Invest Securities Ltd., Belize-incorporated SCGP Investments Ltd., Australia-based EZTD Australia PTY Ltd., and Vanuatu-registered EZ Trader Ltd. Group companies hold licenses in Cyprus and Japan.
Earlier this month, EZTD was charged by the SEC with misleading investors. The broker was ordered to pay more than $1.7 million – some $1.5 million in illegaly obtained revenues from US customers and a penalty in the amount of $200,000. This, coupled with a bad financial performance puts the broker in trouble. For the first half of the year, EZTD reported a net loss of $8.3 million, which deepened to $11.5 at the end of September.
YA II PN Ltd. is a Cayman Islands exempt limited partnership and an affiliate of Yorkville Advisors Global LLC.