UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
| (Mark One) | ||
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
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the fiscal year ended | ||
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| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
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Preferred Stock Purchase Rights
(Title of class)
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asked price of $10.00 as reported on OTC Markets on June 30, 2022 (the last business day of the registrant’s most recently completed
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The number of shares outstanding of the registrant’s common stock on March 29, 2023 was .
DOCUMENTS INCORPORATED BY REFERENCE
GLASSBRIDGE ENTERPRISES, INC.
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2022
TABLE OF CONTENTS
| 1 |
Cautionary Statements Regarding Forward-Looking Statements
We may from time to time make written or oral forward-looking statements with respect to our future goals, including statements contained in this Form 10-K, in our other filings with the U.S. Securities and Exchange Commission (“SEC”) and in our reports to stockholders.
Certain information which does not relate to historical financial information may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include information concerning the launch of our asset management business and related investment vehicles, strategic initiatives and potential acquisitions, the results of operations of our existing business lines, the impact of legal or regulatory matters on our business, as well as other actions, strategies and expectations, and are identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans,” “seeks,” “estimates,” “projects,” “may,” “will,” “could,” “might,” or “continues” or similar expressions. Such statements are subject to a wide range of risks and uncertainties that could cause our actual results in the future to differ materially from our historical results and those presently anticipated or projected. We wish to caution investors not to place undue reliance on any such forward-looking statements. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date. Risk factors include various factors set forth from time to time in our filings with the SEC including the following: the negative impacts of our delisting from the OTCQB, including reduced liquidity and market price of our common stock and the number of investors willing to hold or acquire our common stock; significant costs relating to pending and future litigation; our ability to attract and retain talented personnel; the structure or success of our participation in any joint investments; risks associated with any future acquisition or business opportunities; our need to consume resources in researching acquisitions, business opportunities or financings and capital market transactions; our ability to integrate additional businesses or technologies; the market price volatility of our common stock; our need to incur asset impairment charges for intangible assets and goodwill; our reliance on aging information systems and our ability to protect those systems against security breaches; changes in tax guidance and related interpretations and inspections by tax authorities; our ability to raise capital from third party investors for our asset management business; our ability to comply with extensive regulations relating to the launch and operation of our asset management business; our ability to compete in the intensely competitive asset management business; the performance of any investment funds we sponsor or accounts we manage; difficult market and economic conditions, including changes in interest rates and volatile equity and credit markets; our ability to achieve steady earnings growth on a quarterly basis in our asset management business; the significant demands placed on our resources and employees, and associated increases in expenses, risks and regulatory oversight, resulting from the potential growth of our asset management business; our ability to establish a favorable reputation for our asset management business; the lack of operating history of our asset manager subsidiary and any funds that we may sponsor; foreign currency fluctuations and negative or uncertain global or regional economic conditions as well as various factors set forth from time to time in Item 1A of this Form 10-K and from time to time in our filings with the SEC.
| 2 |
PART I
| Item 1. | Business. |
General
GlassBridge Enterprises, Inc. owns and operates an asset management business through various subsidiaries.
As used in this document, the terms “GlassBridge”, “the Company”, “we”, “us”, and “our” mean GlassBridge Enterprises, Inc. and its subsidiaries unless the context indicates otherwise.
Asset Management Business
The Company operates its private asset management business through a number of subsidiaries. We expect our asset management business to earn revenues primarily by providing investment advisory services to third party investors through managed funds, as well as separate managed accounts.
Our employees each support one or more of the subsidiaries, which provide to our clients what we consider unique and cutting-edge investment strategies. Since the end of 2019, we have added or augmented a number of strategies and continue to seek and create additional ones. We may also look to acquire other asset managers to complement or supplement our business.
We have established a full internal support infrastructure for our asset management business that can support additional strategies and assets growth.
Our asset management business’s success will depend in large part on our ability to create attractive investment products and raise capital from third party investors. If we are unable to raise capital from third party investors, we would be unable to collect management fees or deploy capital into investments and potentially collect performance fees, which would adversely affect our ability to generate revenue and cash flow from this business.
The investment advisory industry is intensely competitive. We compete with many domestic and global competitors that may provide investment products with similar features and objectives to those we offer. These institutions range from small boutique firms to large financial institutions.
Poor performance of any investment funds we sponsor or accounts we manage would adversely affect our ability to generate revenue, income and cash flow, and could adversely affect our ability to raise capital for future investment funds and accounts.
Difficult market and economic conditions, including, without limitation, changes in interest rates and volatile equity and credit markets, can adversely affect our asset management business in many ways, including by reducing the value or performance of the investments made by any investment funds we sponsor or accounts we manage and reducing our ability to raise or deploy capital, each of which could adversely affect our revenue, earnings and cash flow and adversely affect our financial prospects and condition.
Any revenue, earnings, net income and cash flow attributable to our asset management business is likely to be highly variable, which may make it difficult for us to achieve steady earnings growth on a quarterly basis and may cause the price of shares of our common stock to decline and be volatile.
Company History
GlassBridge was incorporated as Imation Corp. in Delaware in 1996, from the spin-off of substantially all of 3M Company’s data storage and imaging systems businesses. We changed our name to GlassBridge Enterprises, Inc. in 2017.
GlassBridge has, during recent periods, undergone significant changes. Until 2015, we primarily provided data storage and security solutions through our two legacy business segments. On August 16, 2018, the Company sold its Nexsan business. During 2019, the Company sold its international subsidiaries and acquired a controlling interest in SportBLX. On December 30, 2021, the Company sold its interest in SportBLX.
| 3 |
In July 2020, the Company and certain of its subsidiaries completed a series of transactions that resulted, among other things, in the Company’s reacquiring shares of Adara Enterprises, Corp. (“Adara” or “AEC”) sold in October 2019; disposing of obligations incurred in connection with the sale; and entering into a Loan and Security Agreement (the “ESW Loan Agreement”).
In January 2021, Adara received notice from ESW Holdings, Inc. (“ESW”) that Adara had defaulted on its obligation to pay at maturity, i.e., on January 20, 2021, $11,000,000 in principal and all other amounts due to ESW under the ESW Loan Agreement. Pursuant to the ESW Loan Agreement, AEC gave to ESW a security interest in all of AEC’s assets, and GlassBridge pledged to ESW all of GlassBridge’s AEC stock and 30% of GlassBridge’s SportBLX stock. The Loan Agreement provided that, upon AEC’s default, AEC may elect to cooperate with ESW to effect a prearranged reorganization of AEC in bankruptcy, pursuant to which ESW would acquire all equity in AEC, as reorganized, and indirectly certain of AEC’s assets, most notably, property and equipment consisting of quantitative trading software, as well as deferred tax assets resulting from AEC’s net operating losses. In the loan agreement, ESW agreed to provide $8.5 million to the bankruptcy estate to cover costs of administering the AEC bankruptcy case and to satisfy the claims of valid creditors, with any residual funds to be paid to GlassBridge. The $8.5 million was to be paid upon the effectiveness of AEC’s Chapter 11 plan (less any amounts advanced to AEC in the form of a DIP loan) and maintained awaiting outside creditor claims.
AEC’s prepackaged Chapter 11 plan of reorganization was confirmed at a hearing on June 9, 2021 and became effective on June 15, 2021 (the “Effective Date”). Upon the occurrence of the Effective Date, ESW deposited $8.5 million, less $325,000 that ESW had previously funded in the form of a post-petition debtor-in-possession loan, into a distribution trust established pursuant to AEC’s Chapter 11 plan to fund the costs of administration associated with AEC’s bankruptcy case and to satisfy valid creditor claims. Also on the Effective Date, by order of the Bankruptcy Court, GlassBridge shares of AEC were canceled, and shares in reorganized AEC were issued to ESW and an affiliate. Finally, on the Effective Date, GlassBridge received a release of its guaranty obligations to ESW.
The Company received distributions from the bankruptcy estate totaling $6,594,703 in 2021 and received additional distributions of $17,909 during the year ended December 31, 2022. As of December 31, 2022, there are no funds remaining in the bankruptcy estate.
Adara has historically been one of the subsidiaries through which the Company has operated its asset management business. The Company, however, remains committed to its asset management business and holds various investments and assets, including Arrive LLC (“Arrive”), in other subsidiaries.
At December 31, 2022, the Company employed 5 people.
Executive Officers
As of April 7, 2023, the Company has two executive officers.
Daniel A. Strauss, age 38, is our Chief Executive Officer and principal executive officer. Mr. Strauss served as our Chief Operating Officer from March 2017 through December 2019. Mr. Strauss was a Portfolio Manager at Clinton Group Inc. (“Clinton”), a hedge fund, from 2010 until 2019. Mr. Strauss was formerly a member of the board of directors of SportBLX, the Chief Executive Officer of Adara, and a member of the board of directors of Adara through June 2021. Mr. Strauss has over ten years of experience in corporate finance as a portfolio manager and investment analyst in private and public equity, through which he has developed a deep understanding of corporate finance and strategic planning activities. At Clinton, Mr. Strauss was responsible for evaluating and executing private equity transactions across a range of industries. Post-investment, Mr. Strauss was responsible for the ongoing management and oversight of Clinton’s portfolio investments. From 2008 to 2010, he worked for Angelo, Gordon & Co. as a member of the firm’s private equity and special situations area. Mr. Strauss was previously with Houlihan Lokey, where he focused on mergers and acquisitions, from 2006 to 2008. Mr. Strauss has served on the boards of directors of Pacific Mercantile Bancorp (NASDAQ: PMBC), from August 2011 until December 2015, and Community Financial Shares, Inc. (OTC: CFIS) from December 2012 until its sale to Wintrust Financial Corporation in July 2015. Mr. Strauss received a Bachelor of Science in Finance and International Business from the Stern School of Business at New York University.
Francis Ruchalski, CPA, age 59, is our Chief Financial Officer. Mr. Ruchalski is on the Clinton board of directors and was formerly the Chief Financial Officer of Clinton from February 1997 to December 2019. In addition, Mr. Ruchalski was formerly the Chief Financial Officer of SportBLX, a member of its board of directors and a member of the board of directors for Adara. Prior to joining Clinton, Mr. Ruchalski was an audit manager with Anchin, Block & Anchin, LLP, a certified public accounting firm, from 1986 to 1997. Mr. Ruchalski’s responsibilities while with Anchin, Block & Anchin LLP included client auditing and financial and taxation planning. Mr. Ruchalski holds a bachelor of science in accounting from St. John’s University.
| 4 |
Availability of SEC Reports
Our SEC filings are available to the public from the SEC’s internet site at www.sec.gov. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and our proxy statements are available on the SEC’s internet site. These reports are available through the SEC’s internet site as soon as they are published by the SEC, after we electronically file the material with, or furnish it to, the SEC. You may read and copy any document we file at the SEC’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The foregoing reports are available free of charge on our internet site, www.glassbridge.com, and we make electronic or paper copies available on request.
A copy of the GlassBridge code of ethics and charters for the committees of our Board may be obtained, free of charge, by sending a written request to Corporate Secretary, GlassBridge Enterprises, Inc., 411 East 57th Street, Suite 1-A, New York, New York 10022. Our code of ethics is part of our broader Business Conduct Policy, which may be obtained by written request to the Corporate Secretary, as above. If we make any amendments to our code of ethics other than technical, administrative or other non-substantive amendments, or grant any waiver, including any implicit waiver, from a provision of the code of ethics applicable to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions requiring disclosure under applicable SEC rules, we intend to disclose the nature of such amendment or waiver via current report on Form 8-K and/or a separate release, as necessary. Our website address is www.glassbridge.com. No information furnished via any website is incorporated by reference into this Annual Report on Form 10-K.
| 5 |
| Item 1A. | Risk Factors |
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
| Item 1B. | Unresolved Staff Comments. |
None.
| Item 2. | Properties. |
Our worldwide headquarters is in New York City. Our headquarters facility is in good operating condition, suitable for our use, and is adequate for our current needs.
| Facility; how held | Function | Segment(s) Using Space | ||
| New York, New York; leased | Corporate Headquarters, Administrative | Corporate, Asset Management |
| Item 3. | Legal Proceedings. |
Plaintiff Cypress Holdings, III L.P. (“Cypress”) filed an action against GlassBridge Enterprises, Inc. in New York Supreme Court, which was removed to the United States District Court, Southern District of New York, on February 14, 2022, captioned Cypress Holdings, III L.P. v. Sport-BLX, Inc. et al., 1:22-cv-01243-LGS (S.D.N.Y.). In its Second Amended Complaint, Cypress purports to assert claims against SportBLX, Mr. Hall, and Mr. De Perio for securities fraud and related issues and seeks compensatory damages, punitive damages and attorneys’ fees, in connection with solicitations of investments in SportBLX. Cypress also purports to allege that GlassBridge Enterprises, Inc. is liable for unjust enrichment, tortious interference with contract, aiding and abetting a breach of fiduciary duty and minority shareholder oppression. Cypress also purports to assert claims against Messrs. Strauss and Ruchalski for breach of fiduciary duty and corporate waste, as well as additional claims against Clinton Group Inc., Cesar Baez, Christopher Johnson, and Sport-BLX Securities, Inc. arising from solicitations of investments in SportBLX.
| Item 4. | Mine Safety Disclosures. |
Not Applicable.
| 6 |
PART II
| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
As of March 29, 2023, there were 25,170 shares of our common stock, $0.01 par value, outstanding and held by 36 stockholders of record.
Until May 21, 2021, our common stock traded on the OTCQB under the symbol “GLAE”. On May 21, 2021, OTC Markets moved the Company’s common stock from the OTCQB market to Pink because we had not yet filed Form 10-K for 2020.
Over-the counter quotations reported by OTC Markets reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.
No dividends were declared or paid during 2022 or 2021. Any future dividend payments will depend on our earnings, capital requirements, financial condition and other factors considered relevant by our Board.
Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Issuer Purchases of Equity Securities
Not applicable.
Securities Authorized for Issuance Under Equity Compensation Plans
See Note 9 – Stock Based Compensation of Notes to Consolidated Financial Statements.
| Item 6. | [Reserved]. |
| 7 |
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
GlassBridge Enterprises, Inc. owns and operates an asset management business through various subsidiaries.
The following discussion is intended to be read in conjunction with Item 1. Business and our Consolidated Financial Statements and related Notes that appear elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. GlassBridge’s actual results could differ materially from those anticipated due to various factors discussed under “Cautionary Statements Regarding Forward-Looking Statements” and in Item 1A. Risk Factors of this Annual Report on Form 10-K.
The financial statements in this Annual Report on Form 10-K are presented on a consolidated basis and include the accounts of the Company and our subsidiaries. See, Notes to Consolidated Financial Statements—Note 2 - Summary of Significant Accounting Policies, for further information regarding consolidation. References to “GlassBridge,” the “Company,” “we,” “us” and “our” are to GlassBridge Enterprises Inc., and its subsidiaries and consolidated entities unless the context indicates otherwise. Our Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
Introduction
GlassBridge has, during recent periods, undergone significant changes. Until 2015, we primarily provided data storage and security solutions through our two legacy business segments. On August 16, 2018, the Company sold its Nexsan business. During 2019, the Company sold its international subsidiaries and acquired a controlling interest in SportBLX. On December 30, 2021, the Company sold its interest in SportBLX.
As a result of these transactions, the Company now operates a single segment, an asset management business.
In January 2021, Adara received notice from ESW that Adara had defaulted on its obligation to pay at maturity, i.e., on January 20, 2021, $11,000,000 in principal and all other amounts due to ESW under the ESW Loan Agreement. Pursuant to the ESW Loan Agreement, AEC gave to ESW a security interest in all of AEC’s assets, and GlassBridge pledged to ESW all of GlassBridge’s AEC stock and 30% of GlassBridge’s SportBLX stock. The Loan Agreement provided that, upon AEC’s default, AEC may elect to cooperate with ESW to effect a prearranged reorganization of AEC in bankruptcy, pursuant to which ESW acquires from GlassBridge all equity in AEC and certain of its assets, most notably property and equipment consisting of quantitative trading software, as well as deferred tax assets resulting from net operating losses, for consideration of $8,500,000, which amount would be used to satisfy the claims of all valid creditors and certain administrative expenses associated with the bankruptcy case, with all residual funds to be paid to GlassBridge. On April 22, 2021, AEC filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court for the District of Delaware. AEC’s prepackaged chapter 11 plan of reorganization was confirmed at a hearing on June 9, 2021 and became effective on June 15, 2021. On the effective date, ESW paid $8.5 million, less $325,000 that ESW had previously funded in the form of a postpetition debtor-in-possession loan to fund the costs of administration associated with AEC’s bankruptcy case. Also on the effective date, all shares in reorganized AEC were issued to ESW and an affiliate. In addition, GlassBridge received a release of its guaranty obligations to ESW.
The Company received distributions from the bankruptcy estate totaling $6,594,703 in 2021 and received additional distributions of $17,909 during the year ended December 31, 2022. As of December 31, 2022, there are no funds remaining in the bankruptcy estate.
Adara has historically been one of the subsidiaries through which the Company has operated its asset management business. The Company, however, remains committed to its asset management business and holds various investments and assets, including Arrive, in other subsidiaries.
Executive Summary
Consolidated Results of Continuing Operations for the Year Ended December 31, 2022
| ● | Revenue of $0.1 million in 2022, compared with revenue of $0.1 million in 2021. |
| ● | Selling, general and administrative expense was $3.1 million in 2022, down $2.9 million compared with $6.0 million in 2021. The decrease is primarily due to consulting fees paid to GHI LLC and the Chapter 11 reorganization of Adara in the prior year. |
| ● | Operating loss from continuing operations was $3.0 million in 2022, compared to an operating loss of $6.2 million in 2021. The decrease is primarily due to the same reasons as the decrease in selling, general and administrative expenses. |
| 8 |
| ● | Other income was $0.0 million in 2022, compared with other income of $19.2 million in 2021. Other income in 2021 primarily related to the gain on Chapter 11 reorganization of Adara. |
| ● | Basic and diluted loss per share from continuing operations was $113.64 for 2022 compared with income per share of $511.81 for 2021 due to items mentioned above. |
Consolidated Cash Flow/Financial Condition for the Year Ended December 31, 2022
| ● | Cash and cash equivalents totaled $1.2 million as of December 31, 2022, compared with $4.1 million cash and cash equivalents at December 31, 2021. |
| ● | Cash used in operating activities was $2.7 million in 2022 compared with cash used in operating activities of $6.6 million in 2021. Cash used in operating activities in 2022 was primarily related to ordinary operating expenses. Cash used in operating activities in 2021 was primarily related to a consulting agreement signed with GHI LLC and ordinary operating expenses. |
| ● | Cash used in investing activities was $0.2 million in 2022 compared with cash provided by investing activities of $8.6 million in 2021. Cash used in investing activities for the year ended December 31, 2022, included a $0.2 million contribution to the Arrive investment. Cash provided by investing activities in 2021 included the sale of unsecured claims, the collection of notes receivable from related parties pursuant to the Chapter 11 reorganization and proceeds from the assignment of related party notes receivable, accrued interest receivable and the distribution of funds from the bankruptcy trust. |
| ● | Cash provided by financing activities was $0.0 million in 2022, compared with $0.3 million in 2021. Cash provided by financing activities in 2021 was primarily related to a debtor-in-possession note payable, the GHI note payable and payments related to the Stock Purchase Agreement notes payable. |
See Analysis of Cash Flows section below for further information.
Results of Operations
Net Revenue
| Years Ended December 31, | Percent Change | |||||||||||
| 2022 | 2021 | 2022 vs. 2021 | ||||||||||
| (In millions) | ||||||||||||
| Net revenue | $ | 0.1 | $ | 0.1 | 0.0 | % | ||||||
“NM” - Indicates the Percent Change is not meaningful
Net revenue was $0.1 million for the year ended December 31, 2022, and $0.1 million for the year ended December 31, 2021.
Selling, General and Administrative (SG&A)
| Years Ended December 31, | Percent Change | |||||||||||
| 2022 | 2021 | 2022 vs. 2021 | ||||||||||
| (In millions) | ||||||||||||
| Selling, general and administrative | $ | 3.1 | $ | 6.0 | (48.3 | )% | ||||||
| As a percent of revenue | NM | NM | ||||||||||
SG&A expense decreased in 2022 compared with 2021 by $2.9 million (or 48.3%) primarily due to consulting fees paid to GHI LLC and the Chapter 11 reorganization of Adara in the prior year.
| 9 |
Restructuring
| Years Ended December 31, | Percent Change | |||||||||||
| 2022 | 2021 | 2022 vs. 2021 | ||||||||||
| (In millions) | ||||||||||||
| Restructuring | $ | — | $ | 0.3 | (100.0 | )% | ||||||
| As a percent of revenue | NM | 300.0 | % | |||||||||
Total restructuring expense was $0.0 million and $0.3 million, for the years ended December 31, 2022 and 2021, respectively. Restructuring expense of $0.3 million for the year ended December 31, 2021 was attributable to post petition fees in connection with the bankruptcy.
Operating Loss From Continuing Operations
| Years Ended December 31, | Percent Change | |||||||||||
| 2022 | 2021 | 2022 vs. 2021 | ||||||||||
| (In millions) | ||||||||||||
| Operating loss | $ | (3.0 | ) | $ | (6.2 | ) | (51.6 | )% | ||||
| As a percent of revenue | (3,000 | )% | (6,200.0 | )% | ||||||||
Operating loss from continuing operations of $3.0 million decreased in 2022 by $3.2 million, compared with an operating loss of $6.2 million in 2021.
Other Income and (Expense)
| Years Ended December 31, | Percent Change | |||||||||||
| 2022 | 2021 | 2022 vs. 2021 | ||||||||||
| (In millions) | ||||||||||||
| Interest expense | $ | (0.3 | ) | $ | (2.0 | ) | (85.0 | )% | ||||
| Gain on Chapter 11 reorganization | — | 20.4 | (100.0 | )% | ||||||||
| Bank Loan forgiveness | — | 0.4 | (100.0 | )% | ||||||||
| Other income (expense), net | 0.3 | 0.4 | (25.0 | )% | ||||||||
| Total other income (expense) | $ | — | $ | 19.2 | (100.0 | )% | ||||||
| As a percent of revenue | NM | 19,200.0 | % | |||||||||
NM - Not meaningful
Total other expense was $0.0 million in 2022, compared to other income of $19.2 million in 2021. Other expense in 2022 primarily related to interest in connection with the GHI Loan Agreement. Other income in 2021 primarily related to the gain on Chapter 11 reorganization of Adara and forgiveness of a note payable issued under the Paycheck Protection Program (the “Bank Loan”).
Income Tax Benefit (Provision)
| Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (In millions) | ||||||||
| Income tax benefit (provision) | $ | — | $ | — | ||||
| Effective tax rate | NM | NM | ||||||
NM - Not meaningful
| 10 |
The income tax provision was $0.0 million in 2022 and 2021. Because we maintain a valuation allowance related to our U.S. deferred tax assets, the tax provision generally represents discrete tax events that may occur from time to time.
As of December 31, 2022 and 2021, we had valuation allowances of $148.1 million and $157.2 million, respectively, to account for deferred tax assets we have concluded are not considered to be more-likely-than-not to be realized in the future due to our cumulative losses in recent years. The deferred tax assets subject to valuation allowance include certain operating loss carryforwards, deferred tax deductions, capital loss carryforwards and tax credit carryforwards.
Income (loss) from discontinued operations
| For the Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (In millions) | ||||||||
| Net revenue | — | — | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative | — | 1.1 | ||||||
| Impairment of goodwill | — | — | ||||||
| Restructuring and other | — | (0.6 | ) | |||||
| Total operating expenses | — | 0.5 | ||||||
| Operating loss from discontinued operations | — | (0.5 | ) | |||||
| Other expense: | ||||||||
| Interest expense | — | (0.2 | ) | |||||
| Total other expense | — | (0.2 | ) | |||||
| Loss from discontinued operations, before income taxes | — | (0.7 | ) | |||||
| Gain on sale and deconsolidation of discontinued business | — | 16.7 | ||||||
| Income tax | — | — | ||||||
| Income (loss) from discontinued operations, net of income taxes | $ | — | $ | 16.0 | ||||
Discontinued operations represent the results of operations from our Sports Technology Platform.
Restructuring and other includes the net loss attributable to noncontrolling interest of $0.6 million for the year ended December 31, 2021. This amount was reclassified to discontinued operations due to the sale of the Sports Technology Platform in the period ending December 31, 2021.
On December 30, 2021, in a series of transactions, the Company completed the disposition of its entire interest in SportBLX. As a result of these transactions, the Company recorded a net gain on the sale and deconsolidation of SportBLX of $16.7 million for the year ended December 31, 2021.
See Note 4 - Discontinued Operations in our Notes to Consolidated Financial Statements for more information.
Segment Results
With the sale of the Sport Technology Platform business on December 30, 2021, the asset management business is our only reportable segment as of December 31, 2022. Results from the Sports Technology Platform were reported within discontinued operations.
We evaluate segment performance based on revenue and operating loss. The operating loss reported in our segments excludes corporate and other unallocated amounts. Although such amounts are excluded from the business segment results, they are included in reported consolidated results. Corporate and unallocated amounts include costs which are not allocated to the business segments in management’s evaluation of segment performance such as litigation settlement expense, corporate expense and other expenses.
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Information related to our segments is as follows:
Asset Management Business
| Years Ended December 31, | Percent Change | |||||||||||
| 2022 | 2021 | 2022 vs. 2021 | ||||||||||
| (In millions) | ||||||||||||
| Net revenue | $ | 0.1 | $ | 0.1 | (100.0 | )% | ||||||
| Operating loss | $ | (1.3 | ) | $ | (2.0 | ) | (35.0 | )% | ||||
| As a percent of revenue | (1,300.0 | )% | (2,000.0 | )% | ||||||||
NM - Not meaningful
Revenue from our asset management business primarily consists of management and performance fees paid by the funds under our management.
Corporate and Unallocated
| Years Ended December 31, | Percent Change | |||||||||||
| 2022 | 2021 | 2022 vs. 2021 | ||||||||||
| (In millions) | ||||||||||||
| Corporate and unallocated operating loss | $ | (1.7 | ) | $ | (4.2 | ) | (59.5 | )% | ||||
| Restructuring and other | — | — | — | % | ||||||||
| Total | $ | (1.7 | ) | $ | (4.2 | ) | (59.5 | )% | ||||
For the year ended December 31, 2022, the corporate and unallocated operating loss decreased by $2.5 million compared to 2021. For the year ended December 31, 2021, the $0.3 million of restructuring expense presented on the Consolidated Statements of Operations was allocated to the Asset Management Business.
Financial Position
Our cash and cash equivalents balance, as of December 31, 2022, was $1.2 million, compared to cash of $4.1 million, as of December 31, 2021. See the Analysis of Cash Flows section below for more information.
Our accounts payable balance, as of December 31, 2022, was $1.2 million, an increase of $0.1 million from $1.1 million, as of December 31, 2021.
Our other current liabilities balance, as of December 31, 2022 and 2021, was $0.4 million.
Liquidity and Capital Resources
Our primary sources of liquidity include our cash and cash equivalents. Our primary operating liquidity needs relate to our working capital and funding our operations.
We had $1.2 million cash on hand as of December 31, 2022.
Our liquidity needs for the next 12 months include the following: corporate expenses of approximately $2.8 million and any cash shortfall associated with our businesses.
We expect that our cash, in addition to asset monetization, will provide liquidity sufficient to meet our needs for our operations and our obligations. We also plan to raise additional capital if necessary, although no assurance can be made that we will be able to secure such financing, if needed, on favorable terms or at all.
Cash and Cash Equivalents
Cash equivalents consist of highly liquid investments purchased with original maturities of three months or less. Restricted cash is related to contractual obligations or restricted by management and is included in other current assets on our Consolidated Balance Sheets depending on the timing of the restrictions. The restricted cash balance in other current assets as of December 31, 2022 and 2021 was $0.0 million.
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Analysis of Cash Flows
Cash Flows Used in Operating Activities:
| Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (In millions) | ||||||||
| Net income (loss) | $ | (3.0 | ) | $ | 29.0 | |||
| Adjustments to reconcile net income (loss) to net cash used in operating activities | 0.3 | (37.8 | ) | |||||
| Changes in operating assets and liabilities | — | 2.2 | ||||||
| Net cash used in operating activities | $ | (2.7 | ) | $ | (6.6 | ) | ||
Cash flows from operating activities can fluctuate from period to period as many items can impact cash flows. Cash used in operating activities for 2022 and 2021 was primarily driven by corporate expenditures.
Cash Flows Provided by (Used in) Investing Activities:
| Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (In millions) | ||||||||
| Purchase of investments | $ | (0.2 | ) | $ | — | |||
| Proceeds from sale of unsecured claims from related party pursuant to Chapter 11 reorganization | — | 0.5 | ||||||
| Proceeds from sale of platform code to a related party | — | 0.2 | ||||||
| Proceeds from sale of SportBLX to a related party | — | 0.2 | ||||||
| Collection of notes receivable from related party pursuant to Chapter 11 reorganization | — | 0.7 | ||||||
| Proceeds from bankruptcy trust pursuant to Chapter 11 reorganization | — | 6.6 | ||||||
| Proceeds received for the assignment of related party notes receivable and accrued interest to FDC | — | 0.4 | ||||||
| Net cash provided by (used in) investing activities | $ | (0.2 | ) | $ | 8.6 | |||
Cash used in investing activities in 2022 included a $0.2 million contribution to the Arrive investment. Cash provided by investing activities in 2021 included proceeds distributed from the bankruptcy trust of $6.6 million and proceeds from related party transactions in connection with the disposition of SportBLX. See Note 7 – Debt and Note 14 - Related Party Transactions for more information.
Cash Flows Provided by Financing Activities:
| Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (In millions) | ||||||||
| Proceeds from ESW debtor-in-possession note payable | $ | — | $ | 0.3 | ||||
| Proceeds from GHI LLC note payable | — | 3.3 | ||||||
| Payment to satisfy in full the Stock Purchase Agreement notes payable | — | (3.4 | ) | |||||
| Payment to satisfy $1,500,000 of related party debt | — | (0.1 | ) | |||||
| Proceeds from sale of warrants | — | 0.2 | ||||||
| Net cash provided by financing activities | $ | — | $ | 0.3 | ||||
Cash provided by financing activities in 2022 was $0.0 million. Cash provided by financing activities of $0.3 million in 2021 relates to a debtor-in-possession note payable, the GHI note payable and payments related to the stock purchase agreement notes payable. See Note 7 – Debt and Note 14 – Related Party Transactions for more information.
No dividends were declared or paid during 2022 or 2021. Any future dividends are at the discretion of and subject to the approval of our Board.
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Related Party Transactions
See Note 14 - Related Party Transactions in our Notes to Consolidated Financial Statements for information on related party transactions between the Company and GlassBridge’s Board of Directors and Executive Officers.
Off-Balance Sheet Arrangements
Other than the operating lease commitments discussed in Note 13 - Litigation, Commitments and Contingencies in the Notes to Consolidated Financial Statements, we are not using off-balance sheet arrangements, including special purpose entities.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates to ensure they are consistent with historical experience and the various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and could materially impact our results of operations.
We believe the following critical accounting policies are affected by significant judgments and estimates used in the preparation of our Consolidated Financial Statements:
Uncertain Tax Positions. Our income tax returns are subject to review by various taxing authorities. As such, we record accruals for items that we believe may be challenged by these taxing authorities. The threshold for recognizing the benefit of a tax return position in the consolidated financial statements is that the position must more-likely-than-not be sustained by the taxing authorities based solely on the technical merits of the position. If the recognition threshold is met, the tax benefit is measured and recognized as the largest amount of tax benefit that, in our judgment, is greater than 50 percent likely to be realized. At December 31, 2021 and 2022, our accrual related to uncertain tax positions and unrecognized tax benefits was $0.0 million.
Our U.S. federal income tax returns for 2019 through 2021 are subject to examination by the Internal Revenue Service. With few exceptions, we are no longer subject to examination by foreign tax jurisdictions or state and local tax jurisdictions for years before 2016.
The ultimate outcome of tax matters may differ from our estimates and assumptions. Unfavorable settlement of any particular issue may require the use of cash and could result in increased income tax expense. Favorable resolution could result in reduced income tax expense. It is reasonably possible that our unrecognized tax benefits could increase or decrease significantly during the next twelve months due to the resolution of certain U.S. and international tax uncertainties; however, it is not possible to estimate the potential change at this time.
Intangibles. We record all assets and liabilities acquired in purchase transactions, including intangibles, at estimated fair value. Intangible assets with a definite life are amortized based on a pattern in which the economic benefits of the assets are consumed, typically with useful lives ranging from one to 30 years. The initial recognition of intangible assets, the determination of useful lives and, if necessary, subsequent impairment analysis require management to make subjective judgments concerning estimates of how the acquired assets will perform in the future using certain valuation methods including discounted cash flow analysis. We evaluate assets on our balance sheet, including such intangible assets, whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Factors such as unfavorable variances from forecasted cash flows, established business plans or volatility inherent to external markets and industries may indicate a possible impairment that would require an impairment test. The test for impairment requires a comparison of the carrying value of the asset or asset group with their estimated undiscounted future cash flows. If the carrying value of the asset or asset group is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the asset or asset group exceeds its fair value.
Goodwill. We record all assets and liabilities acquired in purchase acquisitions, including goodwill, at fair value. The initial recognition of goodwill and subsequent impairment analysis require management to make subjective judgments concerning estimates of how the acquired assets will perform in the future using valuation methods including discounted cash flow analysis. Goodwill is the excess of the cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is not amortized. We test the carrying amount of a reporting unit’s goodwill for impairment on an annual basis during the fourth quarter of each year or if an event occurs or circumstances change that would warrant impairment testing during an interim period.
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Goodwill is considered impaired when its carrying amount exceeds its implied fair value. The Company may assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill. If we determine in this assessment that the fair value of the reporting unit is more than its carrying amount, we may conclude that there is no need to perform Step 1 of the impairment test. We have an unconditional option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing Step 2 of the goodwill impairment test.
Step 1 of the impairment test involves comparing the fair value of the reporting unit to which goodwill was assigned to its carrying amount. If fair value is deemed to be less than carrying value, Step 2 of the impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of the reporting unit’s goodwill. If the carrying amount of the reporting unit’s goodwill is greater than the implied fair value of the reporting unit’s goodwill, an impairment loss must be recognized for the excess. This involves measuring the fair value of the reporting unit’s assets and liabilities (both recognized and unrecognized) at the time of the impairment test. The difference between the reporting unit’s fair value and the fair values assigned to the reporting unit’s individual assets and liabilities is the implied fair value of the reporting unit’s goodwill.
Claims and Litigation. We record a liability when a loss from a pending or threatened claim or litigation is known or considered probable and the amount can be reasonably estimated.
Recently Issued Accounting Standards
See Note 2 — Summary of Significant Accounting Policies in our Notes to Consolidated Financial Statements for disclosure related to recently issued accounting standards.
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk. |
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
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| Item 8. | Financial Statements and Supplementary Data. |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of GlassBridge Enterprises, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of GlassBridge Enterprises, Inc. (the “Company”) at December 31, 2022 and 2021 and the related consolidated statements of operations, shareholders’ equity (deficit), and cash flows for each of the two years in the period ended December 31, 2022 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provides a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Critical Audit Matter Description
As described in Note 5 to the consolidated financial statements, the Company maintains a significant investment in a private company. For investments in equity securities that do not to have a readily determinable fair value, the Company made the election to measure the securities it holds at amortized cost in accordance with ASC 321-10-35. The Company performed a qualitative assessment to determine whether its investment should be impaired due to any decline in fair value below cost.
The determination of the fair value for these securities requires significant judgment and subjective evaluation of qualitative factors. In addition, the Company prepared a valuation model to support its determination, and the valuation process involves significant assumptions and estimates.
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How the Critical Matter Was Addressed in the Audit
Our principal audit procedures performed to address this critical audit matter included the following:
| - | Reviewed and assessed management’s evaluation of qualitative factors and relevant events and circumstances to determine whether the fair value of these securities was less than the amortized cost. |
| - | Corroborated that analysis with examination of internally prepared valuation model and evaluated management’s assumptions and forecasts. |
/s/
We have served as the Company’s auditor since 2018.
April 7, 2023
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GLASSBRIDGE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (In
millions, except share
and per share amounts) | ||||||||
| Net revenue | $ | $ | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative | ||||||||
| Restructuring and other | ||||||||
| Total operating expenses | ||||||||
| Operating loss from continuing operations | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Gain on Chapter 11 reorganization | ||||||||
| Bank Loan forgiveness | ||||||||
| Other income, net | ||||||||
| Total other income | ||||||||
| Income (loss) from continuing operations before income taxes | ( | ) | ||||||
| Income tax | ||||||||
| Income (loss) from continuing operations | ( | ) | ||||||
| Discontinued operations: | ||||||||
| Loss from discontinued operations, net of income taxes | ( | ) | ||||||
| Gain on sale and deconsolidation of discontinued business, net of income taxes | ||||||||
| Loss from discontinued operations, net of income taxes | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Income (loss) per common share — basic and diluted: | ||||||||
| Continuing operations | $ | ( | ) | $ | ||||
| Discontinued operations | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic and diluted (in thousands) | ||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
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GLASSBRIDGE ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
| December 31, | ||||||||
| 2022 | 2021 | |||||||
| (In millions, except share and per | ||||||||
| share amounts) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Total current assets | ||||||||
| Investment in Arrive, cost (See Note 6 – Arrive Investment) | ||||||||
| Other assets and other investments (See Note 6 – Arrive Investment) | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| GHI LLC note payable | ||||||||
| Deferred tax liabilities | ||||||||
| Total liabilities | ||||||||
| See Note 13 – Litigation, Commitments and Contingencies | ||||||||
| Shareholders’ equity: | ||||||||
| Preferred stock, $ par value, authorized shares, issued and outstanding | ||||||||
| Common stock, $ par value, authorized shares | ||||||||
| 2022 – shares issued: , outstanding: | ||||||||
| 2021 – shares issued: , outstanding: | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Treasury stock, at cost shares at December 31, 2022; shares at December 31, 2021 | ( | ) | ( | ) | ||||
| Total shareholders’ equity | $ | $ | ||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
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GLASSBRIDGE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
| Common Stock | Additional
Paid-in | Accumulated | Treasury Stock | Non-controlling | Total Shareholders’ Equity | |||||||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Shares | Amount | Interest | (Deficit) | |||||||||||||||||||||||||
| Balance as of December 31, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||
| Net income (loss) | ( | ) | ||||||||||||||||||||||||||||||
| Deconsolidation of subsidiary | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Sale of warrants | ||||||||||||||||||||||||||||||||
| Extinguishment of Stock Purchase Agreement Notes Payable, related party | ||||||||||||||||||||||||||||||||
| Extinguishment of related party debt | ||||||||||||||||||||||||||||||||
| Balance as of December 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
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GLASSBRIDGE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (In millions) | ||||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Payment-in-Kind interest | ||||||||
| Gain on Chapter 11 reorganization | ( | ) | ||||||
| Gain on sale and deconsolidation of SportBLX | ( | ) | ||||||
| Bank Loan forgiveness | ( | ) | ||||||
| Change in non-controlling interest | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Other current assets | ||||||||
| Other assets | ( | ) | ||||||
| Accounts payable | ||||||||
| Other liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of investments | ( | ) | ||||||
| Proceeds from sale of unsecured claims from related party pursuant to Chapter 11 reorganization | ||||||||
| Proceeds from sale of platform code to a related party | ||||||||
| Proceeds from sale of SportBLX to a related party | ||||||||
| Collection of notes receivable from related party pursuant to Chapter 11 reorganization | ||||||||
| Proceeds from bankruptcy trust pursuant to Chapter 11 reorganization | ||||||||
| Proceeds received for the assignment of related party notes receivable and accrued interest to Fintech Debt Corp | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from ESW debtor-in-possession note payable | ||||||||
| Proceeds from GHI LLC note payable | ||||||||
| Payment to satisfy in full the Stock Purchase Agreement notes payable | ( | ) | ||||||
| Payment to satisfy
$ | ( | ) | ||||||
| Proceeds from sale of warrants | ||||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents — beginning of year | ||||||||
| Cash and cash equivalents — end of year (a) | $ | $ | ||||||
| Supplemental disclosures of cash paid during the year: | ||||||||
| Income taxes (net of refunds received) | $ | $ | ( | ) | ||||
| Interest expense | ||||||||
| Non-cash investing and financing activities during the period: | ||||||||
| Extinguishment of ESW note payable in Chapter 11 reorganization | ( | ) | ||||||
| Extinguishment of debtor-in-possession loan in Chapter 11 reorganization | ( | ) | ||||||
| Forgiveness of Bank Loan | ( | ) | ||||||
| Extinguishment of Stock Purchase Agreement Notes Payable | ( | ) | ||||||
| Recognition of related party debt and accrued interest payable to Fintech Debt Corp. | ||||||||
| Extinguishment of related party debt and accrued interest payable to Fintech Debt Corp. | ( | ) | ||||||
| Total non-cash investing and financing activities during the period | $ | $ | ( | ) | ||||
| (a) The following table provides a reconciliation of cash and cash equivalents to amounts reported within the Consolidated Balance Sheets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Total cash and cash equivalents | $ | $ | ||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
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GLASSBRIDGE ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Background and Basis of Presentation
Background
GlassBridge Enterprises, Inc. owns and operates an asset management business through various subsidiaries.
As used in this document, the terms “GlassBridge”, “the Company”, “we”, “us”, and “our” mean GlassBridge Enterprises, Inc. and its subsidiaries unless the context indicates otherwise.
The Company’s continued operations and ultimate ability to continue as a going concern will depend on its ability to enhance revenue and operating results, enter into strategic relationships or raise additional capital. The Company can provide no assurances that all or any of such plans will occur; and if the Company is unable to return to profitability or otherwise raise sufficient capital, there would be a material adverse effect on its business.
In July 2020, the Company and certain of its subsidiaries completed a series of transactions that resulted among other things, in the Company’s reacquiring shares of Adara Enterprises, Corp. (“Adara” or “AEC”) sold in October 2019; disposing of obligations incurred in connection with the sale; and entering into a Loan and Security Agreement (the “ESW Loan Agreement”).
In
January 2021, Adara received notice from ESW Holdings, Inc. (“ESW”) that Adara had defaulted on its obligation to pay at
maturity, i.e., on January 20, 2021, $
The
Company received distributions from the bankruptcy estate totaling $
Adara has historically been one of the subsidiaries through which the Company has operated its asset management business. The Company, however, remains committed to its asset management business and holds various investments and assets, including Arrive LLC (“Arrive”), in other subsidiaries.
On
December 30, 2021 the Company completed the disposition of its entire interest in SportBLX, selling all of its shares to Fintech Debt
Corp. (“FDC”) for $
Basis of Presentation
The financial statements are presented on a consolidated basis and include the accounts of the Company, its wholly-owned subsidiaries, and entities in which the Company owns or controls fifty percent or more of the voting shares and has the right to control. The results of entities disposed of are included in the Consolidated Financial Statements up to the date of the disposal and, where appropriate, these operations have been reflected as discontinued operations. Our Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All inter-company balances and transactions have been eliminated in consolidation and, in the opinion of management, all normal recurring adjustments necessary for a fair presentation have been included in the results reported.
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The operating results of the Sports Technology Platform, are presented in our Consolidated Statements of Operations as discontinued operations for all periods presented. Our continuing operations in each period presented represents our “Asset Management Business” as well as corporate expenses and activities not directly attributable to the Sports Technology Platform. Assets and liabilities directly associated with the Sports Technology Platform that are not part of our ongoing operations have been separately presented on the face of our Consolidated Balance Sheets for all periods presented. See Note 4 - Discontinued Operations for further information.
Note 2 — Summary of Significant Accounting Policies
Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported asset and liability amounts and the contingent asset and liability disclosures at the date of the financial statements, as well as the revenue and expense amounts reported during the period. Actual results could differ from those estimates.
Foreign Currency. For our international operations, where the local currency has been determined to be the functional currency, assets and liabilities are translated at year-end exchange rates with cumulative translation adjustments included as a component of shareholders’ equity. Income and expense items are translated at average foreign exchange rates prevailing during the year. Income and losses from foreign currency transactions are included in our Consolidated Statements of Operations.
Cash Equivalents. Cash equivalents consist of highly liquid investments with an original maturity of three months or less at the time of purchase. The carrying amounts reported in our Consolidated Balance Sheets for cash equivalents approximate fair value.
Restricted
Cash. Cash related to contractual obligations or restricted by management for specific use is classified as restricted and is included
in other current assets on our Consolidated Balance Sheets depending on the timing of the restrictions. As of December 31, 2022 and 2021, we did
Investments. Investment securities are classified into one of three categories: (1) held-to-maturity, (2) available-for-sale, or (3) trading. The corresponding income or loss associated with these trading securities is reported in our Consolidated Statements of Operations as a component of “Other income (expense), net”. Trading securities are bought and held principally for the purpose of selling them in the near term therefore are only held for a short period of time.
Fair Value Measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or the exit price in an orderly transaction between market participants on the measurement date. A three-level hierarchy is used for fair value measurements based upon the observability of the inputs to the valuation of an asset or liability as of the measurement date. Level 1 measurements consist of unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 measurements include quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 3 measurements include significant unobservable inputs. A financial instrument’s level within the hierarchy is based on the highest level of any input that is significant to the fair value measurement. The Company measures certain assets and liabilities including cash and cash equivalents, and investments in trading securities at their estimated fair value on a recurring basis. The Company’s non-financial assets such as goodwill and intangible assets are recorded at fair value on a nonrecurring basis.
Trade Accounts Receivable and Allowances. Trade accounts receivable are stated net of estimated allowances, which primarily represent estimated amounts associated with customer returns, discounts on payment terms and the inability of certain customers to make the required payments. When determining the allowances, we take several factors into consideration, including prior history of accounts receivable credit activity and write-offs, the overall composition of accounts receivable aging, the types of customers and our day-to-day knowledge of specific customers. Changes in the allowances are recorded as reductions of net revenue or as bad debt expense (included in selling, general and administrative expense), as appropriate, in our Consolidated Statements of Operations. In general, accounts which have entered into an insolvency action, have been returned by a collection agency as uncollectible or whose existence can no longer be confirmed are written off in full and both the receivable and the associated allowance are removed from our Consolidated Balance Sheets. If, subsequent to the write-off, a portion of the account is recovered, it is recorded as a reduction of bad debt expense in our Consolidated Statements of Operations at the time cash is received.
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Intangible Assets. We record all assets and liabilities acquired in purchase acquisitions, including intangibles, at estimated fair value. The initial recognition of intangible assets, the determination of useful lives and, if necessary, subsequent impairment analyses require management to make subjective estimates of how the acquired assets will perform in the future using certain valuation methods.
Impairment of Long-Lived Assets. We periodically review the carrying value of our property and equipment and our intangible assets, including goodwill, to test whether current events or circumstances indicate that such carrying value may not be recoverable. For the testing of long-lived assets that are “held for use,” if the tests indicate that the carrying value of the asset group that contains the long-lived asset being evaluated is greater than the expected undiscounted cash flows to be generated by such asset or asset group, an impairment loss would be recognized. The impairment loss is determined by the amount by which the carrying value of such asset group exceeds its estimated fair value. We generally measure fair value by considering sale prices for similar assets or by discounting estimated future cash flows from such assets using an appropriate discount rate. Management judgment is necessary to estimate the fair value of assets and, accordingly, actual results could vary significantly from such estimates.
Restructuring. Restructuring generally includes significant actions involving employee-related severance charges, contract termination costs, and impairment or accelerated depreciation/amortization of assets associated with such actions. These charges are reflected in the quarter when the actions are probable and the amounts are estimable, which is typically when management approves the associated actions. Contract termination and other charges primarily reflect costs to terminate a contract before the end of its term or costs that will continue to be incurred under the contract for its remaining term without economic benefit to the Company. Asset impairment charges related to intangible assets and property, plant and equipment, when applicable, reflect the excess of the assets’ carrying values over their fair values.
Revenue Recognition. The Company recognizes revenue in light of the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers. Revenue is recognized when control of goods has transferred to customers. For the majority of the Company’s customer arrangements, control transfers to customers at a point-in-time when goods/services have been delivered as that is generally when legal title, physical possession and risks and rewards of goods/services transfers to the customer. Revenue is recognized at the transaction price which the Company expects to be entitled. The majority of the Company’s customer arrangements contain a single performance obligation for services as the promise for services is not separately identifiable from other promises in the contracts and, therefore, not distinct. The Company may also enter into customer arrangements that involve intellectual property out-licensing, multiple performance obligations, services and non-standard terms and conditions.
Income Taxes. We are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax obligations based on expected taxable income, statutory tax rates and tax credits allowed in the various jurisdictions in which we operate. Tax laws require certain items to be included in our tax returns at different times than the items are reflected in our results of operations. Some of these differences are permanent, such as expenses that are not deductible in our tax returns, and some are temporary differences that will reverse over time. Temporary differences result in deferred tax assets and liabilities, which are included in our Consolidated Balance Sheets. We must assess the likelihood that our deferred tax assets will be realized and establish a valuation allowance to the extent necessary.
We record income taxes using the asset and liability approach. Under this approach, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the book and tax basis of assets and liabilities. We measure deferred tax assets and liabilities using the enacted statutory tax rates that are expected to apply in the years in which the temporary differences are expected to be recovered or paid.
We regularly assess the likelihood that our deferred tax assets will be recovered in the future. In accordance with accounting rules, a valuation allowance is recorded to the extent we conclude a deferred tax asset is not considered to be more-likely-than-not to be realized. We consider all positive and negative evidence related to the realization of the deferred tax assets in assessing the need for a valuation allowance. If we determine it is more-likely-than-not that we will not realize all or part of our deferred tax assets, an adjustment to the deferred tax asset will be charged to earnings in the period such determination is made.
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Our income tax returns are subject to review by various taxing authorities. As such, we record accruals for items that we believe may be challenged by these taxing authorities. The threshold for recognizing the benefit of a tax return position in the consolidated financial statements is that the position must be more-likely-than-not to be sustained by the taxing authorities based solely on the technical merits of the position. If the recognition threshold is met, the tax benefit is measured and recognized as the largest amount of tax benefit that, in our judgment, is greater than 50 percent likely to be realized.
Treasury Stock. Our repurchases of shares of common stock are recorded at cost as treasury stock and are presented as a reduction of shareholders’ equity. When treasury shares are reissued, we use a last-in, first-out method, and the difference between repurchase cost and fair value at reissuance is treated as an adjustment to equity.
The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. The assumptions used in the valuation model are supported primarily by historical indicators and current market conditions. Expected volatilities are based on historical volatility of our stock and are calculated using the historical weekly close rate for a period of time equal to the expected term. The risk-free rate for the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. We use historical data and management judgment to estimate option exercise and employee termination activity within the valuation model. The expected term of stock options granted is based on historical data and represents the period of time that stock options granted are expected to be outstanding. It is calculated on an aggregated basis and estimated based on an analysis of options already exercised and any foreseeable trends or changes in recipients’ behavior. In determining the expected term, we consider the vesting period of the awards, the contractual term of the awards, historical average holding periods, stock price history, impacts from recent restructuring initiatives and the relative weight for each of these factors. The dividend yield, if applicable, is based on the latest dividend payments made on or announced by the date of the grant. Forfeitures are estimated based on historical experience and current demographics. See Note 9 - Stock-Based Compensation for further information regarding stock-based compensation.
Diluted income (loss) per common share is computed on the basis of the weighted average basic shares outstanding plus the dilutive effect of our stock-based compensation plans using the “treasury stock” method. Since the exercise price of our stock options is greater than the average market price of the Company’s common stock for the period, we did not include dilutive common equivalent shares for these instruments in the computation of diluted income (loss) per common share because the effect would be anti-dilutive. See Note 3 - Income (Loss) per Common Share for our calculation of weighted average basic and diluted shares outstanding.
New Accounting Pronouncements
The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
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| Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (In millions, except share and per share amounts) | ||||||||
| Numerator: | ||||||||
| Income (loss) from continuing operations | $ | ( | ) | $ | ||||
| Loss from discontinued operations, net of income taxes | ( | ) | ||||||
| Gain on sale and deconsolidation of discontinued business, net of income taxes | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Denominator: | ||||||||
| Weighted average number of shares outstanding during the period - basic and dilutive (in thousands) | ||||||||
| Income (loss) per common share — basic and diluted: | ||||||||
| Continuing operations | $ | ( | ) | $ | ||||
| Discontinued operations | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
The Company has shares of outstanding and exercisable stock options that have been excluded because they would be anti-dilutive. See Note 9 –Stock-Based Compensation for additional information on the stock options.
Note 4 — Discontinued Operations
The Sports Technology Platform
On December 30, 2021, the Company completed a series of transactions for the purpose of disposing of its interest in SportBLX, as described below:
| ● | On
December 21, 2021, SportBLX sold proprietary code to S-BLX Securities, a related party, for
$ |
| ● | On
December 24, 2021, SportBLX repurchased $ |
| ● | Finally,
on December 30, 2021, the Company completed the disposition of its entire interest in SportBLX,
selling all of its shares to FDC for $ |
| 26 |
As a result of these transactions, the Company recorded a net gain on the sale and deconsolidation of SportBLX of $16.7 million for the year ended December 31, 2021, the components of which are described in the table below.
| (in millions) | ||||
| Sale of proprietary code to S-BLX Securities | $ | |||
| Gain on repurchase of SportBLX debt from FDC | ||||
| Sale of SportBLX to FDC | ||||
| Proceeds | ||||
| Basis in SportBLX | ||||
| Goodwill | ( | ) | ||
| Non-controlling interest | ||||
| Net gain on the sale and deconsolidation of SportBLX | $ | |||
Results of Discontinued Operations
The operating results for the Sports Technology Platform are presented in our Consolidated Statements of Operations as discontinued operations for all periods presented and reflect revenues and expenses that are directly attributable to these businesses that were eliminated from our ongoing operations.
The key components of the results of discontinued operations were as follows:
| For the Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (In millions) | ||||||||
| Net revenue | $ | $ | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative | ||||||||
| Restructuring and other | ( | ) | ||||||
| Total operating expenses | ||||||||
| Operating loss from discontinued operations | ( | ) | ||||||
| Other expense: | ||||||||
| Interest expense | ( | ) | ||||||
| Total other expense | ( | ) | ||||||
| Loss from discontinued operations, before income taxes | ( | ) | ||||||
| Gain on sale and deconsolidation of discontinued business | ||||||||
| Income tax | ||||||||
| Income (loss) from discontinued operations, net of income taxes | $ | $ | ||||||
Restructuring
and other includes the net loss attributable to the noncontrolling interest of $
The
income tax benefit related to discontinued operations was $
Note 5 — Supplemental Balance Sheet Information
Additional supplemental balance sheet information is provided below.
Other
current assets were $
Other current liabilities (included as a separate line item in our Consolidated Balance Sheets) include the following:
| December 31, | ||||||||
| 2022 | 2021 | |||||||
| (In millions) | ||||||||
| Accrued payroll | $ | $ | ||||||
| Other current liabilities | ||||||||
| Total other current liabilities | $ | $ | ||||||
Other current liabilities, as of December 31, 2022 and 2021, include insurance and corporate liability accruals.
Note 6 — Arrive Investment
Arrive is a company that was formed in partnership with Roc Nation with the intent of building a new platform and brand focused on early stage, high growth opportunities. Roc Nation is a full-service entertainment company, inclusive of artist and athlete management, label, publishing, touring, film/TV and new ventures. Arrive seeks to leverage these relationships to invest in proprietary opportunities and provide services including, but not limited to, marketing, promotion or strategic advice for its portfolio investments. The Company holds two separate Arrive investments described below.
| ● | Investment in Arrive of
$ | |
| ● | Other assets of $ |
The Company did not record any unrealized gains or losses during the years ended December 31, 2022 or 2021 related to these investments. The Company is not required to contribute additional capital to either of the investments.
Historically, the Company accounted for such investments under the cost method of accounting. The adoption of ASU No. 2016-01 in the first quarter of 2018 effectively eliminated the cost method of accounting, and the carrying value of this investment is written down, or impaired, to fair value when a decline in value is considered to be other-than-temporary. Our strategic investment in equity securities does not have a readily determinable fair value; therefore, the new guidance was adopted prospectively. As of December 31, 2022, there were no indicators of impairment for this investment. The Company will assess the investment for potential impairment, quarterly.
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Note 7 — Debt
Debt and notes payable consists of the following:
| Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (In millions) | ||||||||
| GHI LLC note payable | $ | $ | ||||||
| Other liabilities | ||||||||
| Total long term debt | $ | $ | ||||||
The
Company entered into a Term Loan and Security Agreement (“GHI Loan Agreement”) with Gazellek Holdings I, LLC (“GHI
LLC”), pursuant to which GHI LLC lent $
The
Company is required to prepay the loan upon receiving proceeds from future indebtedness exceeding $
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Scheduled maturities of the Company’s long-term debt, as they exist as of December 31, 2022, in each of the next five fiscal years and thereafter are as follows:
| Fiscal years ending in | (in millions) | |||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 and thereafter | ||||
| Total | $ | |||
Note 8 — Restructuring and Other Expense
Restructuring expenses generally include severance and related charges, lease termination costs and other costs related to restructuring programs. Employee-related severance charges are largely based upon distributed employment policies and substantive severance plans. Generally, these charges are reflected in the period in which the Board approves the associated actions, the actions are probable, and the amounts are estimable which may occur prior to the communication to the affected employee(s). This estimate considers all information available as of the date the consolidated financial statements are issued.
Restructuring
and other expense was $
The 2011 Incentive Plan was approved and adopted by our stockholders on May 4, 2011 and became effective immediately. The 2011 Incentive Plan was amended and approved by our stockholders on May 8, 2013. The 2011 Incentive Plan permits the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, performance awards, stock awards and other stock-based awards. The number of shares available for awards, as well as the terms of outstanding awards, is subject to adjustments as provided in the 2011 Incentive Plan for stock splits, stock dividends, recapitalization and other similar events. Awards were able to be granted under the 2011 Incentive Plan until the earlier to occur of May 3, 2021 or the date on which all shares available for awards under the 2011 Incentive Plan have been granted; provided, however, that incentive stock options may not be granted after February 10, 2021. Prior to its expiration, the aggregate number of shares of our common stock issuable under all stock-based awards made under the 2011 Incentive Plan was .
Stock-based compensation awards issued under the 2011 Incentive Plan generally have a term of ten years and, for employees, vest over a three-year period. Exercise prices of awards issued under these plans are equal to the fair value of the Company’s stock on the date of grant.
As of December 31, 2022, there were outstanding stock-based compensation awards under the 2011 Incentive Plan. As of December 31, 2022, there were shares available for grant under our 2011 Incentive Plan.
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Stock Options
| Stock Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | ||||||||||
| Outstanding December 31, 2020 | $ | |||||||||||
| Outstanding December 31, 2021 | $ | |||||||||||
| Outstanding December 31, 2022 | $ | |||||||||||
| Exercisable as of December 31, 2022 | $ | |||||||||||
The Company did t grant any options during the years ended December 31, 2022 and 2021. There were options exercised in 2021 or 2022. As of December 31, 2022 there are shares outstanding and exercisable. The aggregate intrinsic value of all outstanding stock options was $million as of December 31, 2022.
Total stock-based compensation expense associated with stock options related to continuing operations recognized in our Consolidated Statements of Operations for the years ended December 31, 2022 and 2021 was $ million. As of December 31, 2022, there is no unrecognized compensation expense related to outstanding stock options.
No related stock-based compensation was capitalized as part of an asset for the years ended December 31, 2022 or 2021.
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Note 10 — Income Taxes
The components of income (loss) from continuing operations before income taxes were as follows:
| Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (In millions) | ||||||||
| U.S. | $ | ( | ) | $ | ||||
| International | ||||||||
| Total | $ | ( | ) | $ | ||||
The components of the income tax (provision) benefit from continuing operations were as follows:
| Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (In millions) | ||||||||
| Current | ||||||||
| Federal | $ | $ | ||||||
| International | ||||||||
| Deferred | ||||||||
| International | ||||||||
| Total | $ | $ | ||||||
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The income tax provision differs from the amount computed by applying the statutory United States income tax rate (21 percent) because of the following items:
| Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (In millions) | ||||||||
| Tax at statutory U.S. tax rate | $ | ( | ) | $ | ||||
| State income taxes, net of federal benefit | ( | ) | ||||||
| Net effect of subsidiary deconsolidations – Adara reorganization and SportBLX sale | ||||||||
| Valuation allowances | ( | ) | ( | ) | ||||
| Adjustment prior year tax loss carryover | ||||||||
| Income tax (provision) benefit | $ | $ | ||||||
The
2020 tax law change that had the most significant impact was in the CARES Act, which accelerated the refund schedule for alternative
minimum tax credit carryovers. The Company had recorded a tax benefit of $
Tax laws require certain items to be included in our tax returns at different times than the items are reflected in our results of operations. Some of these items are temporary differences that will reverse over time. We record the tax effect of temporary differences as deferred tax assets and deferred tax liabilities in our Consolidated Balance Sheets.
In
2022 and 2021 the net cash paid for income taxes, relating to both continuing and discontinued operations, was $
The components of net deferred tax assets and liabilities were as follows:
| As of December 31, | ||||||||
| 2022 | 2021 | |||||||
| (In millions) | ||||||||
| Tax credit carryforwards | ||||||||
| Net operating loss carryforwards | ||||||||
| Intangible assets and investments | ||||||||
| Capital losses | ||||||||
| Other, net | ||||||||
| Total deferred tax assets | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax assets | ||||||||
| Unremitted earnings of foreign subsidiaries | ( | ) | ( | ) | ||||
| Total deferred tax liabilities | ( | ) | ( | ) | ||||
| Valuation allowance | ||||||||
| Total deferred tax liabilities | ( | ) | ( | ) | ||||
| Net deferred tax liabilities | $ | ( | ) | $ | ( | ) | ||
We regularly assess the likelihood that our deferred tax assets will be recovered in the future. A valuation allowance is recorded to the extent we conclude a deferred tax asset is not considered more-likely-than-not to be realized. We consider all positive and negative evidence related to the realization of the deferred tax assets in assessing the need for a valuation allowance.
Our accounting for deferred tax consequences represents our best estimate of future events. A valuation allowance established or revised as a result of our assessment is recorded through income tax provision in our Consolidated Statements of Operations. Changes in our current estimates due to unanticipated events, or other factors, could have a material effect on our financial condition and results of operations.
| 32 |
We
maintain a valuation allowance related to our deferred tax assets. The valuation allowance was $
The
net deferred tax liability not offset by valuation allowance of $
The table below shows the components of our deferred tax balances as they are recorded on our Consolidated Balance Sheets:
| As of December 31 | ||||||||
| 2022 | 2021 | |||||||
| (In millions) | ||||||||
| Deferred tax liability - non-current | ( | ) | ( | ) | ||||
| Total | $ | ( | ) | $ | ( | ) | ||
Federal
net operating loss carryforwards totaling $
The
Company performed an analysis to confirm that none of the federal net operating loss carryovers should be limited by Section 382.
We
have federal capital losses of $
Our income tax returns are subject to review by various U.S. and foreign taxing authorities. As such, we record accruals for items that we believe may be challenged by these taxing authorities. The threshold for recognizing the benefit of a tax return position in the consolidated financial statements is that the position must be more-likely-than-not to be sustained by the taxing authorities based solely on the technical merits of the position. If the recognition threshold is met, the tax benefit is measured and recognized as the largest amount of tax benefit that, in our judgment, is greater than 50 percent likely to be realized.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| 2022 | 2021 | |||||||
| (In Millions) | ||||||||
| Beginning Balance | $ | $ | ||||||
| Additions: | ||||||||
| Additions for tax positions of current years | ||||||||
| Additions for tax positions of prior years | ||||||||
| Reductions: | ||||||||
| Reductions for tax positions of prior years | ||||||||
| Settlements with taxing authorities | ||||||||
| Reductions due to lapse of statute of limitations | ||||||||
| Total | ||||||||
Our federal income tax returns for 2019 through 2021 are subject to examination by the Internal Revenue Service. For state purposes, the statutes of limitation vary by jurisdiction. With few exceptions, we are no longer subject to examination for years before 2016.
| 33 |
Note 11 — Shareholders’ Equity
Treasury Stock
On November 14, 2016, our Board authorized a share repurchase program under which we may repurchase up to shares of our outstanding shares of common stock. Under the share repurchase program, we may repurchase shares from time to time using a variety of methods, which may include open market transactions and privately negotiated transactions.
Since
the inception of the November 14, 2016 authorization, we have repurchased
shares of common stock for $
During the years ended December 31, 2022 and 2021, the Company did not purchase any treasury shares. The treasury stock held as of December 31, 2022 was acquired at an average price of $ per share. The following is a summary of treasury share activity:
| Treasury Shares | |
| Balance as of December 31, 2020 | |
| Purchases | |
| Forfeitures and other | |
| Balance as of December 31, 2021 | |
| Purchases | |
| Forfeitures and other | |
| Balance as of December 31, 2022 |
382 Rights Agreement
On
November 30, 2021, the Board of Directors adopted a rights plan intended to avoid an “ownership change” within the meaning
of Section 382 of the Code, and thereby preserve the current ability of the Company to utilize certain net operating loss carryforwards
and other tax benefits of the Company and its subsidiaries (the “Tax Benefits”). If the Company experiences an “ownership
change,” as defined in Section 382 of Code, the Company’s ability to fully utilize the Tax Benefits on an annual basis will
be substantially limited, and the timing of the usage of the Tax Benefits and such other benefits could be substantially delayed, which
could therefore significantly impair the value of those assets. The rights plan is intended to act as a deterrent to any person or group
acquiring “beneficial ownership” of
As part of the Rights Agreement, the Board authorized and declared a dividend distribution of one right (a Right) for each outstanding share of the Company’s common stock, to stockholders of record at the close of business on December 1, 2021. Each Right entitles the holder to purchase from the Company a unit consisting of one one-hundredth of a share (a “Unit”) of Series A Participating Preferred Stock, par value $ per share, of the Company (the “Preferred Stock”) at a purchase price of $ per Unit, subject to adjustment (the “Purchase Price”). Until a Right is exercised, the holder thereof, as such, will have no separate rights as a stockholder of the Company, including the right to vote or to receive dividends in respect of Rights.
Under
the Rights Agreement, an Acquiring Person is any person or group of affiliated or associated persons (a “Person”) who is
or becomes the beneficial owner of
| 34 |
The Rights Agreement provides that a Person shall not become an Acquiring Person for purpose of the Rights Agreement in a transaction that the Board determines is exempt from the Rights Agreement, which determination shall be made in the sole and absolute discretion of the Board, upon request by any Person prior to the date upon which such Person would otherwise become an Acquiring Person, including, without limitation, if the Board determines that (i) neither the beneficial ownership of shares of common stock by such Person, directly or indirectly, as a result of such transaction nor any other aspect of such transaction would jeopardize or endanger the availability to the Company of the Tax Benefits or (ii) such transaction is otherwise in the best interests of the Company.
Initially, the Rights will not be exercisable and will be attached to all common stock representing shares then outstanding, and no separate Rights certificates will be distributed. Subject to certain exceptions specified in the Rights Agreement, the Rights will separate from the common stock and become exercisable and a distribution date (a “Distribution Date”) will occur upon the earlier of (i) 10 business days (or such later date as the Board shall determine) following a public announcement that a Person has become an Acquiring Person or (ii) 10 business days (or such later date as the Board shall determine) following the commencement of a tender offer, exchange offer or other transaction that, upon consummation thereof, would result in a Person becoming an Acquiring Person.
Until the Distribution Date, common stock held in book-entry form, or in the case of certificated shares, common stock certificates, will evidence the Rights and will contain a notation to that effect. Any transfer of shares of common stock prior to the Distribution Date will constitute a transfer of the associated Rights. After the Distribution Date, the Rights may be transferred on the books and records of the Rights Agent as provided in the Rights Agreement.
If on or after the Distribution Date, a Person is or becomes an Acquiring Person, each holder of a Right, other than certain Rights including those beneficially owned by the Acquiring Person (which will have become void), will have the right to receive upon exercise common stock (or, in certain circumstances, cash, property or other securities of the Company) having a value equal to two times the Purchase Price.
In
the event that, at any time following the first date of a public announcement that a Person has become an Acquiring Person or that discloses
information which reveals the existence of an Acquiring Person or such earlier date as a majority of the Board becomes aware of the existence
of an Acquiring Person (any such date, the Stock Acquisition Date), (i) the Company engages in a merger or other business combination
transaction in which the Company is not the surviving corporation, (ii) the Company engages in a merger or other business combination
transaction in which the Company is the surviving corporation and the common stock of the Company is changed or exchanged or (iii)
At
any time following the Stock Acquisition Date and prior to an Acquiring Person obtaining shares that would lead to a more than
The Rights and the Rights Agreement will expire on the earliest of (i) 5:00 P.M. New York City time on December 1, 2024, (ii) the time at which the Rights are redeemed or exchanged pursuant to the Rights Agreement, (iii) the date on which the Board determines that the Rights Agreement is no longer necessary for the preservation of material valuable Tax Benefits or is no longer in the best interest of the Company and its stockholders, and (iv) the beginning of a taxable year to which the Board determines that no Tax Benefits may be carried forward.
At
any time until the earlier of the Distribution Date or the expiration date of the Rights, the Company may redeem the Rights in whole,
but not in part, at a price of $
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Note 12 — Business Segment Information and Geographic Data
The Sports Technology Platform business is presented in our Consolidated Statements of Operations as discontinued operations and is not included in segment results for all periods presented. See Note 4 - Discontinued Operations for further information about these divestitures.
As of December 31, 2022, the asset management business is our only reportable segment.
We
evaluate segment performance based on revenue and operating loss. The operating loss reported in our segments excludes corporate and
other unallocated amounts. Although such amounts are excluded from the business segment results, they are included in reported consolidated
results. The corporate and unallocated operating loss includes costs which are not allocated to the business segments in management’s
evaluation of segment performance such as litigation settlement expense, corporate expense and other expenses. Restructuring expenses
of $
| Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (In millions) | ||||||||
| Operating income (loss) from continuing operations | ||||||||
| Asset management business | $ | ( | ) | $ | ( | ) | ||
| Total segment operating loss | ( | ) | ( | ) | ||||
| Corporate and unallocated | ( | ) | ( | ) | ||||
| Total operating loss | ( | ) | ( | ) | ||||
| Interest expense | ( | ) | ( | ) | ||||
| Gain on Chapter 11 reorganization | ||||||||
| Bank Loan forgiveness | ||||||||
| Other income (expense), net | ||||||||
| Income (loss) from continuing operations before income taxes | $ | ( | ) | $ | ||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (In millions) | ||||||||
| Assets | ||||||||
| Asset management business | $ | $ | ||||||
| Total segment assets | ||||||||
| Corporate and unallocated | ||||||||
| Total consolidated assets | $ | $ | ||||||
| 36 |
Note 13 — Litigation, Commitments and Contingencies
Plaintiff Cypress Holdings, III L.P. (“Cypress”) filed an action against GlassBridge Enterprises, Inc. in New York Supreme Court, which was removed to the United States District Court, Southern District of New York, on February 14, 2022, captioned Cypress Holdings, III L.P. v. Sport-BLX, Inc. et al., 1:22-cv-01243-LGS (S.D.N.Y.). In its Second Amended Complaint, Cypress purports to assert claims against SportBLX, Mr. Hall, and Mr. De Perio for securities fraud and related issues and seeks compensatory damages, punitive damages and attorneys’ fees, in connection with solicitations of investments in SportBLX. Cypress also purports to allege that GlassBridge Enterprises, Inc. is liable for unjust enrichment, tortious interference with contract, aiding and abetting a breach of fiduciary duty and minority shareholder oppression. Cypress also purports to assert claims against Messrs. Strauss and Ruchalski for breach of fiduciary duty and corporate waste, as well as additional claims against Clinton Group Inc., Cesar Baez, Christopher Johnson, and Sport-BLX Securities, Inc. arising from solicitations of investments in SportBLX.
The matter is presently in the discovery phase and GlassBridge Enterprises, Inc., and Messrs. Strauss and Ruchalski, intend to defend themselves vigorously. As of December 30, 2021, GlassBridge Enterprises, Inc. sold all of its interest in SportBLX and SportBLX ceased to be a subsidiary.
Indemnification Obligations
In the normal course of business, we periodically enter into agreements that incorporate general indemnification language. Performance under these indemnities would generally be triggered by a breach of terms of the contract or by a supportable third-party claim. There have historically been no material losses related to such indemnifications. As of December 31, 2022, and 2021, estimated liability amounts associated with such indemnifications were not material.
Environmental Matters
Our legacy business operations and indemnification obligations resulting from our spinoff from 3M Company (“3M”) subject us to liabilities arising from a wide range of federal, state and local environmental laws. For example, from time to time we have received correspondence from 3M notifying us that we may have a duty to defend and indemnify 3M with respect to certain environmental claims such as remediation costs. Environmental remediation costs are accrued when a probable liability has been determined and the amount of such liability has been reasonably estimated. These accruals are reviewed periodically as remediation and investigatory activities proceed and are adjusted accordingly. We did not have any environmental accruals as of December 31, 2022. Compliance with environmental regulations has not had a material adverse effect on our financial results.
Operating Leases
The Company does not have any long-term lease obligations as of December 31, 2022.
Note 14 — Related Party Transactions
On
July 31, 2021, Mr. Hall and Mr. De Perio agreed to accept $
Also
on July 31, 2021, as part of the settlement of the Stock Purchase Agreement, the Company assigned obligations owed to it from SportBLX,
totaling $
The net gain on the settlement of the Stock Purchase Agreement and the assignment of obligations to FDC are related party gains, and, as such, were recorded as equity transactions in the Consolidated Balance Sheets, rather than recognized as income in the Consolidated Statements of Operations.
On December 30, 2021, the Company completed a series of transactions for the purpose of disposing of its interest in SportBLX, described below:
| ● | On
December 21, 2021, SportBLX sold proprietary code to S-BLX Securities, a related party, for
$ | |
| ● | On
December 24, 2021, SportBLX repurchased $ | |
| ● | Finally,
on December 30, 2021, the Company completed the disposition of its entire interest in SportBLX,
selling all of its shares to FDC for $ |
The
compensation for the Board of Directors of GlassBridge for their board services totaled $
There was no non-wage compensation for the officers of GlassBridge for the years ended December 31, 2022 and 2021, respectively.
Note 15 — Subsequent Events
Management of the Company has performed a review of all events and transactions occurring after the consolidated balance sheet date to determine if there were any such events or transactions requiring adjustment to or disclosure in the accompanying consolidated financial statements, noting that no such events or transactions occurred other than the following item:
On March 12, 2023, Signature Bank, New York, NY, with whom the Company holds several accounts, was closed by the New York State Department of Financial Services and the Federal Deposit Insurance Corporation (“FDIC”) was named Receiver. To protect depositors, the FDIC transferred all the deposits and substantially all of the assets of Signature Bank to Signature Bridge Bank, National Association (“Signature Bridge Bank”), a full-service bank operated by the FDIC. Depositors automatically became customers of Signature Bridge Bank and continued to have uninterrupted customer service and access to their funds in the same manner as before. Depositors of the institution were made whole and the Company did not incur any losses as a result of the closure.
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures. Based on an evaluation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of December 31, 2022, the end of the period covered by this Annual Report on Form 10-K, our Chief Executive Officer, Daniel Strauss, and Chief Financial Officer, Francis Ruchalski, have concluded that the disclosure controls and procedures were effective.
Changes in Internal Controls. During the quarter ended December 31, 2022, there was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting. Management of GlassBridge is responsible for establishing and maintaining adequate internal control over financial reporting. GlassBridge’s internal control system is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
GlassBridge management assessed the effectiveness of GlassBridge’s internal control over financial reporting as of December 31, 2022. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework version 2013. Based on our assessment, we concluded that, as of December 31, 2022, GlassBridge’s internal control over financial reporting was effective, based on those criteria.
Item 9B. Other Information.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Board of Directors
Our Board of Directors is currently composed of four directors divided into three classes with one Class I director serving until the 2025 Annual Meeting of Stockholders (“Annual Meeting”), two Class II directors serving until the 2025 Annual Meeting, and one Class III director serving until the 2023 Annual Meeting. The members of each class are generally elected to serve three-year terms with the term of office of each class ending in successive years.
Class I Board Member*
| Joseph A. De Perio | Joseph A. De Perio, age 44, joined our Board in 2015. Mr. De Perio served as Chairman of the Board and as the Company’s principal executive officer between 2017 and 2020. Previously, Mr. De Perio served as the Board’s Non-Executive Chairman. Mr. De Perio is the Chairman of the Board and CEO of I Got It Holdings Corporation, dba Metabilia, a corporate entity involved in sports memorabilia and digital collectibles. Previously, Mr. De Perio was a co-founder and executive of Sport-BLX, Inc. (“SportBLX”) from January 2019 to September 2021. Prior to that, Mr. De Perio served as a Senior Portfolio Manager of Clinton Group Inc. (“Clinton”) from October 2010 to January 2019. Mr. De Perio also served on the Board of directors of Viking Systems, Inc., a leading worldwide developer, manufacturer, and marketer of 3D and 2D visualization solutions for complex minimally invasive surgery, from June 2011 until its sale to Conmed Corporation in October 2012, and Overland Storage, Inc. (f/k/a Overland Data, Inc.), a provider of data protection appliances, from April 2011 until its sale to Sphere 3D Corporation in December 2014. Mr. De Perio received a B.A. in business economics and organizational behavior management with honors from Brown University. |
Class II Board Members**
| Robert Searing | Robert Searing, age 73, joined our Board in 2015. Mr. Searing has been the Chief Operating Officer and the Chief Financial Officer of BH Asset Management, LLC, a Registered Investment Advisory firm, since January 2010. From 2003 to 2009, he was the Chief Operating Officer of Schottenfeld Group, LLC, an investment advisory and broker dealer firm. Mr. Searing is also a Certified Public Accountant. Mr. Searing brings to our Board his experience as a financial leader with significant depth and breadth of knowledge in dealing with complex financial and accounting matters as well as broad managerial expertise. |
| Alex Spiro | Alex Spiro, age 40, joined our Board in 2015. He was appointed Chairman of the Board in 2020. Mr. Spiro has been a partner at Quinn Emanuel Urquhart & Sullivan LLP since October 2017. Prior to that, Mr. Spiro had been an attorney at Brafman and Associates in New York City since July 2013. In that position, Mr. Spiro has handled an array of complex litigation and investigations. Prior to his joining Brafman and Associates, from September 2008 to July 2013, Mr. Spiro worked as a Manhattan prosecutor. Mr. Spiro formerly was the director of an autism children’s program at McLean Hospital, Harvard’s psychiatric hospital. Mr. Spiro is a graduate of the Harvard Law School where he remains on the adjunct faculty. Mr. Spiro serves on the board of Arrive, the venture capital arm of Roc Nation. He has lectured and written on a variety of subjects related to psychology and the law. Mr. Spiro brings to our Board his significant analytical and overall business leadership skills. |
* Term was set to expire at the Annual Meeting of Stockholders held in 2021 but no Annual Meeting was held in 2021 or 2022. Accordingly the Class I members remain in office until their successors are elected and qualified at the next Annual Meeting of Stockholders at which elections of directors will be held. It is anticipated that an Annual Meeting of Stockholders will be held in 2023.
** Term was set to expire at the Annual Meeting of Stockholders held in 2022 but no Annual Meeting was held in 2022. Accordingly the Class II members remain in office until their successors are elected and qualified at the next Annual Meeting of Stockholders at which elections of directors will be held. It is anticipated that an Annual Meeting of Stockholders will be held in 2023.
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Class III Board Member, term ending 2023
| Robert G. Torricelli | Robert G. Torricelli, age 71, joined our Board in 2017. Mr. Torricelli served in the U.S. House of Representatives from the Ninth District of New Jersey from 1982 until his election to the U.S. Senate in 1996, where he served until 2003. During his tenure in the Senate, Mr. Torricelli was a member of the Senate Finance, Governmental Affairs, Foreign Relations, Judiciary and Rules Committees and also served as Chair of the Democratic Senatorial Campaign Committee. Upon retiring from the Senate, Mr. Torricelli established a national and international business strategy firm, Rosemont Associates LLC, and created a real estate development business, Woodrose Properties LLC. Mr. Torricelli brings to our board extensive leadership and strategic business experience. |
Executive Officers
The following table provides information regarding our executive officers as of April 7, 2023.
| Officer | Age | Position | |||
| Daniel A. Strauss | 38 | Chief Executive Officer | |||
| Francis Ruchalski | 59 | Chief Financial Officer |
Daniel A. Strauss has served as our Chief Executive Officer since March 2019. Mr. Strauss served as our Chief Operating Officer from March 2017 through December 2019. Mr. Strauss was a Portfolio Manager at Clinton, a hedge fund, from 2010 until 2019. In addition, Mr. Strauss is a member of the board of directors for SportBLX and was formerly the Chief Executive Officer of Adara Enterprises, Corp. (“Adara”) and a member of its board of directors through June 2021. Mr. Strauss also serves on the Board of Arrive, the venture capital arm of Roc Nation. Mr. Strauss has over ten years of experience in corporate finance as a portfolio manager and investment analyst in private and public equity. At Clinton, Mr. Strauss was responsible for evaluating and executing private equity transactions across a range of industries. Post-investment, Mr. Strauss was responsible for the ongoing management and oversight of Clinton’s portfolio investments. From 2008 to 2010, he worked for Angelo, Gordon & Co., as a member of the firm’s private equity and special situations area. Mr. Strauss was previously with Houlihan Lokey, where he focused on mergers and acquisitions from 2006 to 2008. Mr. Strauss has served on the boards of directors of Pacific Mercantile Bancorp (NASDAQ: PMBC) from August 2011 until December 2015 and Community Financial Shares, Inc. (OTC: CFIS) from December 2012 until its sale to Wintrust Financial Corporation in July 2015. Mr. Strauss received a Bachelor of Science in Finance and International Business from the Stern School of Business at New York University.
Francis Ruchalski is our Chief Financial Officer. Mr. Ruchalski is on the Clinton board of directors and was formerly the Chief Financial Officer of Clinton from February 1997 to December 2019. In addition, Mr. Ruchalski was formerly the Chief Financial Officer of SportBLX, a member of its board of directors, and was a member of the board of directors of Adara through June 2021. Prior to joining Clinton, Mr. Ruchalski was an audit manager with Anchin, Block & Anchin, LLP, a certified public accounting firm, from 1986 to 1997. Mr. Ruchalski’s responsibilities while with Anchin, Block & Anchin LLP included client auditing and financial and taxation planning. Mr. Ruchalski holds a bachelor of science in accounting from St. John’s University.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors and executive officers to file reports of ownership and changes in ownership of our common stock with the SEC. We are required to identify any of those individuals who did not file such reports on a timely basis. We believe that during 2022 all of our directors and executive officers complied with their Section 16(a) filing requirements, timely.
Code of Ethics
We adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, and all of our other employees. If we make any amendments to our code of ethics other than technical, administrative or other non-substantive amendments, or grant any waiver, including any implicit waiver, from a provision of the code of ethics applicable to our principal executive officer, principal financial officer, principal accounting officer, or controller or persons performing similar functions requiring disclosure under applicable U.S. Securities and Exchange Commission (“SEC”) rules, we intend to disclose the nature of such amendment or waiver on Form 8-K, Item 5.05. You may request a copy of the code of ethics, which will be provided at no cost to you by contacting GlassBridge Enterprises, Inc., c/o Corporate Secretary, 18 East 50th Street, FL7, New York NY 10022.
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Item 11. Executive Compensation.
Compensation of Named Executive Officers
We are a “smaller reporting company” as such term is defined in Rule 405 of the Securities Act of 1933, as amended (the “Securities Act”), and Item 10 of Regulation S-K. Accordingly, and in accordance with relevant SEC rules and guidance, we have elected, with respect to the disclosures required by Item 402 of Regulation S-K, to comply with the disclosure requirements applicable to smaller reporting companies.
Summary Compensation Table
| Name and principal position | Year | Salary ($) | Bonus ($) | Option Awards ($) | Stock Awards ($) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($) | All Other Compen-sation | Total | ||||||||
| Daniel Strauss (1) | 2022 | 400,000 | 0 | 0 | 0 | 0 | 0 | 400,000 | ||||||||
| (Chief Executive Officer and Former Chief Operating Officer) | 2021 | 400,000 | 0 | 0 | 0 | 0 | 32,500 | 432,500 | ||||||||
| Francis Ruchalski (2) | 2022 | 350,000 | 0 | 0 | 0 | 0 | 0 | 350,000 | ||||||||
| (Chief Financial Officer) | 2021 | 350,000 | 0 | 0 | 0 | 0 | 32,500 | 382,500 |
| (1) | 2021 All Other Compensation consists of director fees for Adara. Mr. Strauss serves as our Chief Executive Officer pursuant to the terms of an employment agreement with the Company dated December 18, 2019. On August 1, 2021, Mr. Strauss amended his employment agreement with the Company, to provide for at-will employment at a salary of $400,000 per year. | |
| (2) | 2021 All Other Compensation consists of director fees for Adara. Mr. Ruchalski was named the Company’s Chief Financial Officer effective March 29, 2019.. |
On August 1, 2021, Mr. Strauss entered into an amended employment agreement with the Company as the Company’s Chief Executive.
The material terms of the employment agreement with the Company:
| ● | Mr. Strauss is an at-will employee with an annual salary of $400,000; and | |
| ● | Mr. Strauss is eligible to participate in the compensation and benefit programs generally available to the Company’s executive officers. |
Equity Awards Outstanding at 2022 Year-End
The following table summarizes the total outstanding equity awards as of December 31, 2022, for each of the named executive officers in the Summary Compensation Table.
| Option Awards | Stock Awards | |||||||||
Name |
Number of securities underlying unexercised options (#) exercisable |
Number of securities underlying unexercised options (#) un-exercisable |
Option exercise price ($) |
Option expiration date |
||||||
| Daniel Strauss (1) | 760 | 0 | 106 | 09/06/2029 | 0 | |||||
| Francis Ruchalski | 0 | 0 | — | — | 0 | |||||
| (1) | One-half of Mr. Strauss’s stock options vested on the date of grant, and the remainder vested in 24 quarterly installments beginning October 1, 2019. |
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Director Compensation for 2022
The table below provides information relating to compensation of our directors for 2022.
Name |
Fees Earned or Paid in Cash ($) |
Stock Awards ($) |
Option Awards ($) (1) |
All Other Compensation ($) |
Total ($) | |||||
| Joseph A. De Perio | 30,000 | 0 | 0 | 0 | 30,000 | |||||
| Robert Searing | 60,000 | 0 | 0 | 0 | 60,000 | |||||
| Alex Spiro | 60,000 | 0 | 0 | 0 | 60,000 | |||||
| Robert Torricelli | 60,000 | 0 | 0 | 0 | 60,000 |
| (1) | The aggregate number of outstanding stock option awards to each director as of December 31, 2022 are as follows: Mr. De Perio, 165; Mr. Searing, 145; Mr. Spiro, 145; Mr. Torricelli, 145. |
Pay Versus Performance
The table below provides information relating to pay versus performance.
|
Summary Compensation Table Total for PEO | Compensation Actually Paid to PEO |
Average Summary Compensation Table Total for Non-PEO NEOs |
Average Compensation Actually Paid to Non-PEO NEOs |
Value of Initial Fixed $100 Investment Based On Total Shareholder Return |
Net Income (loss) in millions | ||||||
| 2022 | $400,000 | $400,000 | $350,000 | $350,000 | $844.69 | (3.0) | ||||||
| 2021 | $432,500 | $400,000 | $382,500 | $350,000 | $7.34 | 29.0 |
Daniel Strauss is the Company’s principal executive officer (“PEO”). Non-PEO named executive officers (“NEOs”) include Francis Ruchalski, the Company’s Chief Financial Officer.
There is no relationship between financial performance measures included in the table and compensation actually payed to its PEO or NEOs.
The value of a hypothetical initial fixed $100 investment in the Company’s stock is based on the Company’s share price on the OTCQB as of December 31 of the prior year, measured to December 31 of the reporting year. Over the counter quotations reported by OTC Markets reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. No dividends were declared or paid during any of the measurement periods.
Indemnification Agreements
It is our policy to indemnify directors and officers against any costs, expenses and other liabilities to which they may become subject by reason of their service to us and to insure our directors and officers against such liabilities to the extent permitted by applicable law. Our bylaws provide for indemnification of our directors, officers and employees against those costs, expenses and other liabilities as long as the director, officer or employee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests. We also enter into indemnity agreements with each of our directors pursuant to which we agree to indemnify each director to the full extent provided by applicable law and our bylaws as currently in effect.
Non-employee directors are compensated for Board service in accordance with the following:
| ● | Annual Retainer: $30,000 |
| ● | Committee Chairman Fee: $30,000 (in addition to the Annual Retainer received by all Directors) |
The Nominating and Governance Committee reviews Board compensation every year.
In lieu of cash, non-employee directors may elect to receive all or part of their Annual Retainer, Non-Executive Chairman fee, Committee Chairman fee and meeting fees in shares of common stock or in restricted stock units equivalent to shares of common stock.
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The table below shows the number of shares of our outstanding common stock, as of April 7, 2023, held by each person that we know owns beneficially (as defined by the SEC for proxy statement purposes) more than 5% of any class of our voting stock. The beneficial ownership percentages listed below are based on 25,170 shares of common stock outstanding as of April 7, 2023.
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | ||
George Hall 80 West River Road Rumson NJ 07760 |
7,578 | 30.1 | ||
Allspring Global Investments Holdings, LLC(1) 525 Market St, 10th F1 San Francisco CA 94105 |
2,515 | 10.0 |
| (1) | The beneficial owner has sole voting power and investment power as to 2,223 shares, shared voting power as to zero shares, and shared investment power as to 2,515 shares, including beneficial ownership by Allspring Funds Management, LLC, Allspring Global Investments, LLC, and Allspring Global Investment Holdings, LLC. Information relating to this beneficial owner is taken from Schedule 13G, filed January 18, 2022. |
The table below shows the number of shares of our common stock beneficially owned, as of April 7, 2023, by each director, each nominated director, each current executive officer named in the Summary Compensation Table in this proxy statement, and all directors and executive officers as a group. Except as otherwise indicated, the named person has sole voting and investment power with respect to the shares held by that person, and the shares are not subject to any pledge. The beneficial ownership percentages listed below are based on 25,170 shares of common stock outstanding as of April 7, 2023.
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | ||
| Daniel Strauss (Chief Executive Officer) | 760 (1) | 3.0 | ||
| Francis Ruchalski (Chief Financial Officer) | 0 | - | ||
| Joseph De Perio (Former Chairman and Principal Executive Officer) | 788 (2) | 3.1 | ||
| Robert Searing (Director) | 346 (3) | 1.4 | ||
| Alex Spiro (Director) | 502 (3) | 2.0 | ||
| Robert G. Torricelli (Director) | 225 (3) | 0.9 | ||
| All Directors and Executive Officers as a Group (6 Persons) | 2,621 (4) | 10.4 |
| (1) | Includes 760 shares issuable pursuant to a currently exercisable option. | |
| (2) | Includes 165 shares issuable pursuant to a currently exercisable option. | |
| (3) | Includes 145 shares issuable pursuant to a currently exercisable option. | |
| (4) | Includes 1,360 shares issuable pursuant to currently exercisable options. |
Item 13. Certain Relationships and Related Transactions and Director Independence.
Related Party Transactions
On July 31, 2021, Mr. Hall and Mr. De Perio agreed to accept $2,354,736 and $1,060,264, respectively, from the Company in satisfaction of its obligations to them in the amounts of $12,116,718 and $5,455,782, respectively. The obligations were due December 12, 2022 and bore interest at a 5% annual rate. Accordingly, GLAE’s obligations in the amounts of $12,116,718 and $5,455,782 have been paid in full.
Also on July 31, 2021, as part of the settlement of the Stock Purchase Agreement, the Company assigned obligations owed to it from Sport-BLX, totaling $4,176,102, to FDC, of which Mr. Hall and Mr. De Perio are controlling stockholders, for $400,000.
The net gain on the settlement of the Stock Purchase Agreement and the assignment of obligations to FDC are related party gains, and, as such, were recorded as equity transactions in the Consolidated Balance Sheets, rather than recognized as income in the Consolidated Statements of Operations.
On December 30, 2021, the Company completed a series of transactions for the purpose of disposing of its interest in SportBLX, described below:
| ● | On December 21, 2021, SportBLX sold proprietary code to S-BLX Securities, a related party, for $225,000. | |
| ● | On December 24, 2021, SportBLX repurchased $1,500,000 of its debt from FDC, a related party, for $126,000. FDC is controlled by George E. Hall and Joseph A. De Perio, who are beneficial owners of the Company. | |
| ● | Finally, on December 30, 2021, the Company completed the disposition of its entire interest in SportBLX, selling all of its shares to FDC for $137,038. |
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Related Person Transaction Policy
In accordance with our policy regarding transactions with related persons, our Chief Financial Officer and the Audit and Finance Committee are responsible for the review and approval of all transactions with related persons that are required to be disclosed under the rules of the SEC. Under the policy, a “related person” includes any of our directors or executive officers, certain of our stockholders and any of their respective immediate family members. The policy applies to transactions in which the Company is a participant, the amount involved exceeds $120,000, and a related person has a direct or indirect material interest. A related person’s material interest in a transaction is to be determined based on the significance of the information to investors in light of all the circumstances. Under the policy, key management meets quarterly to review the list of related parties and to discuss related party transactions. The Audit and Finance Committee also reviews each new, existing or proposed related party transaction, including the terms of the transaction, the business purpose of the transaction, and the benefits to GlassBridge and to the relevant related party. In determining whether to approve a related party transaction, the Audit and Finance Committee will consider the factors it deems relevant to the related party transaction, including, among other things, whether the terms of the related party transaction are fair to the Company on the same basis as would apply if the transaction did not involve a related party.
Director Independence
Our Board of Directors has reviewed whether our directors and nominees are “independent.” Our Board considers to not be independent any person having a relationship that would interfere with the exercise of independent judgment in carrying out the person’s responsibilities as a director. The following persons will be considered not independent:
| ● | a director who is, or at any time during the past three years was, an executive officer or employee of the Company; |
| ● | a director who accepted or has a family member who accepted any compensation from the Company exceeding $120,000 during any year within the three years preceding the determination of independence, other than compensation for Board or Board committee service; compensation paid to a family member who is an employee (other than an executive officer) of the Company; or benefits under a tax-qualified retirement plan or nondiscretionary compensation; or |
| ● | a director who is a family member of a person who is, or at any time during the past three years was, employed by the Company as an executive officer. |
“Family member” means a person’s spouse, parents, children, and siblings, whether by birth, marriage, or adoption, or anyone residing in that person’s home.
None of the directors or nominees, except Mr. De Perio, had a relationship with the Company that the Board considers would interfere with the director’s or nominee’s independence or would not be independent under the enumerated criteria. Therefore, the Board determined that each of the directors and nominees, except Mr. De Perio, is independent.
In 2022, the Board also reviewed whether the Audit and Finance Committee had an audit committee financial expert as defined in the SEC rules and the OTCQB rules. The Board reviewed the skills and experience required under the rules and determined that Mr. Searing qualifies as an audit committee financial expert as defined under those rules.
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Item 14. Principal Accountant Fees and Services.
Audit and Other Fees
Below is a listing of the services provided by type and amount charged to us by our independent registered public accounting firm for 2022 and 2021.
| 2022 | 2021 | |||||||
Audit Fees: GAAP and statutory audits | $ | 56,613 | $ | 51,147 | ||||
Audit-Related Fees: Services related to business transactions | $ | 0 | $ | 0 | ||||
| Total Audit-Related Fees | $ | 56,613 | $ | 51,147 | ||||
| Tax Fees (tax preparation, advice and consulting) | $ | 0 | $ | 0 | ||||
All Other Fees: Other Business Consulting Fees | $ | 0 | $ | 0 | ||||
Audit and Finance Committee Pre-Approval Policy of Audit and Permissible Non-Audit Services
All the services provided by our independent registered public accounting firm are subject to pre-approval by the Audit and Finance Committee. The Audit and Finance Committee has authorized the Chairman of the Audit and Finance Committee to approve services by our independent registered public accounting firm in the event there is a need for approval prior to the next full Audit and Finance Committee meeting. The Chairman reports any pre-approval decisions to the Audit and Finance Committee at its next scheduled meeting.
With respect to each proposed pre-approved service, our independent registered public accounting firm provides back-up documentation as requested, including estimated fees regarding the specific services to be provided. The Audit and Finance Committee (or its Chairman, as applicable) reviews the services and the estimated fees and considers whether approval of the proposed services will have a detrimental impact on our independent registered public accounting firm’s independence prior to approving any service. At least annually, a member of our management reports to the Audit and Finance Committee all audit and non-audit services performed during the previous twelve months and all fees billed by our independent registered public accounting firm for those services.
In 2022 and 2021, all audit services, audit-related services, tax services and those items described above under all other fees were pre-approved by the Audit and Finance Committee or its Chairman.
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PART IV
Item 15. Exhibits and Financial Statement Schedules.
List of Documents Filed as Part of this Report
1. Financial Statements
2. Financial Statement Schedules
All financial statement schedules are omitted because of the absence of the conditions under which they are required or because the required information is included in the Consolidated Financial Statements or the notes thereto.
3. Exhibits
The following exhibits are filed as part of this report:
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* Filed herewith
[1] Registrant’s Current Report on Form 8-K, filed 12/1/2021
[2] Registrant’s Current Report on Form 8-K, filed 1/29/2021
[3] Registrant’s Annual Report on Form 10-K f/y/e/ 12/31/2019
[4] Registrant’s Quarterly Report on Form 10-Q, f/q/e 9/30/2019
[5] Registrant’s Current Report on Form 8-K, filed 5/23/2018
[6] Registrant’s Current Report on Form 8-K, filed 12/28/2018
[7] Registrant’s Quarterly Report on Form 10-Q, f/q/e 9/30/2020
[8] Registrant’s Annual Report on Form 10-K f/y/e/ 12/31/2021
[9] Registrant’s Quarterly Report on Form 10-Q, f/q/e 6/30/2021
Item 16. Form 10-K Summary.
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| GlassBridge Enterprises, Inc. | ||
| By: | /s/ Daniel Strauss | |
| Daniel Strauss | ||
| Chief Executive Officer |
Date: April 7, 2023
| 48 |
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Joseph De Perio and Daniel Strauss his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments to this Annual Report on Form 10-K, and to file the same, with all, exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each, and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or the substitute of any or all of them, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Alex Spiro | Chairman | April 7, 2023 | ||
| Alex Spiro | ||||
| /s/ Daniel Strauss | Chief Executive Officer | April 7, 2023 | ||
| Daniel Strauss | ||||
| /s/ Francis Ruchalski | Chief Financial Officer | April 7, 2023 | ||
| Francis Ruchalski | ||||
| /s/ Robert Searing | Director | April 7, 2023 | ||
| Robert Searing | ||||
| /s/ Joseph De Perio | Director | April 7, 2023 | ||
| Joseph De Perio | ||||
| /s/ Robert G. Torricelli | Director | April 7, 2023 | ||
| Robert G. Torricelli |
| 49 |
Exhibit 4.2
DESCRIPTION OF REGISTRANT’S SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
References to “Glassbridge” and the “Company” herein are, unless the context otherwise indicates, only to Glassbridge Enterprises , Inc. and not to any of its subsidiaries. As of December 31, 2022, the end of the period covered by this Annual Report on Form 10-K, Glassbridge has two classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company’s Preferred Stock Purchase Rights and Common Stock.
The following description of the Company’s capital stock and provisions of the Company’s Amended and Restated Certificate of Incorporation, Amendment to the Amended and Restated Certificate of Incorporation, Certificate of Correction, Amended and Restated Bylaws and the Delaware General Corporation Law are summaries and are qualified in their entirety by reference to the Company’s Amended and Restated Certificate of Incorporation, Amendment to the Amended and Restated Certificate of Incorporation, Certificate of Correction and Company’s Amended and Restated Bylaws. Copies of these documents have been filed with the SEC as exhibits to the Annual Report on Form 10-K to which this description has been filed as an exhibit. Pursuant to the Company’s Amended and Restated Certificate of Incorporation and Amendment to the Amended and Restated Certificate of Incorporation, as corrected by the Certificate of Correction dated May 21, 2020, the Company’s authorized capital stock is 250,000, consisting of 50,000 shares of common stock, par value of $0.01 per share (referred to as the Company’s common stock), and 200,000 shares of preferred stock, par value $0.01 per share (referred to as the Company’s preferred stock), to be designated from time to time by the Company’s board of directors.
Common Stock
Holders of common stock are entitled to one vote per share on any matter to be voted upon by stockholders. All shares rank equally as to voting and all other matters. The shares of common stock have no preemptive or conversion rights, no redemption or sinking fund provisions, are not liable for further call or assessment and are not entitled to cumulative voting rights. For as long as such stock is outstanding, the holders of common stock are entitled to receive ratably any dividends when and as declared from time to time by Company’s board of directors out of funds legally available for dividends. Upon a liquidation or dissolution of the Company, whether voluntary or involuntary, creditors will be paid before any distribution to holders of common stock. After such distribution, holders of common stock are entitled to receive a pro rata distribution per share of any excess amount. As of April 7, 2023, there were 25,170 shares of common stock outstanding.
Preferred Stock Purchase Right
In November 2021, the Company’s board of directors adopted a rights plan intended to avoid an “ownership change” within the meaning of Section 382 of the Code, and thereby preserve the current ability of the Company to utilize certain net operating loss carryforwards and other tax benefits of the Company and its subsidiaries (the “Tax Benefits”). If the Company experiences an “ownership change,” as defined in Section 382 of Code, the Company’s ability to fully utilize the Tax Benefits on an annual basis will be substantially limited, and the timing of the usage of the Tax Benefits and such other benefits could be substantially delayed, which could therefore significantly impair the value of those assets. The rights plan is intended to act as a deterrent to any person or group acquiring “beneficial ownership” of 4.9% or more of the Company’s outstanding shares of common stock, without the approval of the board. The description and terms of the Rights (as defined below) applicable to the rights plan are set forth in the 382 Rights Agreement, dated as of December 1, 2021 (the “Rights Agreement”), by and between the Company and Equiniti Trust Company, as Rights Agent.
As part of the Rights Agreement, the board authorized and declared a dividend distribution of one right (a “Right”) for each outstanding share of the Company’s common stock, to stockholders of record at the close of business on December 1, 2021. Each Right entitles the holder to purchase from the Company a unit consisting of one one-hundredth of a share (a “Unit”) of Series A Participating Preferred Stock, par value $0.01 per share, of the Company (the “Preferred Stock”) at a purchase price of $ 1,000.00 per Unit, subject to adjustment (the “Purchase Price”). Until a Right is exercised, the holder thereof, as such, will have no separate rights as a stockholder of the Company, including the right to vote or to receive dividends in respect of Rights.
Under the Rights Agreement, an “Acquiring Person” is any person or group of affiliated or associated persons (a “Person”) who is or becomes the beneficial owner of 4.9% or more of the outstanding shares of the Company’s common stock other than as a result of repurchases of stock by the Company, dividends or distribution by the Company, stock issued under certain benefit plans or certain inadvertent actions by stockholders. For purposes of calculating percentage ownership under the Rights Agreement, outstanding shares of the Company’s common stock include all of the shares of common stock actually issued and outstanding. Beneficial ownership is determined as provided in the Rights Agreement and generally includes, without limitation, any ownership of securities a Person would be deemed to actually or constructively own for purposes of Section 382 of the Code or the Treasury Regulations promulgated thereunder. The Rights Agreement provides that the following shall not be deemed an Acquiring Person for purposes of the Rights Agreement: (i) the Company or any subsidiary of the Company and any employee benefit plan of the Company, or of any subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan or (ii) any Person that, as of December 1, 2021, is the beneficial owner of 4.9% or more of the shares of Common Stock outstanding (such Person, an “Existing Holder”) unless and until such Existing Holder acquires beneficial ownership of additional shares of common stock (other than pursuant to a dividend or distribution paid or made by the Company on the outstanding shares of common stock or pursuant to a split or subdivision of the outstanding shares of common stock) in an amount in excess of 0.5% of the outstanding shares of common stock.
The Rights Agreement provides that a Person shall not become an Acquiring Person for purpose of the Rights Agreement in a transaction that the board determines is exempt from the Rights Agreement, which determination shall be made in the sole and absolute discretion of the board, upon request by any Person prior to the date upon which such Person would otherwise become an Acquiring Person, including, without limitation, if the board determines that (i) neither the beneficial ownership of shares of common stock by such Person, directly or indirectly, as a result of such transaction nor any other aspect of such transaction would jeopardize or endanger the availability to the Company of the Tax Benefits or (ii) such transaction is otherwise in the best interests of the Company.
Initially, the Rights will not be exercisable and will be attached to all common stock representing shares then outstanding, and no separate Rights certificates will be distributed. Subject to certain exceptions specified in the Rights Agreement, the Rights will separate from the common stock and become exercisable and a distribution date (a “Distribution Date”) will occur upon the earlier of (i) 10 business days (or such later date as the board shall determine) following a public announcement that a Person has become an Acquiring Person or (ii) 10 business days (or such later date as the board shall determine) following the commencement of a tender offer, exchange offer or other transaction that, upon consummation thereof, would result in a Person becoming an Acquiring Person.
Until the Distribution Date, common stock held in book-entry form, or in the case of certificated shares, common stock certificates, will evidence the Rights and will contain a notation to that effect. Any transfer of shares of common stock prior to the Distribution Date will constitute a transfer of the associated Rights. After the Distribution Date, the Rights may be transferred on the books and records of the Rights Agent as provided in the Rights Agreement.
If on or after the Distribution Date, a Person is or becomes an Acquiring Person, each holder of a Right, other than certain Rights including those beneficially owned by the Acquiring Person (which will have become void), will have the right to receive upon exercise common stock (or, in certain circumstances, cash, property or other securities of the Company) having a value equal to two times the Purchase Price.
In the event that, at any time following the first date of a public announcement that a Person has become an Acquiring Person or that discloses information which reveals the existence of an Acquiring Person or such earlier date as a majority of the board becomes aware of the existence of an Acquiring Person (any such date, the “Stock Acquisition Date”), (i) the Company engages in a merger or other business combination transaction in which the Company is not the surviving corporation, (ii) the Company engages in a merger or other business combination transaction in which the Company is the surviving corporation and the common stock of the Company is changed or exchanged or (iii) 50% or more of the Company’s assets, cash flow or earning power is sold or transferred, each holder of a Right (except Rights which have previously been voided as set forth above) shall thereafter have the right to receive, upon exercise, common stock of the acquiring company having a value equal to two times the Purchase Price.
At any time following the Stock Acquisition Date and prior to the acquisition by the Acquiring Person of 50% or more of the outstanding common stock, the board may exchange the Rights (other than Rights owned by such Person which have become void), in whole or in part, for common stock or Preferred Stock at an exchange ratio of one share of common stock, or one one-hundredth of a share of Preferred Stock (or of a share of a class or series of the Company’s preferred stock having equivalent rights, preferences and privileges), per Right, subject to adjustment.
The Rights and the Rights Agreement will expire on the earliest of (i) 5:00 P.M. New York City time on December 1, 2024, (ii) the time at which the Rights are redeemed or exchanged pursuant to the Rights Agreement, (iii) the date on which the board determines that the Rights Agreement is no longer necessary for the preservation of material valuable Tax Benefits or is no longer in the best interest of the Company and its stockholders, (iv) the beginning of a taxable year to which the board determines that no Tax Benefits may be carried forward.
At any time until the earlier of the Distribution Date or the expiration date of the Rights, the Company may redeem the Rights in whole, but not in part, at a price of $0.001 per Right. Immediately upon the action of the board ordering redemption of the Rights, the Rights will terminate and the only right of the holders of Rights will be to receive the $0.001 redemption price.
Preferred Stock
Under the Company’s Amended and Restated Certificate of Incorporation, the Company’s board of directors has authority to issue up to 200,000 shares of preferred stock without stockholder approval. The Company’s board of directors may also determine or alter for each class of preferred stock the voting powers, designations, preferences, and special rights, qualifications, limitations, or restrictions as permitted by law. The Company’s board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of the common stock. Issuing preferred stock provides flexibility in connection with possible acquisitions and other corporate purposes, but could also, among other things, have the effect of delaying, deferring or preventing a change in control of Glassbridge and may adversely affect the market price of the Company’s common stock and the voting and other rights of the holders of common stock.
The Company’s board of directors will fix the rights, preferences, privileges, qualifications and restrictions of the preferred stock of each series that Glassbridge issues in the certificate of designation relating to that series. This will include:
| ● | the title and stated value; | |
| ● | the number of shares being authorized; | |
| ● | the liquidation preference per share; | |
| ● | the purchase price per share; | |
| ● | the currency for which the shares may be purchased; | |
| ● | the dividend rate per share, dividend period and payment dates and method of calculation for dividends; | |
| ● | whether dividends will be cumulative or non-cumulative and, if cumulative, the date from which dividends will accumulate; | |
| ● | the Company’s right, if any, to defer payment of dividends and the maximum length of any such deferral period; | |
| ● | the procedures for any auction and remarketing, if any; |
| ● | the provisions for a sinking fund, if any; | |
| ● | the provisions for redemption or repurchase, if applicable, and any restrictions on the Company’s ability to exercise those redemption and repurchase rights; | |
| ● | any listing of the preferred stock on any securities exchange or market; | |
| ● | whether the preferred stock will be convertible into the Company’s common stock or other securities of the Company, and, if applicable, the conversion period, the conversion price, or how it will be calculated, and under what circumstances it may be adjusted; | |
| ● | voting rights, if any, of the preferred stock; | |
| ● | restrictions on transfer, sale or other assignment, if any; | |
| ● | the relative ranking and preferences of the preferred stock as to dividend rights and rights if the Company liquidates, dissolves or winds up its affairs; | |
| ● | any limitations on issuances of any class or series of preferred stock ranking senior to or on a parity with the series of preferred stock being issued as to dividend rights and rights if the Company liquidates, dissolves or winds up its affairs; and | |
| ● | any other specific terms, rights, preferences, privileges, qualifications or restrictions of the preferred stock. |
As of April 7, 2023 , there were no shares of preferred stock outstanding.
Certain Anti-Takeover Effects of Delaware Law and Provisions of Glassbridge’s Amended and Restated Certificate of Incorporation and Bylaws
The Company’s Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws include a number of provisions that may have the effect of encouraging persons considering unsolicited tender offers or other unilateral takeover proposals to negotiate with the Company’s board of directors rather than pursue non-negotiated takeover attempts. These provisions include:
| ● | No written consent of stockholders. The Company’s Amended and Restated Certificate of Incorporation provides that all stockholder actions are required to be taken by a vote of the stockholders at an annual or special meeting, and that stockholders may not take any action by written consent in lieu of a meeting. | |
| ● | Meetings of stockholders and the board. A majority of the total number of authorized directors shall constitute a quorum at any meeting of the board of directors. The Company’s Amended and Restated Bylaws limit the business that may be conducted at an annual meeting of stockholders to those matters properly brought before the meeting. At any meeting of stockholders (at which a quorum was present to organize the meeting), all matters, except as otherwise provided by law or by the Certificate of Incorporation or the Bylaws, shall be decided by a majority of the votes cast for and against such matter at such meeting by the holders of shares present in person or represented by proxy and entitled to vote thereon, regardless whether a quorum is present when the vote is taken. For clarity, abstentions are not votes cast. | |
| ● | Advance notice requirements. The Company’s Amended and Restated Bylaws establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to Glassbridge’s corporate secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at the Company’s principal executive offices not later than the close of business on the 90th day, prior to the first anniversary date of the annual meeting for the preceding year; provided, however, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received before the later (a) of the close of business on the twenty-first (21st) day following the day on which such notice of the date of the annual meeting was mailed or the day on which public disclosure of the date of the annual meeting was made, whichever first occurs and (b) the close of business on the day which is ninety (90) days prior to the date of the annual meeting. The notice must contain certain information specified in the Amended and Restated Bylaws. |
| ● | Amendment to bylaws and certificate of incorporation. As required by the Delaware General Corporation Law, any amendment of the Company’s Amended and Restated Certificate of Incorporation must first be approved by a majority of the Company’s board of directors and 80 percent of the voting power of all of the shares of capital stock issued and outstanding and entitled to vote generally in any election of directors, voting together as a single class. The Company’s Amended and Restated Bylaws may be amended by the affirmative vote of a majority vote of the directors then in officeor by the affirmative vote of at least 80 percent of the voting power of all of the shares of capital stock issued and outstanding and entitled to vote generally in any election of directors, voting together as a single class. | |
| ● | Blank check preferred stock. As described above, the Company’s Amended and Restated Certificate of Incorporation authorizes 200,000 shares of preferred stock. The existence of authorized but unissued shares of preferred stock may enable Glassbridge’s board of directors to render more difficult or to discourage an attempt to obtain control of Glassbridge by means of a merger, tender offer, proxy contest, or otherwise. For example, if in the due exercise of its fiduciary obligations, the Company’s board of directors were to determine that a takeover proposal is not in the best interests of the Company or its stockholders, the board of directors could cause shares of preferred stock to be issued without stockholder approval in one or more private offerings or other transactions that might dilute the voting or other rights of the proposed acquirer or insurgent stockholder or stockholder group. In this regard, the Company’s Amended and Restated Certificate of Incorporation grants the board of directors broad power to establish the rights and preferences of authorized and unissued shares of preferred stock. The issuance of shares of preferred stock could decrease the amount of earnings and assets available for distribution to holders of shares. The issuance may also adversely affect the rights and powers, including voting rights, of these holders and may have the effect of delaying, deterring, or preventing a change in control of Glassbridge. |
In addition, Glassbridge is subject to the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a three-year period following the time that this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes, among other things, a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns, or did own within three years prior to the determination of interested stockholder status, 15% or more of the corporation’s voting stock.
Because of these provisions, persons considering unsolicited tender offers or other unilateral takeover proposals may be more likely to negotiate with the Company’s board of directors rather than pursue non-negotiated takeover attempts. As a result, these provisions may make it more difficult for stockholders to benefit from transactions that are opposed by an incumbent board of directors.
Exhibit 21.1
Subsidiaries of the Company as of April 7, 2023
| Subsidiary* | Jurisdiction of Organization | |
| GlassBridge Arrive Investor, LLC | Delaware | |
| GlassBridge Athlete, LLC | Delaware | |
| GlassBridge Capital, LLC | Delaware | |
| GlassBridge Investment Management, LLC | Delaware | |
| Memorex Products Inc. | Delaware | |
| NXSN Acquisition Corp. | Delaware |
*Certain subsidiaries listed are indirectly and/or partially-owned.
Exhibit 31.1
Certification Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
I, Daniel Strauss, certify that:
| 1. | I have reviewed this annual report on Form 10-K of GlassBridge Enterprises, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a - 15(f) and 15d - 15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
April 7, 2023
| By: | /s/ Daniel Strauss | |
| Daniel Strauss, | ||
| Chief Executive Officer |
Exhibit 31.2
Certification Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
I, Francis Ruchalski, certify that:
| 1. | I have reviewed this annual report on Form 10-K of GlassBridge Enterprises, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a - 15(f) and 15d - 15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
April 7, 2023
| By: | /s/ Francis Ruchalski | |
| Francis Ruchalski, | ||
| Chief Financial Officer |
Exhibit 32.1
Certification Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of GlassBridge Enterprises, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2022, as filed with the Securities and Exchange Commission (the “Report”), I, Daniel Strauss, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
April 7, 2023
| /s/ Daniel Strauss | |
| Daniel Strauss, | |
| Chief Executive Officer |
Exhibit 32.2
Certification Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of GlassBridge Enterprises, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2022, as filed with the Securities and Exchange Commission (the “Report”), I, Francis Ruchalski, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
April 7, 2023
| /s/ Francis Ruchalski | |
| Francis Ruchalski, | |
| Chief Financial Officer |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 200,000 | 200,000 |
| Preferred stock, shares issued | 0 | 0 |
| Preferred stock, shares outstanding | 0 | 0 |
| Common stock, par value | $ 0.01 | $ 0.01 |
| Common stock, shares authorized | 50,000 | 50,000 |
| Common stock, shares issued | 28,097 | 28,097 |
| Common stock, shares outstanding | 25,170 | 25,170 |
| Treasury stock shares | 2,927 | 2,927 |
Consolidated Statements of Shareholders' Equity (Deficit) - USD ($) $ in Millions |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Treasury Stock [Member] |
Noncontrolling Interest [Member] |
Total |
|---|---|---|---|---|---|---|
| Balance at Dec. 31, 2020 | $ 1,059.6 | $ (1,065.0) | $ (24.9) | $ 22.7 | $ (7.6) | |
| Balance, shares at Dec. 31, 2020 | 28,097 | 2,927 | ||||
| Net income (loss) | 29.0 | (0.7) | 28.3 | |||
| Deconsolidation of subsidiary | (22.0) | (22.0) | ||||
| Sale of warrants | 0.2 | 0.2 | ||||
| Extinguishment of Stock Purchase Agreement Notes Payable, related party | 10.0 | 10.0 | ||||
| Extinguishment of related party debt | 3.2 | 3.2 | ||||
| Balance at Dec. 31, 2021 | 1,073.0 | (1,036.0) | $ (24.9) | 12.1 | ||
| Balance, shares at Dec. 31, 2021 | 28,097 | 2,927 | ||||
| Net income (loss) | (3.0) | (3.0) | ||||
| Balance at Dec. 31, 2022 | $ 1,073.0 | $ (1,039.0) | $ (24.9) | $ 9.1 | ||
| Balance, shares at Dec. 31, 2022 | 28,097 | 2,927 |
Consolidated Statements of Cash Flows (Parenthetical) |
Dec. 31, 2021
USD ($)
|
|---|---|
| Statement of Cash Flows [Abstract] | |
| Due to related party debt | $ 1,500,000 |
Background and Basis of Presentation |
12 Months Ended |
|---|---|
Dec. 31, 2022 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Background and Basis of Presentation | Note 1 — Background and Basis of Presentation
Background
GlassBridge Enterprises, Inc. owns and operates an asset management business through various subsidiaries.
As used in this document, the terms “GlassBridge”, “the Company”, “we”, “us”, and “our” mean GlassBridge Enterprises, Inc. and its subsidiaries unless the context indicates otherwise.
The Company’s continued operations and ultimate ability to continue as a going concern will depend on its ability to enhance revenue and operating results, enter into strategic relationships or raise additional capital. The Company can provide no assurances that all or any of such plans will occur; and if the Company is unable to return to profitability or otherwise raise sufficient capital, there would be a material adverse effect on its business.
In July 2020, the Company and certain of its subsidiaries completed a series of transactions that resulted among other things, in the Company’s reacquiring shares of Adara Enterprises, Corp. (“Adara” or “AEC”) sold in October 2019; disposing of obligations incurred in connection with the sale; and entering into a Loan and Security Agreement (the “ESW Loan Agreement”).
In January 2021, Adara received notice from ESW Holdings, Inc. (“ESW”) that Adara had defaulted on its obligation to pay at maturity, i.e., on January 20, 2021, $11,000,000 in principal and all other amounts due to ESW under the ESW Loan Agreement. Pursuant to the ESW Loan Agreement, AEC had given to ESW a security interest in all of AEC’s assets, and GlassBridge pledged to ESW all of GlassBridge’s AEC stock and 30% of GlassBridge’s Sport-BLX, Inc. (“SportBLX”) stock. The Loan Agreement provided that, upon AEC’s default, AEC may elect to cooperate with ESW to effect a prearranged reorganization of AEC in bankruptcy, pursuant to which ESW would acquire from GlassBridge all equity in AEC, as reorganized, and certain of its assets, most notably property and equipment consisting of quantitative trading software, as well as deferred tax assets resulting from net operating losses, for consideration of $8,500,000, which amount would be used to satisfy the claims of all valid creditors and certain administrative expenses associated with the bankruptcy case, with all residual funds to be paid to GlassBridge. On April 22, 2021, AEC filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court for the District of Delaware. AEC’s prepackaged chapter 11 plan of reorganization was confirmed at a hearing on June 9, 2021 and became effective on June 15, 2021 (the “Effective Date”). Upon the occurrence of the Effective Date, ESW paid $8.5 million in consideration, less $325,000 that ESW had previously funded in the form of a post-petition debtor-in-possession loan to AEC to fund the costs of administration associated with AEC’s bankruptcy case and to satisfy valid creditor claims Also on the Effective Date, by order of the Bankruptcy Court, GlassBridge shares of AEC were canceled, and shares in reorganized AEC were issued to ESW and an affiliate. In addition, on the Effective Date, GlassBridge received a release of its guaranty obligations to ESW.
The Company received distributions from the bankruptcy estate totaling $6,594,703 in 2021 and received additional distributions of $17,909 during the year ended December 31, 2022. As of December 31, 2022, there are no funds remaining in the bankruptcy estate.
Adara has historically been one of the subsidiaries through which the Company has operated its asset management business. The Company, however, remains committed to its asset management business and holds various investments and assets, including Arrive LLC (“Arrive”), in other subsidiaries.
On December 30, 2021 the Company completed the disposition of its entire interest in SportBLX, selling all of its shares to Fintech Debt Corp. (“FDC”) for $137,038. FDC is controlled by George E. Hall and Joseph A. De Perio, who are beneficial owners of the Company.
Basis of Presentation
The financial statements are presented on a consolidated basis and include the accounts of the Company, its wholly-owned subsidiaries, and entities in which the Company owns or controls fifty percent or more of the voting shares and has the right to control. The results of entities disposed of are included in the Consolidated Financial Statements up to the date of the disposal and, where appropriate, these operations have been reflected as discontinued operations. Our Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All inter-company balances and transactions have been eliminated in consolidation and, in the opinion of management, all normal recurring adjustments necessary for a fair presentation have been included in the results reported.
The operating results of the Sports Technology Platform, are presented in our Consolidated Statements of Operations as discontinued operations for all periods presented. Our continuing operations in each period presented represents our “Asset Management Business” as well as corporate expenses and activities not directly attributable to the Sports Technology Platform. Assets and liabilities directly associated with the Sports Technology Platform that are not part of our ongoing operations have been separately presented on the face of our Consolidated Balance Sheets for all periods presented. See Note 4 - Discontinued Operations for further information.
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Summary of Significant Accounting Policies |
12 Months Ended |
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Dec. 31, 2022 | |
| Accounting Policies [Abstract] | |
| Summary of Significant Accounting Policies | Note 2 — Summary of Significant Accounting Policies
Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported asset and liability amounts and the contingent asset and liability disclosures at the date of the financial statements, as well as the revenue and expense amounts reported during the period. Actual results could differ from those estimates.
Foreign Currency. For our international operations, where the local currency has been determined to be the functional currency, assets and liabilities are translated at year-end exchange rates with cumulative translation adjustments included as a component of shareholders’ equity. Income and expense items are translated at average foreign exchange rates prevailing during the year. Income and losses from foreign currency transactions are included in our Consolidated Statements of Operations.
Cash Equivalents. Cash equivalents consist of highly liquid investments with an original maturity of three months or less at the time of purchase. The carrying amounts reported in our Consolidated Balance Sheets for cash equivalents approximate fair value.
Restricted Cash. Cash related to contractual obligations or restricted by management for specific use is classified as restricted and is included in other current assets on our Consolidated Balance Sheets depending on the timing of the restrictions. As of December 31, 2022 and 2021, we did not have any restricted cash included in other current assets.
Investments. Investment securities are classified into one of three categories: (1) held-to-maturity, (2) available-for-sale, or (3) trading. The corresponding income or loss associated with these trading securities is reported in our Consolidated Statements of Operations as a component of “Other income (expense), net”. Trading securities are bought and held principally for the purpose of selling them in the near term therefore are only held for a short period of time.
Fair Value Measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or the exit price in an orderly transaction between market participants on the measurement date. A three-level hierarchy is used for fair value measurements based upon the observability of the inputs to the valuation of an asset or liability as of the measurement date. Level 1 measurements consist of unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 measurements include quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 3 measurements include significant unobservable inputs. A financial instrument’s level within the hierarchy is based on the highest level of any input that is significant to the fair value measurement. The Company measures certain assets and liabilities including cash and cash equivalents, and investments in trading securities at their estimated fair value on a recurring basis. The Company’s non-financial assets such as goodwill and intangible assets are recorded at fair value on a nonrecurring basis.
Trade Accounts Receivable and Allowances. Trade accounts receivable are stated net of estimated allowances, which primarily represent estimated amounts associated with customer returns, discounts on payment terms and the inability of certain customers to make the required payments. When determining the allowances, we take several factors into consideration, including prior history of accounts receivable credit activity and write-offs, the overall composition of accounts receivable aging, the types of customers and our day-to-day knowledge of specific customers. Changes in the allowances are recorded as reductions of net revenue or as bad debt expense (included in selling, general and administrative expense), as appropriate, in our Consolidated Statements of Operations. In general, accounts which have entered into an insolvency action, have been returned by a collection agency as uncollectible or whose existence can no longer be confirmed are written off in full and both the receivable and the associated allowance are removed from our Consolidated Balance Sheets. If, subsequent to the write-off, a portion of the account is recovered, it is recorded as a reduction of bad debt expense in our Consolidated Statements of Operations at the time cash is received.
Intangible Assets. We record all assets and liabilities acquired in purchase acquisitions, including intangibles, at estimated fair value. The initial recognition of intangible assets, the determination of useful lives and, if necessary, subsequent impairment analyses require management to make subjective estimates of how the acquired assets will perform in the future using certain valuation methods.
Impairment of Long-Lived Assets. We periodically review the carrying value of our property and equipment and our intangible assets, including goodwill, to test whether current events or circumstances indicate that such carrying value may not be recoverable. For the testing of long-lived assets that are “held for use,” if the tests indicate that the carrying value of the asset group that contains the long-lived asset being evaluated is greater than the expected undiscounted cash flows to be generated by such asset or asset group, an impairment loss would be recognized. The impairment loss is determined by the amount by which the carrying value of such asset group exceeds its estimated fair value. We generally measure fair value by considering sale prices for similar assets or by discounting estimated future cash flows from such assets using an appropriate discount rate. Management judgment is necessary to estimate the fair value of assets and, accordingly, actual results could vary significantly from such estimates.
Restructuring. Restructuring generally includes significant actions involving employee-related severance charges, contract termination costs, and impairment or accelerated depreciation/amortization of assets associated with such actions. These charges are reflected in the quarter when the actions are probable and the amounts are estimable, which is typically when management approves the associated actions. Contract termination and other charges primarily reflect costs to terminate a contract before the end of its term or costs that will continue to be incurred under the contract for its remaining term without economic benefit to the Company. Asset impairment charges related to intangible assets and property, plant and equipment, when applicable, reflect the excess of the assets’ carrying values over their fair values.
Revenue Recognition. The Company recognizes revenue in light of the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers. Revenue is recognized when control of goods has transferred to customers. For the majority of the Company’s customer arrangements, control transfers to customers at a point-in-time when goods/services have been delivered as that is generally when legal title, physical possession and risks and rewards of goods/services transfers to the customer. Revenue is recognized at the transaction price which the Company expects to be entitled. The majority of the Company’s customer arrangements contain a single performance obligation for services as the promise for services is not separately identifiable from other promises in the contracts and, therefore, not distinct. The Company may also enter into customer arrangements that involve intellectual property out-licensing, multiple performance obligations, services and non-standard terms and conditions.
Income Taxes. We are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax obligations based on expected taxable income, statutory tax rates and tax credits allowed in the various jurisdictions in which we operate. Tax laws require certain items to be included in our tax returns at different times than the items are reflected in our results of operations. Some of these differences are permanent, such as expenses that are not deductible in our tax returns, and some are temporary differences that will reverse over time. Temporary differences result in deferred tax assets and liabilities, which are included in our Consolidated Balance Sheets. We must assess the likelihood that our deferred tax assets will be realized and establish a valuation allowance to the extent necessary.
We record income taxes using the asset and liability approach. Under this approach, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the book and tax basis of assets and liabilities. We measure deferred tax assets and liabilities using the enacted statutory tax rates that are expected to apply in the years in which the temporary differences are expected to be recovered or paid.
We regularly assess the likelihood that our deferred tax assets will be recovered in the future. In accordance with accounting rules, a valuation allowance is recorded to the extent we conclude a deferred tax asset is not considered to be more-likely-than-not to be realized. We consider all positive and negative evidence related to the realization of the deferred tax assets in assessing the need for a valuation allowance. If we determine it is more-likely-than-not that we will not realize all or part of our deferred tax assets, an adjustment to the deferred tax asset will be charged to earnings in the period such determination is made.
Our income tax returns are subject to review by various taxing authorities. As such, we record accruals for items that we believe may be challenged by these taxing authorities. The threshold for recognizing the benefit of a tax return position in the consolidated financial statements is that the position must be more-likely-than-not to be sustained by the taxing authorities based solely on the technical merits of the position. If the recognition threshold is met, the tax benefit is measured and recognized as the largest amount of tax benefit that, in our judgment, is greater than 50 percent likely to be realized.
Treasury Stock. Our repurchases of shares of common stock are recorded at cost as treasury stock and are presented as a reduction of shareholders’ equity. When treasury shares are reissued, we use a last-in, first-out method, and the difference between repurchase cost and fair value at reissuance is treated as an adjustment to equity.
The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. The assumptions used in the valuation model are supported primarily by historical indicators and current market conditions. Expected volatilities are based on historical volatility of our stock and are calculated using the historical weekly close rate for a period of time equal to the expected term. The risk-free rate for the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. We use historical data and management judgment to estimate option exercise and employee termination activity within the valuation model. The expected term of stock options granted is based on historical data and represents the period of time that stock options granted are expected to be outstanding. It is calculated on an aggregated basis and estimated based on an analysis of options already exercised and any foreseeable trends or changes in recipients’ behavior. In determining the expected term, we consider the vesting period of the awards, the contractual term of the awards, historical average holding periods, stock price history, impacts from recent restructuring initiatives and the relative weight for each of these factors. The dividend yield, if applicable, is based on the latest dividend payments made on or announced by the date of the grant. Forfeitures are estimated based on historical experience and current demographics. See Note 9 - Stock-Based Compensation for further information regarding stock-based compensation.
Diluted income (loss) per common share is computed on the basis of the weighted average basic shares outstanding plus the dilutive effect of our stock-based compensation plans using the “treasury stock” method. Since the exercise price of our stock options is greater than the average market price of the Company’s common stock for the period, we did not include dilutive common equivalent shares for these instruments in the computation of diluted income (loss) per common share because the effect would be anti-dilutive. See Note 3 - Income (Loss) per Common Share for our calculation of weighted average basic and diluted shares outstanding.
New Accounting Pronouncements
The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
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Income (Loss) per Common Share |
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| Income (Loss) per Common Share |
The Company has shares of outstanding and exercisable stock options that have been excluded because they would be anti-dilutive. See Note 9 –Stock-Based Compensation for additional information on the stock options.
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Discontinued Operations |
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| Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discontinued Operations | Note 4 — Discontinued Operations
The Sports Technology Platform
On December 30, 2021, the Company completed a series of transactions for the purpose of disposing of its interest in SportBLX, as described below:
As a result of these transactions, the Company recorded a net gain on the sale and deconsolidation of SportBLX of $16.7 million for the year ended December 31, 2021, the components of which are described in the table below.
Results of Discontinued Operations
The operating results for the Sports Technology Platform are presented in our Consolidated Statements of Operations as discontinued operations for all periods presented and reflect revenues and expenses that are directly attributable to these businesses that were eliminated from our ongoing operations.
The key components of the results of discontinued operations were as follows:
Restructuring and other includes the net loss attributable to the noncontrolling interest of $0.6 million for the year ended December 31, 2021. This amount was reclassified to discontinued operations due to the sale of the Sports Technology Platform during the year ended December 31, 2021.
The income tax benefit related to discontinued operations was $0.0 million for the years ended December 31, 2022 and 2021. See Note 10 - Income Taxes for additional information.
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Supplemental Balance Sheet Information |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Supplemental Balance Sheet Information | Note 5 — Supplemental Balance Sheet Information
Additional supplemental balance sheet information is provided below.
Other current assets were $0.0 million as of December 31, 2022 and 2021.
Other current liabilities (included as a separate line item in our Consolidated Balance Sheets) include the following:
Other current liabilities, as of December 31, 2022 and 2021, include insurance and corporate liability accruals.
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Arrive Investment |
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| Investments, All Other Investments [Abstract] | ||||||||||
| Arrive Investment | Note 6 — Arrive Investment
Arrive is a company that was formed in partnership with Roc Nation with the intent of building a new platform and brand focused on early stage, high growth opportunities. Roc Nation is a full-service entertainment company, inclusive of artist and athlete management, label, publishing, touring, film/TV and new ventures. Arrive seeks to leverage these relationships to invest in proprietary opportunities and provide services including, but not limited to, marketing, promotion or strategic advice for its portfolio investments. The Company holds two separate Arrive investments described below.
The Company did not record any unrealized gains or losses during the years ended December 31, 2022 or 2021 related to these investments. The Company is not required to contribute additional capital to either of the investments.
Historically, the Company accounted for such investments under the cost method of accounting. The adoption of ASU No. 2016-01 in the first quarter of 2018 effectively eliminated the cost method of accounting, and the carrying value of this investment is written down, or impaired, to fair value when a decline in value is considered to be other-than-temporary. Our strategic investment in equity securities does not have a readily determinable fair value; therefore, the new guidance was adopted prospectively. As of December 31, 2022, there were no indicators of impairment for this investment. The Company will assess the investment for potential impairment, quarterly.
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Debt |
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| Debt | Note 7 — Debt
Debt and notes payable consists of the following:
The Company entered into a Term Loan and Security Agreement (“GHI Loan Agreement”) with Gazellek Holdings I, LLC (“GHI LLC”), pursuant to which GHI LLC lent $3,450,000 to the Company on August 6, 2021. The loan bears in-kind interest at the annual rate of 7% and interest is compounded with, and added to the outstanding amount quarterly. The loan is secured by substantially all of the Company’s assets and those of all of its subsidiaries, which are required to guarantee the loan, and matures August 2, 2024.
The Company is required to prepay the loan upon receiving proceeds from future indebtedness exceeding $5,000,000 (other than indebtedness that is junior to the loan), or if the Company issues any capital stock (provided that the Company is allowed to retain up to 20% of the proceeds from such issuance). The GHI Loan Agreement contains customary representations and warranties, covenants and events of default. Upon the occurrence of an event of default, the loan bears interest at a rate 5% above of the then-effective interest rate and, at GHI LLC’s option, is payable either in cash or in cash and shares of Company common stock, valued at market, equal to up to 10% of the outstanding principal amount of the loan. A default fee equal to 0.5% of the outstanding principal applies if any default exists for 10 days or more. As of December 31, 2022, we were in compliance with all covenants under the loan.
Scheduled maturities of the Company’s long-term debt, as they exist as of December 31, 2022, in each of the next five fiscal years and thereafter are as follows:
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Restructuring and Other Expense |
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Dec. 31, 2022 | |
| Restructuring and Related Activities [Abstract] | |
| Restructuring and Other Expense | Note 8 — Restructuring and Other Expense
Restructuring expenses generally include severance and related charges, lease termination costs and other costs related to restructuring programs. Employee-related severance charges are largely based upon distributed employment policies and substantive severance plans. Generally, these charges are reflected in the period in which the Board approves the associated actions, the actions are probable, and the amounts are estimable which may occur prior to the communication to the affected employee(s). This estimate considers all information available as of the date the consolidated financial statements are issued.
Restructuring and other expense was $0.0 million and $0.3 million for the years ended December 31, 2022 and 2021, respectively. Restructuring expense of $0.3 million for the year ended December 31, 2021, was attributable to post petition fees in connection with the bankruptcy and was allocated to the asset management business.
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Stock-Based Compensation |
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| Stock-Based Compensation |
The 2011 Incentive Plan was approved and adopted by our stockholders on May 4, 2011 and became effective immediately. The 2011 Incentive Plan was amended and approved by our stockholders on May 8, 2013. The 2011 Incentive Plan permits the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, performance awards, stock awards and other stock-based awards. The number of shares available for awards, as well as the terms of outstanding awards, is subject to adjustments as provided in the 2011 Incentive Plan for stock splits, stock dividends, recapitalization and other similar events. Awards were able to be granted under the 2011 Incentive Plan until the earlier to occur of May 3, 2021 or the date on which all shares available for awards under the 2011 Incentive Plan have been granted; provided, however, that incentive stock options may not be granted after February 10, 2021. Prior to its expiration, the aggregate number of shares of our common stock issuable under all stock-based awards made under the 2011 Incentive Plan was .
Stock-based compensation awards issued under the 2011 Incentive Plan generally have a term of ten years and, for employees, vest over a three-year period. Exercise prices of awards issued under these plans are equal to the fair value of the Company’s stock on the date of grant.
As of December 31, 2022, there were outstanding stock-based compensation awards under the 2011 Incentive Plan. As of December 31, 2022, there were shares available for grant under our 2011 Incentive Plan.
Stock Options
The Company did t grant any options during the years ended December 31, 2022 and 2021. There were options exercised in 2021 or 2022. As of December 31, 2022 there are shares outstanding and exercisable. The aggregate intrinsic value of all outstanding stock options was $million as of December 31, 2022.
Total stock-based compensation expense associated with stock options related to continuing operations recognized in our Consolidated Statements of Operations for the years ended December 31, 2022 and 2021 was $ million. As of December 31, 2022, there is no unrecognized compensation expense related to outstanding stock options.
No related stock-based compensation was capitalized as part of an asset for the years ended December 31, 2022 or 2021.
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Income Taxes |
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| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | Note 10 — Income Taxes
The components of income (loss) from continuing operations before income taxes were as follows:
The components of the income tax (provision) benefit from continuing operations were as follows:
The income tax provision differs from the amount computed by applying the statutory United States income tax rate (21 percent) because of the following items:
The 2020 tax law change that had the most significant impact was in the CARES Act, which accelerated the refund schedule for alternative minimum tax credit carryovers. The Company had recorded a tax benefit of $2.2 million in 2017-2018 which was originally scheduled to be received as cash refunds in 2019 through 2022. The CARES Act allowed the Company to file a refund claim for the entire remaining balance of $0.6 million which was received (with interest) in February 2021.
Tax laws require certain items to be included in our tax returns at different times than the items are reflected in our results of operations. Some of these items are temporary differences that will reverse over time. We record the tax effect of temporary differences as deferred tax assets and deferred tax liabilities in our Consolidated Balance Sheets.
In 2022 and 2021 the net cash paid for income taxes, relating to both continuing and discontinued operations, was $0.0 million.
The components of net deferred tax assets and liabilities were as follows:
We regularly assess the likelihood that our deferred tax assets will be recovered in the future. A valuation allowance is recorded to the extent we conclude a deferred tax asset is not considered more-likely-than-not to be realized. We consider all positive and negative evidence related to the realization of the deferred tax assets in assessing the need for a valuation allowance.
Our accounting for deferred tax consequences represents our best estimate of future events. A valuation allowance established or revised as a result of our assessment is recorded through income tax provision in our Consolidated Statements of Operations. Changes in our current estimates due to unanticipated events, or other factors, could have a material effect on our financial condition and results of operations.
We maintain a valuation allowance related to our deferred tax assets. The valuation allowance was $148.1 million and $157.2 million as of December 31, 2022 and 2021, respectively. The deferred tax asset changes and corresponding valuation allowance changes in 2022 compared to 2021 were due primarily to a reduction in the 2021 tax loss calculation related to the Chapter 11 reorganization of Adara.
The net deferred tax liability not offset by valuation allowance of $0.2 million relates to foreign tax withholding on unremitted foreign earnings.
The table below shows the components of our deferred tax balances as they are recorded on our Consolidated Balance Sheets:
Federal net operating loss carryforwards totaling $270.5 million will begin expiring in 2029. This net operating loss includes a $110 million worthless stock deduction for the 2021 Adara Chapter 11 reorganization. The Company’s $142.1 million in federal net operating loss carryforwards generated through 2017 continue to be subject to historical tax rules that allow carryforward for 20 years from origin, with the ability to offset 100 percent of future taxable income. Subsequent year tax losses have an indefinite life.
The Company performed an analysis to confirm that none of the federal net operating loss carryovers should be limited by Section 382. This limitation could result if there is a more than 50 percent ownership shift in the GlassBridge shares within a three-year testing period. No such ownership shift has occurred through December 31, 2022.
We have federal capital losses of $140.8 million that will expire between 2024 and 2026. General business credits totaling $3.6 million will expire between 2024 and 2032. Various state income tax losses and tax credits are also available to offset future profits in six states.
Our income tax returns are subject to review by various U.S. and foreign taxing authorities. As such, we record accruals for items that we believe may be challenged by these taxing authorities. The threshold for recognizing the benefit of a tax return position in the consolidated financial statements is that the position must be more-likely-than-not to be sustained by the taxing authorities based solely on the technical merits of the position. If the recognition threshold is met, the tax benefit is measured and recognized as the largest amount of tax benefit that, in our judgment, is greater than 50 percent likely to be realized.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Our federal income tax returns for 2019 through 2021 are subject to examination by the Internal Revenue Service. For state purposes, the statutes of limitation vary by jurisdiction. With few exceptions, we are no longer subject to examination for years before 2016.
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Shareholders’ Equity |
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Dec. 31, 2022 | |||||||||||||||||
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| Shareholders’ Equity | Note 11 — Shareholders’ Equity
Treasury Stock
On November 14, 2016, our Board authorized a share repurchase program under which we may repurchase up to shares of our outstanding shares of common stock. Under the share repurchase program, we may repurchase shares from time to time using a variety of methods, which may include open market transactions and privately negotiated transactions.
Since the inception of the November 14, 2016 authorization, we have repurchased shares of common stock for $0.3 million and, as of December 31, 2021, we had authorization to repurchase additional shares. The remaining common stock included in treasury shares relates to restricted stock forfeitures and prior share repurchase programs.
During the years ended December 31, 2022 and 2021, the Company did not purchase any treasury shares. The treasury stock held as of December 31, 2022 was acquired at an average price of $ per share. The following is a summary of treasury share activity:
382 Rights Agreement
On November 30, 2021, the Board of Directors adopted a rights plan intended to avoid an “ownership change” within the meaning of Section 382 of the Code, and thereby preserve the current ability of the Company to utilize certain net operating loss carryforwards and other tax benefits of the Company and its subsidiaries (the “Tax Benefits”). If the Company experiences an “ownership change,” as defined in Section 382 of Code, the Company’s ability to fully utilize the Tax Benefits on an annual basis will be substantially limited, and the timing of the usage of the Tax Benefits and such other benefits could be substantially delayed, which could therefore significantly impair the value of those assets. The rights plan is intended to act as a deterrent to any person or group acquiring “beneficial ownership” of 4.9% or more of the Company’s outstanding shares of common stock, without the approval of the Board. The description and terms of the Rights (as defined below) applicable to the rights plan are set forth in the 382 Rights Agreement, dated as of December 1, 2021 (the “Rights Agreement”), by and between the Company and Equiniti Trust Company, as Rights Agent.
As part of the Rights Agreement, the Board authorized and declared a dividend distribution of one right (a Right) for each outstanding share of the Company’s common stock, to stockholders of record at the close of business on December 1, 2021. Each Right entitles the holder to purchase from the Company a unit consisting of one one-hundredth of a share (a “Unit”) of Series A Participating Preferred Stock, par value $ per share, of the Company (the “Preferred Stock”) at a purchase price of $ per Unit, subject to adjustment (the “Purchase Price”). Until a Right is exercised, the holder thereof, as such, will have no separate rights as a stockholder of the Company, including the right to vote or to receive dividends in respect of Rights.
Under the Rights Agreement, an Acquiring Person is any person or group of affiliated or associated persons (a “Person”) who is or becomes the beneficial owner of 4.9% or more of the outstanding shares of the Company’s common stock other than as a result of repurchases of stock by the Company, dividends or distribution by the Company, stock issued under certain benefit plans or certain inadvertent actions by stockholders. For purposes of calculating percentage ownership under the Rights Agreement, outstanding shares of the Company’s common stock include all of the shares of common stock actually issued and outstanding. Beneficial ownership is determined as provided in the Rights Agreement and generally includes, without limitation, any ownership of securities a Person would be deemed to actually or constructively own for purposes of Section 382 of the Code or the Treasury Regulations promulgated thereunder. The Rights Agreement provides that the following shall not be deemed an Acquiring Person for purposes of the Rights Agreement: (i) the Company or any subsidiary of the Company and any employee benefit plan of the Company, or of any subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan or (ii) any Person that, as of December 1, 2021, is the beneficial owner of 4.9% or more of the shares of Common Stock outstanding (such Person, an “Existing Holder”) unless and until such Existing Holder acquires beneficial ownership of additional shares of common stock (other than pursuant to a dividend or distribution paid or made by the Company on the outstanding shares of common stock or pursuant to a split or subdivision of the outstanding shares of common stock) in an amount in excess of 0.5% of the outstanding shares of common stock.
The Rights Agreement provides that a Person shall not become an Acquiring Person for purpose of the Rights Agreement in a transaction that the Board determines is exempt from the Rights Agreement, which determination shall be made in the sole and absolute discretion of the Board, upon request by any Person prior to the date upon which such Person would otherwise become an Acquiring Person, including, without limitation, if the Board determines that (i) neither the beneficial ownership of shares of common stock by such Person, directly or indirectly, as a result of such transaction nor any other aspect of such transaction would jeopardize or endanger the availability to the Company of the Tax Benefits or (ii) such transaction is otherwise in the best interests of the Company.
Initially, the Rights will not be exercisable and will be attached to all common stock representing shares then outstanding, and no separate Rights certificates will be distributed. Subject to certain exceptions specified in the Rights Agreement, the Rights will separate from the common stock and become exercisable and a distribution date (a “Distribution Date”) will occur upon the earlier of (i) 10 business days (or such later date as the Board shall determine) following a public announcement that a Person has become an Acquiring Person or (ii) 10 business days (or such later date as the Board shall determine) following the commencement of a tender offer, exchange offer or other transaction that, upon consummation thereof, would result in a Person becoming an Acquiring Person.
Until the Distribution Date, common stock held in book-entry form, or in the case of certificated shares, common stock certificates, will evidence the Rights and will contain a notation to that effect. Any transfer of shares of common stock prior to the Distribution Date will constitute a transfer of the associated Rights. After the Distribution Date, the Rights may be transferred on the books and records of the Rights Agent as provided in the Rights Agreement.
If on or after the Distribution Date, a Person is or becomes an Acquiring Person, each holder of a Right, other than certain Rights including those beneficially owned by the Acquiring Person (which will have become void), will have the right to receive upon exercise common stock (or, in certain circumstances, cash, property or other securities of the Company) having a value equal to two times the Purchase Price.
In the event that, at any time following the first date of a public announcement that a Person has become an Acquiring Person or that discloses information which reveals the existence of an Acquiring Person or such earlier date as a majority of the Board becomes aware of the existence of an Acquiring Person (any such date, the Stock Acquisition Date), (i) the Company engages in a merger or other business combination transaction in which the Company is not the surviving corporation, (ii) the Company engages in a merger or other business combination transaction in which the Company is the surviving corporation and the common stock of the Company is changed or exchanged or (iii) 50% or more of the Company’s assets, cash flow or earning power is sold or transferred, each holder of a Right (except Rights which have previously been voided as set forth above) shall thereafter have the right to receive, upon exercise, common stock of the acquiring company having a value equal to two times the Purchase Price.
At any time following the Stock Acquisition Date and prior to an Acquiring Person obtaining shares that would lead to a more than 50% change in the outstanding common stock, the Board may exchange the Rights (other than Rights owned by such Person which have become void), in whole or in part, for common stock or Preferred Stock at an exchange ratio of one share of common stock, or one one-hundredth of a share of Preferred Stock (or of a share of a class or series of the Company’s preferred stock having equivalent rights, preferences and privileges), per Right, subject to adjustment.
The Rights and the Rights Agreement will expire on the earliest of (i) 5:00 P.M. New York City time on December 1, 2024, (ii) the time at which the Rights are redeemed or exchanged pursuant to the Rights Agreement, (iii) the date on which the Board determines that the Rights Agreement is no longer necessary for the preservation of material valuable Tax Benefits or is no longer in the best interest of the Company and its stockholders, and (iv) the beginning of a taxable year to which the Board determines that no Tax Benefits may be carried forward.
At any time until the earlier of the Distribution Date or the expiration date of the Rights, the Company may redeem the Rights in whole, but not in part, at a price of $0.001 per Right. Immediately upon the action of the Board ordering redemption of the Rights, the Rights will terminate and the only right of the holders of Rights will be to receive the $0.001 redemption price.
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Business Segment Information and Geographic Data |
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| Business Segment Information and Geographic Data | Note 12 — Business Segment Information and Geographic Data
The Sports Technology Platform business is presented in our Consolidated Statements of Operations as discontinued operations and is not included in segment results for all periods presented. See Note 4 - Discontinued Operations for further information about these divestitures.
As of December 31, 2022, the asset management business is our only reportable segment.
We evaluate segment performance based on revenue and operating loss. The operating loss reported in our segments excludes corporate and other unallocated amounts. Although such amounts are excluded from the business segment results, they are included in reported consolidated results. The corporate and unallocated operating loss includes costs which are not allocated to the business segments in management’s evaluation of segment performance such as litigation settlement expense, corporate expense and other expenses. Restructuring expenses of $0.3 million associated with the Adara bankruptcy were allocated to the asset management business.
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Litigation, Commitments and Contingencies |
12 Months Ended |
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Dec. 31, 2022 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Litigation, Commitments and Contingencies | Note 13 — Litigation, Commitments and Contingencies
Plaintiff Cypress Holdings, III L.P. (“Cypress”) filed an action against GlassBridge Enterprises, Inc. in New York Supreme Court, which was removed to the United States District Court, Southern District of New York, on February 14, 2022, captioned Cypress Holdings, III L.P. v. Sport-BLX, Inc. et al., 1:22-cv-01243-LGS (S.D.N.Y.). In its Second Amended Complaint, Cypress purports to assert claims against SportBLX, Mr. Hall, and Mr. De Perio for securities fraud and related issues and seeks compensatory damages, punitive damages and attorneys’ fees, in connection with solicitations of investments in SportBLX. Cypress also purports to allege that GlassBridge Enterprises, Inc. is liable for unjust enrichment, tortious interference with contract, aiding and abetting a breach of fiduciary duty and minority shareholder oppression. Cypress also purports to assert claims against Messrs. Strauss and Ruchalski for breach of fiduciary duty and corporate waste, as well as additional claims against Clinton Group Inc., Cesar Baez, Christopher Johnson, and Sport-BLX Securities, Inc. arising from solicitations of investments in SportBLX.
The matter is presently in the discovery phase and GlassBridge Enterprises, Inc., and Messrs. Strauss and Ruchalski, intend to defend themselves vigorously. As of December 30, 2021, GlassBridge Enterprises, Inc. sold all of its interest in SportBLX and SportBLX ceased to be a subsidiary.
Indemnification Obligations
In the normal course of business, we periodically enter into agreements that incorporate general indemnification language. Performance under these indemnities would generally be triggered by a breach of terms of the contract or by a supportable third-party claim. There have historically been no material losses related to such indemnifications. As of December 31, 2022, and 2021, estimated liability amounts associated with such indemnifications were not material.
Environmental Matters
Our legacy business operations and indemnification obligations resulting from our spinoff from 3M Company (“3M”) subject us to liabilities arising from a wide range of federal, state and local environmental laws. For example, from time to time we have received correspondence from 3M notifying us that we may have a duty to defend and indemnify 3M with respect to certain environmental claims such as remediation costs. Environmental remediation costs are accrued when a probable liability has been determined and the amount of such liability has been reasonably estimated. These accruals are reviewed periodically as remediation and investigatory activities proceed and are adjusted accordingly. We did not have any environmental accruals as of December 31, 2022. Compliance with environmental regulations has not had a material adverse effect on our financial results.
Operating Leases
The Company does not have any long-term lease obligations as of December 31, 2022.
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Related Party Transactions |
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| Related Party Transactions | Note 14 — Related Party Transactions
On July 31, 2021, Mr. Hall and Mr. De Perio agreed to accept $2,354,736 and $1,060,264, respectively, from the Company in satisfaction of its obligations to them in the amounts of $12,116,718 and $5,455,782, respectively. The obligations were due December 12, 2022 and bore interest at a 5% annual rate. Accordingly, GLAE’s obligations in the amounts of $12,116,718 and $5,455,782 have been paid in full.
Also on July 31, 2021, as part of the settlement of the Stock Purchase Agreement, the Company assigned obligations owed to it from SportBLX, totaling $4,176,102, to FDC, of which Mr. Hall and Mr. De Perio are controlling stockholders, for $400,000.
The net gain on the settlement of the Stock Purchase Agreement and the assignment of obligations to FDC are related party gains, and, as such, were recorded as equity transactions in the Consolidated Balance Sheets, rather than recognized as income in the Consolidated Statements of Operations.
On December 30, 2021, the Company completed a series of transactions for the purpose of disposing of its interest in SportBLX, described below:
The compensation for the Board of Directors of GlassBridge for their board services totaled $210,000 and $425,000 for the years ended December 31, 2022 and 2021, respectively.
There was no non-wage compensation for the officers of GlassBridge for the years ended December 31, 2022 and 2021, respectively.
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Subsequent Events |
12 Months Ended |
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Dec. 31, 2022 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | Note 15 — Subsequent Events
Management of the Company has performed a review of all events and transactions occurring after the consolidated balance sheet date to determine if there were any such events or transactions requiring adjustment to or disclosure in the accompanying consolidated financial statements, noting that no such events or transactions occurred other than the following item:
On March 12, 2023, Signature Bank, New York, NY, with whom the Company holds several accounts, was closed by the New York State Department of Financial Services and the Federal Deposit Insurance Corporation (“FDIC”) was named Receiver. To protect depositors, the FDIC transferred all the deposits and substantially all of the assets of Signature Bank to Signature Bridge Bank, National Association (“Signature Bridge Bank”), a full-service bank operated by the FDIC. Depositors automatically became customers of Signature Bridge Bank and continued to have uninterrupted customer service and access to their funds in the same manner as before. Depositors of the institution were made whole and the Company did not incur any losses as a result of the closure. |
Summary of Significant Accounting Policies (Policies) |
12 Months Ended |
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Dec. 31, 2022 | |
| Accounting Policies [Abstract] | |
| Use of Estimates | Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported asset and liability amounts and the contingent asset and liability disclosures at the date of the financial statements, as well as the revenue and expense amounts reported during the period. Actual results could differ from those estimates.
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| Foreign Currency | Foreign Currency. For our international operations, where the local currency has been determined to be the functional currency, assets and liabilities are translated at year-end exchange rates with cumulative translation adjustments included as a component of shareholders’ equity. Income and expense items are translated at average foreign exchange rates prevailing during the year. Income and losses from foreign currency transactions are included in our Consolidated Statements of Operations.
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| Cash Equivalents | Cash Equivalents. Cash equivalents consist of highly liquid investments with an original maturity of three months or less at the time of purchase. The carrying amounts reported in our Consolidated Balance Sheets for cash equivalents approximate fair value.
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| Restricted Cash | Restricted Cash. Cash related to contractual obligations or restricted by management for specific use is classified as restricted and is included in other current assets on our Consolidated Balance Sheets depending on the timing of the restrictions. As of December 31, 2022 and 2021, we did not have any restricted cash included in other current assets.
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| Investments | Investments. Investment securities are classified into one of three categories: (1) held-to-maturity, (2) available-for-sale, or (3) trading. The corresponding income or loss associated with these trading securities is reported in our Consolidated Statements of Operations as a component of “Other income (expense), net”. Trading securities are bought and held principally for the purpose of selling them in the near term therefore are only held for a short period of time.
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| Fair Value Measurements | Fair Value Measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or the exit price in an orderly transaction between market participants on the measurement date. A three-level hierarchy is used for fair value measurements based upon the observability of the inputs to the valuation of an asset or liability as of the measurement date. Level 1 measurements consist of unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 measurements include quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 3 measurements include significant unobservable inputs. A financial instrument’s level within the hierarchy is based on the highest level of any input that is significant to the fair value measurement. The Company measures certain assets and liabilities including cash and cash equivalents, and investments in trading securities at their estimated fair value on a recurring basis. The Company’s non-financial assets such as goodwill and intangible assets are recorded at fair value on a nonrecurring basis.
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| Trade Accounts Receivable and Allowances | Trade Accounts Receivable and Allowances. Trade accounts receivable are stated net of estimated allowances, which primarily represent estimated amounts associated with customer returns, discounts on payment terms and the inability of certain customers to make the required payments. When determining the allowances, we take several factors into consideration, including prior history of accounts receivable credit activity and write-offs, the overall composition of accounts receivable aging, the types of customers and our day-to-day knowledge of specific customers. Changes in the allowances are recorded as reductions of net revenue or as bad debt expense (included in selling, general and administrative expense), as appropriate, in our Consolidated Statements of Operations. In general, accounts which have entered into an insolvency action, have been returned by a collection agency as uncollectible or whose existence can no longer be confirmed are written off in full and both the receivable and the associated allowance are removed from our Consolidated Balance Sheets. If, subsequent to the write-off, a portion of the account is recovered, it is recorded as a reduction of bad debt expense in our Consolidated Statements of Operations at the time cash is received.
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| Intangible Assets | Intangible Assets. We record all assets and liabilities acquired in purchase acquisitions, including intangibles, at estimated fair value. The initial recognition of intangible assets, the determination of useful lives and, if necessary, subsequent impairment analyses require management to make subjective estimates of how the acquired assets will perform in the future using certain valuation methods.
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| Impairment of Long-Lived Assets | Impairment of Long-Lived Assets. We periodically review the carrying value of our property and equipment and our intangible assets, including goodwill, to test whether current events or circumstances indicate that such carrying value may not be recoverable. For the testing of long-lived assets that are “held for use,” if the tests indicate that the carrying value of the asset group that contains the long-lived asset being evaluated is greater than the expected undiscounted cash flows to be generated by such asset or asset group, an impairment loss would be recognized. The impairment loss is determined by the amount by which the carrying value of such asset group exceeds its estimated fair value. We generally measure fair value by considering sale prices for similar assets or by discounting estimated future cash flows from such assets using an appropriate discount rate. Management judgment is necessary to estimate the fair value of assets and, accordingly, actual results could vary significantly from such estimates.
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| Restructuring | Restructuring. Restructuring generally includes significant actions involving employee-related severance charges, contract termination costs, and impairment or accelerated depreciation/amortization of assets associated with such actions. These charges are reflected in the quarter when the actions are probable and the amounts are estimable, which is typically when management approves the associated actions. Contract termination and other charges primarily reflect costs to terminate a contract before the end of its term or costs that will continue to be incurred under the contract for its remaining term without economic benefit to the Company. Asset impairment charges related to intangible assets and property, plant and equipment, when applicable, reflect the excess of the assets’ carrying values over their fair values.
|
| Revenue Recognition | Revenue Recognition. The Company recognizes revenue in light of the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers. Revenue is recognized when control of goods has transferred to customers. For the majority of the Company’s customer arrangements, control transfers to customers at a point-in-time when goods/services have been delivered as that is generally when legal title, physical possession and risks and rewards of goods/services transfers to the customer. Revenue is recognized at the transaction price which the Company expects to be entitled. The majority of the Company’s customer arrangements contain a single performance obligation for services as the promise for services is not separately identifiable from other promises in the contracts and, therefore, not distinct. The Company may also enter into customer arrangements that involve intellectual property out-licensing, multiple performance obligations, services and non-standard terms and conditions.
|
| Income Taxes | Income Taxes. We are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax obligations based on expected taxable income, statutory tax rates and tax credits allowed in the various jurisdictions in which we operate. Tax laws require certain items to be included in our tax returns at different times than the items are reflected in our results of operations. Some of these differences are permanent, such as expenses that are not deductible in our tax returns, and some are temporary differences that will reverse over time. Temporary differences result in deferred tax assets and liabilities, which are included in our Consolidated Balance Sheets. We must assess the likelihood that our deferred tax assets will be realized and establish a valuation allowance to the extent necessary.
We record income taxes using the asset and liability approach. Under this approach, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the book and tax basis of assets and liabilities. We measure deferred tax assets and liabilities using the enacted statutory tax rates that are expected to apply in the years in which the temporary differences are expected to be recovered or paid.
We regularly assess the likelihood that our deferred tax assets will be recovered in the future. In accordance with accounting rules, a valuation allowance is recorded to the extent we conclude a deferred tax asset is not considered to be more-likely-than-not to be realized. We consider all positive and negative evidence related to the realization of the deferred tax assets in assessing the need for a valuation allowance. If we determine it is more-likely-than-not that we will not realize all or part of our deferred tax assets, an adjustment to the deferred tax asset will be charged to earnings in the period such determination is made.
Our income tax returns are subject to review by various taxing authorities. As such, we record accruals for items that we believe may be challenged by these taxing authorities. The threshold for recognizing the benefit of a tax return position in the consolidated financial statements is that the position must be more-likely-than-not to be sustained by the taxing authorities based solely on the technical merits of the position. If the recognition threshold is met, the tax benefit is measured and recognized as the largest amount of tax benefit that, in our judgment, is greater than 50 percent likely to be realized.
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| Treasury Stock | Treasury Stock. Our repurchases of shares of common stock are recorded at cost as treasury stock and are presented as a reduction of shareholders’ equity. When treasury shares are reissued, we use a last-in, first-out method, and the difference between repurchase cost and fair value at reissuance is treated as an adjustment to equity.
|
| Stock-Based Compensation |
The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. The assumptions used in the valuation model are supported primarily by historical indicators and current market conditions. Expected volatilities are based on historical volatility of our stock and are calculated using the historical weekly close rate for a period of time equal to the expected term. The risk-free rate for the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. We use historical data and management judgment to estimate option exercise and employee termination activity within the valuation model. The expected term of stock options granted is based on historical data and represents the period of time that stock options granted are expected to be outstanding. It is calculated on an aggregated basis and estimated based on an analysis of options already exercised and any foreseeable trends or changes in recipients’ behavior. In determining the expected term, we consider the vesting period of the awards, the contractual term of the awards, historical average holding periods, stock price history, impacts from recent restructuring initiatives and the relative weight for each of these factors. The dividend yield, if applicable, is based on the latest dividend payments made on or announced by the date of the grant. Forfeitures are estimated based on historical experience and current demographics. See Note 9 - Stock-Based Compensation for further information regarding stock-based compensation.
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| Income (Loss) per Common Share |
Diluted income (loss) per common share is computed on the basis of the weighted average basic shares outstanding plus the dilutive effect of our stock-based compensation plans using the “treasury stock” method. Since the exercise price of our stock options is greater than the average market price of the Company’s common stock for the period, we did not include dilutive common equivalent shares for these instruments in the computation of diluted income (loss) per common share because the effect would be anti-dilutive. See Note 3 - Income (Loss) per Common Share for our calculation of weighted average basic and diluted shares outstanding.
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| New Accounting Pronouncements | New Accounting Pronouncements
The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
Income (Loss) per Common Share (Tables) |
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Computation of Weighted Average Basic and Diluted Income (Loss) Per Share |
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Discontinued Operations (Tables) |
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Discontinued Operations | As a result of these transactions, the Company recorded a net gain on the sale and deconsolidation of SportBLX of $16.7 million for the year ended December 31, 2021, the components of which are described in the table below.
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| Schedule of Key Components of Discontinued Operations | The key components of the results of discontinued operations were as follows:
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Supplemental Balance Sheet Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Other Current Liabilities | Other current liabilities (included as a separate line item in our Consolidated Balance Sheets) include the following:
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Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Debt and Notes Payable | Debt and notes payable consists of the following:
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| Schedule of Long-term Debt Maturities | Scheduled maturities of the Company’s long-term debt, as they exist as of December 31, 2022, in each of the next five fiscal years and thereafter are as follows:
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Stock-Based Compensation (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Stock-Based Compensation for Continuing Operations |
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| Summary of Stock Option Activity |
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Income Taxes (Tables) |
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Loss from Continuing Operations Before Income Taxes | The components of income (loss) from continuing operations before income taxes were as follows:
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| Schedule of Components of Income Tax Expense (Benefit) | The components of the income tax (provision) benefit from continuing operations were as follows:
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| Schedule of Income Tax Rate Reconciliation | The income tax provision differs from the amount computed by applying the statutory United States income tax rate (21 percent) because of the following items:
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| Schedule of Deferred Tax Assets and Liabilities | The components of net deferred tax assets and liabilities were as follows:
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| Schedule of Components of Deferred Tax Balances | The table below shows the components of our deferred tax balances as they are recorded on our Consolidated Balance Sheets:
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| Schedule of Unrecognized Tax Benefits Reconciliation | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
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Shareholders’ Equity (Tables) |
12 Months Ended | ||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||
| Equity [Abstract] | |||||||||||||||||
| Schedule of Treasury Stock |
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Business Segment Information and Geographic Data (Tables) |
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Net Revenue, Operating Loss from Continuing Operations and Assets by Segment |
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Summary of Significant Accounting Policies (Details Narrative) - USD ($) |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Accounting Policies [Abstract] | ||
| Restricted cash current | $ 0 | $ 0 |
Schedule of Computation of Weighted Average Basic and Diluted Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Earnings Per Share [Abstract] | ||
| Income (loss) from continuing operations | $ (3.0) | $ 13.0 |
| Loss from discontinued operations, net of income taxes | (0.7) | |
| Gain on sale and deconsolidation of discontinued business, net of income taxes | 16.7 | |
| Net income (loss) | $ (3.0) | $ 29.0 |
| Weighted average number of shares outstanding during the period - basic and dilutive (in thousands) | 26,400 | 25,400 |
| Continuing operations | $ (113.64) | $ 511.81 |
| Discontinued operations | 629.92 | |
| Net income (loss) | $ (113.64) | $ 1,141.73 |
Income (Loss) per Common Share (Details Narrative) - shares |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|---|
| Earnings Per Share [Abstract] | |||
| Number of shares outstanding | 1,360 | 1,360 | 1,360 |
Schedule of Discontinued Operations (Details) - USD ($) $ in Millions |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
| Sale of proprietary code to S-BLX Securities | ||
| Gain on repurchase of SportBLX debt from FDC | 1.4 | |
| Net gain on the sale and deconsolidation of SportBLX | 16.7 | |
| Sport BLX [Member] | ||
| Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
| Sale of proprietary code to S-BLX Securities | 0.2 | |
| Proceeds | 0.1 | |
| Basis in SportBLX | 1.3 | |
| Goodwill | (8.3) | |
| Non-controlling interest | $ 22.0 | |
Schedule of Key Components of Discontinued Operations (Details) - USD ($) $ in Millions |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Discontinued Operations and Disposal Groups [Abstract] | ||
| Net revenue | ||
| Operating expenses: | ||
| Selling, general and administrative | 1.1 | |
| Restructuring and other | (0.6) | |
| Total operating expenses | 0.5 | |
| Operating loss from discontinued operations | (0.5) | |
| Interest expense | (0.2) | |
| Total other expense | (0.2) | |
| Loss from discontinued operations, before income taxes | (0.7) | |
| Gain on sale and deconsolidation of discontinued business | 16.7 | |
| Income tax | ||
| Income (loss) from discontinued operations, net of income taxes | $ 16.0 | |
Discontinued Operations (Details Narrative) - USD ($) |
12 Months Ended | ||||
|---|---|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 30, 2021 |
Dec. 24, 2021 |
Dec. 21, 2021 |
|
| Restructuring and other expense | $ 0.0 | $ 300,000 | |||
| Net cash paid for income taxes | $ 0.0 | 0.0 | |||
| Noncontrolling Interest [Member] | |||||
| Restructuring and other expense | $ 600,000 | ||||
| Sport BLX [Member] | |||||
| Securities purchased under agreements to resell | $ 225,000 | ||||
| Securities purchased under agreements to resell | $ 1,500,000 | ||||
| Fintech Debt Corp [Member] | |||||
| Securities purchased under agreements to resell | $ 137,038 | ||||
| Securities sold under agreements to resell securities loaned | $ 126,000 | ||||
Schedule of Other Current Liabilities (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Accrued payroll | $ 0.2 | $ 0.2 |
| Other current liabilities | 0.2 | 0.2 |
| Total other current liabilities | $ 0.4 | $ 0.4 |
Supplemental Balance Sheet Information (Details Narrative) - USD ($) |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Other current assets | $ 0.0 | $ 0.0 |
Arrive Investment (Details Narrative) - USD ($) $ in Millions |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Investments, All Other Investments [Abstract] | ||
| Investment | $ 12.8 | $ 12.8 |
| Management fee description | the Company is entitled to receive between 18% and 20% of all general partner consideration on pooled investment vehicles managed by Arrive, whether characterized as management fees or incentive fees. | |
| Other assets | $ 0.5 | $ 0.2 |
Schedule of Debt and Notes Payable (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Short-Term Debt [Line Items] | ||
| Total long term debt | $ 3.9 | $ 3.6 |
| GHILLC Note Payable [Member] | ||
| Short-Term Debt [Line Items] | ||
| Total long term debt | 3.7 | 3.4 |
| Other Liabilities [Member] | ||
| Short-Term Debt [Line Items] | ||
| Total long term debt | $ 0.2 | $ 0.2 |
Schedule of Long-term Debt Maturities (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Debt Disclosure [Abstract] | ||
| 2023 | ||
| 2024 | 3.9 | |
| 2025 | ||
| 2026 | ||
| 2027 | ||
| 2028 and thereafter | ||
| Total | $ 3.9 | $ 3.6 |
Debt (Details Narrative) - USD ($) |
Aug. 06, 2021 |
Jul. 31, 2021 |
|---|---|---|
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
| Debt interest bear percentage | 5.00% | |
| Debt maturity date | Dec. 12, 2022 | |
| GHI Loan Agreement [Member] | ||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
| Proceeds from indebtedness | $ 5,000,000 | |
| Debt description | Upon the occurrence of an event of default, the loan bears interest at a rate 5% above of the then-effective interest rate and, at GHI LLC’s option, is payable either in cash or in cash and shares of Company common stock, valued at market, equal to up to 10% of the outstanding principal amount of the loan. A default fee equal to 0.5% of the outstanding principal applies if any default exists for 10 days or more. As of December 31, 2022, we were in compliance with all covenants under the loan. | |
| GHI Loan Agreement [Member] | Gazellek Holdings I, LLC [Member] | ||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
| Debt instrument, face amount | $ 3,450,000 | |
| Debt interest bear percentage | 7.00% | |
| Debt maturity date | Aug. 02, 2024 |
Restructuring and Other Expense (Details Narrative) - USD ($) $ in Millions |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Restructuring and Related Activities [Abstract] | ||
| Restructuring and other expense | $ 0.0 | $ 0.3 |
| Restructuring expense | $ 0.3 | |
Summary of Stock Option Activity (Details) - $ / shares |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Share-Based Payment Arrangement [Abstract] | |||
| Stock Options Outstanding | 1,360 | 1,360 | 1,360 |
| Weighted Average Exercise Price Outstanding | $ 106.00 | $ 106.00 | $ 106.00 |
| Weighted Average Remaining Contractual Life (Years), Outstanding | 6 years 8 months 12 days | 7 years 8 months 12 days | 8 years 8 months 12 days |
| Stock Options Exercisable | 1,360 | ||
| Weighted Average Exercise Price Exercisable | $ 106.00 | ||
| Weighted Average Remaining Contractual Life (Years), Exercisable | 6 years 8 months 12 days | ||
Stock-Based Compensation (Details Narrative) - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
| Number of shares outstanding | 1,360 | 1,360 | 1,360 |
| Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Net of Forfeitures | 0 | ||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period | 0 | ||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Intrinsic Value | $ 0.0 | ||
| Stock compensation expense | $ 0.0 | $ 0.0 | |
| 2011 Incentive Plan [Member] | |||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
| Number of shares authorized to award | 4,671 | ||
| Number of shares outstanding | 1,360 | ||
| Number of shares available for grant | 0 | ||
Schedule of Loss from Continuing Operations Before Income Taxes (Details) - USD ($) $ in Millions |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Income Tax Disclosure [Abstract] | ||
| U.S. | $ (3.0) | $ 13.0 |
| International | ||
| Income (loss) from continuing operations before income taxes | $ (3.0) | $ 13.0 |
Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Current | ||
| Federal | ||
| International | ||
| Deferred | ||
| International | ||
| Total | ||
Schedule of Income Tax Rate Reconciliation (Details) - USD ($) $ in Millions |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Income Tax Disclosure [Abstract] | ||
| Tax at statutory U.S. tax rate | $ (0.6) | $ 6.1 |
| State income taxes, net of federal benefit | (0.1) | 1.2 |
| Net effect of subsidiary deconsolidations – Adara reorganization and SportBLX sale | 67.4 | |
| Valuation allowances | (9.1) | (74.7) |
| Adjustment prior year tax loss carryover | 9.8 | |
| Total | ||
Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Income Tax Disclosure [Abstract] | ||
| Tax credit carryforwards | $ 3.9 | $ 4.1 |
| Net operating loss carryforwards | 64.3 | 72.9 |
| Intangible assets and investments | 0.3 | 0.4 |
| Capital losses | 35.2 | 35.5 |
| Other, net | 44.4 | 44.3 |
| Total deferred tax assets | 148.1 | 157.2 |
| Valuation allowance | (148.1) | (157.2) |
| Net deferred tax assets | ||
| Unremitted earnings of foreign subsidiaries | (0.2) | (0.2) |
| Total deferred tax liabilities | (0.2) | (0.2) |
| Valuation allowance | ||
| Total deferred tax liabilities | (0.2) | (0.2) |
| Net deferred tax liabilities | $ (0.2) | $ (0.2) |
Schedule of Components of Deferred Tax Balances (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Income Tax Disclosure [Abstract] | ||
| Deferred tax liability - non-current | $ (0.2) | $ (0.2) |
| Net deferred tax liabilities | $ (0.2) | $ (0.2) |
Schedule of Unrecognized Tax Benefits Reconciliation (Details) - USD ($) $ in Millions |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Income Tax Disclosure [Abstract] | ||
| Unrecognized tax benefits, beginning balance | $ 0.2 | $ 0.2 |
| Additions for tax positions of current years | ||
| Additions for tax positions of prior years | ||
| Reductions for tax positions of prior years | ||
| Settlements with taxing authorities | ||
| Reductions due to lapse of statute of limitations | ||
| Unrecognized tax benefits, ending balance | $ 0.2 | $ 0.2 |
Schedule of Treasury Stock (Details) - shares |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Equity [Abstract] | ||
| Treasury shares, beginning balance | 2,927 | 2,927 |
| Purchases | ||
| Forfeitures and other | ||
| Treasury shares, ending balance | 2,927 | 2,927 |
Schedule of Net Revenue, Operating Loss from Continuing Operations and Assets by Segment (Details) - USD ($) $ in Millions |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Operating income (loss) from continuing operations | ||
| Total operating loss | $ (3.0) | $ (6.2) |
| Interest expense | (0.3) | (2.0) |
| Gain on Chapter 11 reorganization | 20.4 | |
| Bank Loan forgiveness | 0.4 | |
| Other income (expense), net | 0.3 | 0.4 |
| Income (loss) from continuing operations before income taxes | (3.0) | 13.0 |
| Total consolidated assets | 14.6 | 17.2 |
| Operating Segments [Member] | ||
| Operating income (loss) from continuing operations | ||
| Total operating loss | (1.3) | (2.0) |
| Total consolidated assets | 13.5 | 13.2 |
| Corporate, Non-Segment [Member] | ||
| Operating income (loss) from continuing operations | ||
| Total operating loss | (1.7) | (4.2) |
| Total consolidated assets | 1.1 | 4.0 |
| Asset Management Income [Member] | ||
| Operating income (loss) from continuing operations | ||
| Total operating loss | (1.3) | (2.0) |
| Total consolidated assets | $ 13.5 | $ 13.2 |
Business Segment Information and Geographic Data (Details Narrative) $ in Millions |
12 Months Ended |
|---|---|
|
Dec. 31, 2022
USD ($)
| |
| Segment Reporting [Abstract] | |
| Restructuring expenses | $ 0.3 |