Variable Interest Entities

12 Months Ended

Dec. 31, 2022

Variable Interest Entities

Variable Interest Entities

Note 9 – Variable Interest Entities

We evaluate our investments and other significant relationships to determine whether any investee is a variable interest entity (“VIE”). If we conclude that an investee is a VIE, we evaluate our power to direct the activities of the investee, our obligation to absorb the expected losses of the investee and our right to receive the expected residual returns of the investee to determine whether we are the primary beneficiary of the investee. If we are the primary beneficiary of a VIE, we consolidate such entity and reflect the non-controlling interest of other beneficiaries of that entity.

We determine whether we are the primary beneficiary of a VIE by performing an analysis that principally considers:

● The VIE’s purpose, design, and risks the VIE was designed to create and pass through to its variable interest holders;

● The VIE’s capital structure;

● The terms between the VIE and its variable interest holders and other parties involved with the VIE; and

● Related-party affiliations.

The table below presents a summary of the nonconsolidated VIEs in which we hold variable interests:

	December 31, 2022		December 31, 2021
Total nonconsolidated variable interest entities:
Carrying value of variable interest - assets	$	11,530	$	895
Carrying value of variable interest - liabilities		—		—
Maximum exposure to loss:
Non-public equity (1)		11,530		895
Total	$	11,530	$	895

⁽¹⁾ The maximum exposure to loss is limited to the carrying value of the interest.

In the table above:

● The nature of our variable interest is described in the row under maximum exposure to loss.

● Our exposure to the obligations of the VIE is limited to our interest in the entity.

The primary purpose of our U.S-based, nonconsolidated VIE investments is to create strategic partnerships within market-leading providers of law enforcement technology solutions. We present all variable interests in unconsolidated VIEs as strategic investments within the long-term assets section of the condensed consolidated balance sheet.

We have provided financial support to the nonconsolidated VIEs in exchange for preferred equity as well as other financial instruments that give us the ability to commit additional capital overtime. Financial support provided to the nonconsolidated VIEs is used to continue to finance their operations. We have no explicit or implicit arrangements to provide additional financial support to the VIEs and we have no liabilities to the VIEs as of December 31, 2022 and December 31, 2021.