TIGE Tigrent Inc (CE)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

o          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to               

Commission file number: 0-27403

TIGRENT INC.

(Exact name of registrant as specified in its charter)

(239) 542-0643

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x   No  o

Indicate by check mark whether the registrant has electronically submitted and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  o   No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definition of “larger accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o   No  x

There were 13,028,587 shares of common stock outstanding as of November 5, 2010.

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PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

TIGRENT INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TIGRENT INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited, in thousands, except per share data)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TIGRENT INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TIGRENT INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1 — Basis of Presentation

The unaudited condensed consolidated financial statements (“Condensed Consolidated Financial Statements”) include the accounts of Tigrent Inc. and its wholly-owned and majority-owned subsidiaries (collectively referred to herein as the “Company,” “Tigrent,” “we,” “us” or “our”). All intercompany balances and transactions have been eliminated in consolidation.

The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2009 included in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2009 (“2009 Annual Report”) as filed with the Securities and Exchange Commission (“SEC”) on April 15, 2010. Certain prior period amounts have been reclassified to conform with the current period presentation.

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the applicable provisions of Regulation S-K and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations.

In the opinion of management, all adjustments, consisting of normal recurring adjustments, which are considered necessary to make a fair presentation of its financial position and operating results have been included. The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and the reported amount of revenue and expenses during the reporting period.  The results for the three and nine months ended September 30, 2010 are not necessarily indicative of the results expected for the year ending December 31, 2010.

Going Concern

Management has evaluated whether we have sufficient liquidity to fund our working capital needs through December 31, 2010 and through 2011.  In its analysis, management analyzed projected sales and expenses and considered the scalability of our business expenses relative to the size of our revenues.  Significant efforts to control costs through reductions in staff and other cost-cutting measures, as well as potential additional cash flow from our continued efforts to sell our non-core assets, were taken into consideration.   We continue to incur a negative cash flow (totaling $6.7 million for the nine months ended September 30, 2010) primarily due to the on-going challenges with our business.  Management currently projects that our available cash balances may not be sufficient to maintain our operations beyond December 31, 2010, when considering all of the operational and external risks and uncertainties. These risks and uncertainties include, but are not limited to, the sale of our remaining non-core assets (which could be subject to further deterioration of fair value), creditor concessions, cash contributions from new and ongoing business initiatives, negative outcomes from SEC and DOJ investigations and current and potential future litigation matters. Therefore, management has concluded that we are not adequately capitalized, raising doubts about our ability to continue as a going concern beyond December 31, 2010.  Our financial statements as of September 30, 2010 and December 31, 2009 and for the nine months ended September 30, 2010 and 2009 are prepared assuming we will continue as a going concern and do not include any adjustments that might result from our inability to meet our obligations and continue our operations.

Management’s Plan

In response to the continued decline in profitability and the related impact on our cash position, we have significantly reduced the number of live events, eliminated historically weak markets for live events and reduced the frequency in which we visit any one particular market. We believe these actions may improve the profitability of each event remaining on the live event schedule. While we implemented many of these changes early in 2010, upon reevaluation, we made additional significant modifications in the third quarter of 2010 and may make further modifications going forward as we attempt to optimize our operating structure.  The primary focus of the reduction of scheduled events is in the U.S. In addition, we are striving to fulfill more of our advanced courses online in an effort to reduce costs. During the fourth quarter of 2010, we plan to continue development and testing of digitally-delivered programs, which are expected to decrease our event and fulfillment costs and lower our marketing costs.

In 2010, we implemented reductions in staff to align with our anticipated sales level. In addition, we have decreased occupancy costs and have reduced operating costs in all areas.  Many of these cost-cutting actions occurred during the third quarter of 2010. In October 2010, we sold two of our non-core assets and will continue to pursue the sale of the remaining non-core assets but

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cannot be assured when or if such sales will be completed.  We are also in current discussions with some of our larger creditors to re-negotiate amounts owed.  The sufficiency of our cash resources is dependent on these actions.

We may seek to obtain additional capital through issuance of equity which may dilute the equity holdings of current investors.  In addition, we may seek to borrow additional capital from institutional and commercial banking sources or other sources to fund our operations on terms that may include restrictive covenants, liens on assets, high effective interest rates and repayment provisions that may reduce our cash resources and limit future access to capital markets. We do not currently have any commitments for future external funding. Our ability to raise additional capital may be adversely impacted by the current economic environment and our financial results and liquidity position.

If we cannot generate the required revenues to sustain our operations or obtain additional capital on acceptable terms, we will need to make further revisions to our business plan, sell or liquidate assets, file for bankruptcy or cease operations, which could cause our investors to suffer the loss of a significant portion or all of their investment in us.  The financial statements do not include any adjustments that might result from the outcome from these uncertainties.

Note 2 — Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Summary of Significant Accounting Policies

Our significant accounting policies are discussed in Note 2 - Significant Accounting Policies and Related Information of our audited consolidated financial statements for the fiscal year ended December 31, 2009, included in the 2009 Annual Report. These accounting policies have not changed significantly during the nine months ended September 30, 2010.

Recent Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB’) issued guidance that requires reporting entities to make new disclosures about recurring or nonrecurring fair-value measurements including significant transfers into and out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. The guidance became effective for us with the reporting period beginning January 1, 2010, except for the Level 3 reconciliation disclosures that are effective for interim and annual periods beginning after December 15, 2010. Adoption of this new guidance did not have a material impact on our consolidated financial statements.

In October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue Arrangements, a consensus of the FASB Emerging Issues Task Force .  Under this new guidance, when vendor specific objective evidence or third party evidence for deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate deliverables and allocate arrangement consideration and the use of the relative selling price method is required. The new guidance eliminates the residual method of allocating arrangement consideration to deliverables and includes new disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue recognition.  This guidance will be effective for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with earlier adoption permitted. Adoption of this new guidance is not expected to have a material impact on our consolidated financial statements.

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Note 3 — Notes Receivable

Notes receivable consists of the following (in thousands):

(a)  As discussed more fully in Note 13 — Subsequent Events , we sold this note to an unrelated third party on October 5, 2010.  As a result, we recognized an impairment charge of $3.0 million (See Note 4—Impairment of Assets ) during the quarter ended September 30, 2010, and reclassified the note receivable as a current asset at September 30, 2010.

Note 4—Impairment of Assets

We performed impairment testing of our long-lived assets in accordance with the applicable accounting literature. We test for impairment annually or when events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable. In accordance with ASC 820, Fair Value Measurements and Disclosures , we used Level 3 inputs, defined as unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities, to measure estimated fair market values. In estimating fair market values we used market indicators such as appraisals, recent market activity and other related information.

For the nine months ended September 30, 2010, we recorded $4.6 million in impairment charges consisting of the following (in thousands):

(a) As discussed more fully in Note 13 — Subsequent Events , we sold this note to an unrelated third party on October 5, 2010. Based on the known transaction value, albeit subsequent to the end of the current reporting period, the Company recorded an impairment charge during the period ended September 30, 2010 to decrease the note’s value to its fair market value.

(b)  As discussed more fully in Note 13 — Subsequent Events , in October 2010, we transferred title of Tranquility Bay in exchange for a credit to us of $300,000 against sums due and coming due under the notes and a deferral of further payments under the notes until February 15, 2011 (see Note 7 — Long-Term Debt ). Based on the value received from this exchange, we recorded an additional impairment charge of $0.5 million during the quarter ended September 30, 2010. We previously recorded an impairment charge on this property of $0.2 million during its quarter ended March 31, 2010.

(c) We made inquiries regarding the salability of its non-core real estate investment in Costa Rica and as a result of this process, determined that the book value of our investment was higher than the estimated fair value and recorded an impairment charge, accordingly, during the quarter ended September 30, 2010.

(d) We have been in discussions with a real estate brokers regarding the potential sale of our corporate headquarters. Based on the estimated fair value, we recorded an impairment charge during the quarter ended September 30, 2010.

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Note 5 — Certain Relationships and Related Transactions

As of September 30, 2010, our remaining ownership interest in Costa Rica and Panamanian entities included a hotel and beachfront land concession known as Monterey del Mar, S.A. (“MDM”) and Mar y Tierra del Oeste, S.A. (“MTO”), respectively. We have a 67.5% ownership interest in the entities totaling $1.2 million, which is included in Investments in real estate. The MDM/MTO investment is accounted for in our consolidated financial statements. For the nine months ended September 30, 2010 and 2009, using the equity method of accounting, we recorded our share of the losses related to our interests in these entities of approximately $229,000 and $57,000, respectively.

In addition, we own a 50% interest in Monterey del Llano, S.A. (“MDL”), which owns a one-third interest in Monterey Group, S.A. (“MG”), whose only asset is two and one-half acres of beachfront land adjacent to MDM/MTO, our hotel property. Our former Chairman and Chief Executive Officer, Mr. Whitney, indirectly owns approximately 50% of MDL and 22% of MG. MDL and MG are not operating entities and have no operating results. Therefore, we do not record an equity interest related to these entities.

A committee of the Board of Directors is responsible for reviewing Costa Rica transactions regarding compliance with the applicable governance and related party transaction requirements.

As discussed more fully in Note 10 — Stockholders’ Deficit and Noncontrolling Interest , in May 2010, the Company entered into new agreements with the Rich Global, LLC and Rich Dad Operating Company, LLC (“RDO”) to restructure the agreements under which the Company licenses and operates under the Rich Dad brand.  In accordance with the terms of the license agreement, the Company paid RDO, approximately $3.2 million during the nine months ended September 30, 2010.  As discussed more fully in Note 12 — Contingencies , the Company owed approximately $1.8 million of current and deferred royalty payments as of September 30, 2010, which is included in Other accrued expenses in the accompanying condensed consolidated balance sheet as of September 30, 2010.

Note 6 — Income Taxes

Significant management judgment is required in developing our provision for income taxes, including the determination of foreign tax liabilities, deferred tax assets and liabilities and any valuation allowances that might be required against the deferred tax assets.  Management evaluates our ability to realize its deferred tax assets on an annual basis and adjusts its valuation allowance when it believes that it is more likely than not that all or a portion of the asset will not be realized. Management has determined that it is more likely than not that the net deferred tax assets will not be realized, and therefore a full valuation has been recorded on the net deferred tax assets.

Our net deferred tax asset balances as of September 30, 2010 and 2009 were comprised primarily of deferred revenue offset by deferred expenses, and foreign net operating losses, and were both reduced by a full valuation allowance. At September 30, 2010, the Company had foreign and state net operating loss carryforwards of approximately $21.5 million. The effective income tax rate differs from the federal statutory rate primarily due to foreign rate differentials, state income taxes, and valuation allowance. For the nine months ended September 30, 2010 the valuation allowance decreased $1.1 million.

On March 17, 2009 we were notified by the Internal Revenue Service (“IRS”) that our Company’s federal tax returns for the years ended December 31, 2005, December 31, 2006, and December 31, 2007 are under examination. We believe that our accruals for tax liabilities are adequate. However, as tax regulations are subject to interpretation and tax litigation is inherently uncertain, estimates used in the determination of our tax liability may not be representative of actual outcomes.

Note 7 — Long-Term Debt

Long-term debt consists of the following (in thousands):

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(a)  As discussed more fully in Note 13 — Subsequent Events , we sold the note receivable collaterized by the land and building in Central Florida to an unrelated third party on October 5, 2010.  In conjunction with this sale, we satisfied the notes payable in October 2010. As a result, we reclassified the note payable as a current liability at September 30, 2010.

(b) As of September 30, 2010, the carrying values of MDM/MTO and Tranquility Bay are $1.2 million and $0.3 million, respectively. See Note 12 — Contingencies - Litigation for further discussion of MDM, Tranquility Bay and litigation involving M. Barry Strudwick and Susan Weiss. These notes are to be secured by our interests in (i) MDM and in that certain hotel property in Costa Rica operated for the benefit of MDM and (ii) Tranquility Bay, undeveloped real property in Lee County, Florida. We missed payments of approximately $220,337 and $5,983 with respect to the First Note and Second Note, respectively, which were due on July 15, 2010, which nonpayment became an event of default on July 25, 2010, resulting in the acceleration of the amounts due and payable on the notes. As discussed more fully in Note 13 — Subsequent Events , in October, 2010, we transferred ownership of Tranquility Bay in exchange for a $300,000 credit against payments due under the notes in July 2010 and October 2010 along with the deferral of certain other monies owed under the notes until February 15, 2011.

Note 8 — Net Income per Share

Basic net income per share is calculated using the weighted average number of common stock outstanding. Diluted income per share reflects the potential dilution that could occur from common stock issuable through stock options, warrants and restricted performance shares, as appropriate. As of September 30, 2010, and September 30, 2009, in accordance with the treasury stock method, there were no dilutive effects from outstanding stock options or warrants. There were stock options to purchase 75,500 shares of common stock and no warrants outstanding as of September 30, 2010, and stock options to purchase 201,350 shares of common stock and warrants to purchase 690,719 shares of common stock outstanding as of September 30, 2009. See Note 9 — Stock Option and Incentive Plans for further discussion of stock options and restricted performance shares.

Note 9 — Stock Option and Incentive Plans

1998 Stock Option Plan

Our 1998 Stock Option Plan (“1998 Plan”) provided for the issuance of up to 2,187,500 shares of our common stock as incentive stock options and nonqualified stock options. The 1998 Plan expired on August 30, 2008, but options that were issued under the 1998 Plan prior to the expiration date are still outstanding and exercisable when vested. Employees, directors and consultants were eligible to receive awards under the 1998 Plan. The exercise price of a stock option grant under the 1998 Plan was not less than the market price of our common stock on the date of the grant and no options had a term of more than ten years. Options granted under the 1998 Plan typically vested as follows: 25% of the options vested on the grant date, an additional 25% vested on the first anniversary of the grant date, another 25% vested on the second anniversary of the grant date, and 100% of the shares vested on the third anniversary of the grant date, although the Compensation Committee had discretion to approve a different vesting period. All options expire ten years from the date of grant.

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2009 Incentive Plan

Our 2009 Incentive Plan (“Incentive Plan”), which was approved by our shareholders on September 2, 2009, provides for the issuance of up to 1.3 million shares of our common stock. The Incentive Plan allows for the granting of a broad range of award types, including stock options (incentive and non-qualified), stock appreciation rights, restricted stock, restricted stock units, performance shares and performance units and other stock awards. Employees, directors, management and consultants are eligible to receive awards. The purpose of the Incentive Plan is to motivate participants to achieve long range goals, attract and retain eligible employees, provide incentives competitive with other similar companies and align the interest of employees and directors with those of our shareholders. The Incentive Plan is administered by the Compensation Committee of the Board of Directors.  In September 2008, our Board of Directors entered into a Restricted Performance Share Agreement with our former Chief Executive Officer, providing for the issuance of 600,000 restricted shares of our Common Stock, which vest in accordance with certain market and service conditions. Effective March 16, 2010, our Chief Executive Officer was no longer employed by us, and these shares were forfeited on June 14, 2010.  As of September 30, 2010, no awards are outstanding under the Incentive Plan.

Note 10 — Stockholders’ Deficit and Noncontrolling Interest

The following reflects the equity activity, including our noncontrolling interest, for the period ended September 30, 2010 (in thousands):

(a)  On May 26, 2010, we entered into definitive agreements with Rich Global, LLC (“Rich Global”) and Rich Dad Operating Company, LLC (“RDO”) to restructure the agreements under which we license and operate under the Rich Dad brand.  Rich Global and RDO (collectively, the “Rich Dad Parties”) are entities controlled by Robert and Kim Kiyosaki.  We entered into a (i) License Agreement, dated May 26, 2010 (the “License Agreement”), with the Rich Dad Parties, with respect to the Rich Dad brand, and (ii) Settlement Agreement and Release, dated May 26, 2010 (the “Settlement Agreement”), with the Rich Dad Parties, related to our previous licensing agreement for the Rich Dad brand and which commits the parties to enter into a cooperative marketing agreement that contemplates the development and implementation of improved customer contact management strategies.

The License Agreement is for a term of approximately five years or until December 31, 2014.  Rich Global is a consenting party to the License Agreement with respect to the use of its database. The License Agreement gives us the non-exclusive right to sell and market Rich Dad products in live seminars and training courses in the United States, Canada and the United Kingdom. The License Agreement provides that we must establish escrow and cash collateral accounts in an aggregate amount equal to 30% of our deferred revenues during the term of the License Agreement (“Reserve Goal”). The purpose of the escrow and cash collateral accounts is to ensure that we can fulfill our contractual commitments to the customers who purchased the Rich Dad and Tigrent courses. Until the Reserve Goal has been met, we will pay (i) to RDO a current royalty (“current royalty”) of 3% of Gross Revenue related to the Rich Dad brands and (ii) into the escrow account a deferred royalty of 5% of Gross Revenues (“unfulfilled royalty”) related to the Rich Dad brands.  Under the License Agreement, the term “Gross Revenues” means gross revenues related to the Rich Dad brands, net of merchant fees, taxes, shipping, refunds, rebates, bad debt and sums paid to RDO’s third party coaching provider under a separate cross marketing agreement.

In addition, we will pay into the cash collateral account on a monthly basis the amount by which the average cash balance of all unrestricted funds in our accounts for the prior 90 day period (excluding the proceeds from the sale of, or other realization upon, any non-core assets or any cash accounts from Rich Dad Education, LLC (“RDE”) made available to us) exceeds $6 million. Our merchant deposit reserve funds will also be credited to the Reserve Goal.  After the Reserve Goal has been met, we will pay to RDO

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royalty payments equal to 10% of Gross Revenue related to the Rich Dad brands in lieu of paying the current royalty to RDO and the unfulfilled royalty into the escrow account. If the combined amounts in the escrow account and the cash collateral account exceeds the Reserve Goal, the excess funds may be withdrawn from the escrow account twice each year and applied to the deferred fulfillment royalties that are due to RDO. In addition, on a quarterly basis, RDO may withdraw 40% of payments into the escrow account during the prior three-month period.

The License Agreement contains covenants relating to performance standards and cash operating profits. We are limited in making any capital expenditures with respect to any businesses other than the Rich Dad Education Business that exceed $500,000 per year without obtaining written approval from RDO. We must also consult with RDO prior to hiring a Chief Executive Officer, Chief Financial Officer or any other officer who reports directly to the Chief Executive Officer. RDO has the right to allow one representative to observe all meetings of our Board of Directors in a non-voting capacity.

In accordance with the Settlement Agreement, we issued 9.9% of our outstanding common stock (1,290,000 shares) to Rich Global and redeemed Rich Global’s 49% interest in RDE, the limited liability company that was formed by Rich Global and us to operate the Rich Dad business. Our common stock issued to Rich Global is subject to a shareholder agreement with us, that gives Rich Global demand and piggyback registration rights after January 1, 2011. The Company and Rich Global transferred the RDE assets to the Company, except the data base of customer names and customer leads, resulting in full ownership by us of the business previously conducted by RDE.  We and Rich Global agreed to dissolve RDE, and terminate the license and administrative services agreements associated with RDE. We have responsibility for any and all liabilities remaining in RDE, including but not limited to obligations related to the fulfillment of course work for the Rich Dad students. We have agreed to release Rich Global from all general claims related to RDE and Rich Global has agreed to release us from specific claims that it made against us and RDE in connection with its alleged default letter dated March 27, 2009. Among other things, the Settlement Agreement proposes enhanced cooperation in advertising, marketing, and educational programs between us and RDO through a customer contact and data base management strategy that emphasizes seamless support of the Rich Dad brand and its customers.

Note 11 — Segment Information

We operate primarily in two business segments, Proprietary brands and Rich Dad ™ Education . Our revenue is generated through the sale of real estate and financial instruments training courses, programs and products and is categorized into segments depending on the channel under which the customer was acquired. Operating results for the reportable segments are evaluated regularly by executive management.

Our segment revenue and gross profit are as follows (in thousands):

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(1) Segment gross profit is calculated as revenue less direct course expenses and is impacted by inter-segment fulfillment charges.

For the nine months ended September 30, 2010, 77.1% of our revenue was generated domestically and 22.9% was generated internationally.  For the nine months ended September 30, 2009, 87.5% of our revenue was generated domestically and 12.5% was generated internationally.

Note 12 — Contingencies

Litigation

On November 14, 2006, we were notified by the SEC that it is conducting a formal, nonpublic investigation to determine whether we complied with securities laws in connection with (i) the claimed efficacy or trading success of our stock market training programs and, (ii) our acquisition of certain other companies. The SEC has requested documents and information from us in the course of their investigation, though neither we nor any of our subsidiaries or present or former directors or officers have been charged by the SEC.

On December 11, 2006, we received a subpoena from the Department of Justice (“DOJ”) requesting documents and information in connection with their investigation of our marketing activities from January 1, 2002 to the present. We were notified that a grand jury investigation related to this matter had commenced.  Neither we nor any of our subsidiaries have been charged in any indictment, and none of our present or former directors or officers have been charged in any indictment.

On March 6, 2008, a federal grand jury in the Eastern District of Virginia returned an indictment charging Linda Woolf and David Gengler, two former independent contractors, with one count of conspiracy to commit mail fraud and wire fraud.  Woolf and Gengler were alleged in the indictment to have been independent contractors of our EduTrades, Inc. (“EduTrades”) subsidiary at the time of their alleged criminal activities. The defendants are no longer independent contractors for either us or any of our subsidiaries.  On March 11, 2008, the SEC filed civil fraud charges against Woolf and Gengler alleging that Woolf and Gengler made false and misleading statements to sell “Teach Me to Trade” packages for EduTrades.  On April 13, 2009, a trial was commenced on the criminal charges in the U.S. District Court in Alexandria, Virginia (“Virginia Court”). On May 7, 2009, the jury returned a guilty

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verdict as to both Woolf and Gengler.  On June 11, 2009, Woolf and Gengler filed a joint motion for a judgment of acquittal or in the alternative for a new trial (“Motion for Judgment of Acquittal”). On October 23, 2009, the Court issued its Order and Memorandum Opinion granting the Motion for Judgment of Acquittal on the basis of insufficient evidence to prove that Woolf or Gengler devised or knowingly participated in a scheme to defraud as alleged in the indictment and dismissing the indictment of Woolf and Gengler and finding that should the Court’s judgment of acquittal be reversed or vacated the interests of justice require a new trial.  On November 23, 2009 the United States filed a Notice of Appeal to the United States Court of Appeals for the Fourth Circuit to attempt to reverse the district court’s order on October 23, 2009, which granted defendants’ joint motion for judgment of acquittal; dismissed the indictment; and conditionally granted defendants a new trial if the judgment of acquittal is later vacated or reversed.

On January 11, 2007, Whitney Canada, Inc., a wholly-owned subsidiary, and Whitney Information Network (“WIN”) received notice of an Amended Motion for Authorization to Institute a Class Action in the Province of Québec, Canada on behalf of all persons who are alleged to have made various real estate investments at the alleged inducement of, or through, Marc Jémus, François Roy, Robert Primeau and/or their companies, and/or B2B Trust, and/or Whitney Canada, Inc., and/or Jean Lafrenière and/or us. The complaint filed in Superior Court for the Province of Quebec, District of Hull (Canada) (“Canadian Court”), seeks repayment of $39,235 to the petitioner, unspecified payment to each member of the class of an amount corresponding to their lost investments, payment of $10,000 to each member of the class as general damages, recovery of costs and other litigation expenses, and unspecified equitable relief. On October 19-20, 2009 WIN argued its motions to dismiss for lack of jurisdiction and challenging the authorization of the class claims against WIN.  On November 3, 2009 the Canadian Court denied our motion for lack of jurisdiction. On August 19, 2010, the Canadian Court denied the petitioner’s Re-re-Amended Motion for Authorization to Institute a Class action against us, but granted the motion against, Whitney Canada, Inc.  On September 17, 2010, the petitioner filed a notice of appeal with respect to the Canadian Court’s denial of the petitioner’s Re-re-Amended Motion for Authorization to Institute a Class action against us.  We will vigorously defend against the claims made in this lawsuit.

On March 22, 2007, our wholly-owned subsidiary, Tigrent Group Inc. (formerly Whitney Education Group, Inc. (“WEG”)) received a complaint styled Glenn Acciard, et al. v. Russell Whitney, individually, John Kane, individually and WEG, et al., filed in the Circuit Court of the Twentieth Judicial Court in and for Lee County, Florida (“Lee County Court”) alleging that WEG, two of our former executive officers, and 18 other defendants not associated with us breached certain of their alleged fiduciary duties to the named plaintiffs, all of whom are alleged to be our customers.  This case arises out of our past business activities with Gulfstream Development Group, LLC (“Gulfstream”).  In June 2003, we entered into an agreement with Gulfstream in which we were compensated for appointing Gulfstream as the exclusive offeror of homes for customers of our advanced real estate courses. Customers were offered the opportunity to purchase residential lots in Southwest Florida from Gulfstream, other lot owners, or Mr. Russell A. Whitney, our former Chairman and Chief Executive Officer.  Gulfstream constructed homes on lots owned by our customers.  Under the Referral Services Agreement with Gulfstream, Gulfstream compensated us for each customer that closed on a home built by Gulfstream.  Our relationship with Gulfstream was terminated in 2008.  The allegations in the complaint include claims of constructive and common law fraud and other violations. The plaintiffs seek unspecified monetary damages, unspecified punitive damages, interest, a refund of the purchase price of the lots sold to the plaintiffs, costs, attorney’s fees and unspecified equitable relief. On July 31, 2007, the case was removed to the U.S. District Court for the Middle District of Florida.  On March 28, 2008, we and Tigrent Learning Inc., formerly known as Wealth Intelligence Academy, Inc. (“WIA”), were added as defendants. On January 20, 2009, we, Mr. Kane, WEG, and WIA filed an answer and affirmative defenses and the parties have conducted extensive discovery. We will vigorously defend against the claims made in this lawsuit.

On January 29, 2010, we, on behalf of ourselves and our wholly-owned subsidiaries Tigrent Group Inc. (formerly Whitney Education Group, Inc.) and Tigrent Learning Inc. (formerly Wealth Intelligence Academy, Inc.), were served with a complaint styled Thomas L. Altimas, et al. v. Russell Whitney, individually, and Whitney Information Network, Inc., Whitney Education Group, Inc. and Wealth Intelligence Academy, Inc., et al. filed in the U.S. District Court for the Middle District of Florida in September 2009.  The complaint alleges that we, our named subsidiaries, Russell Whitney, and other defendants not associated with us participated in a scheme to defraud the plaintiffs through the sale of real estate in southwest Florida during the estimated period of 2002 to 2007 in the course of our relationship with Gulfstream described above.  The complaint includes claims of breach of fiduciary duty, constructive fraud, violation of Florida Deceptive and Unfair Trade Practices Act, fraud in the inducement, civil conspiracy, Florida RICO, federal RICO, and other violations. The plaintiffs seek unspecified monetary damages, including punitive damages, treble damages, interest, a refund of the purchase price of the properties sold to the plaintiffs, costs, attorney’s fees and unspecified equitable relief.  On March 15, 2010, we filed an answer and affirmative defenses.  The case is currently in the discovery stage.  We will vigorously defend against the claims made in the lawsuit.

On November 3, 2008, the Office of Attorney General of the State of Florida issued an investigative subpoena pursuant to the Florida Deceptive and Unfair Trade Practices Act that seeks information about consumer-investors who attended our Millionaire University (“MU”) course and invested in Florida homes built by Gulfstream, Gulfstream Realty (“GR”) and Gulfstream Realty and Development, LLC (“GRD”) since August 1, 2004, as well as the amount of payments received by us from Gulfstream, GR and GRD. We have produced documents responsive to the subpoena. On October 29, 2009, we received a second investigative subpoena from

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the Office of Attorney General of the State of Florida seeking documents relating to Gulfstream Development Group, LLC, including the amount of payments received by us or by any of our current or former officer, director, employee or independent contractor from Gulfstream.

On October 21, 2008, Mr. Simon, our former Co-President and Chief Operating Officer, filed a lawsuit against us in the Lee County Court for $1.4 million for funds allegedly owed to him due to the allegedly improper termination of his employment agreement. On January 11, 2010, the Court denied Mr. Simon’s Motion for Summary Judgment. The lawsuit is currently in the discovery phase. Trial has been set to March 29, 2011.  We will vigorously defend against the claims made in this lawsuit.

On April 13, 2009, we and two of our subsidiaries, WEG and WIA, were served with a complaint filed by Learning Annex Holdings, LLC and Learning Annex, LLC (collectively “Learning Annex”) in the Supreme Court of the State of New York, County of New York. The complaint alleges, among other things, misappropriation of business opportunity, breach of fiduciary duty, breach of covenant to negotiate in good faith, constructive trust, breach of contract, breach of implied covenant of good faith and fair dealing, promissory estoppel, equitable estoppel, unjust enrichment, quantum meruit, and fraud arising out of an alleged agreement to form a business relationship. The case was removed to the United States District Court for the Southern District of New York on May 8, 2009. On October 8, we entered into a settlement agreement with Learning Annex pursuant to which we agreed to pay Learning Annex $100,000 in exchange for a full release of all claims that were or could have been brought by Learning Annex in the lawsuit.  We made payment of the $100,000 sum on October 18, 2010 and the lawsuit against us, WEG, and WIA was discontinued with prejudice on October 12, 2010.

On July 9, 2009, we and our subsidiary WEG received a summons and complaint filed by and on behalf of Rothstein Rosenfeldt Adler, P.A. (“RRA”) in the Circuit Court in and for Broward County, Florida. The suit alleges damages totaling $348,000 for unpaid legal invoices. We intend to vigorously defend against the claims made in the lawsuit.  On November 6, 2009, we filed a counterclaim against RRA alleging legal malpractice with respect to the filing of lawsuits by RRA against Susan Weiss and M. Barry Strudwick that were the subject of the settlement entered into on September 13, 2009.  The counterclaim seeks unspecified damages in excess of $3.8 million dollars.  In November of 2009, a forfeiture action was filed against RRA founder Scott Rothstein (“Rothstein”) in connection with allegations against Rothstein and RRA pertaining to a Ponzi scheme involving the sale of structured settlements.  On November 10, 2009, four creditors filed an involuntary petition under Chapter 11 of the Bankruptcy Code against RRA in the U.S. District Court for the Southern District of Florida (Case No. 09-34791-BKC-RBR) (“RRA Bankruptcy Action”).  We filed a Proof of Claim in the amount of $4 million in the RRA Bankruptcy Action on May 12, 2010.  On December 2, 2009, Carolina Casualty Insurance Company (“Carolina Casualty”) filed a Complaint for Rescission against RRA related to RRA’s involuntary bankruptcy seeking a declaratory judgment rescinding two lawyer’s professional liability policies that Carolina Casualty issued to RRA for the policy periods 2008-09 and 2009-10 (the “Rescission Action”).  In the Rescission Action, Carolina Casualty seeks declarations rescinding the two lawyer professional liability policies and holding that coverage is precluded for all claims and suits reported under those policies based upon alleged misrepresentations in the applications RRA submitted in support of the renewal of the policies.  We filed a motion to intervene in the Rescission Action on the basis that we had a stake in the outcome of the Rescission Action.  Our motion to intervene was denied on June 7, 2010.  On July 16, 2010, the Court heard our Motion to Reconsider the Court’s denial of our Motion to Intervene, which Motion to Reconsider was also denied on August 24, 2010.

On or about October 6, 2009, we and two of our subsidiaries, EduTrades and WIA, received a complaint filed in the United States District Court for the Southern District of Florida by Eric Springer and Maurice J. Seghers, Jr., on behalf of themselves and all persons who purchased investor-education products sold under the Teach Me To Trade (“TMTT”) brand.  Two former independent contractors, Linda Woolf and David Gengler, along with their companies, Hands on Capital, Inc., and Lashaico, Inc., are additional defendants to the lawsuit.  The complaint alleges, among other things, fraud, negligent misrepresentation, civil conspiracy, and deceptive and unfair trade practices arising out of our business relationship with and use of Linda Woolf and David Gengler as trainers for the TMTT brand.  Plaintiffs seek for themselves and others similarly situated a refund of all amounts spent on TMTT products and services, unspecified compensatory damages, costs, an award of attorney’s fees, and unspecified legal and equitable relief.  The complaint relies on the findings from the verdict in the Woolf and Gengler criminal trial.  As has been previously reported, the verdict in the Woolf and Gengler criminal trial was vacated on October 23, 2009 by way of an Order granting Woolf and Gengler’s Motion for Judgment of Acquittal.  On October 30, 2009 we and our subsidiaries accepted service of the complaint.  On July 27, 2010, the Court granted the parties motion to stay the case indefinitely.   October 22, 2010, the U.S. District Court lifted the stay and we await receipt of an amended complaint to be filed by the plaintiff no later than December 28, 2010. We will vigorously defend against the claims made in this lawsuit.

On March 11, 2010, the Office of the Attorney General of the State of Florida issued an investigative subpoena pursuant to the Florida Deceptive and Unfair Trade Practices Act that seeks information about our courses and seminars offered in Florida, including those offered under the Rich Dad brand.  On April 15, 2010, we produced documents responsive to the subpoena. Neither we nor any of our subsidiaries or present or former directors or officers have been charged by the Attorney General.

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On September 30, 2010, we received a written demand from the Hilton in the Walt Disney World Resort (“Hilton”) for $1.4 million, where Hilton alleges it is entitled to liquidated damages following our alleged cancellation of conferences to be held at the Hilton in 2011, 2012, and 2013.  We have disputed the claim and will defend our position, though there can be no assurances that we will reach an acceptable resolution to the dispute with Hilton.

We are involved from time to time in routine legal matters incidental to our business, including disputes with students and requests from state regulatory agencies. Based upon available information, we believe that the resolution of such matters will not have a material adverse effect on our consolidated financial position or results of operations

Other Matters

We missed payments of approximately $226,000 with respect to a First Note in the original principal amount of $2.3 million and a Second Note in the original principal amount of $300,000, respectively (collectively, the “Notes”), which payments were due on July 15, 2010, which nonpayment became an event of default on July 25, 2010 under the terms of a previously disclosed Settlement Memorandum with M. Barry Strudwick, Susan Weiss and certain other parties with respect to our previously disclosed litigation relating to Monterey del Mar, S.A. and other matters.  On July 30, 2010, the parties agreed to a forbearance (the “Forbearance”) pursuant to which the holders of the Notes agreed to forbear from enforcing their rights and remedies under the Notes and the Settlement Memorandum for a period ending August 13, 2010 in consideration of the payment of $50,000 made by us on July 30, 2010 to be applied against our obligations under the Notes.  See Note 13 — Subsequent Events , below, for information with respect to an agreement subsequent to September 30, 2010 pursuant to which the default was cured.

As of the date of this report, RDO has the option to declare us in default on certain royalty payment obligations under our License Agreement with them and Rich Global.   Under the License Agreement we are required to pay (i) to RDO a current royalty of 3% of Gross Revenue related to the Rich Dad brands and (ii) into the escrow account a deferred royalty of 5% of Gross Revenues related to the Rich Dad brands. Failure to make any payments required under the License Agreement gives rise to an option in favor of RDO of declaring a default.  If RDO chooses to declare us in default, and we fail to cure that default within 30 days of receipt of notice from RDO, RDO may, at its sole and absolute discretion, declare a material breach of License Agreement and terminate the agreement effective immediately.  We failed to make the deferred royalty payment into the escrow account for June and failed to make the current royalty payments (to RDO) and deferred royalty payments for July, August and September, all of which total approximately $1.8 million. Although we have been working with RDO to structure a plan to make such payments, and they have not yet declared us in default, there is no guarantee that they will not do so in the future.  For the nine months ended September 30, 2010, Rich Dad™ Education offerings represented approximately 92.2% of our revenue.  If RDO declares us in default on these obligations, it would adversely affect our business operating results and financial condition to such an extent that we would be forced to substantially revise our business plan, file for bankruptcy, sell assets or cease operations.

. Note 13 — Subsequent Events

Notes Payable and Tranquility Bay Property

On October 7, 2010, we agreed to a Memorandum of Terms of Agreement (the “MTA”) with M. Barry Strudwick, Susan Weiss and certain other parties with respect to the previously disclosed Settlement Memorandum and Forbearance.  Under the terms of the MTA, an affiliate of the holders of the Notes accepted title to Tranquility Bay, undeveloped real property located in Lee County, Florida, in exchange for a credit to us of $300,000 against sums due and coming due under the notes and a deferral of further payments under the notes until February 15, 2011.

SCB Note Receivable and Related Notes Payable

On September 23, 2010, SCB Building, LLC (“Seller”), our affiliate, entered into a loan purchase agreement (the “Loan Purchase Agreement”) with Sentinel Capital Partners, LLC (“Purchaser”).  Pursuant to the terms of the Loan Purchase Agreement, Seller agreed to sell to Purchaser a secured promissory note, dated November 1, 2005 and amended on January 4, 2006, in the original principal amount of $10,950,000, issued to Seller by 250 North Orange Avenue, LLC (“Borrower”) in connection with the sale of an office building to Borrower in November 2005 (the “SCB Note”).  In addition to the Note, Seller has agreed to assign certain other rights and obligations related to the SCB Note, including a mortgage and security agreement dated November 2, 2005 and an intercreditor agreement dated November 13, 2006 (collectively with the SCB Note, the “SCB Loan”). The outstanding principal balance of the SCB Note as of the closing date was approximately $6.9 million.

In consideration for the sale of the SCB Loan, Purchaser paid to Seller $1.5 million in cash.  In addition, Purchaser agreed to satisfy in full certain notes, with an original aggregate principal amount of $3,000,000, issued in connection with our purchase of the

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outstanding equity interests in Seller that were acquired in March 2006 (the “Notes”).  The purchase was subject to certain terms and conditions, including the completion to Purchaser’s reasonable satisfaction of a due diligence investigation related to the SCB Loan. The aggregate outstanding principal balance of the Notes as of the closing date of the transaction was approximately $2.8 million. On September 30, 2010, the Purchaser completed its due diligence investigation and, based on the results of the investigation, the parties agreed on October 1, 2010 to reduce the purchase price for the Loan from $1,500,000 to $1,026,057.  No other provision of the Loan Purchase Agreement was amended. All other terms and conditions were satisfied or waived by the parties, and the purchase was completed on October 5, 2010.

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In this Quarterly Report on Form 10-Q, “Tigrent” and the terms “Company”, “we”, “us” and “our” refer to Tigrent Inc. and its wholly-owned and majority-owned subsidiaries.

Forward-Looking Statements

This discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the accompanying notes included in this report and the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2009. Operating results for the three and nine months ended September 30, 2010 are not necessarily indicative of results that may occur in future periods.

This report contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are contained principally in the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.” These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, without limitation, statements about our course breakage estimates, media spending allocations, settlement of defaults, consumer interest in our products and services, the impact of shifting from live to primarily digitally-delivered programs, plans to reduce future live seminar events; plans to further lower operating expenses, preserve capital and align costs, our working capital deficit, future expenses related to the Security and Exchange Commission (“SEC”) and Department of Justice (“DOJ”) investigations and related legal proceedings, the sufficiency of our cash balances and our ability to continue as a going concern.    In some cases, you can identify forward-looking statements by terms such as “anticipate,” “will,” “believe,” “estimate,” “expect,” “plan” and similar expressions intended to identify such forward-looking statements. Forward-looking statements reflect our current views with respect to future events, are based on assumptions, and are subject to risks and uncertainties. There can be no assurance that these statements will prove to be correct. We discuss many of these risks in this Quarterly Report on Form 10-Q in greater detail in the section entitled “Risk Factors” under Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2009 filed with the SEC on April 15, 2010 and under Part II, Item 1A below. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q. You should read this Quarterly Report on Form 10-Q and the documents that we incorporate by reference in and have filed as exhibits to this Quarterly Report on Form 10-Q, completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

Executive Overview

Our Business

We are a provider of practical, high-quality and value-based training, conferences, publications, technology-based tools and mentoring to help customers become financially literate. We provide customers with comprehensive instruction and mentoring on the topics of real estate and financial instruments investing and entrepreneurship in the United States, the United Kingdom, and Canada. Our training is offered in non-accredited free preview workshops, as well as basic training, advanced courses, mentoring and coaching.

In July 2006, we created Rich Dad Education, LLC (“RDE”) with Rich Global, LLC (“Rich Global”). This entity has provided basic training courses under the Rich Dad™ Education brand, which focuses on the real estate teachings and philosophies of Robert Kiyosaki as detailed in the book entitled, Rich Dad Poor Dad . The Rich Dad Poor Dad book series is published in 51 languages, is available in 106 countries, and has sold over 28 million copies worldwide.  On May 26, 2010, we entered into definitive agreements with Rich Global and Rich Dad Operating Company, LLC (“RDO”) to restructure the agreements under which we license and operate under the Rich Dad brand.  Rich Global and RDO (together, the “Rich Dad Parties”) are entities controlled by Robert and Kim Kiyosaki. More details about the restructuring and the proposed terms of the license agreements are discussed below under the section entitled Licensing Agreements with the Rich Dad Parties .

We currently have two Rich Dad™ Education offerings:

·      Rich Dad™ Learn to be Rich —focuses on real estate training; and

·      Rich Dad™ Stock Success —concentrates on financial instruments training.

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We began offering our Rich Dad™ Learn to be Rich basic training to customers in the United States in 2006. In 2007, we expanded our Rich Dad™ Learn to be Rich training to include customers in Canada and the United Kingdom. During 2008, we created the Rich Dad™ Stock Success training and introduced it to customers in the United States and the United Kingdom. We began offering this training to our customers in Canada in 2009.

For the nine months ended September 30, 2010, Rich Dad™ Education represented approximately 92.2% and our Proprietary brands represented approximately 7.8% of our revenue. Our international business, which includes both Rich Dad™ Education and Proprietary brands, was approximately 22.9% of our total revenue.

Management’s Plan

In response to the continued decline in profitability and the related impact on our cash position, we have significantly reduced the number of live events, eliminated historically weak markets for live events and reduced the frequency in which we visit any one particular market. We believe these actions may improve the profitability of each event remaining on the live event schedule. While we implemented many of these changes early in 2010, upon reevaluation, we made additional significant modifications in the third quarter of 2010 and may make further modifications going forward as we attempt to optimize our operating structure.  The primary focus of the reduction of scheduled events is in the U.S. In addition, we are striving to fulfill more of our advanced courses online in an effort to reduce costs. During the fourth quarter of 2010, we plan to continue development and testing of digitally-delivered programs, which are expected to decrease our event and fulfillment costs and lower our marketing costs.

In 2010, we implemented reductions in staff to align with our anticipated sales level. In addition, we have decreased occupancy costs and have reduced operating costs in all areas.  Many of these cost-cutting actions occurred during the third quarter of 2010. In October 2010, we sold two of our non-core assets and will continue to pursue the sale of the remaining non-core assets but cannot be assured when or if such sales will be completed.  We are also in current discussions with some of our larger creditors to re-negotiate amounts owed.  The sufficiency of our cash resources is dependent on these actions.

We may seek to obtain additional capital through issuance of equity which may dilute the equity holdings of current investors.  In addition, we may seek to borrow additional capital from institutional and commercial banking sources or other sources to fund our operations on terms that may include restrictive covenants, liens on assets, high effective interest rates and repayment provisions that may reduce our cash resources and limit future access to capital markets. We do not currently have any commitments for future external funding. Our ability to raise additional capital may be adversely impacted by the current economic environment and our financial results and liquidity position.

If we cannot generate the required revenues to sustain operations or obtain additional capital on acceptable terms, we will need to make further revisions to our business plan, sell or liquidate assets, file for bankruptcy or cease operations, which could cause our investors to suffer the loss of a significant portion or all of their investment in us.  The financial statements do not include any adjustments that might result from the outcome from these uncertainties.

Our Strategy

Our objective is to be a leading provider of training services and products that provide customers with the skills, knowledge and tools to achieve their personal and financial goals. In addition to our current course offerings, we will continue to assess the viability of alternative training curriculum and delivery methods as potential sources of business growth.

Our strategy is focused on the following areas:

·                   Enhanced sales and utilization of the Rich Dad brand . We intend to concentrate our marketing efforts on the Rich Dad brand, and increase lifetime customer value through cooperative marketing strategies among the various Rich Dad partners and make broader, coordinated use of the Rich Dad customer data base and other managed customer contact strategies.

·                   Focus on fulfillment of customer obligations . We intend to optimize the speed and improve the cost efficiency with which we fulfill our long term customer commitments. We have expanded the options for course fulfillment in order to reduce the number of expired contracts and the resulting breakage determination. We have increased the number of courses offered on DVDs and via the internet. Additionally, we have implemented an outreach notification program that involves contacting our customers by email and the U.S. mail as courses near expiration. Finally, we have tested the concept of a symposium fulfillment experience, which we believe will play a significant role in our business model going forward. Symposiums allow us to hold several advanced classes in one location resulting in cost savings based on

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economies of scale.  These events have been well received by our customers, providing them with networking opportunities as well as bonus events and activities that have enhanced their experience.

·                   Enhanced eLearning . We intend to develop new interactive and online distributed course content for all brands and enhanced technology platforms capable of streaming video, interactive e-learning, and distributed e-learning.

·                   Consistent quality assurance . We believe that to be a viable provider of training we need to ensure that our course offerings meet our strict quality assurance guidelines. To that end, we will continue to monitor and enforce standards for marketing, sales presentations and training delivery throughout our organization.

Intellectual Property

We regard our training materials and products, trademarks, service marks, trade names, copyrights and patents as proprietary. As such, we primarily rely on federal statutory and common law protections to uphold our interests in these materials. We market various courses and training programs under the Rich Dad brand, as licensee, as well as our Proprietary brands, as described below under the section entitled Training Programs . While several of our proprietary materials may contain commonly used terms and do not afford us significant trademark protection, we also use employee and third party non-compete and confidentiality agreements as well as other contractual methods of protecting proprietary rights to safeguard our intellectual property.

Licensing Agreements with the Rich Dad Parties

In July 2006, we formed a limited liability company, RDE, with Rich Global to promote the financial philosophy espoused by Robert Kiyosaki in his book, Rich Dad Poor Dad . The ownership of RDE was held 51% by us and the remaining 49% by Rich Global. Pursuant to a license agreement dated July 6, 2006 (“Rich Dad License”), Rich Global granted RDE a license to use the Rich Dad trademarks, trade names and other business information in seminars that it conducts in the United States, Canada and the United Kingdom.

On May 26, 2010, we entered into definitive agreements with Rich Global, LLC (“Rich Global”) and Rich Dad Operating Company, LLC (“RDO”) to restructure the agreements under which we license and operate under the Rich Dad brand.  Rich Global and RDO (collectively, the “Rich Dad Parties”) are entities controlled by Robert and Kim Kiyosaki.  We entered into a (i) License Agreement, dated May 26, 2010 (the “License Agreement”), with the Rich Dad Parties, with respect to the Rich Dad brand, and (ii) Settlement Agreement and Release, dated May 26, 2010 (the “Settlement Agreement”), with the Rich Dad Parties, related to our previous licensing agreement for the Rich Dad brand and which commits the parties to enter into a cooperative marketing agreement that contemplates the development and implementation of improved customer contact management strategies.

The License Agreement is for a term of approximately five years or until December 31, 2014.  Rich Global is a consenting party to the License Agreement with respect to the use of its database. The License Agreement gives us the non-exclusive right to sell and market Rich Dad products in live seminars and training courses in the United States, Canada and the United Kingdom. The License Agreement provides that we must establish escrow and cash collateral accounts in an aggregate amount equal to 30% of our deferred revenues during the term of the License Agreement (“Reserve Goal”). The purpose of the escrow and cash collateral accounts is to ensure that we can fulfill our contractual commitments to the customers who purchased the Rich Dad and Tigrent courses. Until the Reserve Goal has been met, we will pay (i) to RDO a current royalty (“current royalty”) of 3% of Gross Revenue related to the Rich Dad brands and (ii) into the escrow account a deferred royalty of 5% of Gross Revenues (“unfulfilled royalty”) related to the Rich Dad brands.  Under the License Agreement, the term “Gross Revenues” means gross revenues related to the Rich Dad brands, net of merchant fees, taxes, shipping, refunds, rebates, bad debt and sums paid to RDO’s third party coaching provider under a separate cross marketing agreement.

In addition, we will pay into the cash collateral account on a monthly basis the amount by which the average cash balance of all unrestricted funds in our accounts for the prior 90 day period (excluding the proceeds from the sale of, or other realization upon, any non-core assets or any cash accounts from Rich Dad Education, LLC (“RDE”) made available to us) exceeds $6 million. Our merchant deposit reserve funds will also be credited to the Reserve Goal.  After the Reserve Goal has been met, we will pay to RDO royalty payments equal to 10% of Gross Revenue related to the Rich Dad brands in lieu of paying the current royalty to RDO and the unfulfilled royalty into the escrow account. If the combined amounts in the escrow account and the cash collateral account exceeds the Reserve Goal, the excess funds may be withdrawn from the escrow account twice each year and applied to the deferred fulfillment royalties that are due to RDO. In addition, on a quarterly basis, RDO may withdraw 40% of payments into the escrow account during the prior three-month period.

The License Agreement contains covenants relating to performance standards and cash operating profits. We are limited in making any capital expenditures with respect to any businesses other than the Rich Dad Education Business that exceed $500,000 per

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year without obtaining written approval from RDO. We must also consult with RDO prior to hiring a Chief Executive Officer, Chief Financial Officer or any other officer who reports directly to the Chief Executive Officer. RDO has the right to allow one representative to observe all meetings of our Board of Directors in a non-voting capacity.

In accordance with the Settlement Agreement, we issued 9.9% of our outstanding common stock (1,290,000 shares) to Rich Global and redeemed Rich Global’s 49% interest in RDE, the limited liability company that was formed by Rich Global and us to operate the Rich Dad business. Our common stock issued to Rich Global is subject to a shareholder agreement with us, that gives Rich Global demand and piggyback registration rights after January 1, 2011. The Company and Rich Global transferred the RDE assets to us, except the data base of customer names and customer leads, resulting in full ownership by us of the business previously conducted by RDE.  We and Rich Global agreed to dissolve RDE, and terminate the license and administrative services agreements associated with RDE. We have responsibility for any and all liabilities remaining in RDE, including but not limited to obligations related to the fulfillment of course work for the Rich Dad students. We have agreed to release Rich Global from all general claims related to RDE and Rich Global has agreed to release us from specific claims that it made against us and RDE in connection with its alleged default letter dated March 27, 2009. Among other things, the Settlement Agreement proposes enhanced cooperation in advertising, marketing, and educational programs between us and RDO through a customer contact and data base management strategy that emphasizes seamless support of the Rich Dad brand and its customers.

Marketing

We acquire our customers through direct marketing activities, including television short-form commercials, radio advertising, direct mail, newspaper advertising, email marketing, search engine optimization and marketing and internet-based banner ads. Potential customers are invited to attend free preview two-hour workshops in their local areas, during which we offer follow-up three day basic training courses. Customers enroll and attend the basic training courses and receive reference materials relevant to the subject matter. The basic training is usually held over the weekend within two to four weeks of the initial free preview workshop. In 2010, approximately 21.4% of the attendees at the preview workshops enrolled in the basic training courses.

At the basic training courses, customers are taught the fundamentals of course topics and are encouraged to enroll in advanced, detailed courses covering specific topics within the training segment. Our basic and advanced trainings are described below under the section entitled Training Programs .

Training Programs

For the nine months ended September 30, 2010, basic training courses accounted for 8.8% of worldwide revenue and advanced training courses accounted for 71.5% of our worldwide revenue. The remaining 19.7% of worldwide revenue came from coaching and our other training services, products and programs.

Basic Training Courses

In the first nine months of 2010, we offered basic training courses under the following marketing programs and brands:

Rich Dad™ Education offers courses teaching real estate, financial instruments and entrepreneurship as well as philosophies taught by Robert Kiyosaki, author of Rich Dad Poor Dad . We currently have two Rich Dad™ Education courses, which are Rich Dad™ Learn to be Rich , which is focused on real estate investing, and Rich Dad™ Stock Success which is focused on financial instruments investing. These courses concentrate on principles while allowing customers to apply what they have learned playing the board game, CASHFLOW® , which was developed by Mr. Kiyosaki. These courses are offered in the United States, the United Kingdom and Canada.

In the United Kingdom, we also offer products under the following brands:

Building Wealth™ offers a curriculum focused on the general business of real estate and the fundamentals of negotiating real estate purchases with sellers, rehabilitating distressed properties and leasing rental units to tenants to generate multiple sources of cash flow. Customers are taught the mechanics of completing a real estate transaction in their community, from making an offer to closing the transaction, with emphasis on creative financing strategies.

Making Money from Property with Martin Roberts offers a real estate curriculum focused on property auctions. The seminar reflects the real estate expertise of Martin Roberts, a well-known U.K. presenter and property journalist who develops properties in the United Kingdom, Europe and Canada. Customers are taught about buying at auction, rental and capital growth strategies, negotiating transactions and buying properties overseas.

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Teach Me To Trade® offers a curriculum focused on financial instruments trading strategies, using software and specific teaching techniques designed by us. Customers are taught to understand the stock market, foreign exchange, options, futures, investment strategies, risks and how to improve returns in both bull and bear markets.

Women in Wealth™ teaches women how to take control of their financial circumstances, gain enough money and independence to achieve their goals and gain information on the latest wealth-building strategies and techniques.

Advanced Training Courses

Customers who attend our basic training courses may choose to continue with advanced training courses in real estate or financial instruments investing or entrepreneurship skills. The advanced training courses of study under the Tigrent Learning brand include:

Customers may access training content through multiple delivery channels, including:

·                   Live instruction in classroom settings;

·                   Onsite mentoring;

·                   Telephonic coaching;

·                   Electronic access to live online or pre-recorded on-demand programs;

·                   DVDs;

·                   Conferences; and

·                   Teleconferences.

Through strategic partners, customers can purchase a license to use supporting software for real estate or financial instruments investing. With either software program, a subscription-based data service is available for purchase which allows customers to interactively determine investment options and make better informed decisions about potential investments.

Results of Operations

Our operating results are expressed as a percentage of revenue in the table below:

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