Israel-based binary options and forex broker EZTD Inc. has attracted another investor, from which it has received $3 million with which to fight its financial issues, according to a filing with the US Securities and Exchange Commission (SEC). The broker has entered into a definitive Securities Purchase Agreement (SPA) with Compagnie Financiere St. Exupery SICAV-SIF, an affiliate of private hedge fund Yorkville Advisors Global LLC., under which the investors has acquired 366,667 shares at a purchase price of $6 apiece, or $2.2 million in total. The broker received the additional $800,000 earlier this year under an agreement signed in late December 2016.
The deal was entered into on 3 February, but is effective as of 26 January.
In November last year, the SEC charged EZTD with misleading investors. It was ordered to pay more than $1.7 million – some $1.5 million in illegally obtained revenues from US customers and a penalty in the amount of $200,000. This, coupled with a multi-million financial losses puts the broker in peril.
At the time, EZTD attracted another investor, YA II PN Ltd., also an affiliate of Yorkville Advisors Global. The two signed a deal, under which within a three-year period EZTD would issue and sell to YA II PN up to $10 million worth of common stocks. In addition, they also agreed YA II PN would acquire $1 million worth of notes from EZTD.
As part of the new investment agreement, EZTD’s existing convertible debt holders are required to convert their debt in the company into common stocks at prices per unit in the $5.7234 to $7.00 range.
The new Investor requires some management changes
Another major condition included in the investment agreement is that EZTD gets a new members in the management team.
The company’s CEO Shimon Citron has been re-appointed under an independent contractor agreement. He will continue to act as a CEO and director of the company, but has “terminated any employment, consulting or service agreements currently in place and forfeited any credits toward the Company, its subsidiaries or related entities to which he was entitled directly or indirectly”. He will receiving a monthly fee of $20,000, plus a bonus of 5% of the Company’s annual consolidated net income, paid quarterly.
Citron will also continue to serve as director of Win Global Markets (Israel) Ltd., a unit of the holding company EZTD Inc., for which he will receive additional monthly salary of NIS30,000.
“Due to the Company’s current financial situation and modified corporate focus, Mr. Citron is required, directly or indirectly, to acquire the shares of Winner Option Ltd. currently held by the Company, and Winner Option Ltd. has foregone any payments that it may be owed by the Company after December 31, 2016. Mr. Citron is also required to invest at least $500,000 in the Company at a price of $6.00 per share by June 30, 2017. In addition, any existing options issued to Mr. Citron directly or indirectly have been amended to have an exercise price of $6.00 per share,” EZTD’s filing read.
In addition, Compagnie Financiere St. Exupery SICAV-SIF requires to be granted the right to designate two directors to the managing board of EZTD. It also asked that convertible debt holders also be granted the right to appoint an observer to participate in all meetings of the broker’s board of directors and any of its subsidiaries. They, however, would not be granted voting or other powers.
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.