Variable Interest Entity

12 Months Ended

Jul. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entity

Note 13—Variable Interest Entity

As of May 31, 2021, the Company entered into a Warrant Purchase Agreement with the shareholders of an entity (the variable interest entity or “VIE”) that operates money transfer businesses. The purchase price of the warrant was cash of $0.8 million and a contingent payment of $0.1 million. The Company has various management rights and protective provisions pursuant to the Warrant Purchase Agreement. Primarily as a result of the Warrant Purchase Agreement, the Company can obtain 90% of the ownership interests in the VIE. The Company determined that, effective May 31, 2021, it had the power to direct the activities of the VIE that most significantly impact its economic performance, and the Company has the obligation to absorb losses of and the right to receive benefits from the VIE that could potentially be significant to it. The Company therefore determined that it is the primary beneficiary of the VIE, and as a result, the Company consolidates the VIE. The Company does not currently own any interest in the VIE and thus the net income incurred by the VIE was attributed to noncontrolling interests in the accompanying statements of income.

IDT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The VIE’s net income and aggregate funding provided by (repaid to) the Company were as follows:

(in thousands)	Year ended July 31, 2023		Year ended July 31, 2022			For the period from May 31, 2021 to July 31, 2021
Net income of the VIE	$	322	$	248		$	54
Aggregate funding provided by (repaid to) the Company, net	$	112	$	(94	)	$	8

The VIE’s summarized consolidated balance sheet amounts are as follows:

July 31 (in thousands)	2023		2022
ASSETS
Cash and cash equivalents	$	1,596	$	1,808
Restricted cash		7,848		4,490
Trade accounts receivable, net		62		31
Disbursement prefunding		585		925
Prepaid expenses		197		14
Other current assets		317		462
Due from the Company		—		86
Property, plant, and equipment, net		272		467
Other intangibles, net		737		889
TOTAL ASSETS	$	11,614	$	9,172
LIABILITIES AND NONCONTROLLING INTERESTS
Trade accounts payable	$	—	$	—
Accrued expenses		70		54
Settlement liabilities		7,573		5,525
Due to the Company		26		—
Accumulated other comprehensive income (loss)		21		(9	)
Noncontrolling interests		3,924		3,602
TOTAL LIABILITIES AND NONCONTROLLING INTERESTS	$	11,614	$	9,172

The VIE’s assets may only be used to settle the VIE’s obligations and may not be used for other consolidated entities. The VIE’s liabilities are non-recourse to the general credit of the Company’s other consolidated entities.