10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 2019

ENTERPRISE DIVERSIFIED, INC.

(Exact Name of Registrant as Specified in Its Charter)

Commission file number 000-27763

Nevada	88-0397234
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
1518 Willow Lawn Drive, Richmond, VA	23230
(Address of Principal Executive Offices)	(Zip Code)

(434) 336-7737

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	Not applicable	Not applicable

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.125 par value

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes    ☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes    ☒ No

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes    ☐ No

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

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

The aggregate market value of the voting common equity held by non-affiliates as of June 28, 2019, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $7,937,500 based on the price at which the common stock last sold on such day. This price reflects inter-dealer prices without retail mark up, mark down, or commissions, and may not represent actual transactions.

The number of shares outstanding of Common Stock, $0.125 par value, as of March 27, 2020 is 2,602,240.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the 2020 Proxy Statement for the Annual Meeting of Shareholders, scheduled to be held on May 28, 2020, are incorporated by reference into Part III of this Form 10-K.

Table of Contents

		Page No.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
PART I
Item 1.	Business	1
Item 1A.	Risk Factors	5
Item 1B.	Unresolved Staff Comments	5
Item 2.	Properties	5
Item 3.	Legal Proceedings	5
Item 4.	Mine Safety Disclosures	6
PART II
Item 5.	Market for Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	7
Item 6.	Selected Financial Data	7
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	15
Item 8.	Financial Statements	15
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	15
Item 9A.	Controls and Procedures	15
Item 9B.	Other Information	16
PART III
Item 10.	Directors, Executive Officers, and Corporate Governance	17
Item 11.	Executive Compensation	17
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters	17
Item 13.	Certain Relationships and Related Transactions	17
Item 14.	Principal Accountant Fees and Services	17
PART IV
Item 15.	Exhibits, Financial Statement Schedules	18
Item 16.	Form 10-K Summary	20
Signatures		21
Reports of Independent Registered Public Accounting Firms		22
Consolidated Financial Statements		23
Notes to Consolidated Financial Statements		29

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K, including, without limitation, Part I, Item 1, “Business” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein, contains statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. The words “believe,” “estimate,” “expect,” “intend,” “anticipate,” “plan,” and similar expressions and variations thereof identify certain of such forward-looking statements which speak only as of the dates on which they were made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties which may affect the Company’s business and prospects, including changes in economic and market conditions, acceptance of the Company’s products and services, maintenance of strategic alliances, and other factors discussed elsewhere in this Form 10-K, and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors.

PART I

ITEM 1. BUSINESS

Overview

Enterprise Diversified, Inc. (formerly White Dove Systems, Inc., Interfoods Consolidated, Inc., and then Sitestar Corporation) was incorporated in Nevada on December 17, 1992. On June 1, 2018, the Company amended its Articles of Incorporation to change the name of the Company to “Enterprise Diversified, Inc.” Unless the context otherwise requires, and when used in this Report, the “Company,” “ENDI,” “we,” “our,” or “us” refers to Enterprise Diversified, Inc. and its subsidiaries.

During the year ended December 31, 2019, the Company operated through five reportable segments:

● Asset Management Operations - this segment includes revenue and expenses derived from our various joint ventures, service offerings, and initiatives undertaken in the asset management industry;

● Real Estate Operations - this segment includes revenue and expenses related to the management of properties held for investment and held for resale through Mt Melrose (prior to the sale of 65% of our equity in Mt Melrose on June 27, 2019) located in Lexington, Kentucky, and revenue and expenses related to the management of legacy properties held for investment and held for resale through EDI Real Estate located in Roanoke, Virginia;

●  Internet Operations - this segment includes revenue and expenses related to our sale of internet access, hosting, storage, and other ancillary services;

● Home Services Operations - this segment includes discontinued revenue and expenses derived from our former operation of HVAC and plumbing companies in Arizona; and

● Other Operations - this segment includes any revenue and expenses from nonrecurring or one-time strategic funding or similar opportunities previously undertaken, and any revenue or expenses derived from corporate office operations, as well as expenses related to public company reporting, the oversight of subsidiaries, and other items that affect the overall Company.

As of the year ended December 31, 2019, and for all prior periods presented, Home Services Operations are reported as discontinued operations. The management of the Company also continually reviews various business opportunities for the Company, including those in other lines of business.

In previous periods, the Company reported under the following six business segments: Asset Management, Mt Melrose, HVAC, Internet, Real Estate, and Corporate. In an effort to highlight the direction of the Company and increase segment transparency, these historical segments were reorganized during the quarter ended June 30, 2018. Additional reorganizations were made as of January 1, 2019, in order to appropriately reflect the similarities in the Company’s real estate operations. As a result, the “Mt Melrose” and legacy “Real Estate” segments are referred to collectively as “Real Estate,” with the “HVAC” segment being referred to as “Home Services.” “Corporate” and other additional investments are combined under “Other Operations.” The “Asset Management” and “Internet” segments remain unchanged. See below for additional information on the activity included in each respective segment report.

Note that as of May 24, 2019, as per the Current Report on Form 8-K filed with the SEC on May 28, 2019, the Company completed a divestiture of its Home Services Operations, via its subsidiary, Specialty Contracting Group, LLC (formerly known as HVAC Value Fund, LLC), to an unaffiliated third-party purchaser, Rooter Hero Plumbing, Inc. (“Rooter Hero”). In the transaction, the Company sold and conveyed all of the subsidiary’s personal property and customer lists and records, excluding stock inventory and other current assets. As part of the transaction, Rooter Hero assumed the subsidiary’s obligations under lease and/or loan agreements for all outstanding vehicles and equipment, as well as the obligations to service all of the subsidiary’s remaining customer accounts going forward. No cash consideration was exchanged in the transaction. As consideration for the transaction, Rooter Hero will pay monthly royalties for the sixty (60) months following the closing, calculated on the basis of any revenue received from the customer accounts transferred. Under such royalty arrangements, the Company will receive 7.5% of any monthly revenue generated from qualified sales during the first year, and 5% of any monthly revenue during years two through five. Royalties received will be reduced by pre-approved warranty-related costs for select customers.

Additionally, on June 27, 2019, as per the Current Report on Form 8-K filed with the SEC on July 3, 2019, the Company sold 65% of its membership interest in Mt Melrose, LLC to an unaffiliated third-party purchaser, Woodmont Lexington, LLC (“Woodmont”). As consideration for the transaction, Woodmont paid the Company $100,000 and agreed to assume full responsibility for the management and operation of Mt Melrose and its real estate portfolio.

Asset Management Operations

ENDI created a wholly-owned subsidiary on October 10, 2016, named Willow Oak Asset Management, LLC (“Willow Oak”). Willow Oak is an asset management operational platform oriented to the value-investing community. Value investing and knowledge of the global value-investing community are core competencies of Willow Oak’s management. Willow Oak intends to apply its core competencies to become a hub for the value-investing community, offering various forms of affiliations with respected value investment managers. Such affiliations to date include fund seeding and reinvestments, fund launching, investor relations, and fund management administrative support. The Company intends to actively expand its Willow Oak platform with additional affiliations and services that enhance the value of the Willow Oak platform to all affiliated funds. 

Willow Oak began offering its fund management services (“FMS”) to external funds on November 1, 2018, when it signed a consulting services agreement with Arquitos Capital, a domestic and offshore private investment fund controlled by Steven Kiel, a Company director and our principal executive officer. Willow Oak also provides FMS to the Bonhoeffer Fund. FMS consists of services not typically provided by traditional third-party providers to the hedge fund industry, including: access to the Willow Oak network, investor relations and marketing, administration and compliance, interface to traditional service providers, standard tools and best practices repository, and access to Willow-Oak-vetted third-party service providers.

Willow Oak expanded its affiliations on October 1, 2019, forming a new joint venture with Focused Compounding Capital Management, LLC (“Focused Compounding Capital Management”) through a wholly-owned Company subsidiary, Willow Oak Capital Management, LLC (“Willow Oak Capital Management”). Willow Oak Capital Management was made a 10% owner of Focused Compounding Capital Management and is entitled to receive 10% of any and all gross fees (including management fees and incentive fees), before expenses, generated from any and all separately managed accounts and funds that are managed or advised, directly or indirectly, by Focused Compounding Capital Management, including a new private investment fund, Focused Compounding Fund, LP, that was launched by Focused Compounding Capital Management on January 1, 2020. Under the terms of the joint venture, Focused Compounding Capital Management’s principals, Geoff Gannon and Andrew Kuhn, agreed to bear sole responsibility for any and all investment advisory matters associated with the conduct of Focused Compounding Capital Management’s business, while Willow Oak Capital Management agreed to bear the organizational expenses of the fund launch and also to provide Willow Oak’s FMS to Focused Compounding Capital Management on an ongoing basis. 

1

Real Estate Operations

The Company operates its real estate operations through EDI Real Estate, LLC, a wholly-owned subsidiary, and, indirectly, through Mt Melrose, LLC, a formerly consolidated subsidiary. Mt Melrose, LLC owns and operates a portfolio of residential and other income-producing real estate in Lexington, Kentucky, which was acquired pursuant to a certain Master Real Estate Asset Purchase Agreement entered into on December 10, 2017, with a like-named seller, Mt. Melrose, LLC, a Kentucky limited liability company (“Old Mt. Melrose”). On January 10, 2018, Mt Melrose, LLC (“New Mt Melrose”) completed its first acquisition of 44 real properties under the agreement, and on June 29, 2018, it completed its second acquisition of 69 additional real properties under the agreement. However, during the quarterly period ended December 31, 2018, the parties mutually agreed to terminate the Master Real Estate Asset Purchase Agreement and no further acquisitions were consummated. A third-party property manager was engaged during this quarterly period ended December 31, 2018, to manage certain of the real properties previously acquired. Management also determined that it was necessary to right-size New Mt Melrose’s operations to reduce its level of high-interest debt. In an effort to expedite the optimization of the Mt Melrose portfolio, management further determined that a dedicated operator was necessary to manage the subsidiary. Accordingly, on June 27, 2019, the Company sold 65% of its membership interest in New Mt Melrose, LLC to Woodmont, who agreed to assume full responsibility for the management and operation of New Mt Melrose and its real estate portfolio. The general terms and conditions governing the arrangement between the Company and Woodmont are set forth in an Amended and Restated Limited Liability Company Agreement of Mt Melrose, LLC.

Our other real estate operations include activity from a legacy real estate investment portfolio held through EDI Real Estate, LLC. The portfolio, primarily located in the Roanoke area of Virginia, includes residential properties and vacant land. The portfolio includes single-family homes that are currently rented and managed through a third-party property manager, as well as other properties currently listed for sale.

Internet Operations

The Company operates its internet operations through Sitestar.net, a wholly-owned subsidiary that offers consumer and business-grade internet access, wholesale managed modem services, web hosting, third-party software as a reseller, and various ancillary services. Sitestar.net provides services and support to customers in the United States and Canada.

Discontinued Operations - Home Services Operations

The Company operated its home services operations through Specialty Contracting Group, LLC (formerly known as HVAC Value Fund, LLC), formerly a wholly-owned subsidiary focused on the management of HVAC and plumbing companies in Arizona. As of December 31, 2017, the subsidiary had closed on six acquisitions for an aggregate purchase price of approximately $2.02 million, which included earn-outs of approximately $325,000. For all six acquisitions, all earn-outs had been paid in full as of December 31, 2018. On May 24, 2019, the Company completed its divestiture of the home services operations to Rooter Hero. As of the year ended December 31, 2019, and for all prior periods presented, all revenue and expenses related to home services operations have been reported as discontinued operations on the accompanying consolidated statements of operations.

Other Operations

Other operations include corporate activity and nonrecurring or one-time strategic funding or similar activity, previously undertaken, that is not considered to be one of the Company’s primary lines of business. This activity includes opportunities such as the Company’s investment in Huckleberry Real Estate Fund II, LLC and its financing arrangement with Triad Guaranty, Inc.

This also includes any revenue or expenses derived from corporate office operations, as well as expenses related to public company reporting, the oversight of subsidiaries, and other items that affect the overall Company.

Products and Services

Asset Management Operations

The Company operates its asset management operations business through Willow Oak.

In 2016, the Company made a strategic determination to fund a seed investment totaling $10 million through Willow Oak to assist in the launch of Alluvial Fund, LP, a private investment partnership that was launched on January 1, 2017 by unaffiliated sponsor and general partner, Alluvial Capital Management, LLC. The Company had determined that Willow Oak’s support of Alluvial Capital Management, LLC and its direct investment in Alluvial Fund were both beneficial and necessary undertakings in conjunction with establishing an asset management operations business and gaining credibility within that industry. Under a side letter agreement with Alluvial Fund’s general partner, Willow Oak agreed not to fully withdraw its capital account prior to a date five years after the effective date of the side letter agreement. However, on December 31, 2017, pursuant to an amendment to the side letter agreement dated December 15, 2017, the Company caused $3.0 million to be withdrawn from Alluvial Fund in order to partially fund the Company’s acquisitions of real estate in the 2018 Mt Melrose transactions. As of December 31, 2019, Willow Oak continues to hold its remaining direct investment in Alluvial Fund. Investment gains and losses are reported as revenue on the accompanying consolidated statements of operations.

In furtherance of establishing the asset management operations business, Willow Oak signed a fee share agreement on June 13, 2017, with Coolidge Capital Management, LLC (“Coolidge”), whose sole member is Keith D. Smith, who is also an ENDI director. Willow Oak is the sole member of Bonhoeffer Capital Management, LLC, the general partner to Bonhoeffer Fund, LP, a private investment partnership. Under their agreement, Willow Oak paid all start-up expenses and pays agreed-upon operating expenses that are not partnership expenses, and Willow Oak receives 50% of all performance and management fees earned by the general partner.

On August 1, 2018, Willow Oak, through a wholly-owned Company subsidiary, Willow Oak Capital Management, LLC (“Willow Oak Capital Management”), launched a newly organized private investment partnership, Willow Oak Select Fund, LP (“Select Fund”). Willow Oak Capital Management served as the general partner of Select Fund. Select Fund ultimately dissolved in June 2019 so that other joint ventures and partnerships could be pursued.

On November 1, 2018, Willow Oak also entered into a fund management services agreement with Arquitos Investment Manager, LP, which is managed by our chairman and principal executive officer, Steven L. Kiel, to provide Arquitos with Willow Oak’s Fund Management Services (“FMS”) consisting of the following services: investor relations, marketing, administration, legal, accounting and bookkeeping, annual audit coordination, and liaison to third-party service providers. As consideration for the services, Arquitos pays Willow Oak a fixed fee and a performance-based fee.

On October 1, 2019, Willow Oak partnered with Geoff Gannon and Andrew Kuhn to form Focused Compounding Capital Management, LLC (“Focused Compounding”). This new joint venture, of which Willow Oak Capital Management, LLC is a 10% owner, manages capital through separately managed accounts and a private partnership launched January 1, 2020. As a member of the general partner, Willow Oak provides ongoing FMS and operational support in addition to covering all one-time expenses associated with the launch of Focused Compounding Fund, LP. As consideration for the arrangement, Willow Oak is entitled to 10% of gross management and performance fees earned by Focused Compounding. In addition to hosting a popular investing podcast, the individual principals of Focused Compounding share investment news and advice through a subscription-based service. 

2

Real Estate Operations

ENDI created a wholly-owned subsidiary named Mt Melrose, LLC, a Delaware limited liability company (“New Mt Melrose”), on December 14, 2017, to acquire a portfolio of residential and other income-producing real estate in Lexington, Kentucky, pursuant to a certain Master Real Estate Asset Purchase Agreement entered into on December 10, 2017, with a like-named seller, Mt. Melrose, LLC (“Old Mt. Melrose”), a Kentucky limited liability company owned by Jeff Moore, then an ENDI director. On January 10, 2018, New Mt Melrose, consistent with the terms of the purchase agreement, completed a first acquisition from Old Mt. Melrose of 44 residential and other income-producing real properties located in Lexington, Kentucky. On June 29, 2018, New Mt Melrose, consistent with the terms of the purchase agreement, completed a second acquisition from Old Mt. Melrose of an additional 69 residential and other income-producing real properties located in Lexington, Kentucky. The Company accounted for the first and second purchases of properties as an asset acquisition (consisting of a concentrated group of similar identifiable assets, including land, buildings, improvements, and in-place leases). As has been reported, on June 27, 2019 the Company sold 65% of its membership interest in New Mt Melrose, LLC to Woodmont. The Company deconsolidated the operations of New Mt Melrose, LLC on June 27, 2019, as a result of no longer having a controlling financial interest.

ENDI created a wholly-owned real estate subsidiary on July 10, 2017, named EDI Real Estate, LLC, to hold ENDI’s legacy portfolio of real estate. As of December 31, 2019, through EDI Real Estate, LLC, ENDI owns a legacy real estate investment portfolio that includes eight residential properties and vacant land. Our real estate portfolio under EDI Real Estate, LLC is primarily focused in the Roanoke area of Virginia. The portfolio includes single-family homes, both rented and vacant, that are managed by a third-party property management company. The leases in effect as of December 31, 2019, are based on annual time periods and include month-to-month provisions after the completion of the initial term.

State and municipal laws and regulations govern the real estate industry and do not vary significantly from one community to another. State laws, including the Virginia Residential Landlord and Tenant Act, in addition to local ordinances, govern rental properties and also do not vary significantly throughout our real estate holding areas.

Internet Operations

Sitestar.net is an Internet Service Provider (ISP) that offers consumer and business-grade internet access, web hosting, and various ancillary services. We provide services to customers in the United States and Canada. This segment markets and sells narrow-band (dial-up and ISDN) and broadband services (DSL and fiber-optic). Additionally, we market and sell web hosting and related services to consumers and businesses.

Our primary competitors include regional and national cable and telecommunications companies that have substantially greater market presence, brand-name recognition, and financial resources compared to Sitestar.net. Secondary competitors include local and regional ISPs.

The residential broadband internet access market is dominated by cable and telecommunications companies. These companies offer internet connectivity through the use of cable modems, Digital Subscriber Line (DSL) programs, and fiber. These competitors have extensive scale and significantly more resources than Sitestar.net. Competitors often offer incentives for customers to purchase internet access by offering discounts for bundled service offerings (i.e., phone, television, Internet). While we are a reseller of broadband services including DSL and fiber services, our profit margin is heavily influenced by these competitive forces.

There are currently laws and regulations directly applicable to access or commerce on the internet, covering issues such as user privacy, freedom of expression, pricing, characteristics and quality of products and services, taxation, advertising, intellectual property rights, information security, and the convergence of traditional telecommunications services with Internet communications. We may be positively or negatively affected by the repeal, modification, or adoption of various laws and regulations. These changes may occur at the international, federal, state, and local levels, and may cover a wide range of issues.

As of December 31, 2019, the focus of our internet segment is to generate cash flow, work to make our costs variable, and reinvest in our operations when an acceptable return is available. We did not make significant reinvestments into the internet segment during 2019.

Management is currently identifying the market value for domain names owned by the Company in order to assess potential income opportunities. Management evaluates these domain names for third-party sales potential, as well as for other marketing opportunities that could generate new revenue from current customers who utilize the domains.

Discontinued Operations - Home Services Operations

Prior to May 24, 2019, the Company operated its home services segment through its wholly-owned subsidiary, Specialty Contracting Group, LLC (formerly known as HVAC Value Fund, LLC). The Company, along with JNJ Investments, LLC, an unaffiliated third party, organized and launched Specialty Contracting Group, LLC on June 13, 2016. On May 18, 2018, the Company terminated its operating agreement with JNJ Investments, LLC, dated June 13, 2016. Specialty Contracting Group was focused on the management of HVAC and plumbing companies in Arizona.

As has been reported, on May 24, 2019, the Company completed its divestiture of the home services operations to Rooter Hero. See Note 3 for more information.

3

Other Operations

Other operations include nonrecurring or one-time strategic funding or similar activity and other corporate operations that are not considered to be one of the Company’s primary lines of business. Below are the main activities that comprise other operations.

Huckleberry Real Estate Fund

On January 30, 2017, the Company, through Willow Oak, committed to make a capital contribution to Huckleberry Real Estate Fund II, LLC, a private investment fund, in the aggregate amount of $750,000. On May 14, 2018, Willow Oak transferred the Huckleberry investment to EDI Real Estate, LLC, another wholly-owned subsidiary of the Company. Under the fund’s operating agreement, the fund’s managing member has sole discretion regarding the amounts and timing of any distributions to the members of the fund. As of December 31, 2019, a full redemption has been made, with the related gain included on the consolidated statements of operations under the other operations segment.

Triad DIP Investors

On August 24, 2017, the Company entered into an agreement with several independent third parties to provide debtor-in-possession financing to an unaffiliated third party, Triad Guaranty, Inc., through Triad DIP Investors, LLC. The Company initially contributed $100,000. Triad Guaranty, Inc. exited bankruptcy on April 27, 2018, and the Company subsequently entered into an amended and restated promissory note. As part of the amended and restated promissory note, the Company provided an additional contribution in the amount of $55,000 on May 18, 2018. The terms of the promissory note provide for interest in the amount of 10% annually, a repayment date no later than April 29, 2020, and the issuance of warrants in Triad Guaranty, Inc. equal to 2.5% of the company. Accordingly, on April 28, 2018, the Company was issued warrants to purchase 450,000 shares for $0.01 per share. On November 12, 2019, the Company exercised its warrants and purchased 450,000 shares of Triad Guaranty, Inc. Subsequently, on December 30, 2019 the Company sold all 450,000 shares at a price of $0.18/share.

Corporate Operations

Corporate operations include any revenue or expenses derived from corporate office operations, as well as expenses related to public company reporting, the oversight of subsidiaries, and other items that affect the overall Company.

Employees

As of December 31, 2019, we employed seven full-time individuals through the asset management, real estate, internet, home services, and other segments. We also utilize outside contractors as necessary to assist with financial reporting, technical support, and customer service. Our employees are not unionized, and we consider relations with employees to be favorable.

Available Information

Enterprise Diversified, Inc. files annual, quarterly, and current reports and other documents with the Securities and Exchange Commission (SEC) under the Securities Exchange Act. Also, the SEC maintains an internet website that contains reports, proxy and information statements, and other information regarding issuers, including the Company, that file electronically with the SEC. The public can obtain any documents that the Company files with the SEC at http://www.sec.gov. The Company also makes available free of charge on or through the Company’s website, http://www.enterprisediversified.com, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the SEC.

4

ITEM 1A. RISK FACTORS

This item is not required for smaller reporting companies.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

The Company operates its Real Estate, Internet, and Other operations remotely–that is, without dedicated office space. The principal office for our Asset Management Operations is office space leased by the Company located in New York, New York. The principal office of our Home Services Operations, prior to being discontinued, was a mix of office and industrial warehouse space previously leased by Specialty Contracting Group, LLC located in Scottsdale, Arizona.

As of December 31, 2019, through EDI Real Estate, LLC, the Company owns various real estate properties including eight residential properties and interests in several undeveloped lots. Subsequent to December 31, 2019, two properties held for resale have been sold.

On December 24, 2019, the Company completed the sale of its commercial warehouse space located in Lexington, Kentucky. The property was sold at its carrying value of $850,000.

ITEM 3. LEGAL PROCEEDINGS

Enterprise Diversified, Inc. (f/k/a Sitestar Corporation) v. Frank Erhartic, Jr.

On April 12, 2016, the Company filed a civil action complaint against Frank Erhartic, Jr. (the “Former Erhartic CEO”), the Company’s former CEO and director (prior to December 14, 2015) and currently an owner of record or beneficially of more than 5% of the Company’s Common Stock, alleging, among other things, that the Former Erhartic CEO engaged in, and caused the Company to engage in to its detriment, a series of unauthorized and wrongful related party transactions, including causing the Company to borrow certain amounts from the Former Erhartic CEO’s mother unnecessarily and at a commercially unreasonable rate of interest, converting certain funds of the Company for personal rent payments to the Former Erhartic CEO, commingling in land trusts certain real properties owned by the Company and real properties owned by the Former Erhartic CEO, causing the Company to pay certain amounts to the Former Erhartic CEO for lease payments under an unauthorized lease as to a storage facility owned by the Former Erhartic CEO, causing the Company to pay rent on its corporate headquarters owned by the Former Erhartic CEO’s ex-wife in amounts commercially unreasonable and excessive, and to make real estate tax payments thereon for the personal benefit of the Former Erhartic CEO, converting to the Former Erhartic CEO and/or absconding with five motor vehicles owned by the Company, causing the Company to pay real property and personal property taxes on numerous properties owned personally by the Former Erhartic CEO, causing the Company to pay personal credit card debt of the Former Erhartic CEO, causing the Company to significantly overpay the Former Erhartic CEO’s health and dental insurance for the benefit of the Former Erhartic CEO, and causing the Company to pay the Former Erhartic CEO’s personal automobile insurance. The Company is seeking, among other relief available, monetary damages in excess of $350,000. This litigation matter is currently pending in the Circuit Court for the City of Lynchburg (Lynchburg, Virginia).

Other: Mt Melrose-related Proceedings

Various disputes have arisen and are continuing between the Company and Woodmont Lexington, LLC (“Woodmont”), the entity to whom the Company sold, on June 27, 2019, 65% of the Company’s membership interest in Mt Melrose, LLC (“Mt Melrose”). 

In undertaking a sale of its membership interests in Mt Melrose, the Company had sought to partner with an operator who, in exchange for being granted a substantial equity interest at a significant discount to the amounts the Company had invested in Mt Melrose, would assume full responsibility for the management and operation of Mt Melrose and its real estate portfolio and endeavor in good faith to generate favorable returns inuring to the long-term best interests of the Company and its shareholders.

Shortly following the closing of the Mt Melrose transaction, however, the relationship between the Company and Woodmont soured. Woodmont, by its representative, Tice Brown, unexpectedly proceeded to make numerous claims and demands upon the Company, which the Company determined to be unfounded and frivolous, if not disingenuous to the parties’ understandings. During the year ended December 31, 2019, Woodmont also has submitted three formal claims for indemnification under the parties’ purchase agreement, each of which were considered by the Company and then rejected and disputed in short order as unfounded. An additional claim has been submitted, considered, and disputed subsequent to December 31, 2019.

In addition, Woodmont, acting as the sole manager of Mt Melrose, purported to unilaterally amend and restate as of August 29, 2019 the Mt Melrose limited liability company agreement among the parties, purporting to change the terms of the distribution waterfall the parties had expressly agreed to and purporting to reallocate the parties’ respective interests in Mt Melrose – unilaterally reducing the Company’s percentage membership interest from 35% to 20.8% while increasing Woodmont’s percentage membership interest from 65% to 79.2%. The Company has rejected and disputed these purported changes and Woodmont’s conduct.                    

In connection with the primary disputes between the Company and Woodmont and following the Company’s Delaware Action (as defined below), on December 5, 2019, Woodmont also filed a verified complaint in the Fayette County, Kentucky Circuit Court against the Company and a third party who was then-under contract with the Company for such party’s purchase of the Company’s warehouse and associated real property located in Lexington, Kentucky – see Woodmont Lexington, LLC, et al. v. Enterprise Diversified, et al., Fayette Circuit Court, Civil Action No. 19-CI-04304 (the “Kentucky Action”). The Court in the Kentucky Action enjoined the Company and the warehouse purchaser from removing or cleaning out the various items of building materials and salvage owned by Mt Melrose that had been placed in the warehouse premises, and required the Company and the warehouse purchaser to provide rent-free access so that Woodmont and Mt Melrose could realize “full value” on their liquidation of the stored personal property until February 1, 2020. The Company believes that Woodmont’s attempt to hold up the sale of an $850,000 warehouse and property because it wanted to store spare toilets, doors, floor tiles and other residential building materials there, rent free, for more than six months, was disingenuous and intentionally injurious to the Company. On December 27, 2019, the Company filed verified counter-claims in the Kentucky Action against Woodmont, alleging, among other things, Woodmont’s tortious interference with the Company’s business and Woodmont’s unjust enrichment. The Company is seeking, among other relief available against Woodmont, declaratory relief; trial by jury on all issues; money damages, including all special and consequential damages, in amounts to be determined at trial; and the Company’s costs and expenses, including attorneys’ fees; together with pre- and post-judgement interest. The parties to the Kentucky Action have recently engaged in settlement negotiations, although they have not been successful. This action remains pending in the Fayette County, Kentucky Circuit Court.             

All the while, since the closing of the Mt Melrose transaction, Woodmont, by its representative, Tice Brown, has made repeated “low ball” offers to buy out the Company’s remaining interest in Mt Melrose, insisting that the Company relinquish its Mt Melrose interest in order to avoid further claims and demands and in order to avoid threatened public disparagement (including by way of statements made on various social media by Woodmont’s representative, Tice Brown). All such offers have been rejected or not responded to by the Company, as being unfavorable, undesirable, and not in the long-term best interests of the Company and its shareholders.

On January 7, 2020, Woodmont, acting as the sole manager of Mt Melrose, also caused Mt Melrose to distribute a $600,000 cash dividend directly to Woodmont. Woodmont expressly excluded the Company from receiving any portion of this distribution. The Company has rejected and disputed the propriety of this distribution and Woodmont’s conduct.

5

The Company believes that Woodmont, directly and by its representative, Tice Brown, has engaged, and continues to engage, in intentionally injurious and harassing conduct concerning Mt Melrose that runs counter to the long-term best interests of the Company and its shareholders. Accordingly, as previously reported in the Company’s Current Report on Form 8-K filed with the SEC on November 20, 2019, the Company filed a verified complaint in the Court of Chancery of the State of Delaware on November 20, 2019, commencing a civil action against Woodmont – see Civil Action No. 2019-0928-JTL (the “Delaware Action”). The Delaware Action was filed by the Company in response to the repeated claims and demands and injurious conduct by Woodmont and its representative, Tice Brown. On March 9, 2020, the Company filed further an amended verified complaint against Woodmont in the Delaware Action, expanding its claims against Woodmont. The Company is seeking, among other relief available against Woodmont, injunctive, declaratory and equitable relief, and relief for, among other things, Woodmont’s breaches of contract and unjust enrichment, along with attorneys’ fees and expenses. This action remains pending in the Delaware Court of Chancery.

Management intends to vigorously prosecute the Company’s claims, and defend the Company’s rights, against Woodmont and its representative, Tice Brown, in all of these Mt Melrose-related proceedings.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

6

PART II

ITEM 5. MARKET FOR COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Enterprise Diversified’s Common Stock is listed on the OTC QB Markets (“OTCQB”) under the symbol “SYTE.”

Record Holders

As of March 27, 2020, we had approximately 119 shareholders of record. This number does not reflect the number of individuals or institutional investors holding stock in nominee name through banks, brokerage firms, and others.

Equity Compensation Plans

On November 7, 2019, Enterprise Diversified’s Governance, Compensation, and Nomination Committee of the Board of Directors approved the creation of an equity incentive program for board members as well as eligible senior management. The Committee determined that it was advisable, and in the best interests of the Company and its stockholders, to provide guidelines for the issuance of equity incentive awards, such as restricted stock and restricted stock units, to attract, retain, and motivate eligible persons whose present and potential contributions are important to the long-term success of the Company and its subsidiaries and to align their interests with those of the Company’s stockholders. Consistent with this and the Company’s intention to retain its cash, it was also determined that such a program would provide for a more-formal process by which amounts of director’s fees and annual management bonuses accrued from time to time could be paid, at the direction of the Committee, in shares of Common Stock in lieu of cash. The provisions of the program were memorialized as the Enterprise Diversified, Inc. 2020 Equity Incentive Plan (the “2020 EIP”), which was approved and adopted by the Board effective as of January 31, 2020. The 2020 EIP may be amended or terminated at any time by the Board or the Committee. A copy of the 2020 EIP accompanies this Report as Exhibit 99.1.

Dividends

To date, we have not paid any cash dividends on our capital stock. We intend to retain our cash and, therefore, do not anticipate paying any cash dividends in the foreseeable future.

Issuances of Unregistered Shares of Common Stock

On December 20, 2019, the Company issued 21,870 unregistered shares of its Common Stock to Steven L. Kiel, the Company’s Executive Chairman, as its repayment of an outstanding $100,000 promissory note owed to Mr. Kiel. The number of shares issued in lieu of cash payment of the obligation was determined by the Governance, Compensation, and Nomination Committee of the Board of Directors using the volume weighted average price of a share of Common Stock for the immediately preceding ninety (90) days, which equaled $4.57. To the extent this issuance constituted an offer or sale of securities under the Securities Act, it was exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act and Regulation D Rule 506, as a transaction by an issuer not involving a public offering.

On February 14, 2020, the Company issued a total of 35,594 unregistered shares of its Common Stock to members of the Board of Directors and select senior management in lieu of cash payment of certain accrued director’s fees and annual management bonuses, in line with the 2020 EIP described above. The number of shares issued was determined by the Governance, Compensation, and Nomination Committee of the Board of Directors using the volume weighted average price of a share of Common Stock for the ninety (90) days immediately preceding January 31, 2020, which equaled $3.6537. To the extent this issuance constituted an offer or sale of securities under the Securities Act, it was exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act and Regulation D Rule 506, as a transaction by an issuer not involving a public offering.

ITEM 6. SELECTED FINANCIAL DATA

Not applicable.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section is intended to provide readers of our financial statements information regarding our financial condition, results of operations, and items that management views as important. The following discussion and analysis should be read in conjunction with the Company’s accompanying consolidated financial statements and accompanying notes as of and for the years ended December 31, 2019 and 2018. The discussion of results, causes, and trends should not be construed to imply any conclusion that such results or trends will necessarily continue in the future. Additionally, it should be noted that a uniform comparative analysis cannot be performed for all segments, as a segment’s limited financial history or recent restructuring results in less comparable financial performance.

Summary of Financial Performance

Common stockholders’ equity decreased from $15,915,651 at December 31, 2018, to $10,633,958 at December 31, 2019. This change was attributable to $4,998,487 of net loss in the real estate segment, $1,510,475 of loss resulting from discontinued operations under the home services segment, and $791,916 of net loss in other segments, and was partially offset by $1,399,615 of net income in the asset management segment and $522,626 of net income in the internet segment. Corporate expenses for the year ended December 31, 2019, included in the net loss from other operations, totaled $1,101,098. Total comprehensive net loss (all attributable to Enterprise Diversified, Inc. stockholders) for the year ended December 31, 2019 equaled $5,381,691, which includes $3,054 of accumulated other comprehensive loss attributable to the internet segment.

Historical Variable Interests

As of the quarterly periods ended March 31, 2018, June 30, 2018, and September 30, 2018, the Company had determined that Old Mt. Melrose was a “variable interest entity” because the seller’s equity interests in Old Mt. Melrose were not effective in determining whether the seller or New Mt Melrose had a controlling financial interest, and that New Mt Melrose’s rights under a certain Cash Flow Agreement that had been entered into on January 10, 2018 with Old Mt. Melrose (the “Cash Flow Agreement”) were deemed to be variable interests in Old Mt. Melrose. During those periods, the Company had determined that New Mt Melrose was the primary beneficiary of Old Mt. Melrose since substantially all of Old Mt. Melrose’s activities had been conducted on behalf of New Mt Melrose and because New Mt Melrose may have been required to provide financial support to Old Mt. Melrose under the Cash Flow Agreement. As its primary beneficiary, New Mt Melrose previously consolidated Old Mt. Melrose’s financial results beginning on January 10, 2018. The fair values of the assets and liabilities of Old Mt. Melrose had been consolidated accordingly on the unaudited consolidated balance sheets for the quarterly periods ended March 31, 2018, June 30, 2018, and September 30, 2018. As noted on the unaudited consolidated statements of stockholders’ equity during those quarters, the ending noncontrolling interest allocated to the variable interest entity represented the remaining equity held by Old Mt. Melrose for properties that had not yet been acquired under the Purchase Agreement. The ending noncontrolling interest amount also included any income or loss generated by the remaining properties that were to be acquired under the Purchase Agreement for the period then ended.

As of November 1, 2018, pursuant to the termination of the Master Real Estate Asset Purchase Agreement and Cash Flow Agreement noted above, New Mt Melrose was no longer the primary beneficiary of Old Mt. Melrose. Additionally, as of November 1, 2018, New Mt Melrose no longer had a controlling financial interest in Old Mt. Melrose. Consequently, as of November 1, 2018, the Company no longer consolidated the fair values of the assets and liabilities of Old Mt. Melrose, and the balance of noncontrolling interest as of December 31, 2019 and 2018, is accordingly reflected as zero on the accompanying consolidated balance sheets and statements of stockholders’ equity.

7

Balance Sheet Analysis

This section provides an overview of changes in our assets, liabilities, and equity and should be read together with our accompanying consolidated financial statements, including the accompanying notes to the financial statements. The table below provides a balance sheet summary for the periods presented and is designed to provide an overview of the balance sheet changes from quarter to quarter.

	December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018
ASSETS
Cash and equivalents	$	666,810	$	161,275	$	542,856	$	519,525	$	435,726
Accounts receivables, net		52,889		35,646		20,212		65,614		58,263
Investments, at fair value		10,126,204		9,522,236		9,735,274		9,821,054		8,915,238
Real estate, total		479,425		1,412,208		1,421,364		11,691,075		11,811,789
Goodwill and other assets		574,316		713,578		769,570		3,353,607		3,298,436
Total assets	$	11,899,644	$	11,844,943	$	12,489,276	$	25,450,875	$	24,519,452
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	157,934	$	66,584	$	161,357	$	168,147	$	165,495
Accrued expenses		198,374		51,703		80,761		453,657		338,050
Deferred revenue		204,960		217,811		217,020		213,288		210,212
Notes payable and other liabilities		704,418		1,137,250		1,372,303		8,326,363		7,890,044
Total liabilities		1,265,686		1,473,348		1,831,441		9,161,455		8,603,801
Total stockholders’ equity		10,633,958		10,371,595		10,657,835		16,289,420		15,915,651
Total liabilities and stockholders’ equity	$	11,899,644	$	11,844,943	$	12,489,276	$	25,450,875	$	24,519,452

Financial Condition, Liquidity, and Capital Resources

During 2019, Enterprise Diversified carried out its business strategy in five operating segments: Asset Management Operations, Real Estate Operations, Internet Operations, Home Services Operations, and Other Operations. As of the year ended December 31, 2019, and for all prior periods presented, home services operations are reported as discontinued operations. Our primary focus is on generating cash flow so that we have the flexibility to pursue opportunities as they present themselves. We will only invest cash in each segment if we believe that the return on this invested capital is appropriate for the risk associated with the investment. This consideration is measured against all investment opportunities available to us and is not limited to these particular segments or the Company’s historical operations.

Cash and equivalents totaled $666,810 at the year ended December 31, 2019, compared to $435,726 at year-end December 31, 2018. The Company intends to continue to build up cash reserves moving forward. Real estate held for investment decreased to $380,515 at the year ended December 31, 2019, compared to $9,492,877 at year-end December 31, 2018, and real estate held for resale decreased to $98,910 at the year ended December 31, 2019, compared to $2,318,912 at year-end December 31, 2018. Property and equipment also decreased to $17,753 at the year ended December 31, 2019, from $1,019,742 at year-end December 31, 2018. The decreases in real estate and property and equipment are primarily due to the equity sale and subsequent deconsolidation under the real estate segment. The Company does not expect to make significant reinvestments into property and equipment used in operating activities at this time. Total notes payable decreased to $511,025 from $7,521,819 during the same time period. This decrease was also primarily related to the equity sale and deconsolidation under the real estate segment.

The Company currently believes that our existing balances of cash, cash equivalents, and cash generated from operations will be sufficient to satisfy our currently anticipated cash requirements through at least the next 12 months.

The aging of accounts receivable as of December 31, 2019, and December 31, 2018, is as shown:

	December 31, 2019		December 31, 2018
Current	$	50,909	$	58,263
30 – 60 days		1,495		—
60 + days		485		—
Total	$	52,889	$	58,263

We have no material capital expenditure requirements.

As of December 31, 2019, no lines of credit remain open through the home services segment. The line of credit that existed as of December 31, 2018 through the home services segment, was held with Steven L. Kiel, an ENDI director and our principal executive officer. The Company assumed this debt, which was paid off during the current year through the issuance of Company stock. Additional debt held through the home services segment as of December 31, 2018, included loans for various vehicles and equipment. Two vehicle loans were entered into during the quarter ended March 31, 2018. These loans required monthly payments through May 2023 and held annual interest rates of 5.99%. As of December 31, 2019, all of these loans have been assumed by Rooter Hero, as a result of our divestiture of the home services segment. See Note 3 for more information.

During the quarter ended September 30, 2017, EDI Real Estate, LLC, as a borrower, issued two promissory notes, each secured by a property held for investment. These notes carry annual interest rates of 6%, pay interest quarterly, and are due September 15, 2022, with early payoff permitted. Subsequent to the year ended December 31, 2019, one of these notes has been paid off. Additionally, during the quarter ended September 30, 2018, EDI Real Estate, LLC issued a promissory note secured by additional properties held for investment. This note carries an annual interest rate of 5.6% and fully matures on September 1, 2033, with early payoff permitted. The interest rate on this note is subject to change once each five-year period based on an index rate plus a margin of 2.750 percentage points. The index rate is calculated as a monthly average yield on U.S. Treasury Securities, adjusted to a constant maturity of five years.

8

With respect to outstanding debt secured by the real properties acquired by Mt Melrose, LLC, these notes began to mature during the year ended December 31, 2018, with the last note extending until January 2042. Some of these loans were interest only while others accrued interest that is due in full with a final balloon payment. As of December 31, 2018, the debt secured by the real properties had varying annual interest rates from 4.375% to 13%. As the Company no longer has a controlling financial interest in Mt Melrose, it no longer consolidates Mt Melrose, LLC’s assets, liabilities (including notes payable), or results of operations.

The remaining notes payable as of December 31, 2019, consisted of the following:

	Interest Rates		Average Term	2019			2018
Interest-bearing amounts due on traditional mortgages on real estate held through Mt Melrose, LLC		4.38% - 5.75%	14 years	$	—		$	4,505,139
Interest-bearing amounts due on hard money loans on real estate held through Mt Melrose, LLC		10.00% - 13.00%	2 years		—			2,379,851
Interest-bearing amounts due on promissory notes		10.00%	1 year		—			131,279
Non-interest-bearing amount due on promissory notes		0.00%	1 year		—			218,270
Equipment and vehicle capital leases and loans acquired by HVAC Value Fund, LLC		0.00% - 4.90%	5 years		—			55,797
Vehicle loans through HVAC Value Fund, LLC		5.99%	5 years		—			53,638
Interest-bearing amount due on promissory note through EDI Real Estate, LLC		5.60%	15 years		373,425			384,304
Interest-bearing amount due on real estate held for investment through EDI Real Estate, LLC		6.00%	5 years		137,600			137,600
Less notes related to discontinued operations					—			(209,436	)
Less accrued interest					—			(134,623	)
Less current portion					(11,453	)		(1,002,965	)
Long-term portion				$	499,572		$	6,518,854

The timing of future payments of notes payable are as follows:

2020	$	11,453
2021		12,181
2022		12,891
2023		151,242
2024 and thereafter		323,258
Total	$	511,025

Off-Balance Sheet Arrangements

We are not a party to any material off-balance sheet arrangements as of December 31, 2019, nor at any time from January 1, 2019, through December 31, 2019.

Other Contractual Obligations

As previously reported in our Current Reports on Form 8-K filed with the SEC on September 19, 2016, and December 30, 2016, respectively, on September 19, 2016, the Company announced that it had entered into a letter of intent agreement with Alluvial Capital Management, LLC (“Alluvial Capital”) to make a seed investment through Willow Oak Asset Management in Alluvial Fund, LP, a private investment partnership that was launched by Alluvial Capital on January 1, 2017 (“Alluvial Fund”). Alluvial Capital acts as the general partner and the Company, through Willow Oak Asset Management, has invested in Alluvial Fund as a limited partner.

The Company, through Willow Oak, agreed to make capital contributions to Alluvial Fund in the aggregate amount of $10 million to be provided over four equal tranches on January 1, 2017, April 1, 2017, July 1, 2017, and October 1, 2017. As of September 30, 2017, the Company satisfied its obligation to provide $10 million in accordance with the contribution schedule. On January 1, 2018, pursuant to an amendment to the Alluvial Side Letter Agreement, dated December 15, 2017, Willow Oak withdrew $3,000,000 from its $10,000,000 investment in Alluvial Fund, LP in order to partially fund the Company’s first close of the Mt Melrose Transaction. Arquitos Capital Partners, LP, which is managed by our director and principal executive officer Steven L. Kiel, simultaneously invested $3,000,000 in Alluvial to temporarily replace the amount withdrawn by Willow Oak. The Arquitos investment into Alluvial counts toward Willow Oak’s seed investment total for purposes of Willow Oak’s agreement with Alluvial.

Also through the asset management operations segment, an operating lease on office space in New York City commenced on October 1, 2017. This lease extends through September 30, 2020.

Through the home services segment, an operating lease on warehouse and office space in Scottsdale, Arizona, commenced on May 1, 2018. This lease extends through May 31, 2021. This lease was not conveyed with the divestiture on May 24, 2019. Specialty Contracting Group, LLC (formerly known as HVAC Value Fund, LLC) was the lessee party to the lease. Specialty Contracting Group, in connection with its dissolution and winding up, surrendered possession of the premises to the landlord, in default of this lease.

On June 27, 2019, as per the Current Report on Form 8-K filed with the SEC on July 3, 2019, the Company sold 65% of its membership interest in Mt Melrose, LLC to an unaffiliated third-party purchaser, Woodmont Lexington, LLC (“Woodmont”). Under the terms of the parties’ membership interest purchase agreement, the Company agreed to indemnify Woodmont against any losses actually incurred as a result of breaches of the Company’s representations and warranties made under the agreement. To date, Woodmont has made four claims for indemnification under the agreement, all of which have been rejected and disputed by the Company. Also, in connection with the transaction, the Company and Woodmont entered into a certain Amended and Restated Limited Liability Company Agreement of Mt Melrose, LLC (the “A&R LLC Agreement”). The A&R LLC Agreement sets forth the general terms and conditions governing the arrangements between the two members. The A&R LLC Agreement provides that the business and affairs of Mt Melrose will be managed exclusively by one or more managers; and Woodmont is designated as the sole manager. In addition, the Company expressly agreed to a three-year “standstill” arrangement, during which time the Company will not in any way participate, directly or indirectly, in the management or control of Mt Melrose; and with respect to any matters requiring a vote of the members, the Company will vote with (i.e., the same as) Woodmont. Subsequent to the transaction, Woodmont, as the manager of Mt Melrose, has purported that the Company’s membership interest in Mt Melrose has been diluted to 20.8%. The Company disputes this assertion and maintains that it has retained its 35% membership interest.

9

Results of Operations

Asset Management Operations

The Company operates its asset management operations business through two wholly-owned subsidiaries, Willow Oak Asset Management, LLC and Willow Oak Capital Management, LLC. These subsidiaries were formed on October 10, 2016 and May 24, 2018, respectively. During the segment’s first year of operations, Willow Oak entered into three fee share agreements with multiple private investment partnerships and made an additional investment through another partnership arrangement. During the year ended December 31, 2018, two new partnerships were formed, multiple fee share agreements were entered into, and a new service offering, Fund Management Services, was launched. During the year ended December 31, 2019, one new joint venture was formed in which Willow Oak Capital Management is a non-managing owner.

As of December 31, 2019, Willow Oak holds a direct investment in the Alluvial Fund, LP. The realized and unrealized investment gains and losses are reported as revenue on the accompanying consolidated statements of operations. This treatment can result in reporting negative revenue figures for a given period. Willow Oak continues to earn revenue through the remaining fee share arrangements, as well as through fund management services.

During the year ended December 31, 2019, the asset management operations segment produced $1,773,276 of revenue. Cost of revenue was $0 and operating expenses totaled $410,226. Other income attributable to the asset management operations segment totaled $36,565. Net income for the year ended December 31, 2019, totaled $1,399,615. This compares to the year ended December 31, 2018, when the asset management operations segment produced negative $775,249 of revenue, cost of revenue was $0, and operating expenses totaled $286,283. Additionally, other income for the year ended December 31, 2018, was $41,632, and total net loss for the year ended December 31, 2018, was $1,019,900. The increase in revenue in 2019 is due to market volatility and the application of specific GAAP revenue recognition rules as noted above. The increase in operating expenses is primarily due to higher payroll and event expenses. Other income for the segment is primarily due to sub-lease rental income earned through the Company’s New York office space.

As of December 31, 2019, the fair value of long-term investments held through the asset management operations segment totaled $10,072,358. This compares to the fair value of long-term investments held at December 31, 2018, which totaled $8,446,488. This increase in investments is attributable to positive Alluvial Fund performance during the year ended December 31, 2019. 

The tables below provide a summary of income statement amounts over time. These figures are specific to the asset management operations segment and are presented for the annual and quarterly periods designated below.

Annual	Year Ended December 31, 2019		Year Ended December 31, 2018
Revenues	$	1,773,276	$	(775,249	)
Cost of revenue		—		—
Operating expenses		410,226		286,283
Other income (expense)		36,565		41,632
Comprehensive income (loss)	$	1,399,615	$	(1,019,900	)

Asset Management Operations Revenue	Year Ended December 31, 2019		Year Ended December 31, 2018
Realized and unrealized gains (losses) on investment activity	$	1,607,644	$	(834,014	)
Management and performance fee revenue		65,171		41,151
Fund management services revenue		100,461		17,614
Total revenue	$	1,773,276	$	(775,249	)

Quarterly	December 31, 2019		September 30, 2019			June 30, 2019		March 31, 2019
Revenues	$	646,201	$	(159,085	)	$	589,180	$	696,980
Cost of revenue		—		—			—		—
Operating expenses		100,330		81,906			104,526		123,464
Other income (expense)		17,491		4,983			7,052		7,039
Comprehensive income (loss)	$	563,362	$	(236,008	)	$	491,706	$	580,555

10

Real Estate Operations

EDI Real Estate Operations

For the year ended December 31, 2019, the EDI Real Estate portfolio generated rental revenue of $76,792. The cost of rental revenue totaled $104,279. Operating expenses for the year ended December 31, 2019, were $42,080. Other expenses totaled $75,359and the net loss for the year ended December 31, 2019, totaled $155,057. This compares to the year ended December 31, 2018, when the EDI Real Estate portfolio generated rental revenue of $77,391, cost of rental revenue totaled $43,063, operating expenses were $17,200, other expenses totaled $13,591, and net rental income was $3,537. Other expenses incurred during the years ended December 31, 2019 and 2018, were primarily interest-related expenses. The 2019 increases in cost of rental revenue and operating expenses were due to significant deferred maintenance expenses and newly allocated payroll expenses, respectively.

For the year ended December 31, 2019, depreciation expense on the EDI Real Estate portfolio of properties was $22,161. This compares to depreciation expense for the year ended December 31, 2018, when depreciation expense on the EDI Real Estate portfolio of properties was $21,215.

During the year ended December 31, 2019, one property held for resale was sold for gross proceeds of $95,000. Net proceeds totaled $84,869 and closing costs totaled $10,131. This compares to its carrying value of $95,000, which resulted in no gain or loss being recognized on the sale. This compares to the year ended December 31, 2018, when two residential properties and one commercial property held for resale were sold for gross proceeds of $88,000. Net proceeds totaled $82,656. This compares to their carrying value of $95,033, which resulted in a loss of $7,033. No properties were purchased during the years ended December 31, 2019 or 2018.

During the year ended December 31, 2019, net impairment adjustments of $26,170 were recorded on real estate held for resale through EDI Real Estate, LLC in order to properly reflect sales activity throughout the year. During the year ended December 31, 2018, an impairment adjustment of $64,038 was recorded to real estate held for resale through EDI Real Estate, LLC in order to properly reflect market value for those properties held during the year.

Through EDI Real Estate, as of December 31, 2019, the Company owns a total of eleven units consisting of six units held for investment, two units held for resale, and three vacant lots held for resale as noted below:

EDI Real Estate	December 31, 2019	December 31, 2018
Units occupied or available for rent	6	6
Vacant units being prepared for rent	—	3
Total units held for investment	6	9
Units held for resale	2	—
Vacant lots held for resale	3	3
Total units held for resale	5	3

Units held for investment consist of single-family residential rental units.

The leases in effect, as of December 31, 2019, are based on annual time periods and typically include month-to-month provisions after the completion of the initial term. An outside property management company manages these rental properties on behalf of the Company. The property management company has introduced updated and renewed leases for existing rental properties.

EDI Real Estate	December 31, 2019			December 31, 2018
Total real estate held for investment	$	484,590		$	710,022
Accumulated depreciation		(104,075	)		(107,576	)
Real estate held for investment, net		380,515			602,446
Real estate held for resale	$	98,910		$	40,047

Mt Melrose Operations

Management has determined that the Company no longer has a controlling financial interest in Mt Melrose and is no longer the primary beneficiary as of June 27, 2019. All activity prior to the deconsolidation event has been included on the accompanying consolidated statements of operations for the year ended December 31, 2019, under the real estate segment. Simultaneously, as of June 27, 2019, all previously consolidated assets and liabilities of Mt Melrose, LLC have been removed from the consolidated balance sheets. Note that this deconsolidation event is separate from the deconsolidation event that took place on November 1, 2018, related to the change in variable interest reporting. As of December 31, 2018, the Company did have a controlling financial interest in Mt Melrose and was the primary beneficiary.

For the period ended June 27, 2019, the Mt Melrose portfolio generated rental revenue of $365,971. The cost of rental revenue totaled $276,049. Operating expenses for the period ended June 27, 2019, were $295,945. Other expenses totaled $4,580,940 and the net loss for the period ended June 27, 2019, totaled $4,786,963. This compares to the year ended December 31, 2018, when the Mt Melrose portfolio generated rental revenue of $778,657, cost of rental revenue totaled $450,859, operating expenses were $920,309, other expenses totaled $1,416,257, and total net loss was $2,008,768. The other expenses for the year ended December 31, 2019 are primarily related to the loss recognized on the equity sale of the Mt Melrose entity mentioned previously, which totaled $4,157,809. Other expenses incurred during the year ended December 31, 2018, were primarily impairment and interest-related expenses.

During the period ended June 27, 2019, depreciation expense on the Mt Melrose portfolio of properties totaled $110,978. This compares to the year ended December 31, 2018, when depreciation expense on the Mt Melrose portfolio of properties was $159,514.

No purchases were made during the period ended June 27, 2019. During the year ended December 31, 2018, Mt Melrose purchased a total of 61 properties, outside of the original purchase agreement, for a gross purchase price of $2,585,463. The majority of these purchases resulted in a note payable. 

11

During the period ended June 27, 2019, Mt Melrose sold nineteen residential properties and five vacant lots for gross proceeds of $775,850. Net proceeds totaled $151,672. This compares to their carrying value of $755,918, which resulted in a net gain of $16,932. During the year ended December 31, 2018, Mt Melrose sold three residential properties consisting of five rental units for gross proceeds of $295,000 and net proceeds of $113,734. This compares to their carrying value of $237,273, which resulted in a net gain of $57,727.

During the period ended June 27, 2019, an impairment adjustment of $126,827 was recorded on a commercial warehouse held for resale in order to properly reflect market value at that time. During the year ended December 31, 2018, an impairment adjustment of $964,743 was recorded to real estate held for resale through Mt Melrose, LLC in order to properly reflect market value for those properties held at the end of the year. This adjustment was the result of 62 properties being transitioned to “held for resale” from “held for investment” as part of a portfolio redirection intended to reduce high-interest debt.

Effective on June 27, 2019, the end of the consolidation period, the Company recognized a loss on the partial sale of Mt Melrose in the amount of $4,157,809, which has been reported separately on the accompanying consolidated statements of operations under the real estate segment for the year ended December 31, 2019. The amount of the loss is based upon the value of the Company’s remaining interest in the subsidiary, less the Company’s previous carrying value of the subsidiary.

As of December 31, 2018, units held for investment consisted of single-family and multi-family residential rental units. The leases in effect for the occupied Mt Melrose units as of December 31, 2018, were based on either annual or multi-year time periods. Month-to-month leases were reserved for special circumstances. Units held for resale consisted of single-family units, multi-family units, commercial properties, and undeveloped lots of land.

The consolidated Mt Melrose assets as of December 31, 2018, included the following units:

Mt Melrose	December 31, 2018
Units occupied or available for rent		98
Vacant units being prepared for rent		15
Total units - held for investment		113
Residential and commercial units		48
Vacant lots		9
Total units - held for resale		57

As of December 31, 2018, the Mt Melrose portfolio of properties was carried at the following amounts on the accompanying consolidated balance sheets:

Mt Melrose	December 31, 2018
Total real estate held for investment	$	9,049,945
Accumulated depreciation		(159,514	)
Real estate held for investment, net		8,890,431
Real estate held for resale	$	2,278,865

Additionally, during the year ended December 31, 2019, a commercial warehouse was sold for gross proceeds of $850,000. Net proceeds after closing costs and a promissory note payoff were $487,944. This resulted in a loss on the sale in the amount of $56,467. This loss is included in other expenses under the real estate segment for the year ended December 31, 2019.

The tables below provide a summary of income statement amounts over time. These figures are specific to the real estate segment as a whole and are presented for the annual and quarterly periods designated below. Revenue and expenses related to the Mt Melrose portfolio of properties are included through the consolidation period, which ended on June 27, 2019 with the Company’s majority equity sale of the entity.

Annual	Year Ended December 31, 2019			Year Ended December 31, 2018
Revenues	$	537,763		$	778,657
Cost of revenue		485,459			450,859
Operating expenses		338,025			920,309
Other income (expense)		(4,712,766	)		(1,416,257	)
Comprehensive income (loss)	$	(4,998,487	)	$	(2,008,768	)

Quarterly	December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
Revenues	$	117,299		$	19,359		$	218,599		$	182,506
Cost of revenue		127,433			30,753			164,130			163,143
Operating expenses		10,254			11,827			211,536			104,408
Other income (expense)		(4,179	)		(13,709	)		(4,566,752	)		(128,126	)
Comprehensive income (loss)	$	(24,567	)	$	(36,930	)	$	(4,723,819	)	$	(213,171	)

For the quarters ended September 30 and June 30, 2019, the Company previously reported the net loss recognized on the sale of our controlling interest in our Mt Melrose subsidiary as an other expense under Other Operations. As of December 31, 2019, the Company has found it appropriate to report this loss under the Real Estate segment. For all reported segment activity, this reclassification has been made as of June 30, 2019. The loss on the sale continues to show separately on the consolidated statements of operations for the year ended December 31, 2019. Additionally, an entry has been made to combine the deconsolidation activity previously reported on the consolidated statements of stockholders’ equity, in the amount of $638,749, with the net loss on the sale reported on the statements of operations for the period ended June 30, 2019. Total ending stockholder’s equity for the period ended June 30, 2019, remains unchanged.

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Internet Operations

As of December 31, 2019, the focus of our internet segment is to generate cash flow, work to make our costs variable, and reinvest in our operations when an acceptable return is available. We did not make significant reinvestments into the internet segment during the year ended December 31, 2019.

Revenue attributed to the internet segment during the year ended December 31, 2019, totaled $1,066,229 and cost of revenue totaled $330,654. Operating expenses for the segment totaled $223,118 for the year ended December 31, 2019, and other income totaled $10,169. Accumulated other comprehensive loss related to the recognition of foreign currency translation adjustments totaled $3,054. Total comprehensive income for the internet segment was $519,572 for the year ended December 31, 2019. This compares to the year ended December 31, 2018, when revenue totaled $1,168,843, cost of revenues totaled $325,234, operating expenses were $241,654, other income was $35,649, and comprehensive income was $637,604. Other income in 2018 for the segment is the result of the sale of various blocks of IP addresses.

Management is currently identifying the market value for domain names owned by the Company in order to assess potential income opportunities. Management evaluates these domain names for third-party sales potential, as well as for other marketing opportunities that could generate new revenue from current customers who utilize the domains.

As of December 31, 2019, we have a total of 7,466 customer accounts across the U.S. and Canada. This compares to the year ended December 31, 2018, when we had a total of 8,058 customer accounts. As of December 31, 2019, approximately 64% of our internet segment revenue is driven by internet access services, with the remaining 36% being earned though web hosting and other web-based storage services.

Approximately 92% of our customer accounts are U.S.-based, while 8% are Canada-based. Revenue generated by our U.S. customers totaled $1,011,407 and revenue generated by our Canadian customers totaled $54,822 during the year ended December 31, 2019. This compares to revenue generated by our U.S. customers of $1,101,999 and revenue generated by our Canadian customers of $66,844 during the year ended December 31, 2018.

The tables below provide a summary of income statement amounts over time. These figures are specific to the internet segment and are presented for the annual and quarterly periods designated below.

Annual	Year Ended December 31, 2019			Year Ended December 31, 2018
Revenues	$	1,066,229		$	1,168,843
Cost of revenue		330,654			325,234
Operating expenses		223,118			241,654
Other income (expense)		10,169			35,649
Other comprehensive income (loss)		(3,054	)		—
Comprehensive income (loss)	$	519,572		$	637,604

Quarterly	December 31, 2019			September 30, 2019		June 30, 2019		March 31, 2019
Revenues	$	260,239		$	265,171	$	265,917	$	274,902
Cost of revenue		76,281			83,517		83,243		87,613
Operating expenses		57,646			43,168		59,035		63,269
Other income (expense)		5,852			384		3,541		392
Other comprehensive income (loss)		(3,054	)		—		—		—
Comprehensive income (loss)	$	129,110		$	138,870	$	127,180	$	124,412

Discontinued Operations - Home Services Operations

As noted previously, Specialty Contracting Group, LLC’s historical operations are now classified as “discontinued operations” in our consolidated financial statements, and all presented prior periods have also been reclassified to discontinued operations for comparability. The net loss reported from discontinued operations related to the home services segment, as of the year ended December 31, 2019, was $1,510,475. Included in this amount is an offsetting $21,629 loss recovery on discontinued operations that represents royalties earned in accordance with the Rooter Hero royalty arrangement mentioned previously. This compares to the net loss of $915,163 reported from discontinued operations related to the home services segment for the year ended December 31, 2018.

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Other Operations

For the year ended December 31, 2019, our other operations segment produced $212,631 of revenue related to a realized gain on the Huckleberry Real Estate Fund. Our other operations produced no cost of goods sold. Operating expenses totaled $1,101,098 and other expenses were $96,551 for the year ended December 31, 2019. The other expenses are primarily related to a realized gain on the sale of Triad Guaranty, Inc. stock. Corporate operating expenses accounted for the full $1,101,098 of reported operating expenses for our other operations. This resulted in a net loss of $791,916 for the year ended December 31, 2019. This compares to revenue of $160,492, cost of revenue of $202,533, operating expenses of $875,527, and other income produced of $2,673 for the year ended December 31, 2018. Corporate expenses totaled $858,327, and the other segment recorded a total net loss of $914,895 for the year ended December 31, 2018. Corporate expenses are higher for the year ended December 31, 2019 primarily due to additional legal fees related to ongoing litigation but were also offset by a decrease in payroll expenses, consulting expenses, and travel expenses.

The carrying value of the Huckleberry Real Estate Fund investment is included under other operations in the accompanying consolidated balance sheets. As of December 31, 2019, and December 31, 2018, the carrying value for this investment is $0 and $468,750, respectively. The decrease in carrying value period over period was due to return of capital that was received prior to June 30, 2019. During the quarter ended March 31, 2019, a gain of $212,631 was recognized as revenue through other segments on the accompanying consolidated statements of operations.

The tables below provide a summary of income statement amounts over time. These figures are specific to other business segments, including corporate and various other investments, and are presented for the annual and quarterly periods designated below.

Annual	Year Ended December 31, 2019			Year Ended December 31, 2018
Revenues	$	212,631		$	160,492
Cost of revenue		—			202,533
Operating expenses		1,101,098			875,527
Other income (expense)		96,551			2,673
Comprehensive income (loss)	$	(791,916	)	$	(914,895	)

Quarterly	December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
Revenues	$	—		$	—		$	—		$	212,631
Cost of revenue		—			—			—			—
Operating expenses		459,624			141,270			305,284			194,920
Other income (expense)		79,876			20,249			(7,471	)		3,897
Comprehensive income (loss)	$	(379,748	)	$	(121,021	)	$	(312,755	)	$	21,608

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This item is not required by smaller reporting companies.

ITEM 8. FINANCIAL STATEMENTS

The information required by this Item 8 may be found immediately after the signatures to this report and is incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

As previously reported in our Current Report on Form 8-K filed with the SEC on July 15, 2019, on July 10, 2019, the Company formally engaged Brown Edwards & Company, LLP to serve as the Company’s independent registered public accounting firm for the year ending December 31, 2019. Prior to this time, Cherry Bekaert, LLP had been appointed as the Company’s independent registered public accounting firm for the year ending December 31, 2019, having served as the Company’s independent registered public accounting firm since 2016. There has been no other change in the independent accountants engaged to audit the financial statements of the Company and its subsidiaries during the last two fiscal years ended December 31, 2019, and there have been no disagreements with such independent accountants during the last two fiscal years ended December 31, 2019, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of our principal executive officer and principal financial officer, have evaluated the effectiveness of the design and operation of our “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of December 31, 2019. Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures. Based upon this evaluation, and based upon material weaknesses in our internal control over financial reporting identified as of the date of our most recent evaluation of internal controls over financial reporting, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of December 31, 2019.

Management’s Report on Internal Control over Financial Reporting

The management of Enterprise Diversified, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of our consolidated financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements. Under the supervision and with the participation of our management, including our Executive Chairman and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on criteria established in the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included evaluation of such elements as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment. Based on this evaluation, our management concluded that, as of December 31, 2019, our internal control over financial reporting was not effective based on such criteria. We have reviewed the results of management’s assessment with our Board of Directors. In addition, we will evaluate any changes to our internal control on a quarterly basis to determine if a material change occurred.

Material Weaknesses in Internal Controls

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements would not be prevented or detected on a timely basis.

As a result of our evaluations, we identified the following material weakness in our internal control over financial reporting as of December 31, 2019:

We have not properly designed internal controls over the preparation of our financial statements. We have incorporated consultants, new hires, and review processes to alleviate some of the associated risks of segregation of duties and financial reporting matters; however, formal and consistent policies and procedures, as well as complete control documentation for all significant financial reporting areas, have not been prepared or implemented.

Changes in Our Internal Controls

During the year ended December 31, 2019, the Company hired a new Vice President of Operations in order to build out new company processes and optimize existing company procedures. Additionally, this role is intended to create a dedicated operational manager across each of the business segments. As a result, corporate management has greater visibility over financial transactions and internal control processes.

During the previous year ended December 31, 2018, the Company had separated the Chief Executive Officer and Chief Financial Officer roles to allow for more specific focus on the Company’s operational and financial needs. Additionally, the Company had hired a new Vice President and Chief of Staff to enhance management’s oversight and further segregate management roles and responsibilities. The Company also had hired an additional accountant at the corporate level in order to add additional layers of internal review and provide segregation of accounting and financial reporting roles and responsibilities.

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ITEM 9B. OTHER INFORMATION

Specialty Contracting Group, LLC

On October 22, 2019, the Company, as and being the sole and managing member of Specialty Contracting Group, LLC, resolved to dissolve and wind up Specialty Contracting Group and proceed with distributing its assets in accordance with §18-804 of the Delaware Limited Liability Company Act. Management had determined that Specialty Contracting Group’s continued existence was not reasonably practicable or financially feasible; the entity having no operational capabilities, no significant assets, and no prospects for the carrying on of any business or receipt of revenue. All of Specialty Contracting Group’s cash on hand was paid out ratably to its creditors and claimants; however, its assets were not sufficient to satisfy in full its known liabilities. After making such payments out of and to the extent of its assets, Specialty Contracting Group filed a Certificate of Cancellation with the Secretary of State of the State of Delaware on November 15, 2019, thereby effecting the cancellation and termination of the entity.

Reverse Stock Split

As previously reported in our Current Report on Form 8-K filed with the SEC on June 7, 2018, the Board of Directors of the Company previously approved, on March 29, 2018, a reverse stock split of all of the Company’s Common Stock, pursuant to which every 125 shares of Common Stock of the Company were reverse split, reconstituted, and converted into one (1) share of Common Stock of the Company (the “Reverse Stock Split”). To effectuate the aforesaid Reverse Stock Split, the Company previously filed on May 23, 2018, a Certificate of Change Pursuant to Nevada Revised Statutes (“NRS”) Section 78.209 (the “Certificate of Change”) with the Secretary of State of the State of Nevada, with a specified effective filing date of June 1, 2018.

The Company submitted an Issuer Company Related Action Notification regarding the Reverse Stock Split to the Financial Industry Regulatory Authority (“FINRA”) on May 22, 2018. FINRA declared the Reverse Stock Split effective in the marketplace July 23, 2018 (the “FINRA Effective Date”). Accordingly, while the Certificate of Change became effective under Nevada state corporate law on June 1, 2018, the Reverse Stock Split did not become effective as to shareholders or the marketplace until the FINRA Effective Date.

Split Adjustment

On the FINRA Effective Date, the total number of shares of the Company’s Common Stock held by each stockholder converted automatically into the number of whole shares of Common Stock equal to (i) the number of shares of Common Stock held by such stockholder immediately prior to the Reverse Stock Split, divided by (ii) one hundred twenty five (125). No fractional shares were issued, and no cash or other consideration was paid. Rather, any fraction of a share of Common Stock that otherwise would have resulted from the Reverse Stock Split were rounded up to the next whole share of Common Stock. That is, stockholders who otherwise would have been entitled to receive fractional shares because they held a number of pre-Reverse Stock Split shares of the Company’s Common Stock not evenly divisible by one hundred twenty five (125), had the number of post-Reverse Stock Split shares of the Company’s Common Stock to which they were entitled rounded up to the next whole number of shares of the Company’s Common Stock. Stockholders’ equity and all references to share and per-share amounts in this annual report on Form 10-K and in the accompanying consolidated financial statements have been retroactively adjusted to reflect the Reverse Stock Split for all periods presented.

Ownership Unchanged

Immediately after the Reverse Stock Split, each stockholder’s percentage ownership interest in the Company and proportional voting power remained unchanged except for minor adjustments resulting from the Company’s election to round up any fraction of a share of Common Stock that otherwise would have resulted from the Reverse Stock Split. The rights and privileges of the holders of shares of Common Stock of the Company were substantially unaffected by the Reverse Stock Split.

Capitalization

Immediately prior to the Certificate of Change becoming effective, the aggregate number of shares which the Company had the authority to issue was three hundred fifty million (350,000,000) shares of Common Stock at $.001 par value, and thirty million (30,000,000) shares of Serial Preferred Stock at $.001 par value. As a result of the Certificate of Change and Reverse Stock Split, the aggregate number of shares which the Company has the authority to issue is two million eight hundred thousand (2,800,000) shares of Common Stock at $.125 par value, and thirty million (30,000,000) shares (unchanged) of Serial Preferred Stock at $.001 par value. 

16

PART III

We expect to file with the SEC in April 2020 (and, in any event, not later than 120 days after the close of our last fiscal year), a definitive Proxy Statement, pursuant to SEC Regulation 14A in connection with our annual meeting of stockholders scheduled to be held on May 28, 2020.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The information required by this item is incorporated herein by reference from the Company’s definitive Proxy Statement for the 2020 annual meeting of stockholders under the sections entitled “Information with Respect to Nominees,” “Management,” and “Corporate Governance.”

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by reference from the Company’s definitive Proxy Statement for the 2020 annual meeting of stockholders under the section entitled “Executive Compensation.”

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item is incorporated herein by reference from the Company’s definitive Proxy Statement for the 2020 annual meeting of stockholders under the sections entitled “Security Ownership of Directors and Executive Officers” and “Information as to Certain Stockholders.”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated herein by reference from the Company’s definitive Proxy Statement for the 2020 annual meeting of stockholders under the sections entitled “Determinations Regarding Independence” and “Transactions with Related Persons.”

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item is incorporated herein by reference from the Company’s definitive Proxy Statement for the 2020 annual meeting of stockholders under the section entitled “Proposal 4. Ratification of the Selection of Independent Registered Public Accounting Firm.”

17

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements – Contained in Item 8:

	Page
Reports of Independent Registered Public Accounting Firms	22
Consolidated Balance Sheets – December 31, 2019 and 2018	23
Consolidated Statements of Operations – Years Ended December 31, 2019 and 2018	24
Consolidated Statements of Comprehensive Income – Years Ended December 31, 2019 and 2018	25
Consolidated Statements of Changes in Stockholders’ Equity – Years Ended December 31, 2019 and 2018	26
Consolidated Statements of Cash Flows – Years Ended December 31, 2019 and 2018	27
Notes to Consolidated Financial Statements	29

18

(b) Exhibits – The following exhibits are filed as part of this Annual Report on Form 10-K or are incorporated herein by reference:

Exhibit	Description
3.1(i)	Articles of Incorporation of the Registrant (December 17, 1992) (a)
3.1(ii)	Amended Articles of Incorporation (July 29, 1998) (a)
3.1(iii)	Amended Articles of Incorporation (October 26, 1998) (a)
3.1(iv)	Amended Articles of Incorporation (July 14, 1999) (a)
3.1(v)	Amended Articles of Incorporation (July 28, 1999) (a)
3.1(vi)	Certificate of Amendment to the Articles of Incorporation (January 23, 2018) (f)
3.1(vii)	Certificate of Change Pursuant to Nevada Revised Statutes Section 78.209 (June 1, 2018) (l)
3.1(viii)	Certificate of Amendment to the Articles of Incorporation (June 1, 2018) (m)
3.2(i)	Bylaws of the Registrant (December 17, 1992) (a)
3.2(ii)	Amended Bylaws of the Registrant (January 28, 2015) (b)
10.1	Limited Partnership Agreement of Alluvial Fund, LP dated as of January 1, 2017, and entered into by Willow Oak Asset Management, LLC on December 27, 2016 (c)
10.2	Side Letter Agreement dated December 28, 2016, by and between Willow Oak Asset Management, LLC and Alluvial Capital Management, LLC (for itself and on behalf of Alluvial Fund, LP) (d) *
10.3	Form of Sitestar Corporation Private Placement Subscription Agreement (e)
10.4	Master Real Estate Asset Purchase Agreement by and between Sitestar Corporation and Mt. Melrose, LLC, dated December 10, 2017 (p)
10.5	Cash Flow Agreement by and between Mt Melrose, LLC, d.b.a. Mt Melrose II, LLC and Mt. Melrose, LLC, dated January 10, 2018 (o)
10.6	Form of Sitestar Corporation Private Placement Subscription Agreement (g)
10.7	Limited Liability Company Operating Agreement of Huckleberry Real Estate Fund II, LLC dated as of January 24, 2017 and entered into by Willow Oak Asset Management, LLC on January 24, 2017 (h)
10.8	Side Letter Agreement dated January 23, 2017 by and between Willow Oak Asset Management, LLC and Huckleberry Capital Management, LLC (for itself and on behalf of Huckleberry Real Estate Fund II, LLC) (i)
10.9	Employment Agreement dated January 25, 2017 by and between Sitestar Corporation and Tabitha Keatts (j)
10.10	Amendment to Alluvial Side Letter Agreement (December 15, 2017) (k)
10.11	Employment Agreement effective as of October 5, 2018 by and between the Registrant and Alea A. Kleinhammer (n)
10.12	Amended and Restated Limited Liability Company Agreement of Mt Melrose, LLC dated June 27, 2019 (r)
16.1	Letter of Cherry Bekaert, LLP dated July 15, 2019 (q)
21	List of Subsidiaries **
31.1	Certification of Principal Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a) **
31.2	Certification of Principal Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a) **
32	Certification Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **
99.1	Enterprise Diversified, Inc. 2020 Equity Incentive Plan**

19

Exhibit

Description

101

Pursuant to Rule 405 of Regulation S-T, the following materials from Enterprise Diversified Inc.’s Annual Report on Form 10-K for the year ended December 31, 2019, and the year ended December 31, 2018, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets as of December 31, 2019 and 2018; (ii) Consolidated Statements of Operations for the Years ended December 31, 2019 and 2018; (iii) Consolidated Statements of Cash Flows for the Years ended December 31, 2019 and 2018 (iv) Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 2019 and 2018; (v) Notes to Consolidated Financial Statements

(a) Filed as an exhibit to the Registrant’s Form-10SB, as amended, initially filed with the Securities and Exchange Commission on October 22, 1999, and incorporated herein by reference.

(b) Filed as an exhibit to Registrant’s Form 8-K filed with the Securities and Exchange Commission on January 28, 2015, and incorporated herein by reference.

(c) Filed as Exhibit 10.1 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on December 30, 2016, and incorporated herein by reference.

(d) Filed as Exhibit 10.2 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on December 30, 2016, and incorporated herein by reference.

(e) Filed as Exhibit 10.1 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on November 9, 2016, and incorporated herein by reference.

(f) Filed as Exhibit 3.1 to Registrant’s Form 8-K Amendment No. 1 filed with the Securities and Exchange Commission on January 24, 2018, and incorporated herein by reference.

(g) Filed as Exhibit 10.1 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on February 6, 2017, and incorporated herein by reference.

(h) Filed as Exhibit 10.1 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on January 30, 2017, and incorporated herein by reference.

(i) Filed as Exhibit 10.2 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on January 30, 2017, and incorporated herein by reference.

(j) Filed as Exhibit 10.2 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on January 26, 2017, and incorporated herein by reference.

(k) Filed as Exhibit 10.13 to Registrant’s Form 10-K for the fiscal year ended December 31, 2017, filed with the Securities and Exchange Commission on March 30, 2018, and incorporated herein by reference.

(l) Filed as Exhibit 3.1 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on June 7, 2018, and incorporated herein by reference.

(m) Filed as Exhibit 3.2 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on June 7, 2018, and incorporated herein by reference.

(n) Filed as Exhibit 10.12 to Registrant’s Form 10-K for the fiscal year ended December 31, 2018, filed with the Securities and Exchange Commission on April 1, 2019, and incorporated herein by reference.

(o) Filed as Exhibit 10.6 to Registrant’s Form 10-K for the fiscal year ended December 31, 2017, filed with the Securities and Exchange Commission on March 30, 2018, and incorporated herein by reference.

(p) Filed as Exhibit 10.5 to Registrant’s Form 10-K for the fiscal year ended December 31, 2017 filed with the Securities and Exchange Commission on March 30, 2018, and incorporated herein by reference.

(q) Filed as Exhibit 16.1 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on July 15, 2019, and incorporated herein by reference.

(r) Filed as Exhibit 10.1 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on July 3, 2019, and incorporated herein by reference.

* Pursuant to a request for confidential treatment, portions of this Exhibit have been redacted from the publicly filed document and have been furnished separately to the Securities and Exchange Commission as required by Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

** Filed herewith

ITEM 16. FORM 10-K SUMMARY

None.

20

SIGNATURES

Pursuant to the requirements of Sections 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.

ENTERPRISE DIVERSIFIED, INC.

(REGISTRANT)

Date: March 30, 2020	By:	/s/Steven L. Kiel
		Steven L. Kiel
		Executive Chairman
		(Principal Executive Officer)
Date: March 30, 2020	By:	/s/Alea A. Kleinhammer
		Alea A. Kleinhammer
		Chief Financial Officer
		(Principal Financial Officer)

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.

Date: March 30, 2020	By:	/s/Steven L. Kiel
		Steven L. Kiel
		Executive Chairman
		(Principal Executive Officer)
Date: March 30, 2020	By:	/s/Alea A. Kleinhammer
		Alea A. Kleinhammer
		Chief Financial Officer
		(Principal Financial Officer)
Date: March 30, 2020	By:	/s/Jeremy K. Deal
		Jeremy K. Deal
		Vice-Chairman
Date: March 30, 2020	By:	/s/Keith D. Smith
		Keith D. Smith
		Director
Date: March 30, 2020	By:	/s/Thomas Braziel
		Thomas Braziel
		Director

21

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Enterprise Diversified, Inc.

Richmond, Virginia

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Enterprise Diversified, Inc. and subsidiaries (the “Company”) as of December 31, 2019, and the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for the year ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for the year ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Emphasis of Matters

As discussed in Note 3 of the Notes to Consolidated Financial Statements, the Company entered into a sales agreement to transfer all of the personal property and customer lists and records, and certain other assets and liabilities of Specialty Contracting Group, LLC (formerly known as HVAC Value Fund, LLC) to a third party. The total loss on disposal of $1,158,732, and associated current operating results, has been reported on the Income (loss) from discontinued operations line of the Company’s consolidated statements of operations for the year ended December 31, 2019. In addition, the current and non-current assets and liabilities previously related to Specialty Contracting Group, LLC have been reclassified to the appropriate held for sale categories on the Company’s consolidated balance sheets. Our opinion is not modified with respect to this matter.

As discussed in Note 4 of the Notes to Consolidated Financial Statements, the Company sold 65% of its membership interest in Mt Melrose, LLC to a third party. The total loss on the sale of Mt Melrose LLC of $4,157,809 has been reported on the Loss on sale of subsidiary line of the Company’s consolidated statements of operations for the year ended December 31, 2019. Our opinion is not modified with respect to this matter.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated 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 audit included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Brown, Edwards & Company, L.L.P.

We have served as the Company’s auditor since 2019.

Lynchburg, Virginia

March 30, 2020

22

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Enterprise Diversified, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Enterprise Diversified, Inc. (the “Company”) as of December 31, 2018, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for the year then ended, 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, 2018, and the results of its operations and its cash flows for the year 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 audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit 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 audit 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 audit 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 audit provide a reasonable basis for our opinion.

/s/ Cherry Bekaert LLP

We have served as the Company’s auditor from 2016 through 2018.

Charlotte, North Carolina

April 1, 2019

23

ENTERPRISE DIVERSIFIED, INC.

And Subsidiaries

CONSOLIDATED BALANCE SHEETS

December 31, 2019 and 2018

	December 31, 2019			December 31, 2018
Assets
Current Assets
Cash and cash equivalents	$	666,810		$	435,726
Accounts receivable, net		52,889			58,263
Inventory		—			120,940
Other current assets		29,555			95,095
Current assets - held for resale		428			232,363
Total current assets		749,682			942,387
Long-term Assets
Real estate - held for investment, net		380,515			9,492,877
Real estate - held for resale		98,910			2,318,912
Property and equipment, net		17,753			1,019,742
Property and equipment - held for resale		—			73,212
Goodwill, net		212,445			212,445
Note receivable		195,121			169,406
Long-term investments, at fair value or net asset value		10,126,204			8,915,238
Lease right-of-use assets		45,056			—
Other assets		73,958			74,664
Long-term assets - held for resale		—			1,300,569
Total long-term assets		11,149,962			23,577,065
Total assets	$	11,899,644		$	24,519,452
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	157,934		$	165,495
Accrued bonus		175,259			90,444
Accrued expenses		23,115			112,983
Accrued interest		—			134,623
Deferred revenue		204,960			210,212
Lease liability, current		46,435			—
Notes payable, current		11,453			1,002,965
Other current liabilities - held for resale		146,958			317,487
Total current liabilities		766,114			2,034,209
Long-term Liabilities
Notes payable, net of current portion		499,572			6,518,854
Other long-term liabilities - held for resale		—			50,738
Total long-term liabilities		499,572			6,569,592
Total liabilities		1,265,686			8,603,801
Stockholders’ Equity
Preferred stock, $0.001 par value, 30,000,000 shares authorized; none issued		—			—
Common stock, $0.125 par value, 2,800,000 shares authorized; 2,566,646 and 2,625,282 shares issued; 2,566,646 and 2,544,776 shares outstanding		320,831			328,160
Additional paid-in capital		27,313,734			27,718,308
Treasury stock, at cost, 0 and 80,506 common shares		—			(511,901	)
Accumulated other comprehensive income		—			3,054
Accumulated deficit		(17,000,607	)		(11,621,970	)
Total stockholders’ equity		10,633,958			15,915,651
Total liabilities and stockholders’ equity	$	11,899,644		$	24,519,452

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

24

ENTERPRISE DIVERSIFIED, INC.

and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended			Year Ended
	December 31, 2019			December 31, 2018
Revenues - asset management	$	1,773,276		$	(775,249	)
Revenues - real estate		537,763			778,657
Revenues - internet operations		1,066,229			1,168,843
Revenues - other		212,631			160,492
Total revenues		3,589,899			1,332,743
Cost of revenues - real estate		485,459			450,859
Cost of revenues - internet operations		330,654			325,234
Cost of revenues - other		—			202,533
Total cost of revenues		816,113			978,626
Gross profit (loss) - asset management		1,773,276			(775,249	)
Gross profit - real estate		52,304			327,798
Gross profit - internet operations		735,575			843,609
Gross profit (loss) - other		212,631			(42,041	)
Total gross profit		2,773,786			354,117
Selling, general, and administrative expenses
Insurance		94,785			166,013
Professional fees		726,274			617,451
Salaries and wages		786,797			1,086,424
Travel and meals		34,732			66,736
Other operating expenses		429,879			387,149
Total selling, general and administrative expenses		2,072,467			2,323,773
Income (loss) from operations		701,319			(1,969,656	)
Impairment expense		(199,626	)		(964,743	)
Interest expense		(312,745	)		(539,263	)
Investment income		92,594			—
Loss on sale of subsidiary		(4,157,809	)		—
Other income (loss), net		8,105			167,703
Total other income (loss)		(4,569,481	)		(1,336,303	)
Income (loss) from continuing operations before income taxes		(3,868,162	)		(3,305,959	)
Income tax benefit (expense)		—			—
Income (loss) from continuing operations		(3,868,162	)		(3,305,959	)
Income (loss) from discontinued operations, net of taxes		(1,510,475	)		(915,163	)
Net income (loss)		(5,378,637	)		(4,221,122	)
Less: net income (loss) attributable to the noncontrolling interest		—			(380,437	)
Net income (loss) attributable to Enterprise Diversified, Inc. stockholders	$	(5,378,637	)	$	(3,840,685	)
Net income (loss) per share, basic and diluted		(2.11	)		(1.56	)
Net income (loss) per share from continuing operations, basic and diluted		(1.52	)		(1.34	)
Net income (loss) per share from discontinued operations, basic and diluted		(0.59	)		(0.37	)
Weighted average number of shares, basic		2,544,896			2,461,428
Weighted average number of shares, diluted		2,614,896			2,461,428

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

25

ENTERPRISE DIVERSIFIED, INC.

and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Year Ended			Year Ended
	December 31, 2019			December 31, 2018
Net income (loss)	$	(5,378,637	)	$	(4,221,122	)
Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustments		(3,054	)		—
Comprehensive income (loss)		(5,381,691	)		(4,221,122	)
Less: comprehensive loss attributable to the noncontrolling interest		—			(380,437	)
Comprehensive income (loss) attributable to Enterprise Diversified, Inc. stockholders	$	(5,381,691	)	$	(3,840,685	)

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

26

ENTERPRISE DIVERSIFIED, INC.

and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

						Additional						Accumulated Other								Total
	Common					Paid-in			Treasury			Comprehensive			Accumulated			Noncontrolling		Stockholders’
	Stock		Amount			Capital			Stock			Income			Deficit			Interest		Equity
Balance December 31, 2018		2,544,776	$	328,160		$	27,718,308		$	(511,901	)	$	3,054		$	(11,621,970	)	$	—	$	15,915,651
Net income (loss)		—		—			—			—			—			(5,378,637	)		—		(5,378,637	)
Stock issuance		21,870		2,734			97,264			—			—			—			—		99,998
Cancellation of treasury stock		—		(10,063	)		(501,838	)		511,901			—			—			—		—
Foreign currency translation reclassification to current earnings		—		—			—			—			(3,054	)		—			—		(3,054	)
Balance December 31, 2019		2,566,646	$	320,831		$	27,313,734		$	—		$	—		$	(17,000,607	)	$	—	$	10,633,958

					Additional						Accumulated Other								Total
	Common				Paid-in			Treasury			Comprehensive		Accumulated			Noncontrolling			Stockholders’
	Stock		Amount		Capital			Stock			Income		Deficit			Interest			Equity
Balance December 31, 2017		2,262,672	$	294,527	$	23,538,493		$	(544,571	)	$	3,054	$	(7,400,848	)	$	—		$	15,890,655
Net income (loss)		—		—		—			—			—		(3,840,685	)		(380,437	)		(4,221,122	)
Contributed capital		268,760		33,595		4,032,240			—			—		—			—			4,065,835
Initial accounting of VIE		—		—		—			—			—		—			4,047,623			4,047,623
Net equity distribution for asset acquisition		—		—		—			—			—		—			(3,878,025	)		(3,878,025	)
Adjustment for rounding of reverse stock split		276		38		(38	)		—			—		—			—			—
Sale of treasury stock		13,068		—		147,613			32,670			—		—			—			180,283
Effects of deconsolidation with noncontrolling interest		—		—		—			—			—		(380,437	)		210,839			(169,598	)
Balance December 31, 2018		2,544,776	$	328,160	$	27,718,308		$	(511,901	)	$	3,054	$	(11,621,970	)	$	—		$	15,915,651

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

27

ENTERPRISE DIVERSIFIED, INC.

and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2019 and 2018

	2019			2018
Cash flows (used in) from operating activities:
Net income (loss) from continuing operations		(3,868,162	)		(3,305,959	)
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Deconsolidation of assets and liabilities from sale of subsidiary		(149,425	)		275,740
Loss on sale of subsidiary		4,157,809			—
Impairment of long-term assets		154,015			1,028,781
Depreciation and amortization		161,130			245,764
(Gain) loss on long-term investments		(1,820,074	)		834,014
Bad debt expense		88,511			32,803
Collection of operating notes receivable		—			226,000
(Gain) loss on sale of real estate		(73,399	)		(50,694	)
(Gain) loss on disposal of property and equipment		4,088			5,171
(Gain) on foreign currency reclassification		(3,054	)		—
(Increase) decrease in:
Accounts receivable, net		(32,614	)		(121,750	)
Inventory		4,160			(120,940	)
Other current assets		(10,980	)		(9,027	)
Notes receivable		(15,715	)		—
Other assets		—			3,508
Increase (decrease) in:
Accounts payable		1,976			(106,087	)
Accrued expenses		33,303			(75,613	)
Deferred revenue		(5,252	)		(102,902	)
Accrued interest		103,909			134,623
Net cash flows (used in) from continuing operations		(1,269,774	)		(1,106,568	)
Net cash flows (used in) from discontinued operations		(66,595	)		400,536
Net cash flows (used in) operating activities		(1,336,369	)		(706,032	)
Cash flows from (used in) investing activities:
Proceeds from sale of investments		35,515			281,250
Proceeds from maturity of investments		681,381			—
Purchases of investments		(53,942	)		(21,600	)
Proceeds from sale of real estate		1,774,317			194,282
Purchases of real estate		—			(459,544	)
Improvements to real estate		(105,186	)		(1,707,080	)
Proceeds from sale of subsidiary		100,000			—
Proceeds from sale of property and equipment		—			5,623
Issuance of line of credit		(10,000	)		—
Issuance of notes receivable		—			(169,406	)
Purchases of property and equipment		—			(1,003,131	)
Subsidiary acquisitions		—			(552,644	)
Net cash flows from (used in) continuing operations		2,422,085			(3,432,250	)
Net cash flows from (used in) discontinued operations		—			1,950
Net cash flows from (used in) investing activities		2,422,085			(3,430,300	)
Cash flows from financing activities:
Principal payments on note payable		(1,121,987	)		(399,347	)
Proceeds from notes payable		300,000			1,775,746
Proceeds from issuance of common stock		—			180,283
Capitalized loan fees		—			(10,591	)
Net cash flows (used in) from continuing operations		(821,987	)		1,546,091
Net cash flows (used in) from discontinued operations		(32,645	)		(271,092	)
Net cash flows (used in) from financing activities		(854,632	)		1,274,999
Net increase (decrease) in cash		231,084			(2,861,333	)
Cash and cash equivalents at beginning of the period		435,726			3,297,059
Cash and cash equivalents at end of the period	$	666,810		$	435,726

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

28

ENTERPRISE DIVERSIFIED, INC.

and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

Years Ended December 31, 2019 and 2018

	2019		2018
Non-cash and other supplemental information:
Transfer of property, plant, and equipment held for use to held for resale	$	822,829	$	73,212
Transfer of land to held for investment	$	145,000	$	—
Transfer of real estate held for investment to held for resale	$	193,835	$	2,468,969
Repayment of loan via issuance of common stock	$	100,000	$	—
Effects of adoption of new lease guidance	$	46,435	$	—
Continuing operations cash paid for interest	$	312,745	$	539,263
Discontinued operations cash paid for interest	$	7,754	$	12,943
Effects of adoption of new lease guidance on discontinued operations	$	50,110	$	—
Assumption of debt in subsidiary acquisition	$	—	$	4,565,277
Asset acquisition equity activity	$	—	$	4,065,835
Real estate held for investment and land acquired through debt obligations	$	—	$	1,435,043
Equipment acquired through debt obligations of discontinued operations	$	—	$	60,752

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

29

ENTERPRISE DIVERSIFIED, INC.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization and Lines of Business

Enterprise Diversified, Inc. (formerly White Dove Systems, Inc., Interfoods Consolidated, Inc., and then Sitestar Corporation) was incorporated in Nevada on December 17, 1992. On June 1, 2018, the Company amended its Articles of Incorporation to change the name of the Company to “Enterprise Diversified, Inc.” Unless the context otherwise requires, and when used in this Report, the “Company,” “ENDI,” “we,” “our,” or “us” refers to Enterprise Diversified, Inc. and its subsidiaries.

During the year ended December 31, 2019, the Company operated through five reportable segments: Asset Management Operations, Real Estate Operations, Internet Operations, Home Services Operations, and Other Operations. Other Operations include corporate operations and nonrecurring or one-time strategic funding or similar activity that is not considered to be one of our primary lines of business. As of January 1, 2019, legacy real estate operations, previously reported under Other Operations, are being reported under the Real Estate Operations segment. As of the year ended December 31, 2019, and for all prior periods presented, Home Services Operations are reported as discontinued operations. The management of the Company also continually reviews various business opportunities for the Company, including those in other lines of business.

Note Regarding Recent Transactions

On May 24, 2019, as per the Current Report on Form 8-K filed with the SEC on May 28, 2019, the Company completed a divestiture of its Home Services Operations, via its subsidiary, Specialty Contracting Group, LLC (formerly known as HVAC Value Fund, LLC), to an unaffiliated third-party purchaser, Rooter Hero Plumbing, Inc. (“Rooter Hero”). In the transaction, the Company sold and conveyed all of the subsidiary’s personal property and customer lists and records, excluding stock inventory and other current assets. As part of the transaction, Rooter Hero assumed the subsidiary’s obligations under lease and/or loan agreements for all outstanding vehicles and equipment, as well as the obligations to service all of the subsidiary’s remaining customer accounts going forward. No cash consideration was exchanged in the transaction. As consideration for the transaction, Rooter Hero will pay monthly royalties for the sixty (60) months following the closing, calculated on the basis of any revenue received from the customer accounts transferred. Under such royalty arrangements, the Company will receive 7.5% of any monthly revenue generated from qualified sales during the first year, and 5% of any monthly revenue during years two through five. Royalties received will be reduced by pre-approved warranty-related costs for select customers. The operations of Specialty Contracting Group, LLC have been considered a component of, and the sale reflects a major strategic shift in, the Company’s business. As such, Specialty Contracting Group, LLC historical operations are now classified as “discontinued operations” in the Company’s financial statements. See Note 3 for more information.

Additionally, on June 27, 2019, as per the Current Report on Form 8-K filed with the SEC on July 3, 2019, the Company sold 65% of its membership interest in Mt Melrose, LLC to an unaffiliated third-party purchaser, Woodmont Lexington, LLC (“Woodmont”). As consideration for the transaction, Woodmont paid the Company $100,000 and agreed to assume full responsibility for the management and operation of Mt Melrose and its real estate portfolio. While the operations of Mt Melrose, LLC are considered a component of the Company’s business, the sale did not represent a major strategic shift in the Company’s business. While we deconsolidated the operations of Mt Melrose, LLC on June 27, 2019, as a result of no longer having a controlling financial interest, Mt Melrose, LLC’s historical operations continue to be reflected as “continuing operations” in the Company’s financial statements. See Note 4 for more information.

Note Regarding Historic Consolidation of Old Mt. Melrose

Previously, as of the quarterly periods ended March 31, 2018, June 30, 2018, and September 30, 2018, the Company had determined that Old Mt. Melrose (as defined below) was a “variable interest entity” because the seller’s equity interests in Old Mt. Melrose were not effective in determining whether the seller or New Mt Melrose (as defined below) had a controlling financial interest, and that New Mt Melrose’s rights under the Cash Flow Agreement were deemed to be variable interests in Old Mt. Melrose. As its primary beneficiary, New Mt Melrose previously consolidated Old Mt. Melrose’s financial results beginning on January 10, 2018. The fair values of the assets and liabilities of Old Mt. Melrose had been consolidated accordingly on the unaudited consolidated balance sheets for the quarterly periods ended March 31, 2018, June 30, 2018, and September 30, 2018.

However, as of November 1, 2018, pursuant to a certain Termination of Master Real Estate Asset Purchase Agreement and Cash Flow Agreement, New Mt Melrose no longer had a controlling financial interest in Old Mt. Melrose and was no longer considered Old Mt. Melrose’s primary beneficiary. Consequently, as of November 1, 2018, the Company no longer consolidates the assets, liabilities, or operating results of Old Mt. Melrose, and the balance of noncontrolling interest as of December 31, 2019 and 2018, is zero. See Note 5 for additional information.

Restatement of Prior Interim Period Information

For the quarters ended September 30 and June 30, 2019, the Company previously reported the net loss recognized on the sale of our controlling interest in our Mt Melrose subsidiary as an other expense under Other Operations. As of December 31, 2019, the Company has found it appropriate to report this loss under the Real Estate segment. For all reported segment activity, this reclassification has been made as of June 30, 2019. The loss on the sale continues to show separately on the consolidated statements of operations for the year ended December 31, 2019. Additionally, an entry has been made to combine the deconsolidation activity previously reported on the consolidated statements of stockholders’ equity, in the amount of $638,749, with the net loss on the sale reported on the statements of operations for the period ended June 30, 2019. Total ending stockholder’s equity for the period ended June 30, 2019, remains unchanged.

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Asset Management Operations

The Company operates its asset management operations business through Willow Oak.

In 2016, the Company made a strategic determination to fund a seed investment totaling $10 million through Willow Oak to assist in the launch of Alluvial Fund, LP, a private investment partnership that was launched on January 1, 2017 by unaffiliated sponsor and general partner, Alluvial Capital Management, LLC. The Company had determined that Willow Oak’s support of Alluvial Capital Management, LLC and its direct investment in Alluvial Fund were both beneficial and necessary undertakings in conjunction with establishing an asset management operations business and gaining credibility within that industry. Under a side letter agreement with Alluvial Fund’s general partner, Willow Oak agreed not to fully withdraw its capital account prior to a date five years after the effective date of the side letter agreement. However, on December 31, 2017, pursuant to an amendment to the side letter agreement dated December 15, 2017, the Company caused $3.0 million to be withdrawn from Alluvial Fund in order to partially fund the Company’s acquisitions of real estate in the 2018 Mt Melrose transactions. As of December 31, 2019, Willow Oak continues to hold its remaining direct investment in Alluvial Fund. Investment gains and losses are reported as revenue on the accompanying consolidated statements of operations.

In furtherance of establishing the asset management operations business, Willow Oak signed a fee share agreement on June 13, 2017, with Coolidge Capital Management, LLC (“Coolidge”), whose sole member is Keith D. Smith, who is also an ENDI director. Willow Oak is the sole member of Bonhoeffer Capital Management, LLC, the general partner to Bonhoeffer Fund, LP, a private investment partnership. Under their agreement, Willow Oak paid all start-up expense and pays agreed-upon operating expenses that are not partnership expenses, and Willow Oak receives 50% of all performance and management fees earned by the general partner.

On August 1, 2018, Willow Oak, through a wholly-owned Company subsidiary, Willow Oak Capital Management, LLC (“Willow Oak Capital Management”), launched a newly organized private investment partnership, Willow Oak Select Fund, LP (“Select Fund”). Willow Oak Capital Management served as the general partner of Select Fund. Select Fund ultimately dissolved in June 2019 so that other joint ventures and partnerships could be pursued.

On November 1, 2018, Willow Oak also entered into a fund management services agreement with Arquitos Investment Manager, LP, which is managed by our chairman and principal executive officer, Steven L. Kiel, to provide Arquitos with Willow Oak’s Fund Management Services (“FMS”) consisting of the following services: investor relations, marketing, administration, legal, accounting and bookkeeping, annual audit coordination, and liaison to third-party service providers. As consideration for the services, Arquitos pays Willow Oak a fixed fee and a performance-based fee.

On October 1, 2019, Willow Oak partnered with Geoff Gannon and Andrew Kuhn to form Focused Compounding Capital Management, LLC (“Focused Compounding”). This new joint venture, of which Willow Oak Capital Management, LLC is a 10% owner, manages capital through separately managed accounts and a private partnership launched January 1, 2020. As a member of the general partner, Willow Oak provides ongoing FMS and operational support in addition to covering all one-time expenses associated with the launch of Focused Compounding Fund, LP. As consideration for the arrangement, Willow Oak is entitled to 10% of gross management and performance fees earned by Focused Compounding. In addition to hosting a popular investing podcast, the individual principals of Focused Compounding share investment news and advice through a subscription-based service. 

Real Estate Operations

ENDI created a wholly-owned subsidiary named Mt Melrose, LLC, a Delaware limited liability company (“New Mt Melrose”), on December 14, 2017, to acquire a portfolio of residential and other income-producing real estate in Lexington, Kentucky, pursuant to a certain Master Real Estate Asset Purchase Agreement entered into on December 10, 2017, with a like-named seller, Mt. Melrose, LLC (“Old Mt. Melrose”), a Kentucky limited liability company owned by Jeff Moore, then an ENDI director. On January 10, 2018, New Mt Melrose, consistent with the terms of the purchase agreement, completed a first acquisition from Old Mt. Melrose of 44 residential and other income-producing real properties located in Lexington, Kentucky. On June 29, 2018, New Mt Melrose, consistent with the terms of the purchase agreement, completed a second acquisition from Old Mt. Melrose of an additional 69 residential and other income-producing real properties located in Lexington, Kentucky. The Company accounted for the first and second purchases of properties as an asset acquisition (consisting of a concentrated group of similar identifiable assets, including land, buildings, improvements, and in-place leases). As has been reported, on June 27, 2019, the Company sold 65% of its membership interest in New Mt Melrose, LLC to Woodmont. The Company deconsolidated the operations of New Mt Melrose, LLC on June 27, 2019, as a result of no longer having a controlling financial interest. See Notes 4 and 5 for more information.

ENDI created a wholly-owned real estate subsidiary on July 10, 2017, named EDI Real Estate, LLC, to hold ENDI’s legacy portfolio of real estate. As of December 31, 2019, through EDI Real Estate, LLC, ENDI owns a legacy real estate investment portfolio that includes eight residential properties and vacant land. Our real estate portfolio under EDI Real Estate, LLC is primarily focused in the Roanoke area of Virginia. The portfolio includes single-family homes, both rented and vacant, that are managed by a third-party property management company.

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Internet Operations

The Company operates its internet segment through Sitestar.net, a wholly-owned subsidiary that offers consumer and business-grade internet access, wholesale managed modem services, web hosting, third-party software as a reseller, and various ancillary services. Sitestar.net provides services to customers in the United States and Canada.

Discontinued Operations - Home Services Operations

Prior to May 24, 2019, the Company operated its home services segment through its wholly-owned subsidiary, Specialty Contracting Group, LLC (formerly known as HVAC Value Fund, LLC). The Company, along with JNJ Investments, LLC, an unaffiliated third party, organized and launched Specialty Contracting Group, LLC on June 13, 2016. On May 18, 2018, the Company terminated its operating agreement with JNJ Investments, LLC, dated June 13, 2016. Specialty Contracting Group was focused on the management of HVAC and plumbing companies in Arizona. 

As has been reported, on May 24, 2019, the Company completed its divestiture of the home services operations to Rooter Hero. See Note 3 for more information.

Other Operations

Other operations include nonrecurring or one-time strategic funding or similar activity and other corporate operations that are not considered to be one of the Company’s primary lines of business. Below are the main activities that comprise other operations. Additional investment activity that is not specifically mentioned below is included in the accompanying consolidated financial statements.

Huckleberry Real Estate Fund

On January 30, 2017, the Company, through Willow Oak, committed to make a capital contribution to Huckleberry Real Estate Fund II, LLC, a private investment fund, in the aggregate amount of $750,000. On May 14, 2018, Willow Oak transferred the Huckleberry investment to EDI Real Estate, LLC, another wholly-owned subsidiary of the Company. Under the fund’s operating agreement, the fund’s managing member has sole discretion regarding the amounts and timing of any distributions to the members of the fund.

The carrying value of the Huckleberry Real Estate Fund investment is included in long-term investments under other operations in the accompanying consolidated balance sheets. As of December 31, 2019, and December 31, 2018, the carrying value for this investment is $0 and $468,750, respectively. The decrease in carrying value period over period was due to return of capital that was received prior to June 30, 2019. During the quarter ended March 31, 2019, a gain of $212,631 was recognized as revenue through the Other Operations segment on the accompanying consolidated statements of operations.

Triad DIP Investors

On August 24, 2017, the Company entered into an agreement with several independent third parties to provide debtor-in-possession financing to an unaffiliated third party, Triad Guaranty, Inc., through Triad DIP Investors, LLC. The Company initially contributed $100,000. Triad Guaranty, Inc. exited bankruptcy on April 27, 2018, and the Company subsequently entered into an amended and restated promissory note. As part of the amended and restated promissory note, the Company provided an additional contribution in the amount of $55,000 on May 18, 2018. The terms of the promissory note provide for interest in the amount of 10% annually, a repayment date no later than April 29, 2020, and the issuance of warrants in Triad Guaranty, Inc. equal to 2.5% of the company. Accordingly, on April 28, 2018, the Company was issued warrants to purchase 450,000 shares for $0.01 per share. On November 12, 2019, the Company exercised its warrants and purchased 450,000 shares of Triad Guaranty, Inc. Subsequently, on December 30, 2019 the Company sold all 450,000 shares at a price of $0.18/share. A realized gain of $76,500 is included as other income through other segments on the accompanying consolidated statements of operations for the year ended December 31, 2019.

Corporate Operations

Corporate operations include any revenue or expenses derived from corporate office operations, as well as expenses related to public company reporting, the oversight of subsidiaries, and other items that affect the overall Company.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, and those entities in which it otherwise has a controlling financial interest, including: Willow Oak Asset Management, LLC, Willow Oak Capital Management, LLC, Mt Melrose, LLC (“New Mt Melrose”) prior to the loss of control resulting from the sale of 65% of the equity in New Mt. Melrose on June 27, 2019 (see Note 4), Specialty Contracting Group, LLC prior to the divestiture transaction on May 24, 2019 (see Note 3), Sitestar.net, Inc., and EDI Real Estate, LLC. Additionally, during the period from January 10, 2018, through September 30, 2018, the accompanying consolidated financial statements include the accounts of Old Mt. Melrose, which was, at that time, determined to be a variable interest entity in which the Company was the primary beneficiary.

All intercompany accounts and transactions have been eliminated in consolidation.

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NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

In accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”), the preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.

On an ongoing basis, management evaluates its estimates and judgments, including, among other items, those related to fair value of investments, revenue recognition, accrued expenses, financing operations, fair value of goodwill, fixed asset lives and impairment, lease right-of-use assets and impairment, deferred tax assets, liabilities and valuation allowance, other assets, the present value of lease liabilities, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions. These accounting policies are described at relevant sections in the notes to the consolidated financial statements.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash, cash equivalents, and accounts receivable. The Company places its cash with high-quality financial institutions and, at times, may exceed the FDIC and CDIC insurance limit. The Company extends credit based on an evaluation of customers’ financial condition, generally without collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company defines cash equivalents as all highly liquid instruments purchased with a maturity of three months or less.

Investments

The Company holds various investments through its asset management operations and real estate segments. Additionally, investments can be held and reported under the Company’s “other” segment. Assets held through these segments do not have a readily determinable value as these investments are not publicly traded, nor do they have published sales records. These investments are remeasured to fair value on a recurring basis. See Note 6 for more information.

As of December 31, 2019, the Company also holds its remaining equity investment in Mt Melrose, LLC through its real estate segment. The Company has determined that its remaining equity investment does not have a readily determinable fair value, and the Company will account for the investment at cost, less any impairment, as adjusted for changes resulting from observable price changes. When fair value becomes determinable, the investment will be marked to fair value on a periodic basis.

Accounts Receivable

The Company grants credit in the form of unsecured accounts receivable to its customers. The estimate of the allowance for doubtful accounts, which is the recorded allowance for doubtful accounts and bad debt expense, is based on management’s assessment of current economic conditions and historical collection experience with each customer. Specific customer receivables are considered past due when they are outstanding beyond their contractual terms and are written off from the allowance for doubtful accounts when an account or invoice is individually determined to be uncollectible.

Real estate segment rental accounts are typically paid by tenants via cash or check no later than the fifth of the month. Any accounts collected after the fifth are charged either a flat-rate late fee or a daily-rate late fee based upon the lease agreement. If payments are not provided in a timely manner, then the amount due is designated as an account receivable. If accounts remain uncollected, then standard operating procedures are followed to commence a notice process for the tenant to either pay the amount due or vacate the property. Accounts receivable from rental revenue are generally considered unrecoverable after 90 days unless the Company reasonably believes that recovery is probable. These procedures typically result in low amounts of past due receivables.

The internet segment attempts to reduce the risk of non-collection by including a late-payment fee and a manual-processing-payment fee to customer accounts. Receivables more than 90 days past due are no longer included in accounts receivable and are turned over to a collection agency. Accounts receivable more than 30 days are considered past due. 

As of December 31, 2019 and 2018, allowances offsetting gross accounts receivable on the accompanying consolidated balance sheets totaled $307 and $26,830, respectively. For the years ended December 31, 2019 and 2018, bad debt expense from continuing operations was $88,511 and $32,803, respectively.

Notes Receivable

The Company does not routinely issue notes receivable in the ordinary course of business, but when a business opportunity arises, a subsidiary may issue a note if it appears to be favorable to the Company. Notes receivable are recorded at their principal amount and interest is accrued quarterly based on the applicable interest rate. The Company makes an assessment of the ultimate collectability of each note receivable on an annual basis based upon the financial condition of the borrower.

Inventory

Inventory is carried on the balance sheet at the lower of purchased cost or net realizable value. Inventory is evaluated periodically for any obsolete or damaged stock. As of December 31, 2019 and 2018, there was no obsolescence allowance recorded against inventory held on the consolidated balance sheets.

Property and Equipment

Property and equipment are recorded at cost. Expenditures for maintenance and repairs are charged to operations as incurred, while renewals and betterments are capitalized. Gains and losses on disposals are included in the results of operations. Depreciation is computed using the straight-line method based on the estimated useful lives for each of the following asset classifications:

Furniture and fixtures	5
Equipment (in years)	7
Building improvements (in years)	15
Buildings (in years)	27.5

Property and equipment are analyzed for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable.

The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, then the Company uses estimated future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. Property and equipment to be disposed are reported at the lower of carrying amount or fair value of the asset less cost to sell.

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Goodwill and Other Intangible Assets

Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations accounted for under the acquisition method of accounting. The Company tests its goodwill annually as of December 31st or more often if events and circumstances indicate that those assets might not be recoverable.

Impairment testing of goodwill is required at the reporting-unit level (operating segment or one level below operating segment). The impairment test involves calculating the impairment of goodwill based solely on the excess of the carrying value of the reporting unit over the fair value of the reporting unit. Prior to performing the impairment test, the Company may make a qualitative assessment of the likelihood of goodwill impairment to determine whether a detailed quantitative analysis is required. The Company estimates the fair value of its reporting units using discounted expected future cash flows.

During the year ended December 31, 2018, an impairment adjustment of $754,958 was recorded to goodwill held through the home services segment. As noted above, various qualitative factors were considered before preparing a quantitative analysis. Qualitatively, a general underperformance of previously acquired home services businesses triggered the quantitative analysis. As part of the quantitative analysis, management estimated the fair value of the home services segment at the enterprise level using a discounted cash flow approach. The results were then tested for reasonableness using a market approach by analyzing comparable firms’ growth rates, margins, capital expenditures, and working capital requirements. During the period ended June 30, 2019, an additional impairment of the remaining home services segment goodwill of $1,024,591 was recognized and reported as a component of the loss on the divestiture of Specialty Contracting Group, LLC’s assets.

Intangible assets (other than goodwill) consist of domain names attributed to the internet segment. The Company owns 228 domain names, of which 106 are available for sale. These domains are valued at historical cost. When management determines that material intangible assets are acquired in conjunction with the purchase of a business, the Company determines the fair values of the identifiable intangible assets by taking into account internal and external appraisals. Intangible assets determined to have definite lives are amortized over their estimated useful lives. The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, then the Company uses estimated future undiscounted cash flows of the related intangible asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value.

Real Estate

Real estate properties held for resale are carried at the lower of cost or fair value. All costs directly related to the improvement and carrying of real estate are capitalized, including renovations and property taxes, to the extent the capitalized costs of the property do not exceed the estimated fair value of the property. If the cost of the real estate exceeds the estimated fair value, then the excess is charged to expense. Fair value is estimated based on comparable sales in the geographic area in which the real estate is located. Fair value is evaluated annually by management or when events or changes in circumstances indicate the carrying value of the real estate may not be recoverable.

During the year ended December 31, 2019, net impairment adjustments of $26,170 were recorded on real estate held for resale through EDI Real Estate, LLC in order to properly reflect sales activity throughout the year. During the year ended December 31, 2018, an impairment adjustment of $64,038 was recorded to real estate held for resale through EDI Real Estate, LLC in order to properly reflect market value for those properties held during the year. This adjustment was primarily the result of a deteriorating building purchased by prior management in 1998. 

During the year ended December 31, 2019, an impairment adjustment of $126,827 was recorded on the Company’s commercial warehouse held for resale in order to properly reflect market value at that time. During the year ended December 31, 2018, an impairment adjustment of $964,743 was recorded to real estate held for resale through Mt Melrose, LLC in order to properly reflect market value for those properties held at the end of the year. This adjustment was the result of 62 properties being transitioned to “held for resale” from “held for investment” as part of a portfolio redirection. See Note 5 for more information. Recent tax assessments, valuations, and local real estate agents were used to value this portfolio of held-for-resale properties.

Real estate properties held for investment are carried at the cost basis plus additional costs where the cost extended the life of or added value to the property. Otherwise, the cost is expensed as incurred. Properties categorized as real estate held for investment are not expected by management to be sold in the next 12 months. This determination is periodically reviewed by management.

Accrued Bonus

Accrued bonuses represent performance-based incentives that have not yet been paid. Bonuses can be paid in the form of cash or via the issuance of Company stock. Bonus structures for employees are a pre-approved part of a formal employment agreement or arrangement. Stock based compensation, issued as part of the Company’s Equity Incentive Plan, is reserved for board members and members of senior management. The compensation accrual amount is based on the final value of Company stock that has been approved to be issued by the Governance, Compensation, and Nomination Committee of the Board of Directors. These bonus amounts are accrued when earned and able to be estimated and are paid or issued annually after financial records are finalized.

Other Accrued Expenses

Other accrued expenses represent incurred but not-yet-paid expenses from payroll accruals, vacation accruals, professional fees, and other accrued taxes.

Leases

On January 1, 2019, the Company adopted ASU No. 2016-02, “Leases” (Topic 842). The guidance in ASU No. 2016-02 supersedes the lease recognition requirements in ASC Topic 840 and established ASC Topic 842. ASU No. 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU No. 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company adopted this guidance using the following practical expedients:

● the Company did not reassess if any expired or existing contracts are leases or contain leases;

● the Company did not reassess the classification of any expired or existing leases; and

● the Company did not reassess whether the classification of existing costs associated with expired or existing leases should be classified as initial direct costs.

Additionally, the Company made ongoing accounting policy elections whereby it (i) does not recognize right-of-use (ROU) assets or lease liabilities for short-term leases (those with original terms of 12 months or less) and (ii) combines lease and non-lease elements of our leases. 

Upon adoption of the new guidance on January 1, 2019, the Company recorded an ROU asset of approximately $184,000 (net of existing deferred rent liability) and recognized a lease liability of approximately $186,000, with no resulting cumulative effect adjustment to retained earnings.

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Revenue Recognition

Asset Management and Other Investment Revenue

The Company earns revenue from investments through various fee share and consulting agreements, as well as through realized and unrealized gains and losses, which may result in negative period or quarterly revenues. Management fees earned are recorded and paid out monthly and are included in revenue on the accompanying consolidated statements of operations. Performance fees earned are accrued monthly, paid out annually, and are also included in revenue on the accompanying consolidated statements of operations. Consulting fees are billed out monthly after services have been performed. Long-term investments are marked to market at the end of each reporting period. Realized and unrealized gains and losses are recognized as revenue in the period of adjustment.

Management notes that the structure of these arrangements leaves a very low possibility for nonperformance. While the amount of revenue varies from month to month, collectability is very high. No contract assets or liabilities are recognized or incurred.

Additionally, the Company earns revenue from direct participation in various private investment funds, primarily the Alluvial Fund. This results in the realized and unrealized gains and losses within a fund such as the Alluvial Fund being recognized as revenue, or a decrease in revenue, on the accompanying consolidated statements of operations.

A summary of revenue earned through asset management operations for the years ended December 31, 2019 and 2018 is included below:

Asset Management Operations Revenue	Year Ended December 31, 2019		Year Ended December 31, 2018
Realized and unrealized gains (losses) on investment activity	$	1,607,644	$	(834,014	)
Management and performance fee revenue		65,171		41,151
Fund management services revenue		100,461		17,614
Total revenue	$	1,773,276	$	(775,249	)

Real Estate Revenue

The Company earns real estate revenue through rental agreements on real estate held for investment, as well as through the sale of real estate held for resale.

Rental revenue from real estate held for investment is recognized when it is earned, generally on the last day of each month or at another regular period agreed upon by the Company and the tenant. Tenants generally provide a security deposit at the time of possession. This deposit is held separately from revenue and only applied to revenue when rental payment comparable to the security deposit amount is not provided in a timely manner and considered unlikely to be recovered. Otherwise, the security deposit is returned in a timely manner after the property is surrendered back to the Company. Management has concluded that the nature of the performance obligation is cyclical and predictable with a very low possibility for nonperformance. No contract assets or liabilities are recognized or incurred.

Revenue from real estate held for resale is recognized upon closing of the sale (transfer of control), as all conditions for full revenue recognition have been met at that time. All costs associated with the property sold are removed from the consolidated balance sheets and charged to cost of revenue at that time.

Internet Revenue

The Company sells internet services under annual and monthly contracts. Under the annual contracts, the subscriber pays a one-time annual fee, which is recognized as revenue ratably over the life of the contract. Under the monthly contracts, the subscriber is billed monthly and revenue is recognized for the period to which the service relates. Domain name registration revenue is recognized at the point of registration. Sales of computer hardware are recognized as revenue upon delivery and acceptance of the product by the customer. Sales are adjusted for any returns or allowances. Management has concluded that the nature of the performance obligation is cyclical with a very low possibility for nonperformance. Contract liabilities (deferred revenue) were recognized in the amount of collections received in advance of services to be performed. No contract assets were recognized or incurred.

The Company generates revenue in its internet segment from consumer and business-grade internet access, wholesale managed modem services for downstream ISPs, web hosting, third-party software as a reseller, and various ancillary services in the United States and Canada. Services include narrow-band (dial-up and ISDN) and broadband services (DSL, fiber-optic, and wireless), web hosting, and additional related services to consumers and businesses. Customers may also subscribe to web hosting plans to include email access and storage. Internet revenue is affected by the changing composition of revenue sources. In some years, this shift can be significant.

Home Services Revenue

Prior to the divestiture transaction on May 24, 2019, the Company performed HVAC and plumbing service repairs and installed HVAC units for its customers through its home services segment. Revenue was recognized upon completion of the installation or service call. Sales were adjusted for any returns or allowances. A return or allowance situation would arise based on the two-year workmanship warranty that typically conveyed with the installation of a new unit. There was also a two-year assurance warranty on newly installed parts and equipment that was honored by the manufacturer. If an installation was performed over multiple days, then it was accounted for using work-in-process (WIP) accounting. Contract progress was measured by comparing materials and labor hours incurred to materials and labor hours expected per the contract. These types of contracts were typically completed within one month’s time. A small portion of revenue was from the sale of annual service agreements. Revenue attributable to these agreements was recognized over the life of the agreement.

If payment was received prior to contract completion, then the amount of revenue attributable to the unperformed work was designated as unearned revenue. If payment was not provided in advance or at the time of service or installation completion, then the amount due was recognized as revenue and as an account receivable.

Management has acknowledged that these performance obligations were recognized at designated points in time during the contract, including the completion of the contract. As the customer controlled the asset and had the right to use it during the contract, the Company had the right to payment for performance completed to date. Contract liabilities (deferred revenue) were recognized in the amount of collections received in advance of services to be performed. No contract assets were recognized or incurred.

Deferred Revenue

Deferred revenue represents collections from customers in advance of internet or home services to be performed. Revenue is recognized in the period service is provided. Total deferred revenue decreased from $210,212 at December 31, 2018 to $204,960 at December 31, 2019. During the years ended December 31, 2019 and 2018, $206,520 and $214,142, respectively, of revenue was recognized from prior-year contract liabilities (deferred revenue).

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Income Taxes

Income taxes are accounted for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax benefits or consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment, inclusive of the recent tax reform act. The most recent three tax years, fiscal years ended December 31, 2019, 2018, and 2017, are open to potential IRS examination.

Income (Loss) Per Share

Basic income (loss) per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period.

In periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all potentially dilutive common shares is anti-dilutive. In periods of net income, diluted earnings per share is computed using the more dilutive of the “two class method” or the “treasury method.” Dilutive earnings per share under the “two class method” is calculated by dividing net income available to common stockholders as adjusted for the participating securities, by the weighted-average number of shares outstanding plus the dilutive impact of all other potentially dilutive common shares, consisting primarily of common shares underlying common stock equity incentives. Dilutive earnings per share under the “treasury method” are calculated by dividing net income available to common stockholders by the weighted-average number of shares outstanding plus the dilutive impact of all potentially dilutive common shares, consisting primarily of common shares underlying common stock equity incentives.

None of the potentially dilutive securities had a dilutive impact during the years ended December 31, 2019 and 2018.

The number of anti-dilutive shares for the years ended December 31, 2019 and 2018, consisting of common shares underlying common stock equity incentives, which have been excluded from the computation of diluted income (loss) per share, was 70,000 shares and zero shares, respectively.

Other Comprehensive Income

Other comprehensive income is the result of the impact of foreign currency translations related to the Company’s internet segment operations in Canada.

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement” (Topic 820). The guidance intends to improve the effectiveness of the disclosures relating to recurring and nonrecurring fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019. Portions of the guidance are to be adopted prospectively while other portions are to be adopted retroactively. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses” (Topic 326). The guidance eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial instruments. The credit loss estimate can now reflect an entity’s current estimate of all future expected credit losses. Under the previous guidance, an entity only considered past events and current conditions. In April 2019, the FASB further clarified the scope of the credit losses standard and addressed issues related to accrued interest receivable balances, recoveries, variable interest rates, and prepayments. In May 2019, the FASB issued further guidance to provide entities with an option to irrevocably elect the fair value option applied on an instrument-by-instrument basis for eligible financial instruments. In November 2019, the FASB issued further guidance on expected recoveries for purchased financial assets with credit deterioration, and transition refiled for troubled debt restructurings, disclosures related to accrued interest receivables, and financial assets secured by collateral maintenance provisions. The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of certain amendments of this guidance must be applied on a modified retrospective basis and the adoption of the remaining amendments must be applied on a prospective basis. The Company currently expects that the adoption of this guidance may change the way we assess the collectability of our receivables and recoverability of other financial instruments. The Company will adopt this guidance as of January 1, 2023. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

The Company does not believe that any other recently issued effective standards, or standards issued but not yet effective, if adopted, would have a material effect on the accompanying consolidated financial statements. 

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NOTE 3. HOME SERVICES SUBSIDIARY DIVESTITURE

On May 24, 2019, as per the Current Report on Form 8-K filed with the SEC on May 28, 2019, the Company completed a divestiture of its Home Services Operations, via its subsidiary, Specialty Contracting Group, LLC (formerly known as HVAC Value Fund, LLC), to an unaffiliated third-party purchaser, Rooter Hero Plumbing, Inc. (“Rooter Hero”). In the transaction, the Company sold and conveyed all of the subsidiary’s personal property and customer lists and records, excluding stock inventory and other current assets. As part of the transaction, Rooter Hero assumed the subsidiary’s obligations under lease and/or loan agreements for all outstanding vehicles and equipment, as well as the obligations to service all of the subsidiary’s remaining customer accounts going forward. No cash consideration was exchanged in the transaction. As consideration for the transaction, Rooter Hero will pay monthly royalties for the sixty (60) months following the closing, calculated on the basis of any revenue received from the customer accounts transferred. Under such royalty arrangements, the Company will receive 7.5% of any monthly revenue generated from qualified sales during the first year, and 5% of any monthly revenue during years two through five. Royalties received will be reduced by pre-approved warranty-related costs for select customers.

As reported in prior periods, the home services subsidiary had failed to meet approved budgets and had underperformed since its inception in 2016. Management noted that the largely decentralized management approach was not a good fit for this industry, and the extensive operating requirements were not conducive to smaller company capacities. The cyclical nature of the business also resulted in unpredictable cash flows, which created immediate and significant needs for additional Company resources. Due to the past performance of the company, management determined that additional resources should not be allocated to this subsidiary. 

The decision was made to exit the business during the quarter ended June 30, 2019. The operations of Specialty Contracting Group, LLC were considered a component of, and the sale reflects a strategic shift in, the Company’s business. As such, Specialty Contracting Group, LLC’s historical operations are now classified as discontinued operations in the Company’s financial statements. The divestiture of the home services subsidiary resulted in an initial pre-tax loss of $1,158,732, which has been included on the accompanying consolidated statements of operations in discontinued operations and under the home services segment for the year ended December 31, 2019. The loss from discontinued operations has been determined using a loss recovery approach, as the collection of future royalties is uncertain and a reasonable estimate could not be made. This approach requires that the contingent consideration, the future royalties to be received, be valued at the lesser of the amount of the “probable,” defined as a greater than 50% likelihood, future proceeds or the carrying value of the disposed assets. Due to the unpredictability of the contingent consideration, and management’s inherent lack of control over the buyer’s operations, management determined it would not be reasonable to attempt to value the contingent consideration. This resulted in assigning the contingent consideration a current valuation of zero. As and to the extent any royalties are deemed probable, they will be subsequently recognized as a “gain from discontinued operations” on the statements of operations and will offset, or recover, the initial loss recorded. Accordingly, during the year ended December 31, 2019, an offsetting $21,629 gain on discontinued operations is included within the $1,510,475 reported loss on discontinued operations.

A breakdown of discontinued assets and liabilities as reported on the face of the accompanying consolidated financial statements for the years ended December 31, 2019 and 2018, is as follows:

	December 31, 2019		December 31, 2018
Cash and cash equivalents	$	428	$	23,954
Accounts receivable		—		136,785
Other current assets		—		71,624
Total current assets - held for resale		428		232,363
Property and equipment, net		—		270,603
Goodwill		—		1,024,591
Other long-term assets		—		5,375
Total long-term assets - held for resale		—		1,300,569
Accounts payable		96,848		75,208
Accrued expenses		—		81,213
Lease liabilities		50,110		—
Other current liabilities		—		2,368
Notes payable, current		—		158,698
Total current liabilities - held for resale		146,958		317,487
Notes payable, long term - held for resale		—		50,738
Total long-term liabilities - held for resale	$	—	$	50,738

A breakdown of the initial recorded pre-tax loss as reported on the accompanying consolidated statements of operations as of the year ended December 31, 2019 is presented below. Asset and liability values used in the calculation represent the Company’s carrying value as of the date of sale, May 24, 2019.

Sale of vehicles, equipment, and furniture, net of depreciation	$	230,578
Impairment of remaining goodwill		1,024,591
Total carrying value of assets sold		1,255,169
Vehicle and equipment notes payable assumed by the buyer		76,791
Service agreements assumed by the buyer		19,646
Total carrying value of liabilities assumed		96,437
Net loss on sale of subsidiary, pre-tax	$	1,158,732

A reconciliation of discontinued operations as reported on the accompanying consolidated statements of operations for the years ended December 31, 2019 and 2018, is as follows:

	For the year ended
	December 31, 2019			December 31, 2018
Revenues	$	675,963		$	3,077,631
Cost of revenues		432,872			2,003,876
Gross profit		243,091			1,073,755
Selling, general, and administrative expenses		535,650			1,235,346
Loss on sale of subsidiary, net of recoveries		(1,125,364	)		—
Other income (expense), net		(92,552	)		(753,572	)
Net income (loss) reported as discontinued operations	$	(1,510,475	)	$	(915,163	)

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NOTE 4. SALE OF CONTROLLING INTEREST IN REAL ESTATE SUBSIDIARY

Transaction

On June 27, 2019, the Company sold 65% of its membership interest in Mt Melrose, LLC to an unaffiliated third-party purchaser, Woodmont Lexington, LLC, a Delaware limited liability company (“Woodmont”). As consideration for the transaction, Woodmont paid the Company $100,000 and agreed to assume full responsibility for the management and operation of Mt Melrose and its real estate portfolio. The Company retained a 35% membership interest in Mt Melrose, with Woodmont owning the other 65% membership interest. Subsequent to the transaction, however, Woodmont, as the manager of Mt Melrose, has purported that the Company’s membership interest in Mt Melrose has been diluted to 20.8%. The Company disputes this assertion and maintains that it has retained its 35% membership interest.

Prior to this transaction, the Company had grown uncomfortable with the extreme amounts of high-priced debt that the Mt Melrose subsidiary had taken on. There were significant principal payments due over the next 12 months at the subsidiary level that the portfolio’s cash flows could not offset and the Company was unwilling to subsidize. As reported in previous quarterly and annual reports, on November 1, 2018, management implemented a right-sizing strategy for the Mt Melrose portfolio. This strategy included the hiring of a dedicated third-party property manager, a restructuring of overhead expenses, the divestiture of non-cash-flowing properties, and a focus on refinancing high-interest debt. The property manager was responsible for all day-to-day operations including, but not limited to: tenant relations and communications, property repairs and renovations, vacancy marketing, and turnover procedures. This allowed management to remain passive operationally and focus on property sales and refinancing opportunities. Subsequent to the sale on June 27, 2019, the property manager continues to fulfill the day-to-day operational responsibilities, and, to management’s knowledge, Woodmont continues to act on management’s previous right-sizing efforts by liquidating non-cash-flowing properties and pursuing refinancing options.

In connection with this transaction, the Company and Woodmont entered into a certain Amended and Restated Limited Liability Company Agreement of Mt Melrose, LLC (the “A&R LLC Agreement”). The A&R LLC Agreement sets forth the general terms and conditions governing the arrangements between the two members. The A&R LLC Agreement provides that the business and affairs of Mt Melrose will be managed exclusively by one or more managers; and Woodmont is designated as the sole manager. In addition, the Company has expressly agreed to a three-year “standstill” arrangement, during which time the Company will not in any way participate, directly or indirectly, in the management or control of Mt Melrose; and with respect to any matters requiring a vote of the members, the Company will vote with (i.e., the same as) Woodmont. This arrangement allows the Company to maintain its passive management structure, while still owning a significant portion of the partnership.

Under the terms of the A&R LLC Agreement, distributions of cash, from whatever source, may be made to the members at such times, and in such amounts, as the manager, Woodmont, determines; provided, however, that any such distributions will be made in accordance with the following priorities: (i) distribution of amounts up to a cumulative total of $2,000,000 will be made pro rata in accordance with the members’ respective percentage interests (as expressly specified in the A&R LLC Agreement); (ii) then, distribution of cumulative amounts in excess of $2,000,000 and up to $3,000,000 will be made 67% to the Company and 33% to Woodmont; and (iii) thereafter, distribution of cumulative amounts in excess of $3,000,000 will be made pro rata in accordance with the members’ respective percentage interests (as expressly specified in the A&R LLC Agreement).

Deconsolidation Due to Transfer of Control

Prior to the sale of 65% of its Mt Melrose interest, the Company owned 100% of the membership interests in Mt Melrose, LLC and controlled the entity by virtue of its voting interests. As a result, the Company consolidated Mt Melrose under the “voting interests” (“VOE”) consolidation model.

By virtue of the A&R LLC Agreement, and the aforementioned standstill agreement, Woodmont is the sole “manager” responsible for all management and operating decisions of Mt Melrose. Management determined that as of June 27, 2019, the Company no longer has a “controlling financial interest” in Mt Melrose and will no longer consolidate Mt Melrose. Furthermore, the Company has concluded that Mt Melrose does not qualify as a “variable interest entity” as Mt Melrose has sufficient equity at risk to permit operations and the Company is not the primary beneficiary of Mt Melrose’s activities. All activity prior to the deconsolidation event has been included on the accompanying consolidated statements of operations for the year ended December 31, 2019, in continuing operations, and under the real estate segment. As of June 27, 2019, all previously consolidated assets and liabilities of Mt Melrose, LLC have been removed from the accompanying consolidated balance sheets. The Company’s membership interest in Mt Melrose will now be accounted for as an investment in the equity of Mt Melrose in the Company’s reported financial statements. 

Accounting for Remaining Mt Melrose Investment

The Company adopted ASU 2016-01 effective January 1, 2018. ASU 2016-01 generally requires entities to measure equity investments at fair value and recognize any changes in fair value in net income. However, entities are able to elect a measurement alternative for equity investments that do not have a “readily determinable fair value.” The Company has determined that its equity investment in Mt Melrose does not have a readily determinable fair value at the time of deconsolidation. The Company’s inability to “exercise significant influence” due to the previously mentioned standstill agreement, also supports the use of the measurement alternative. Under this alternative, the Company will measure the Mt Melrose investment at its implied fair value and assess it for impairment at each reporting date, or more often if indication of a potential impairment exists. When fair value becomes determinable, from observable price changes in orderly transactions, the Company’s investment will be marked to fair value on a periodic basis. Future dividends will be recognized as income and returns of capital recognized as a reduction in the Company’s investment when and if received.

Using the $100,000 transaction price for a 65% interest in Mt Melrose, LLC, the implied value of the retained 35% interest at the time of the transaction is $53,846. This amount is included under the long-term investment amount on the accompanying consolidated balance sheet as of December 31, 2019.

Effective on June 27, 2019, the Company recognized a loss on the partial sale of Mt Melrose in the amount of $4,157,809, which has been reported separately on the accompanying consolidated statements of operations in continuing operations and under the real estate segment for the year ended December 31, 2019. The amount of the loss is based upon the value of the Company’s remaining interest in the subsidiary, less the Company’s previous carrying value of the subsidiary. 

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NOTE 5. ASSET ACQUISITION OF REAL ESTATE PROPERTIES

Historical Acquisition

On December 10, 2017, the Company entered into a certain Master Real Estate Asset Purchase Agreement (the “Purchase Agreement”) with Mt. Melrose, LLC, a Kentucky limited liability company (“Old Mt. Melrose”), that owned and managed a portfolio of residential real estate in Lexington, Kentucky. Old Mt. Melrose was owned by Jeffrey I. Moore (“Moore”), a former Company director.

On January 10, 2018, the Company’s wholly-owned subsidiary, Mt Melrose, LLC (“New Mt Melrose”), completed the first acquisition of 44 residential and other income-producing real properties under the Purchase Agreement for a total purchase price of $3,956,389, which consisted of $500,000 in cash, 120,602 shares of common stock valued at $1,658,270, and the assumption of $1,798,119 of existing debt.

The Company accounted for the initial purchase of properties as an asset acquisition (consisting of a concentrated group of similarly identifiable assets, including land, buildings, improvements, and in-place leases) following the guidance contained in ASU No. 2017-01. The total purchase price, along with approximately $45,250 of transaction expenses, was allocated to the land and buildings acquired based on their relative fair values, as follows:

Land	$	800,328
Buildings		3,201,311
Total Value	$	4,001,639

On June 29, 2018, New Mt Melrose completed the second acquisition of 69 residential and other income-producing real properties under the Purchase Agreement for a total purchase price of $5,174,722, which consisted of 148,158 shares of common stock valued at $2,407,564, and the assumption of $2,767,158 of existing debt.

The Company accounted for the second purchase of properties as an asset acquisition (consisting of a concentrated group of similarly identifiable assets, including land, buildings, improvements, and in-place leases). The total purchase price, along with approximately $7,393 of transaction expenses, was allocated to the land and buildings acquired based on their relative fair values, as follows:

Land	$	1,036,423
Buildings		4,145,692
Total Value	$	5,182,115

Pursuant to that certain Termination of Master Real Estate Asset Purchase Agreement entered into effective November 1, 2018, between the Company and Old Mt. Melrose, the parties mutually agreed to terminate the Purchase Agreement as of November 1, 2018. Accordingly, neither the Company nor New Mt Melrose had any further rights or obligations concerning additional acquisitions of real properties from Old Mt. Melrose under the Purchase Agreement as of that time. A third-party property manager was engaged as of November 1, 2018, to manage certain of the real properties previously acquired. Management also determined that it was necessary to right-size New Mt Melrose operations to reduce its level of high-interest debt. Accordingly, New Mt Melrose began to immediately sell various properties with an emphasis on selling properties that had high-interest-rate loans and did not produce income. 

In an effort to expedite the optimization of the Mt Melrose portfolio, management subsequently determined that a dedicated operator was necessary to manage the subsidiary. On June 27, 2019, as per the Current Report on Form 8-K filed with the SEC on July 3, 2019, the Company sold 65% of its membership interest in Mt Melrose, LLC to an unaffiliated third-party purchaser, Woodmont Lexington, LLC (“Woodmont”). As consideration for the transaction, Woodmont paid the Company $100,000 and agreed to assume full responsibility for the management and operation of Mt Melrose and its real estate portfolio. See Note 4 for more information.

Historical Variable Interests

As of the quarterly periods ended March 31, 2018, June 30, 2018, and September 30, 2018, the Company had determined that Old Mt. Melrose was a “variable interest entity” because the seller’s equity interests in Old Mt. Melrose were not effective in determining whether the seller or New Mt Melrose had a controlling financial interest, and that New Mt Melrose’s rights under a certain Cash Flow Agreement that had been entered into on January 10, 2018 with Old Mt. Melrose (the “Cash Flow Agreement”) were deemed to be variable interests in Old Mt. Melrose. At those times, the Company had determined that New Mt Melrose was the primary beneficiary of Old Mt. Melrose since substantially all of Old Mt. Melrose’s activities had been conducted on behalf of New Mt Melrose and because New Mt Melrose may have been required to provide financial support to Old Mt. Melrose under the Cash Flow Agreement. As its primary beneficiary, New Mt Melrose previously consolidated Old Mt. Melrose’s financial results beginning on January 10, 2018. The fair values of the assets and liabilities of Old Mt. Melrose had been consolidated accordingly on the unaudited consolidated balance sheets for the quarterly periods ended March 31, 2018, June 30, 2018, and September 30, 2018. As noted on the unaudited consolidated statements of stockholders’ equity during those quarters, the ending noncontrolling interest allocated to the variable interest entity represented the remaining equity held by Old Mt. Melrose for properties that had not yet been acquired under the Purchase Agreement. The ending noncontrolling interest amount also included any income or loss generated by the remaining properties that were to be acquired under the Purchase Agreement for the period then ended.

As of November 1, 2018, pursuant to the termination of the Master Real Estate Asset Purchase Agreement and Cash Flow Agreement noted above, New Mt Melrose was no longer the primary beneficiary of Old Mt. Melrose. Additionally, as of November 1, 2018, New Mt Melrose no longer had a controlling financial interest in Old Mt. Melrose. Consequently, as of November 1, 2018, the Company no longer consolidated the fair values of the assets, liabilities, or operating results of Old Mt. Melrose, and the balance of noncontrolling interest as of December 31, 2019 and 2018, is zero.

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NOTE 6. INVESTMENTS

Certain assets held through Willow Oak Asset Management, LLC, Enterprise Diversified, Inc., or EDI Real Estate, LLC do not have a readily determinable value, as these investments are not publicly traded, nor do they have published sales records. The investment in Alluvial Fund, LP is measured using net asset value (NAV) as the practical expedient and is exempt from the fair value hierarchy. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and allocated based on total fund contributions. Due to the nature of the Mt Melrose, LLC (subsequent to the loss of control (see Note 4)) and Huckleberry Real Estate Fund II, LLC investments, the investments are measured at cost basis as fair value is not determinable until additional inputs and measurements become available. As the inputs for these investments are not readily observable, these investments are valued using Level 3 inputs (see Note 7). The following investments are remeasured to fair value on a recurring basis and realized and unrealized gains and losses are recognized as revenue in the period of adjustment. Included in the fair value is the cost basis of the investment, as well as any accrued management fees.

	Cost Basis		Unrealized Gain		Fair Value
December 31, 2019
Alluvial Fund, LP	$	7,042,732	$	3,029,626	$	10,072,358
Mt Melrose, LLC		53,846		—		53,846
Total	$	7,096,578	$	3,029,626	$	10,126,204

	Cost Basis		Unrealized Gain		Fair Value
December 31, 2018
Alluvial Fund, LP	$	7,023,676	$	1,422,812	$	8,446,488
Huckleberry Real Estate Fund II, LLC		468,750		—		468,750
Total	$	7,492,426	$	1,422,812	$	8,915,238

During the year ended December 31, 2019, the Company recognized $76,810 of realized gains, primarily related to the Company’s sale of its Triad Guaranty, Inc. stock. This compares to the year ended December 31, 2018, when the Company recognized $885 of realized losses. These realized losses were the result of reinvested management fee shares earned through various fee share agreements.

Alluvial Fund is a private investment partnership that focuses on investing in what it believes are deeply mispriced securities in the United States and abroad. Alluvial Fund focuses on small companies, thinly traded issues, and special situations, seeking to identify value that its management believes the market has yet to recognize. During the years ended December 31, 2019 and 2018, the Company did not withdraw management or performance fees earned through the Alluvial Fund. The total amount of these reinvested fees were $19,056 and $21,595, respectively.

NOTE 7. FAIR VALUE OF ASSETS AND LIABILITIES

GAAP defines fair value as the amount that would be received from the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants at the measurement date, and establishes a hierarchy for disclosing assets and liabilities measured at fair value based on the inputs used to value them. The fair value hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are based on market pricing data obtained from sources independent of the Company. Unobservable inputs reflect management’s judgment about the assumptions market participants would use in pricing the asset or liability. The fair value hierarchy includes three levels based on the objectivity of the inputs as follows:

● Level 1 - inputs are quoted prices in active markets as of the measurement date for identical assets and liabilities that the Company has the ability to access; this category includes exchange-traded mutual funds and equity securities;

● Level 2 - inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates or yield curves, that are observable at commonly quoted intervals; this category includes mortgage-backed securities, asset-backed securities, corporate debt securities, certificates of deposit, commercial paper, U.S. agency and municipal debt securities, U.S. Treasury securities, and derivative contracts; and

● Level 3 - inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability; the measurements are highly subjective.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company values its investments at fair value at the end of each reporting period. See description of these investments in Note 6 above.

	(Level 1)		(Level 2)		(Level 3)		(Excluded) (a)		Total at Fair Value
December 31, 2019
Alluvial Fund, LP	$	—	$	—	$	—	$	10,072,358	$	10,072,358
Total investments	$	—	$	—	$	—	$	10,072,358	$	10,072,358

	(Level 1)		(Level 2)		(Level 3)		(Excluded) (a)		Total at Fair Value
December 31, 2018
Alluvial Fund, LP	$	—	$	—	$	—	$	8,446,488	$	8,446,488
Huckleberry Real Estate Fund II, LLC		—		—		468,750		—		468,750
Total investments	$	—	$	—	$	468,750	$	8,446,488	$	8,915,238

^(a) Certain investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.

See below for a summary of activity related to the Company’s Level 3 investment, Huckleberry Real Estate Fund II, LLC, for the years ended December 31, 2019 and 2018. The realized gain noted below has been included as revenue under other operations on the consolidated statements of operations for the year ended December 31, 2019.

	Year ended December 31, 2019			Year ended December 31, 2018
Huckleberry Real Estate Fund II, LLC
Beginning investment balance	$	468,750		$	750,000
Realized gain		212,631			—
Redemptions received		(681,381	)		(281,250	)
Ending investment balance	$	—		$	468,750

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Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company analyzes goodwill on an annual basis or more often if events or changes in circumstances indicate potential impairments. During the year ended December 31, 2018, an impairment adjustment of $754,958 was recorded to goodwill held in the home services segment. As described further in Note 1, this adjustment was the result of a general underperformance of previously acquired HVAC and plumbing businesses. During the period ended June 30, 2019, an additional impairment of the remaining home services segment goodwill of $1,024,591 was recognized and reported as a component of the loss on the divestiture of Specialty Contracting Group, LLC’s assets.

The Company values real estate held on the balance sheet on an annual basis or whenever events or changes in circumstances indicate an impairment may have occurred. During the year ended December 31, 2019, an impairment adjustment of $126,827 was recorded on a commercial warehouse held for resale in order to properly reflect market value at that time. During the year ended December 31, 2018, an impairment adjustment of $964,743 was recorded to real estate held for resale through Mt Melrose, LLC in order to properly reflect market value for those properties held at the end of the year. This adjustment was the result of 62 properties being transitioned to “held for resale” from “held for investment” as part of a portfolio redirection intended to reduce high-interest debt. See Note 5 for more information.

During the year ended December 31, 2019, net impairment adjustments of $26,170 were recorded on real estate held for resale through EDI Real Estate, LLC in order to properly reflect market value at that time. During the year ended December 31, 2018, an impairment adjustment of $64,038 was recorded to real estate held for resale through EDI Real Estate, LLC in order to properly reflect market value for those properties held during the year. This adjustment was primarily the result of a deteriorating building purchased by prior management in 1998. 

As discussed in Note 5, in January 2018, Mt Melrose, LLC completed its first acquisition of 44 residential and other income-producing real properties for a total purchase price of $3,956,389. Additionally, in June 2018, Mt Melrose, LLC completed its second acquisition of 69 residential and other income-producing real properties for a total purchase price of $5,174,722. The total purchase price, along with transaction expenses, was allocated to the land and buildings acquired based on their relative fair values. The fair values of the land and buildings were determined using Level 3 inputs, namely comparable properties within the Lexington, Kentucky region.

As discussed in Note 4, the Company’s ongoing equity investment in Mt Melrose, LLC is carried at its implied cost under the alternative approach and will be assessed for impairment at each balance sheet date.

NOTE 8. PROPERTY AND EQUIPMENT

The cost of property and equipment at December 31, 2019, and December 31, 2018, consisted of the following:

	2019			2018
Building	$	—		$	836,827
Computers and equipment		17,330			17,330
Furniture and fixtures		10,850			90,919
Land		—			145,000
		28,180			1,090,076
Less accumulated depreciation		(10,427	)		(70,334	)
Property and equipment, net	$	17,753		$	1,019,742

Depreciation expense was $27,284 for the year ended December 31, 2019, and $135,397 for the year ended December 31, 2018. Included in these amounts are $9,310 and $32,001 for the years ended December 31, 2019 and 2018, respectively, of depreciation expense related to personal property used in real estate segment rental operations. The depreciation expense related to personal property is included in the real estate segment cost-of-goods-sold amount on the accompanying consolidated statements of operations.

As of December 31, 2019, management has identified two residential real estate properties and several vacant lots as real estate held for resale. These properties are carried at $98,910 on the accompanying consolidated balance sheets as of December 31, 2019. This compares to the year ended December 31, 2018, when management reported $73,212 of vehicles and equipment as held for resale and $2,318,912 of real estate as held for resale.

A summary of total assets held for resale as of December 31, 2019, and December 31, 2018, is as follows:

	December 31, 2019		December 31, 2018
Real estate held for resale	$	98,910	$	2,318,912
Equipment and vehicles held for resale		—		73,212
Total assets held for resale	$	98,910	$	2,392,124

On December 24, 2019, the Company completed the sale of a commercial warehouse space held for resale located in Lexington, Kentucky. The property was sold at its carrying value of $850,000. Net proceeds totaled $487,944 after repayment of the attached promissory note. The sale resulted in a loss of $56,467, which is included in other expenses under the real estate segment for the year ended December 31, 2019.

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NOTE 9. REAL ESTATE

EDI Real Estate, LLC

Through EDI Real Estate, as of December 31, 2019, the Company owns a total of eleven units consisting of six units held for investment, two units held for resale, and three vacant lots held for resale as noted below:

EDI Real Estate	December 31, 2019	December 31, 2018
Units occupied or available for rent	6	6
Vacant units being prepared for rent	—	3
Total units held for investment	6	9
Units held for resale	2	—
Vacant lots held for resale	3	3
Total units held for resale	5	3

Units held for investment consist of single-family residential rental units.

The leases in effect, as of December 31, 2019, are based on annual time periods and typically include month-to-month provisions after the completion of the initial term. An outside property management company manages these rental properties on behalf of the Company. The property management company has introduced updated and renewed leases for existing rental properties.

EDI Real Estate	December 31, 2019			December 31, 2018
Total real estate held for investment	$	484,590		$	710,022
Accumulated depreciation		(104,075	)		(107,576	)
Real estate held for investment, net		380,515			602,446
Real estate held for resale	$	98,910		$	40,047

For the year ended December 31, 2019, depreciation expense on the EDI Real Estate portfolio of properties was $22,161. This compares to depreciation expense for the year ended December 31, 2018, when depreciation expense on the EDI Real Estate portfolio of properties was $21,215.

During the year ended December 31, 2019, one property held for resale was sold for gross proceeds of $95,000. Net proceeds totaled $85,037. This compares to its carrying value of $95,000, which resulted in no gain or loss being recognized on the transaction. This compares to the year ended December 31, 2018, when two residential properties and one commercial property held for resale were sold for gross proceeds of $88,000. Net proceeds totaled $82,656. This compares to their carrying value of $95,033, which resulted in a loss of $7,033. No properties were purchased during the year ended December 31, 2019 or 2018 for the EDI Real Estate portfolio.

During the year ended December 31, 2019, net impairment adjustments of $26,170 were recorded on real estate held for resale through EDI Real Estate, LLC in order to properly reflect sales activity throughout the year. During the year ended December 31, 2018, an impairment adjustment of $64,038 was recorded to real estate held for resale through EDI Real Estate, LLC in order to properly reflect market value for those properties held during the year.

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Mt Melrose, LLC

Management has determined that the Company no longer has a controlling financial interest in Mt Melrose and is no longer the primary beneficiary as of June 27, 2019. All activity prior to the deconsolidation event has been included on the accompanying consolidated statements of operations for the year ended December 31, 2019, under the real estate segment. Simultaneously, as of June 27, 2019, all previously consolidated assets and liabilities of Mt Melrose, LLC have been removed from the accompanying consolidated balance sheets. Note that this deconsolidation event is separate from the deconsolidation event that took place on November 1, 2018, related to the change in variable interest reporting. As of December 31, 2018, the Company did have a controlling financial interest in Mt Melrose and was the primary beneficiary. The consolidated Mt Melrose assets as of December 31, 2018, included the following units:

Mt Melrose	December 31, 2018
Units occupied or available for rent		98
Vacant units being prepared for rent		15
Total units - held for investment		113
Residential and commercial units		48
Vacant lots		9
Total units - held for resale		57

As of December 31, 2018, units held for investment consisted of single-family and multi-family residential rental units. The leases in effect for the occupied Mt Melrose units as of December 31, 2018, were based on either annual or multi-year time periods. Month-to-month leases were reserved for special circumstances. Units held for resale consisted of single-family units, multi-family units, commercial properties, and undeveloped lots of land.

As of December 31, 2018, the Mt Melrose portfolio of properties was carried at the following amounts on the accompanying consolidated balance sheets:

Mt Melrose	December 31, 2018
Total real estate held for investment	$	9,049,945
Accumulated depreciation		(159,514	)
Real estate held for investment, net		8,890,431
Real estate held for resale	$	2,278,865

During the period ended June 27, 2019, depreciation expense on the Mt Melrose portfolio of properties totaled $110,978. This compares to the year ended December 31, 2018, when depreciation expense on the Mt Melrose portfolio of properties was $159,514.

No purchases were made during the period ended June 27, 2019. During the year ended December 31, 2018, Mt Melrose purchased a total of 61 properties, outside of the original purchase agreement, for a gross purchase price of $2,585,463. The majority of these purchases resulted in a note payable. 

During the period ended June 27, 2019, Mt Melrose sold nineteen residential properties and five vacant lots for gross proceeds of $775,850. Net proceeds totaled $151,672. This compares to their carrying value of $755,918, which resulted in a net gain of $16,932. During the year ended December 31, 2018, Mt Melrose sold three residential properties consisting of five rental units for gross proceeds of $295,000 and net proceeds of $113,734. This compares to their carrying value of $237,273, which resulted in a net gain of $57,727.

During the year ended December 31, 2019, an impairment adjustment of $126,827 was recorded on a commercial warehouse held for resale in order to properly reflect market value at that time. During the year ended December 31, 2018, an impairment adjustment of $964,743 was recorded to real estate held for resale through Mt Melrose, LLC in order to properly reflect market value for those properties held at the end of the year. This adjustment was the result of 62 properties being transitioned to “held for resale” from “held for investment” as part of a portfolio redirection intended to reduce high-interest debt.

Future Minimum Rental Revenues

The future anticipated minimum rental revenues based on leases in place as of December 31, 2019, for EDI Real Estate, LLC are as follows:

2020	$	34,660
2021		2,000
2022		—
Total	$	36,660

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NOTE 10. NOTES PAYABLE

Notes payable at December 31, 2019 and 2018, consist of the following:

	Interest Rates	Average Term	2019			2018
Interest-bearing amounts due on traditional mortgages on real estate held through Mt Melrose, LLC	4.38% - 5.75%	14 years	$	—		$	4,505,139
Interest-bearing amounts due on hard money loans on real estate held through Mt Melrose, LLC	10.00% - 13.00%	2 years		—			2,379,851
Interest-bearing amounts due on promissory notes	10.00%	1 year		—			131,279
Non-interest-bearing amount due on promissory notes	0.00%	1 year		—			218,270
Equipment and vehicle capital leases and loans acquired by HVAC Value Fund, LLC	0.00% - 4.90%	5 years		—			55,797
Vehicle loans through HVAC Value Fund, LLC	5.99%	5 years		—			53,638
Interest-bearing amount due on promissory note through EDI Real Estate, LLC	5.60%	15 years		373,425			384,304
Interest-bearing amount due on real estate held for investment through EDI Real Estate, LLC	6.00%	5 years		137,600			137,600
Less notes related to discontinued operations				—			(209,436	)
Less accrued interest				—			(134,623	)
Less current portion				(11,453	)		(1,002,965	)
Long-term portion			$	499,572		$	6,518,854

The timing of future payments of notes payable are as follows as of December 31, 2019:

2020	$	11,453
2021		12,181
2022		12,891
2023		151,242
2024 and thereafter		323,258
Total	$	511,025

As of December 31, 2019, no lines of credit remain open through the home services segment. The line of credit that existed as of December 31, 2018 through the home services segment was held with Steven L. Kiel, an ENDI director and our principal executive officer. The Company assumed this debt, which was paid off during the year ended December 31, 2019 through the issuance of Company stock. Additional debt held through the home services segment as of December 31, 2018, included loans for various vehicles and equipment. Two vehicle loans were entered into during the quarter ended March 31, 2018. These loans required monthly payments through May 2023 and held annual interest rates of 5.99%. As of December 31, 2019, all of these loans have been assumed by Rooter Hero, as a result of the divestiture of the home services segment. See Note 3 for more information.

During the quarter ended September 30, 2017, EDI Real Estate, LLC, as a borrower, issued two promissory notes, each secured by a property held for investment. These notes carry annual interest rates of 6%, pay interest quarterly, and are due September 15, 2022, with early payoff permitted. Additionally, during the quarter ended September 30, 2018, EDI Real Estate, LLC issued a promissory note secured by additional properties held for investment. This note carries an annual interest rate of 5.6% and fully matures on September 1, 2033, with early payoff permitted. The interest rate on this note is subject to change once each five-year period based on an index rate plus a margin of 2.750 percentage points. The index rate is calculated as a monthly average yield on U.S. Treasury Securities, adjusted to a constant maturity of five years.

During the quarter ended March 31, 2019, the Company issued a promissory note secured by the commercial warehouse held for resale. The note carried an annual interest rate of 8%, paid interest quarterly, and was due upon successful sale of the warehouse with early payoff permitted. Accordingly, this note was paid off during December 2019, in conjunction with the sale of the warehouse.

With respect to outstanding debt secured by the real properties acquired by Mt Melrose, LLC, these notes began to mature during the quarter ended March 31, 2019, with the last note extending until January 2042. Some of these loans were interest only while others accrued interest that is due in full with a final balloon payment. As of December 31, 2018, the debt secured by the real properties had varying annual interest rates from 4.375% to 13%. As mentioned in Note 4, because the Company no longer has a controlling financial interest in Mt Melrose, it no longer consolidates Mt Melrose, LLC’s assets, liabilities (including notes payable), or results of operations. This results in zero notes payable reported under Mt Melrose, LLC as of December 31, 2019.

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NOTE 11. SEGMENT INFORMATION

During the year ended December 31, 2019, the Company operated through five business segments with separate management and reporting infrastructures that offer different products and services. The five business segments are as follows: Asset Management Operations, Real Estate Operations, Internet Operations, Home Services Operations, and Other Operations. As of the year ended December 31, 2019, and for all prior periods presented, Home Services Operations are reported as discontinued operations.

In previous periods, the Company reported under the following six business segments: Asset Management, Mt Melrose, HVAC, Internet, Real Estate, and Corporate. In an effort to highlight the direction of the Company and increase segment transparency, these historical segments were reorganized during the quarter ended June 30, 2018. Additional reorganizations were made as of January 1, 2019, in order to appropriately reflect the similarities in the Company’s real estate operations. The “Mt Melrose” and legacy “Real Estate” segments are referred to collectively as “Real Estate,” and the “HVAC” segment is referred to as “Home Services.” “Corporate” and other additional investments are combined under “Other Operations.” The “Asset Management” and “Internet” segments remain unchanged. See below for additional information on the activity included in each respective segment report.

As mentioned in Note 3, on May 24, 2019, the Company completed a divestiture of its Home Services Operations, via its subsidiary, Specialty Contracting Group, LLC, to an unaffiliated third-party purchaser, Rooter Hero Plumbing, Inc. (“Rooter Hero”). In the transaction, the Company sold and conveyed all of the subsidiary’s personal property and customer lists and records, excluding stock inventory and other current assets. As part of the transaction, Rooter Hero assumed the subsidiary’s obligations under lease and/or loan agreements for all outstanding vehicles and equipment, as well as the obligations to service all of the subsidiary’s remaining customer accounts going forward. The current and comparative results of the home services segment have been reported as discontinued on the accompanying consolidated financial statements for the year ended December 31, 2019.

As mentioned in Note 4, on June 27, 2019, the Company sold 65% of its membership interest in Mt Melrose, LLC to an unaffiliated third-party purchaser, Woodmont Lexington, LLC.

Management determined that as of June 27, 2019, the Company no longer has a “controlling financial interest” in Mt Melrose; therefore, the Company no longer consolidates Mt Melrose. All activity prior to the deconsolidation event has been included on the accompanying consolidated statements of operations for the year ended December 31, 2019, under the real estate segment. As of June 27, 2019, all previously consolidated assets and liabilities of Mt Melrose, LLC have been removed from the accompanying consolidated balance sheets for the year ended December 31, 2019.

The asset management operations segment includes revenues and expenses derived from various joint ventures, service offerings, and initiatives undertaken in the asset management industry. The real estate segment includes revenue and expenses related to the management of properties held for investment and held for resale through Mt Melrose (prior to the sale of 65% of our equity in Mt Melrose on June 27, 2019) located in Lexington, Kentucky, and revenue and expenses related to the management of legacy properties held for investment and held for resale through EDI Real Estate located in Roanoke, Virginia. The internet segment includes revenue and expenses related to our sale of internet access, hosting, storage, and other ancillary services. The home services segment includes discontinued revenue and expenses derived from our former operation of HVAC and plumbing companies in Arizona. The other segment includes revenue and expenses from nonrecurring or one-time strategic funding or similar activity and any revenue or expenses derived from corporate office operations, as well as expenses related to public company reporting, the oversight of subsidiaries, and other items that affect the overall Company.

The internet segment includes revenue generated by operations in both the United States and Canada. In the year ended December 31, 2019, the internet segment generated revenue of $1,011,407 in the United States and revenue of $54,822 in Canada. This compares to the year ended December 31, 2018, where the internet segment generated revenue of $1,101,999 in the United States and revenue of $66,844 in Canada. All assets reported under the internet segment for the years ended December 31, 2019 and 2018, are located within the United States.

Summarized financial information concerning the Company’s reportable segments is shown in the following tables for the years ended December 31, 2019 and 2018.

Year Ended December 31, 2019		Asset Management		Real Estate			Internet		Other			Discontinued Operations - Home Services			Consolidated
Revenues	$	1,773,276	$	537,763		$	1,066,229	$	212,631		$	—		$	3,589,899
Cost of revenue		—		485,459			330,654		—			—			816,113
Operating expenses		410,226		338,025			223,118		1,101,098			—			2,072,467
Other income (expense)		36,565		(4,712,766	)		10,169		96,551			—			(4,569,481	)
Income (loss) from continuing operations		1,399,615		(4,998,487	)		522,626		(791,916	)		—			(3,868,162	)
Income (loss) from discontinued operations		—		—			—		—			(1,510,475	)		(1,510,475	)
Goodwill		—		—			212,445		—			—			212,445
Identifiable assets	$	10,186,353	$	556,994		$	414,935	$	740,934		$	428		$	11,899,644

Year Ended December 31, 2018		Asset Management			Real Estate			Internet		Other			Discontinued Operations - Home Services			Consolidated
Revenues	$	(775,249	)	$	778,657		$	1,168,843	$	160,492		$	—		$	1,332,743
Cost of revenue		—			450,859			325,234		202,533			—			978,626
Operating expenses		286,283			920,309			241,654		875,527			—			2,323,773
Other income (expense)		41,632			(1,416,257	)		35,649		2,673			—			(1,336,303	)
Income (loss) from continuing operations		(1,019,900	)		(2,008,768	)		637,604		(914,895	)		—			(3,305,959	)
Income (loss) from discontinued operations		—			—			—		—			(915,163	)		(915,163	)
Goodwill		—			—			212,445		—			—			212,445
Identifiable assets	$	8,496,917		$	12,550,571		$	430,503	$	1,508,601		$	1,532,860		$	24,519,452

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NOTE 12. COMMITMENTS AND CONTINGENCIES

Leases

As of December 31, 2019, the Company has three leases classified as operating leases and no finance leases. The previously reported finance leases as of the period ended March 31, 2019, were assumed by Rooter Hero as part of the home services divestiture that took place on May 24, 2019. See Note 3 for more information.

The operating leases correspond to the warehouse and office facilities for Specialty Contracting Group, LLC, which did not convey with the divestiture; office space for Willow Oak Asset Management, LLC; and warehouse space for corporate matters. The lease for warehouse space for corporate matters is a short-term lease, under 12 months, and in accordance with ongoing accounting policy elections, the Company does not recognize right-of-use (ROU) assets or lease liabilities for short-term leases. The leases have remaining terms expiring from 2019 through 2021 and a weighted average remaining lease term of 1.2 years. The right-of-use assets and corresponding lease liabilities for the Company’s operating leases are reported separately on the accompanying consolidated balance sheets. Discount rates used in the calculation of our lease liability was approximately 6.7%. With respect to the leased facilities for Specialty Contracting Group, LLC, possession of the premises was surrendered to the landlord, in connection with the dissolution and winding up of Specialty Contracting Group, in default of that lease. In addition, the Company is the lessor for facility space in New York that it sublets to other tenants; the remaining two subleases of which expired on December 31, 2019.

Lease costs for the year ended December 31, 2019 consisted of the following:

Finance lease costs:
Amortization of ROU assets	$	—
Interest on lease liabilities		—
Operating lease cost		64,092
Sublease income		(28,405	)
Total lease costs from continuing operations		35,687
Total lease costs from discontinued operations		64,901
Total lease costs	$	100,588

A maturity analysis of our operating leases is as follows:

2020	$	86,380
2021		16,634
2022		—
Total		103,014
Discount factor		(6,469	)
Lease liability		96,545
Less lease liability from discontinuing operations		(50,110	)
Amounts due within 12 months		(46,435	)
Long-term lease liability	$	—

Other Commitments

As mentioned in Note 4, on June 27, 2019, the Company sold 65% of its membership interest in Mt Melrose, LLC to an unaffiliated third-party purchaser, Woodmont Lexington, LLC. As consideration for the transaction, Woodmont paid the Company $100,000 and agreed to assume full responsibility for the management and operation of Mt Melrose and its real estate portfolio. Under the terms of the parties’ membership interest purchase agreement, the Company agreed to indemnify Woodmont against any losses actually incurred as a result of breaches of the Company’s representations and warranties made under the agreement. To date, Woodmont has made four claims for indemnification under the agreement, all of which have been rejected and disputed by the Company.

Litigation

Enterprise Diversified, Inc. (f/k/a Sitestar Corporation) v. Frank Erhartic, Jr.

On April 12, 2016, the Company filed a civil action complaint against Frank Erhartic, Jr. (the “Former Erhartic CEO”), the Company’s former CEO and director (prior to December 14, 2015) and currently an owner of record or beneficially of more than 5% of the Company’s Common Stock, alleging, among other things, that the Former Erhartic CEO engaged in, and caused the Company to engage in to its detriment, a series of unauthorized and wrongful related party transactions, including causing the Company to borrow certain amounts from the Former Erhartic CEO’s mother unnecessarily and at a commercially unreasonable rate of interest, converting certain funds of the Company for personal rent payments to the Former Erhartic CEO, commingling in land trusts certain real properties owned by the Company and real properties owned by the Former Erhartic CEO, causing the Company to pay certain amounts to the Former Erhartic CEO for lease payments under an unauthorized lease as to a storage facility owned by the Former Erhartic CEO, causing the Company to pay rent on its corporate headquarters owned by the Former Erhartic CEO’s ex-wife in amounts commercially unreasonable and excessive, and to make real estate tax payments thereon for the personal benefit of the Former Erhartic CEO, converting to the Former Erhartic CEO and/or absconding with five motor vehicles owned by the Company, causing the Company to pay real property and personal property taxes on numerous properties owned personally by the Former Erhartic CEO, causing the Company to pay personal credit card debt of the Former Erhartic CEO, causing the Company to significantly overpay the Former Erhartic CEO’s health and dental insurance for the benefit of the Former Erhartic CEO, and causing the Company to pay the Former Erhartic CEO’s personal automobile insurance. The Company is seeking, among other relief available, monetary damages in excess of $350,000. This litigation matter is currently pending in the Circuit Court for the City of Lynchburg (Lynchburg, Virginia).

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Other: Mt Melrose-related Proceedings

Various disputes have arisen and are continuing between the Company and Woodmont Lexington, LLC (“Woodmont”), the entity to whom the Company sold, on June 27, 2019, 65% of the Company’s membership interest in Mt Melrose, LLC (“Mt Melrose”). 

In undertaking a sale of its membership interests in Mt Melrose, the Company had sought to partner with an operator who, in exchange for being granted a substantial equity interest at a significant discount to the amounts the Company had invested in Mt Melrose, would assume full responsibility for the management and operation of Mt Melrose and its real estate portfolio and endeavor in good faith to generate favorable returns inuring to the long-term best interests of the Company and its shareholders.

Shortly following the closing of the Mt Melrose transaction, however, the relationship between the Company and Woodmont soured. Woodmont, by its representative, Tice Brown, unexpectedly proceeded to make numerous claims and demands upon the Company, which the Company determined to be unfounded and frivolous, if not disingenuous to the parties’ understandings. During the year ended December 31, 2019, Woodmont also has submitted three formal claims for indemnification under the parties’ purchase agreement, each of which were considered by the Company and then rejected and disputed in short order as unfounded. An additional claim has been submitted, considered, and disputed subsequent to December 31, 2019.

In addition, Woodmont, acting as the sole manager of Mt Melrose, purported to unilaterally amend and restate as of August 29, 2019 the Mt Melrose limited liability company agreement among the parties, purporting to change the terms of the distribution waterfall the parties had expressly agreed to and purporting to reallocate the parties’ respective interests in Mt Melrose – unilaterally reducing the Company’s percentage membership interest from 35% to 20.8% while increasing Woodmont’s percentage membership interest from 65% to 79.2%. The Company has rejected and disputed these purported changes and Woodmont’s conduct.

In connection with the primary disputes between the Company and Woodmont and following the Company’s Delaware Action (as defined below), on December 5, 2019, Woodmont also filed a verified complaint in the Fayette County, Kentucky Circuit Court against the Company and a third party who was then-under contract with the Company for such party’s purchase of the Company’s warehouse and associated real property located in Lexington, Kentucky – see Woodmont Lexington, LLC, et al. v. Enterprise Diversified, et al., Fayette Circuit Court, Civil Action No. 19-CI-04304 (the “Kentucky Action”). The Court in the Kentucky Action enjoined the Company and the warehouse purchaser from removing or cleaning out the various items of building materials and salvage owned by Mt Melrose that had been placed in the warehouse premises, and required the Company and the warehouse purchaser to provide rent-free access so that Woodmont and Mt Melrose could realize “full value” on their liquidation of the stored personal property until February 1, 2020. The Company believes that Woodmont’s attempt to hold up the sale of an $850,000 warehouse and property because it wanted to store spare toilets, doors, floor tiles and other residential building materials there, rent free, for more than six months, was disingenuous and intentionally injurious to the Company. On December 27, 2019, the Company filed verified counter-claims in the Kentucky Action against Woodmont, alleging, among other things, Woodmont’s tortious interference with the Company’s business and Woodmont’s unjust enrichment. The Company is seeking, among other relief available against Woodmont, declaratory relief; trial by jury on all issues; money damages, including all special and consequential damages, in amounts to be determined at trial; and the Company’s costs and expenses, including attorneys’ fees; together with pre- and post-judgement interest. The parties to the Kentucky Action have recently engaged in settlement negotiations, although they have not been successful. This action remains pending in the Fayette County, Kentucky Circuit Court.

All the while, since the closing of the Mt Melrose transaction, Woodmont, by its representative, Tice Brown, has made repeated “low ball” offers to buy out the Company’s remaining interest in Mt Melrose, insisting that the Company relinquish its Mt Melrose interest in order to avoid further claims and demands and in order to avoid threatened public disparagement (including by way of statements made on various social media by Woodmont’s representative, Tice Brown). All such offers have been rejected or not responded to by the Company, as being unfavorable, undesirable and not in the long-term best interests of the Company and its shareholders.

On January 7, 2020, Woodmont, acting as the sole manager of Mt Melrose, also caused Mt Melrose to distribute a $600,000 cash dividend directly to Woodmont. Woodmont expressly excluded the Company from receiving any portion of this distribution. The Company has rejected and disputed the propriety of this distribution and Woodmont’s conduct.

The Company believes that Woodmont, directly and by its representative, Tice Brown, has engaged, and continues to engage, in intentionally injurious and harassing conduct concerning Mt Melrose that runs counter to the long-term best interests of the Company and its shareholders. Accordingly, as previously reported in the Company’s Current Report on Form 8-K filed with the SEC on November 20, 2019, the Company filed a verified complaint in the Court of Chancery of the State of Delaware on November 20, 2019, commencing a civil action against Woodmont – see Civil Action No. 2019-0928-JTL (the “Delaware Action”). The Delaware Action was filed by the Company in response to the repeated claims and demands and injurious conduct by Woodmont and its representative, Tice Brown. On March 9, 2020, the Company filed further an amended verified complaint against Woodmont in the Delaware Action, expanding its claims against Woodmont. The Company is seeking, among other relief available against Woodmont, injunctive, declaratory and equitable relief, and relief for, among other things, Woodmont’s breaches of contract and unjust enrichment, along with attorneys’ fees and expenses. This action remains pending in the Delaware Court of Chancery.

Management intends to vigorously prosecute the Company’s claims, and defend the Company’s rights, against Woodmont and its representative, Tice Brown, in all of these Mt Melrose-related proceedings.

NOTE 13. STOCKHOLDERS’ EQUITY

Classes of Shares

As of December 31, 2019, the Company’s Articles of Incorporation, as amended, authorize 32,800,000 shares of capital stock of the Company, consisting of 30,000,000 authorized shares of serial preferred stock, par value of $0.001 per share, and 2,800,000 authorized shares of common stock, par value of $0.125 per share.

Preferred Stock

Preferred stock, any series, shall have the powers, preferences, rights, qualifications, limitations, and restrictions as fixed by the Company’s Board of Directors in its sole discretion. As of December 31, 2019, the Company has not issued any preferred stock.

Common Stock

As of December 31, 2019, 2,566,646 shares of common stock were issued and outstanding.

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NOTE 14. SHARE ADJUSTMENT, CANCELLATION AND SALE OF TREASURY SHARES, AND REVERSE STOCK SPLIT

Cancellation and Sale of Treasury Shares

On May 26, 2018, the Company signed a stock purchase agreement with an unaffiliated third party to sell 1,633,500 shares of the Company’s common stock held as treasury shares to such party for $0.11036586 per share. The settlement date for the sale was July 31, 2018. The number of shares transferred on the settlement date was adjusted for the Company’s reverse stock split to 13,068 shares. To the extent that this sale of previously registered shares held as treasury shares required an exemption from registration, this sale of shares of common stock of the Company was exempt from registration under the Securities Act of 1933 (the “Securities Act”), in reliance upon Section 4(a)(2) of the Securities Act and Regulation D Rule 506, as a transaction by an issuer not involving a public offering.

On December 30, 2019, the Company completed the cancellation of the remaining 80,506 treasury shares upon resolution from the Board of Directors.

Reverse Stock Split

As previously reported in our Current Report on Form 8-K filed with the SEC on June 7, 2018, the Board of Directors of the Company previously approved, on March 29, 2018, a reverse stock split of all of the Company’s Common Stock, pursuant to which every 125 shares of Common Stock of the Company were reverse split, reconstituted, and converted into one (1) share of Common Stock of the Company (the “Reverse Stock Split”). To effectuate the aforesaid Reverse Stock Split, the Company previously filed on May 23, 2018, a Certificate of Change Pursuant to Nevada Revised Statutes (“NRS”) Section 78.209 (the “Certificate of Change”) with the Secretary of State of the State of Nevada, with a specified effective filing date of June 1, 2018.

The Company submitted an Issuer Company Related Action Notification regarding the Reverse Stock Split to the Financial Industry Regulatory Authority (“FINRA”) on May 22, 2018. FINRA declared the Reverse Stock Split effective in the marketplace July 23, 2018 (the “FINRA Effective Date”). Accordingly, while the Certificate of Change became effective under Nevada state corporate law on June 1, 2018, the Reverse Stock Split did not become effective as to shareholders or the marketplace until the FINRA Effective Date.

Split Adjustment

On the FINRA Effective Date, the total number of shares of the Company’s Common Stock held by each stockholder converted automatically into the number of whole shares of Common Stock equal to (i) the number of shares of Common Stock held by such stockholder immediately prior to the Reverse Stock Split, divided by (ii) one hundred twenty five (125). No fractional shares were issued, and no cash or other consideration was paid. Rather, any fraction of a share of Common Stock that otherwise would have resulted from the Reverse Stock Split were rounded up to the next whole share of Common Stock. That is, stockholders who otherwise would have been entitled to receive fractional shares because they held a number of pre-Reverse Stock Split shares of the Company’s Common Stock not evenly divisible by one hundred twenty five (125), had the number of post-Reverse Stock Split shares of the Company’s Common Stock to which they were entitled rounded up to the next whole number of shares of the Company’s Common Stock. Stockholders’ equity and all references to share and per-share amounts in the accompanying consolidated financial statements have been retroactively adjusted to reflect the Reverse Stock Split for all periods presented.

Ownership Unchanged

Immediately after the Reverse Stock Split, each stockholder’s percentage ownership interest in the Company and proportional voting power remained unchanged except for minor adjustments resulting from the Company’s election to round up any fraction of a share of Common Stock that otherwise would have resulted from the Reverse Stock Split. The rights and privileges of the holders of shares of Common Stock of the Company were substantially unaffected by the Reverse Stock Split.

Capitalization

Immediately prior to the Certificate of Change becoming effective, the aggregate number of shares which the Company had the authority to issue was three hundred fifty million (350,000,000) shares of Common Stock at $.001 par value, and thirty million (30,000,000) shares of Serial Preferred Stock at $.001 par value. As a result of the Certificate of Change and Reverse Stock Split, the aggregate number of shares which the Company has the authority to issue is two million eight hundred thousand (2,800,000) shares of Common Stock at $.125 par value, and thirty million (30,000,000) shares (unchanged) of Serial Preferred Stock at $.001 par value. 

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NOTE 15. INCOME TAXES

The provision for federal and state income taxes for the years ended December 31, 2019 and 2018 included the following:

	2019			2018
Current benefit (provision):
Federal	$	—		$	—
State		—			—
Deferred benefit:
Federal		1,097,146			1,262,452
State		95,202			322,027
Valuation allowance		(1,192,348	)		(1,584,479	)
Total income tax provision	$	—		$	—

Deferred tax assets and liabilities reflect the net effect of temporary differences between the carrying amount of assets and liabilities used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2019 and 2018 are as follows:

	2019			2018
Deferred tax assets:
Carrying value differences	$	232,030		$	498,863
Net operating loss carryforward		2,927,848			1,333,361
Tax credits		6,250			6,250
Other		—			—
Subtotal		3,166,128			1,838,474
Valuation allowance		(2,732,064	)		(1,539,716	)
Net deferred tax assets		434,064			298,758
Deferred tax liabilities:
Net unrealized gains on appreciated investments		(434,064	)		(298,758	)
Net deferreds	$	—		$	—

GAAP provides for the recognition of deferred tax assets if realization of such assets is more likely than not. Based on the weight of available evidence, which includes the Company’s historical operational performance and the reported cumulative losses in the three-year period preceding 2019, the Company has provided a full valuation allowance against its net deferred tax assets. The deferred tax liability results from gains on appreciated investments that are realized for financial accounting purposes but not for tax purposes.

As of December 31, 2019, the Company had federal net operating loss carryforwards of approximately $11.8 million and state net operating loss carryforwards of approximately $10.0 million. These carryforwards will expire in various amounts beginning in 2032. Internal Revenue Code Section 382 limits the use of net operating loss carryforwards in certain situations where changes occur in the stock ownership of a company. The Company believes that an ownership change did occur in August 2016. Net operating losses that arose prior to that ownership change will have limited availability to offset taxable income arising in periods following the ownership change.

The Company is required to recognize in the financial statements the impact of a tax position, if that position is not more likely than not of being sustained on audit, based on the technical merits of the position. The Company’s policy is to record interest and penalties related to unrecognized tax benefits in income tax expense. The unrecognized tax benefit was $0 as of December 31, 2019. The Company does not expect that its uncertain tax positions will materially change in the next 12 months. No liability related to uncertain tax positions is recorded on the financial statements related to uncertain tax positions.

The Company operates in various tax jurisdictions and is subject to audit by various tax authorities. To the extent of the Company’s tax loss carryovers, the Company’s federal and state tax returns will be subject to examination by the tax authorities from the earliest years in which such tax attributes arise. While the amount of those tax loss carryovers continues to be subject to adjustment, any assessment of additional tax for those prior years is generally barred, except for the three most recent years (federal) or four most recent years (state). Tax contingencies are based upon their technical merits, relative law, and the specific facts and circumstances as of each reporting period. Changes in facts and circumstances could result in material changes to the amounts recorded for such tax contingencies.

49

NOTE 16. RELATED PARTY TRANSACTIONS

Former CEO, Erhartic

As of the year ended December 31, 2015, the Company previously purported to lease its office building in Lynchburg, Virginia, from the Former CEO, Frank Erhartic, of the Company. Public records indicate that the owner of this property from at least January 1, 2014, through December 31, 2015, was the Former CEO’s ex-wife. The Company has filed a lawsuit against the Former CEO, Erhartic, in order to recover, among other amounts, the payments made to the Former CEO. Additional information on this lawsuit can be found in Note 12. The Company vacated the building as of January 15, 2016.

The Company also leased a storage facility in Salem, Virginia, from the Former CEO, Erhartic. The Company is attempting to recover the payments made to the Former CEO related to this facility. The lease was not approved by the process required by the Company’s Code of Ethics. The Former CEO has refused to provide access to the storage facility to management and has not returned Company-owned equipment located at the storage facility. The value of this equipment is also included in the lawsuit. Additional information can be found in Note 12.

The Former CEO, Erhartic, created several land trusts and designated the Company as the trustee. The Former CEO and, the Company believes, the Former CFO placed personally owned properties within these land trusts. This activity was not approved by the process required by the Company’s Code of Ethics. This activity is the subject of litigation involving the Former CEO, Erhartic. Additional information can be found in Note 12.

Bonhoeffer Fund, LP

The Company’s subsidiary, Willow Oak Asset Management, LLC, signed a fee share agreement on June 13, 2017, with Coolidge Capital Management, LLC (“Coolidge”), whose sole member is Keith D. Smith, also an ENDI director. Willow Oak is the sole member of Bonhoeffer Capital Management LLC, the general partner to Bonhoeffer Fund, LP, a private investment partnership. Under their agreement, Willow Oak pays all start-up and operating expenses that are not partnership expenses under the limited partnership agreement. Willow Oak receives 50% of all performance and management fees earned by the general partner. During the years ended December 31, 2019 and 2018, the Company earned $38,599 and $26,196, respectively, of revenue through this Bonhoeffer Fund arrangement.

Willow Oak Capital Management, LLC

On August 1, 2018, Willow Oak, through a wholly-owned Company subsidiary, Willow Oak Capital Management, LLC (“Willow Oak Capital Management”), launched a newly organized private investment partnership, Willow Oak Select Fund, LP (“Select Fund”). Willow Oak Capital Management served as the general partner of Select Fund. During the year ended December 31, 2018, Willow Oak Capital Management entered into fee share arrangements related to the Select Fund initiative with each of the following related party funds or managers: (i) Steven Kiel, a director of the Company, pursuant to a fee share agreement dated June 25, 2018; (ii) JDP Capital Management, LLC, pursuant to a fee share agreement dated June 15, 2018 (the counterparty was affiliated with Jeremy Deal, a director of the Company); and (iii) Coolidge Capital Management, LLC, pursuant to a fee share agreement dated June 25, 2018 (the counterparty was affiliated with Keith Smith, a director of the Company). These related party transactions were considered and approved by the Audit Committee of the Board of Directors of the Company, acting unanimously, on May 19, 2018. However, Select Fund ultimately dissolved in June 2019 so that other joint ventures and partnerships could be pursued, and these related party arrangements terminated accordingly. During the years ended December 31, 2019 and 2018, the Company earned $1,521 and $610, respectively, of revenue through this Select Fund arrangement.

Willow Oak Asset Management, LLC

On October 1, 2017, Willow Oak Asset Management, LLC entered into sub-lease agreements with Arquitos Capital Management, LLC, which is managed by our director and principal executive officer, Steven L. Kiel, JDP Capital Management, LLC, which is managed by our director and vice-chairman, Jeremy K. Deal, and B.E. Capital Management, LLC, which is managed by our director, Thomas Braziel. At the commencement of the sub-lease arrangement, neither Jeremy K. Deal nor Tomas Braziel met the criteria for a related party. Upon Jeremy K. Deal’s board appointment on April 3, 2018 and Thomas Braziel’s appointment on May 5, 2019, the sub-lease arrangements qualify as related party transactions. During the years ended December 31, 2019 and 2018, the Company earned $28,405 and $41,632, respectively, of sub-lease revenue through these arrangements. Willow Oak’s sub-lease agreement with Arquitos Capital Management, LLC expired on October 31, 2018, and as of December 31, 2019, the remaining two sub-lease arrangements have also expired.

On November 1, 2018, Willow Oak Asset Management, LLC entered into a fund management services agreement with Arquitos Investment Manager, LP, which is managed by our director and principal executive officer, Steven L. Kiel, to provide Arquitos with Willow Oak Fund Management Services (“FMS”) consisting of the following services: investor relations, marketing, administration, legal, accounting and bookkeeping, annual audit coordination, and liaison to third-party service providers. As considerations for the services, Arquitos pays Willow Oak a fixed monthly fee and a performance-based fee. During the years ended December 31, 2019 and 2018, the Company earned $100,461 and $17,614, respectively, of revenue through this fund management services arrangement.

Mt Melrose Transaction

The Company’s and its Mt Melrose subsidiary’s transactions with Old Mt. Melrose and Jeffrey I. Moore, a former director of the Company, were related party transactions and are set out in Notes 5 and 9, respectively.

NOTE 17. SUBSEQUENT EVENTS

Management has evaluated all subsequent events from December 31, 2019, through March 30, 2020, the date the consolidated financial statements were issued. Management concluded that no subsequent events have occurred that would require recognition or disclosure in the consolidated financial statements.

50

EX-21

Exhibit 21

ENTERPRISE DIVERSIFIED, INC. AND SUBSIDIARIES

LISTING OF SUBSIDIARIES

	State of Incorporation	Percentage Owned by Registrant
Bonhoeffer Capital Management, LLC	New York	100%
EDI Real Estate, LLC	Virginia	100%
Mt Melrose, LLC 1	Delaware	35% 2
Sitestar.net, Inc.	Virginia	100%
Specialty Contracting Group, LLC 3	Delaware	100%
Willow Oak Asset Management, LLC	Delaware	100%
Willow Oak Capital Management, LLC	Delaware	100%

¹   Entity ceased to be a subsidiary of the Company (as defined in Rule 1-02(x) of Regulation S-X) effective as of June 27, 2019, upon the closing of the transactions under that certain Membership Interest Purchase Agreement between the Company and Woodmont Lexington, LLC.

²   Ownership percentage in entity is in dispute by the Company and Woodmont Lexington, LLC. The Company maintains that its ownership percentage is 35%; Woodmont Lexington, LLC asserts that the Company’s ownership percentage is 20.8%.

³   Entity ceased to be a subsidiary of the Company (as defined in Rule 1-02(x) of Regulation S-X) effective as of November 15, 2019, upon the filing of its Certificate of Cancellation with the Secretary of State of the State of Delaware.

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

I, Steven L. Kiel, certify that:

1. I have reviewed this annual report on Form 10-K of Enterprise Diversified, 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 evaluations; 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 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.

Date: March 30, 2020	By:	/s/ Steven L. Kiel
		Steven L. Kiel
		Executive Chairman
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

I, Alea A. Kleinhammer, certify that:

1. I have reviewed this annual report on Form 10-K of Enterprise Diversified, 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 evaluations; 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 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.

Date: March 30, 2020	By:	/s/ Alea A. Kleinhammer
		Alea A. Kleinhammer
		Chief Financial Officer
		(Principal Financial Officer)

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Enterprise Diversified, Inc., (SYTE) on Form 10-K for the year ended December 31, 2019, I, Steven L. Kiel, Executive Chairman 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, to the best of my knowledge:

(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.

By:	/s/ Steven L. Kiel
	Steven L. Kiel
	Executive Chairman

March 30, 2020

This certification is being furnished to the SEC with this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section.

EX-99.1

Exhibit 99.1

ENTERPRISE DIVERSIFIED, INC.

2020 EQUITY INCENTIVE PLAN

As adopted by the Board of Directors effective January 31, 2020

Section 1.     Purpose; Available Awards.

1.1     General Purpose. The purpose of the Enterprise Diversified, Inc. 2020 Equity Incentive Plan (the “Plan”) is to promote the long-term financial success of Enterprise Diversified, Inc. (the “Company”), and its Affiliates, by providing a means to retain and reward, and to the extent necessary, attract and incentivize, its Employees, Officers and Directors to promote growth, improve performance and further align the interests of such individuals with those of the Company’s other shareholders through the ownership of additional common stock of the Company. Without limiting any of the foregoing, the Plan is also intended to serve as the means by which Directors will be compensated for their services on the Board by way of Awards of Common Stock in lieu of cash payments of director’s fees by the Company.

1.2     Available Awards. Awards that may be granted under the Plan include: (a) Common Stock, (b) Restricted Stock and (c) Restricted Stock Units.

Section 2.     Definitions.

“Affiliate” means a corporation or other entity that, directly or through one or more intermediaries, controls, is controlled by or is under common control with, the Company.

“Applicable Laws” means the requirements related to or implicated by the administration of the Plan under applicable state corporate law, United States federal and state securities laws, the Code, any stock exchange or quotation system on which the shares of Common Stock are listed or quoted, and the applicable laws of any foreign country or jurisdiction where Awards are granted under the Plan.

“Award” means any right granted under the Plan, including grants of Common Stock, Restricted Stock, or Restricted Stock Units.

“Award Agreement” means a written agreement, contract, certificate or other instrument or document evidencing the terms and conditions of an individual Award granted under the Plan, which may, in the discretion of the Company, be transmitted electronically to any Participant. Each Award Agreement shall be subject to the terms and conditions of the Plan.

“Board” means the Board of Directors of the Company, as constituted at any time.

“Cause” means, with respect to any Participant, unless the applicable Award Agreement states otherwise:

(a)     If the Participant is a party to an employment agreement with the Company or any of its Affiliates and such agreement provides for a definition of Cause, the definition contained therein; or

(b)     If no such agreement exists, or if such agreement does not define Cause: (i) the commission of, or plea of guilty or no contest to, a felony or a crime involving moral turpitude or the commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company or an Affiliate; (ii) conduct that results in or is reasonably likely to result in harm to the reputation or business of the Company or any of its Affiliates; (iii) gross negligence or willful misconduct with respect to the Company or an Affiliate; or (iv) material violation of state or federal securities laws.

The Committee, in its absolute discretion, shall determine the effect of all matters and questions relating to whether a Participant has been discharged for Cause.

“Change in Control” means, unless otherwise determined by the Committee in the applicable Award Agreement or other written agreement with a Participant approved by the Committee: (i) any one person, or more than one person acting as a group (as defined under Treasury Regulation § 1.409A-3(i)(5)(v)(B)) other than the Company or any employee benefit plan sponsored by the Company acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than seventy percent of the total fair market value or total Voting Power of the stock of the Company; or (ii) any one person, or more than one person acting as a group (as defined under Treasury Regulation § 1.409A-3(i)(5)(v)(B)) other than the Company or any employee benefit plan sponsored by the Company acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing seventy percent or more of the total Voting Power of the stock of the Company; or (iii) a majority of members of the Board of Directors is replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors before the date of each appointment or election; or (iv) any one person, or more than one person acting as a group (as defined in Treasury Regulation § 1.409A-3(i)(5)(v)(B)) acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than seventy percent of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions. For purposes of subsection (iv), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. The foregoing subsections (i) through (iv) shall be interpreted in a manner that is consistent with the Treasury Regulations promulgated pursuant to section 409A of the Code so that all, and only, such transactions or events that could qualify as a “change-in-control event” within the meaning of Treasury Regulation §1.409A-3(i)(5)(i) will be deemed to be a Change in Control for purposes of this Plan.

“Code” means the Internal Revenue Code of 1986, as it may be amended from time to time. Any reference to a section of the Code shall be deemed to include a reference to any regulations promulgated thereunder.

“Committee” means the Governance, Compensation and Nomination Committee of the Board or such other committee of one or more members of the Board appointed by the Board to administer the Plan in accordance with herewith, or in the absence of any such committee, the Board, itself.

“Common Stock” means the common stock, par value $0.125, of the Company.

“Company” means Enterprise Diversified, Inc., a Nevada corporation, and any successor thereto.

“Continuous Service” means that the Participant’s service with the Company or an Affiliate as an Employee is not interrupted or terminated. The Participant’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee or a change in the entity for which the Participant renders such service; provided, however, that there is no interruption or termination of the Participant’s Continuous Service; provided further that, if any Award is subject to Section 409A of the Code, this sentence shall only be given effect to the extent consistent with Section 409A of the Code. For example, a change in status from an Employee of the Company to an Employee of an Affiliate will not constitute an interruption of Continuous Service. The Committee or its delegate, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal or family leave of absence. The Committee or its delegate, in its sole discretion, may determine whether a Company transaction, such as a sale or spin-off of a division or subsidiary that employs a Participant, shall be deemed to result in a termination of Continuous Service for purposes of affected Awards, and such decision shall be final, conclusive and binding.

“Covered Employee” has the same meaning as set forth in Section 162(m)(3) of the Code, as interpreted by IRS Notice 2007-49.

“Deferred Stock Units (DSUs)” has the meaning set forth in Section 7.2 hereof.

“Director” means a member of the Board.

“Employee” means any person employed by the Company or an Affiliate. Mere service as a Director or payment of a director’s fee by the Company or an Affiliate shall not be sufficient to constitute “employment” by the Company or an Affiliate.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fair Market Value” means, as of any date, the value of shares of Common Stock of the Company as determined below. If the Common Stock is listed on any established stock exchange or a national market system, Fair Market Value shall refer to the closing price of a share of Common Stock as quoted on such exchange or system on the applicable date or dates of determination, in each case as obtained from Bloomberg. Notwithstanding the foregoing, for purposes of any calculation of the number of shares to be issued based on a certain Fair Market Value or dollar amount specified in an Award, unless otherwise directed by the Committee, such calculation shall be made using the volume weighted average price of a share of Common Share for the ninety (90) consecutive days immediately preceding the applicable date of determination. In the absence of an established market for the Common Stock, Fair Market Value shall be determined in good faith by the Committee and such determination shall be conclusive and binding on all persons.

“Good Reason” means, with respect to any Participant, unless the applicable Award Agreement states otherwise:

(a)     If the Participant is a party to an employment or service agreement with the Company or its Affiliates and such agreement provides for a definition of Good Reason, the definition contained therein; or

(b)     If no such agreement exists or if such agreement does not define Good Reason, the occurrence of one or more of the following without the Participant’s express written consent, which circumstances are not remedied by the Company within thirty (30) days of its receipt of a written notice from the Participant describing the applicable circumstances (which notice must be provided by the Participant within ninety (90) days of the Participant’s knowledge of the applicable circumstances): (i) any material, adverse change in the Participant’s duties, responsibilities, authority, title, status or reporting structure; (ii) a material reduction in the Participant’s base salary or bonus opportunity; or (iii) a geographical relocation of the Participant’s principal office location by more than fifty (50) miles.

“Grant Date” means the date on which the Committee adopts a resolution, or takes other appropriate action, expressly granting an Award to a Participant that specifies the key terms and conditions of the Award or, if a later date is set forth in such resolution, then such date as is set forth in such resolution.

“Non-Employee Director” means a Director who is a “non-employee director” within the meaning of Rule 16b-3.

“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

“Outside Director” means a Director who is an “outside director” within the meaning of Section 162(m) of the Code and Treasury Regulations Section 1.162-27(e)(3) or any successor to such statute and regulation.

“Participant” means an eligible person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award.

“Person” means a person as defined in Section 13(d)(3) of the Exchange Act.

“Plan” means this Enterprise Diversified, Inc. 2020 Equity Incentive Plan, as amended and/or amended and restated from time to time.

“Restricted Award” means any Award of Restricted Stock or a Restricted Stock Unit granted pursuant to Section 7.1(a).

“Restricted Period” has the meaning set forth in Section 7.1.

“Restricted Stock” means one or more shares of Common Stock subject to a vesting condition specified by the Committee in an Award in accordance with Section 7 below.

“Restricted Stock Unit” mean a restricted stock unit providing a Participant with the right to receive Common Stock, cash, or both, in accordance with the terms of such grant and/or upon attainment of performance goals or satisfaction of a vesting condition specified by the Committee in an Award in accordance with Section 7 below.

“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.

“Securities Act” means the Securities Act of 1933, as amended.

“Total Share Reserve” has the meaning set forth in Section 4.1

“Treasury Regulations” mean the final and temporary regulations issued by the United States Treasury Department and/or Internal Revenue Service, as codified in Title 26 of the United Stated Code of Federal Regulations, and including any successor or replacement regulations.

“Voting Power” means the number of votes available to be cast (determined by reference to the maximum number of votes entitled to be cast by the holders of Voting Securities, or by the holders of any Voting Securities for which other Voting Securities may be convertible, exercisable, or exchangeable, upon any matter submitted to shareholders where the holders of all Voting Securities vote together as a single class) by the holders of Voting Securities.

“Voting Securities” means any securities or other ownership interests of an entity entitled, or which may be entitled, to matters submitted to Persons holding such securities or other ownership interests in such entity generally (whether or not entitled to vote in the general election of directors), or securities or other ownership interests which are convertible into, or exercisable in exchange for, such Voting Securities, whether or not subject to the passage of time or any contingency.

Section 3.     Administration.

3.1     Authority of Committee. The Plan shall be administered by the Committee or, in the Board’s sole discretion, by the Board. Subject to the terms of the Plan, the Committee’s charter and Applicable Laws, and in addition to other express powers and authorization conferred by the Plan, the Committee shall have the authority:

(a)     to construe and interpret the Plan and each Award and apply the provisions and policies of the Plan and each Award;

(b)     to prescribe, amend, and rescind rules, regulations, and policies relating to the administration of the Plan;

(c)     to authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan, including, without limitation, the authority to delegate its authority to one or more Officers of the Company with respect to Awards that do not involve Covered Employees or “insiders” within the meaning of Section 16 of the Exchange Act, to determine when Awards are to be granted under the Plan and the applicable Grant Date, and to from time to time to select, subject to the limitations set forth in this Plan, those Participants to whom Awards are granted;

(d)     to determine the number of shares of Common Stock, if any, to be made subject to each Award;

(e)     to prescribe the terms and conditions of each Award, including, without limitation, the medium of payment and vesting provisions, and to specify the provisions of the Award Agreement relating to such grant;

(f)     for any Award subject to one or more performance goals, to select the criteria that will be used to assess the attainment of such goals;

(g)     to amend any outstanding Awards, including for the purpose of modifying the time or manner of vesting, or the term of any outstanding Award; provided, however, that if any such amendment impairs a Participant’s rights or increases a Participant’s obligations under his or her Award or creates or increases a Participant’s federal income tax liability with respect to an Award, such amendment shall also be subject to the Participant’s consent;

(h)     to determine the duration and purpose of leaves of absences which may be granted to a Participant who is an Employee without constituting termination of his or her employment for purposes of the Plan, which periods shall be no shorter than the periods generally applicable to Employees under the Company’s employment policies;

(i)     to make decisions with respect to outstanding Awards that may become necessary upon a change in corporate control or an event that triggers anti-dilution adjustments;

(j)     to interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the Plan and any instrument or agreement relating to, or Award granted under, the Plan; and

(k)     to exercise discretion to make any and all other determinations which it determines to be necessary or advisable for the administration of the Plan.

3.2     Committee Decisions Final. All decisions made by the Committee pursuant to the provisions of the Plan shall be final and binding on the Company and the Participants, unless such decisions are determined by a court having jurisdiction to be arbitrary and capricious.

3.3     Delegation. The Committee or, if no Committee has been appointed, the Board, may delegate administration of the Plan to a committee or committees of one or more members of the Board, and the term “Committee” shall apply to any person or persons to whom such authority has been delegated. The Committee shall have the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in the Plan to the Board or the Committee shall thereafter be to the committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and re-vest in the Board the administration of the Plan.

3.4     Committee Composition. Except as otherwise determined by the Board, the Committee shall consist solely of two or more Non-Employee Directors who are also Outside Directors.

3.5     Indemnification. Members of the Committee shall have all rights of indemnification that they have as Directors to the extent set forth in the Company’s articles of incorporation and bylaws, to the extent allowed by Applicable Laws, including, without limitation, indemnification against the reasonable expenses, including attorney’s fees, actually incurred in connection with any action, suit or proceeding or in connection with any appeal therein, to which the Committee may be party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted under the Plan, and against all amounts paid by the Committee in settlement thereof.

Section 4.     Shares of Company Common Stock Subject to the Plan.

4.1     Subject to adjustment in accordance with Section 11, no more than [Seventy Thousand (70,000)] shares of Common Stock shall be available for the grant of Awards under the Plan (the “Total Share Reserve”). Any shares of Common Stock granted in connection with Awards shall be counted against this limit as one (1) share for every one (1) share of Common Stock granted in connection with such Award. During the terms of the Awards, the Company shall keep available at all times the number of shares of Common Stock required to satisfy such Awards.

4.2     Shares of Common Stock available for distribution under the Plan may consist, in whole or in part, of authorized and unissued shares, including, without limitation, shares of Common Stock reacquired or redeemed by the Company in any manner.

4.3     Any shares of Common Stock subject to an Award that expires or is canceled, forfeited, or terminated without issuance of the full number of shares of Common Stock to which the Award related will again be available for issuance under the Plan. Any shares of Common Stock that again become available for future grants pursuant to this Section 4 shall be added back as one (1) share. Notwithstanding anything to the contrary contained herein: shares subject to an Award under the Plan shall not again be made available for issuance or delivery under the Plan if such shares are (a) shares delivered or withheld by the Company to satisfy any tax withholding obligation, or (b) shares covered by a stock-settled Award that were not issued upon the settlement of the Award.

Section 5.     Eligibility. All present and future management-level Employees, Officers and Directors of the Company or any Affiliate (whether now existing or hereafter created or acquired) shall be eligible to receive Awards under the Plan; provided, however, the Committee shall have the exclusive power and authority, in its sole and absolute discretion, to select eligible persons to receive an Award and to determine for each Participant, the nature and type of Award and the terms and conditions of each Award.

Section 6.     Unrestricted Awards of Common Stock.

6.1     General. The Committee may grant an Award to a Participant in the form of actual shares of Common Stock of the Company that are not subject to any vesting conditions or contractual restrictions (subject to Section 8 hereof). Such unrestricted Awards of Common Stock may be granted in lieu of cash payments of any bonuses in the case of Employees and in lieu of cash payments of director’s fees in the case of Directors. The decision to grant an Award of Common Stock in lieu of cash may be made only by the Committee, and no Participant shall have any discretionary right in this respect. In the case of the Committee’s decision, from time to time, to make Awards of Common Stock in lieu of cash payments of any director’s fees, such manner of payment shall be applied to all members of the Board then-receiving such director’s fees. Each Award of Common Stock granted under the Plan shall be evidenced by an Award Agreement, which shall describe the nature of the payment (for example, whether on account of director’s fees, a bonus or similar).

6.2     Calculation of Number of Shares. For purposes of calculating the number of shares to be issued to a Participant based on a certain Fair Market Value or cash amount specified in an Award, unless otherwise directed by the Committee, such calculation shall be made using the volume weighted average price of a share of Common Share for the ninety (90) consecutive days immediately preceding the applicable date of determination.

Section 7.     Restricted Awards.

7.1     General. A Restricted Award is an Award of shares of Restricted Stock or one or more Restricted Stock Units, which may, but need not, provide that such Restricted Award may not be sold, assigned, transferred or otherwise disposed of, pledged or hypothecated as collateral for a loan or as security for the performance of any obligation or for any other purpose, or that such Restricted Award is subject to vesting conditions or other restrictive terms, for and during such period (the “Restricted Period”) as the Committee shall determine. Each Restricted Award granted under the Plan shall be evidenced by an Award Agreement. No Restricted Award may be granted or settled for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration of vesting in the terms of any Award Agreement upon the occurrence of a specified event. With respect to any Restricted Award subject to vesting conditions, vesting shall cease immediately upon termination of the Participant’s employment or service for any reason, and any portion of the Restricted Award that has not vested on or prior to the date of such termination shall be automatically forfeited on such date.   

7.2     Restricted Stock. The Committee may grant a Restricted Award to a Participant in the form of one or more shares of Restricted Stock comprised of actual shares of Common Stock that are subject to the conditions set forth in this Section 7 and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. Each Participant granted Restricted Stock shall execute and deliver to the Company an Award Agreement with respect to the Restricted Stock setting forth the restrictions and other terms and conditions applicable to such Restricted Stock.

(a)     If the Committee determines that the Restricted Stock shall be held by the Company or in escrow rather than delivered to the Participant pending the release of the applicable restrictions, the Committee may require the Participant to additionally execute and deliver to the Company (A) an escrow agreement satisfactory to the Committee, if applicable and (B) the appropriate blank stock power with respect to the Restricted Stock covered by such agreement. If a Participant fails to execute an agreement evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and stock power, and deliver it to the Company within any time period prescribed by the Committee, the Award shall be null and void.

(b)     Subject to the restrictions set forth in the Award, the Participant generally shall have the rights and privileges of a shareholder as to such Restricted Stock, including the right to vote such Restricted Stock and the right to receive dividends; provided, however, that, any cash dividends and stock dividends with respect to the Restricted Stock shall be withheld by the Company for the Participant’s account, and interest may be credited on the amount of the cash dividends withheld at a rate and subject to such terms as determined by the Committee. The cash dividends or stock dividends so withheld by the Committee and attributable to any particular share of Restricted Stock (and earnings thereon, if applicable) shall be distributed to the Participant in cash or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to the amount of such dividends, if applicable, upon the release of restrictions on such share, and if such share is forfeited, the Participant shall have no right to any such dividends.

(c)     Restricted Stock awarded to a Participant shall be subject to the following restrictions until the expiration of the Restricted Period, and to such other terms and conditions as may be set forth in the applicable Award Agreement: (i) if an escrow arrangement is used, the Participant shall not be entitled to delivery of the stock certificate; (ii) the shares shall be subject to the limitations on transferability set forth in the Award Agreement; (iii) the shares shall be subject to forfeiture to the extent provided in the applicable Award Agreement; and (iv) to the extent such shares are forfeited, the stock certificates for the Restricted Stock shall be returned to the Company, and all rights of the Participant to such shares and as a shareholder with respect to such shares shall terminate without further obligation on the part of the Company. Each certificate representing one or more shares of Restricted Stock awarded under the Plan shall bear a legend in such form as the Company deems appropriate.

(d)     Upon the expiration of the Restricted Period with respect to any shares of Restricted Stock, the restrictions set forth in Section 7.2(c) and the applicable Award Agreement shall be of no further force or effect with respect to such shares, except as set forth in the applicable Award Agreement. If an escrow arrangement is used, upon such expiration, the Company shall deliver to the Participant, or his or her beneficiary, without charge, the stock certificate evidencing the shares of Restricted Stock which have not then been forfeited and with respect to which the Restricted Period has expired (to the nearest full share) and any cash dividends or stock dividends credited to the Participant’s account with respect to such Restricted Stock and the interest thereon, if any.

7.3     Restricted Stock Units. The Committee may grant a Restricted Award to a Participant in the form of one or more Restricted Stock Units comprised of hypothetical shares of Common Stock, which Restricted Stock Units are subject to the conditions set forth in this Section 7 and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. The terms and conditions of a grant of Restricted Stock Units shall be reflected in an Award Agreement. No shares of Common Stock shall be issued at the time a Restricted Stock Unit is granted, and the Company will not be required to set aside funds for the payment of any such Award. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder.

(a)     The Committee may also grant Restricted Stock Units with a deferral feature, whereby settlement is deferred beyond the vesting date until the occurrence of a future payment date or event set forth in an Award Agreement (“Deferred Stock Units”).

(b)     At the discretion of the Committee, each Restricted Stock Unit or Deferred Stock Unit (representing one share of Common Stock) may be credited with cash and stock dividends paid by the Company in respect of one share of Common Stock (“Dividend Equivalents”). Dividend Equivalents shall be paid currently (and in no case later than the end of the calendar year in which the dividend is paid to the holders of the Common Stock or, if later, the 15th day of the third month following the date the dividend is paid to holders of the Common Stock). Dividend Equivalents shall be withheld by the Company and credited to the Participant’s account, and interest may be credited on the amount of cash Dividend Equivalents credited to the Participant’s account at a rate and subject to such terms as determined by the Committee. Dividend Equivalents credited to a Participant’s account and attributable to any particular Restricted Stock Unit or Deferred Stock Unit (and earnings thereon, if applicable) shall be distributed in cash or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to the amount of such Dividend Equivalents and earnings, if applicable, to the Participant upon settlement of such Restricted Stock Unit or Deferred Stock Unit, and if such Restricted Stock Unit or Deferred Stock Unit is forfeited, the Participant shall have no right to any such Dividend Equivalents.

(c)     Restricted Stock Units and Deferred Stock Units awarded to any Participant shall be subject to (i) forfeiture until the expiration of the Restricted Period, and satisfaction of any applicable performance goals during such period, to the extent provided in the applicable Award Agreement, and to the extent such Restricted Stock Units or Deferred Stock Units are forfeited, all rights of the Participant to such Restricted Stock Units or Deferred Stock Units shall terminate without further obligation on the part of the Company and (ii) such other terms and conditions as may be set forth in the applicable Award Agreement.

(d)     Upon the expiration of the Restricted Period with respect to any outstanding Restricted Stock Units, or at the expiration of the deferral period with respect to any outstanding Deferred Stock Units, the Company shall deliver to the Participant, or his or her beneficiary, without charge, one share of Common Stock for each such outstanding vested Restricted Stock Unit or Deferred Stock Unit (“Vested Unit”) and cash equal to any Dividend Equivalents credited with respect to each such Vested Unit in accordance with Section 7.3(b) hereof and the interest thereon or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to such Dividend Equivalents and the interest thereon, if any; provided, however, that, if explicitly provided in the applicable Award Agreement, the Committee may, in its sole discretion, elect to pay cash or part cash and part Common Stock in lieu of delivering only shares of Common Stock for Vested Units. If a cash payment is made in lieu of delivering shares of Common Stock, the amount of such payment shall be equal to the Fair Market Value of the Common Stock as of the date on which the Restricted Period lapsed in the case of Restricted Stock Units, or the delivery date in the case of Deferred Stock Units, with respect to each Vested Unit.

7.4     Removal of Restrictions. The Committee shall have the authority to remove any or all of the contractual conditions and restrictions on the Restricted Stock, Restricted Stock Units and Deferred Stock Units whenever it may determine that, by reason of changes in Applicable Laws or other changes in circumstances arising after the date the Restricted Stock or Restricted Stock Units or Deferred Stock Units are granted, such action is appropriate.

7.5     Restricted Period. With respect to Restricted Awards, the Restricted Period shall commence on the Grant Date and end on the date indicated in the Award Agreement; provided that, a Restricted Award may vest with respect to a proportionate amount of the Restricted Award, as indicated in the Award Agreement, on each anniversary of the Grant Date.

7.6     Performance Goals. The Committee may condition, from time to time, the grant of a Restricted Award or the lapse of restrictions with respect to a Restricted Award, in whole or in part, on the achievement of certain performance goals determined by the Committee in its sole discretion.

Section 8.     Securities Law Compliance; Legends.

8.1     The Committee may require, in its sole discretion, as a condition to the grant or settlement in shares of Common Stock of any Award hereunder, that a registration statement under the Securities Act with respect to the issuance of the shares of Common Stock to be issued upon such grant or settlement shall be effective and current at the time of grant or settlement. Nothing herein shall be construed as requiring the Company to register the Plan, any Award or any Common Stock issued or issuable pursuant to any such Award under the Securities Act or to keep any registration statement effective current. Except as otherwise determined by the Committee, the issuance of shares of Common Stock upon grant or settlement of an Award under the Plan shall not constitute an offer or sale of securities under the Securities Act and/or shall be a transaction not involving any public offering exempt from registration pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated under the Securities Act. If required to do so by the Committee, each Participant shall execute and deliver to the Company a letter of investment intent in such form and containing such provisions and representations as the Committee may require.

8.2     The Company may endorse such legend or legends upon the certificates for shares of Common Stock issued upon grant or settlement of an Award under the Plan and may issue such “stop transfer” instructions to its transfer agent in respect of such shares as the Committee determines, in its discretion, to be necessary or appropriate to (a) prevent a violation of, or to qualify for an exemption from, the registration requirements of the Securities Act and any applicable state securities laws, or (b) implement the provisions of the Plan or any agreement between the Company and a Participant with respect to such shares of Common Stock. In addition, except in the case of any shares of Common Stock issued pursuant to an effective registration statement under the Securities Act, each certificate representing shares of Common Stock issued upon grant or settlement of an Award under the Plan shall have a legend in substantially the following form endorsed conspicuously thereupon:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.”     

Section 9.     Reserved.

Section 10.     Miscellaneous.

10.1     Acceleration of Vesting. The Committee shall have the power to accelerate the time during which an Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Award Agreement stating the time at which it may first be exercised or the time during which it will vest.

10.2     Shareholder Rights. Except as provided in the Plan or an Award Agreement, no Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Award unless and until such Participant has satisfied all requirements for the Award pursuant to its terms, the Company shall have issued and delivered such shares to such Participant and his or her name shall have been entered as a stockholder of record with respect to such shares on the books of the Company.

10.3     No Employment or Other Service Rights. Nothing in the Plan or any instrument executed or Award granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or shall affect the right of the Company or an Affiliate to terminate (a) the employment of an Employee with or without notice and with or without Cause or (b) the service of a Director pursuant to the bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.

10.4     Transfer; Approved Leave of Absence. For purposes of the Plan, no termination of employment by an Employee shall be deemed to result from either (a) a transfer of employment to the Company from an Affiliate or from the Company to an Affiliate, or from one Affiliate to another, or (b) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the Employee’s right to reemployment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Committee otherwise so provides in writing, in either case, except to the extent inconsistent with Section 409A of the Code if the applicable Award is subject thereto.

10.5     Withholding Obligations. To the extent provided by the terms of an Award Agreement and subject to the discretion of the Committee, the Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under an Award by any of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (a) tendering a cash payment; (b) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Award, provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum/maximum amount of tax required to be withheld by law; or (c) delivering to the Company previously owned and unencumbered shares of Common Stock of the Company.

Section 11.     Adjustments Upon Changes in Stock. In the event of changes in the outstanding Common Stock or in the capital structure of the Company by reason of any stock or extraordinary cash dividend, stock split, reverse stock split, an extraordinary corporate transaction such as any recapitalization, reorganization, merger, consolidation, combination, exchange, or other relevant change in capitalization occurring after the Grant Date of any Award, Awards granted under the Plan and any Award Agreements, and the maximum number of shares of Common Stock subject to all Awards stated in Section 4 will be equitably adjusted or substituted, as to the number, price or kind of a share of Common Stock or other consideration subject to such Awards to the extent necessary to preserve the economic intent of such Award. Any adjustments made under this Section 11 shall be made in a manner which does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act. The Company shall give each Participant notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.

Section 12.     Effect of Change in Control.

12.1     Unless otherwise provided in an Award Agreement, notwithstanding any provision of the Plan to the contrary:

(a)     In the event of a Participant’s termination of Continuous Service without Cause or for Good Reason during the 12-month period following a Change in Control, notwithstanding any provision of the Plan or any applicable Award Agreement to the contrary, the Restricted Period shall expire immediately with respect to 100% of the outstanding shares of Restricted Stock or Restricted Stock Units as of the date of the Participant’s termination of Continuous Service, and, if applicable, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions will be deemed met as of the date of the Participant’s termination of Continuous Service.

(b)     To the extent practicable, any actions taken by the Committee under the immediately preceding clause (a) shall occur in a manner and at a time which allows affected Participants the ability to participate in the Change in Control with respect to the shares of Common Stock subject to their Awards.

12.2     In addition, in the event of a Change in Control, the Committee may in its discretion and upon at least 10 days’ advance notice to the affected persons, cancel any outstanding Awards and pay to the holders thereof, in cash or stock, or any combination thereof, the value of such Awards based upon the price per share of Common Stock received or to be received by other shareholders of the Company in the event.

12.3     The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to all or substantially all of the assets and business of the Company and its Affiliates, taken as a whole.

Section 13.     Amendment of the Plan and Awards.

13.1     Amendment of Plan. The Board at any time, and from time to time, may amend the Plan.

13.2     Reserved.

13.3     Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to the nonqualified deferred compensation provisions of Section 409A of the Code and/or to bring the Plan and/or Awards granted under it into compliance therewith.

13.4     No Impairment of Rights. Rights under any outstanding Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing.

13.5     Amendment of Awards. The Committee at any time, and from time to time, may amend the terms of any one or more Awards; provided, however, that the Committee may not affect any amendment which would otherwise constitute an impairment of the rights under any outstanding Award unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing.

Section 14.     General Provisions.

14.1     Forfeiture Events. The Committee may specify in an Award Agreement that the Participant’s rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain events, in addition to applicable vesting conditions of an Award. Such events may include, without limitation, breach of non-competition, non-solicitation, confidentiality, or other restrictive covenants that are contained in the Award Agreement or otherwise applicable to the Participant, or conduct by the Participant that is detrimental to the business or reputation of the Company and/or its Affiliates.

14.2     Clawback. Notwithstanding any other provisions in this Plan, the Company may cancel any Award, require reimbursement of any Award by a Participant, and effect any other right of recoupment of equity or other compensation provided under the Plan in accordance with any Company policies that may be adopted and/or modified from time to time (“Clawback Policy”). In addition, a Participant may be required to repay to the Company previously paid compensation, whether provided pursuant to the Plan or an Award Agreement, in accordance with such Clawback Policy. By accepting an Award, the Participant is agreeing to be bound by such Clawback Policy, as in effect or as may be adopted and/or modified from time to time by the Company in its discretion (including, without limitation, to comply with applicable law or stock exchange listing requirements).

14.3     Other Compensation Arrangements. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements; and such arrangements may be either generally applicable or applicable only in specific cases.

14.4     Sub-plans. The Committee may from time to time establish sub-plans under the Plan for purposes of satisfying blue sky, securities, tax or other laws of various jurisdictions in which the Company intends to grant Awards. Any sub-plans shall contain such limitations and other terms and conditions as the Committee determines are necessary or desirable. All sub-plans shall be deemed a part of the Plan, but each sub-plan shall apply only to the Participants in the jurisdiction for which the sub-plan was designed.

14.5     Deferral of Awards. The Committee may establish one or more programs under the Plan to permit selected Participants the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event that absent the election would entitle the Participant to payment or receipt of shares of Common Stock or other consideration under an Award. The Committee may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts, shares or other consideration so deferred, and such other terms, conditions, rules and procedures that the Committee deems advisable for the administration of any such deferral program.

14.6     Unfunded Plan. The Plan shall be unfunded. Neither the Company, the Board nor the Committee shall be required to establish any special or separate fund or to segregate any assets to assure the performance of its obligations under the Plan. All Participants shall be general, unsecured creditors of the Company with no claims against the Company or its assets except under the Plan or applicable Award Agreement.

14.7     Reserved.

14.8     Delivery. Upon exercise of a right granted under this Plan, the Company shall issue Common Stock or pay any amounts due within a reasonable period of time thereafter. Subject to any statutory or regulatory obligations the Company may otherwise have, for purposes of this Plan, 30 days shall be considered a reasonable period of time.

14.9     No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan. The Committee shall determine whether cash, additional Awards or other securities or property shall be issued or paid in lieu of fractional shares of Common Stock or whether any fractional shares should be rounded, forfeited or otherwise eliminated.

14.10     Other Provisions. The Award Agreements authorized under the Plan may contain such other provisions not inconsistent with this Plan, including, without limitation, restrictions upon the exercise of the Awards, as the Committee may deem advisable.

14.11     Section 409A. The Plan is intended to be exempt from the provisions of Section 409A of the Code to the greatest extent possible, and to the extent not so exempt, to comply with Section 409A of the Code to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted and administered to be in compliance therewith. Any payments described in the Plan that are due within the “short-term deferral period” as defined in Section 409A of the Code shall not be treated as deferred compensation unless Applicable Laws require otherwise. Notwithstanding anything to the contrary in the Plan, to the extent required to avoid accelerated taxation and tax penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six (6) month period immediately following the Participant’s termination of Continuous Service shall instead be paid on the first payroll date after the six-month anniversary of the Participant’s separation from service (or the Participant’s death, if earlier). Notwithstanding the foregoing, neither the Company nor the Committee shall have any obligation to take any action to prevent the assessment of any excise tax or penalty on any Participant under Section 409A of the Code and neither the Company nor the Committee will have any liability to any Participant for such tax or penalty.

14.12     Reserved.

14.13     Section 16 of the Exchange Act. It is the intent of the Company that the Plan satisfy, and be interpreted in a manner that satisfies, the applicable requirements of Rule 16b-3 as promulgated under Section 16 of the Exchange Act so that Participants will be entitled to the benefit of Rule 16b-3, or any other rule promulgated under Section 16 of the Exchange Act, and will not be subject to short-swing liability under Section 16 of the Exchange Act. Accordingly, if the operation of any provision of the Plan would conflict with the intent expressed in this Section 14.13, such provision to the extent possible shall be interpreted and/or deemed amended so as to avoid such conflict.

14.14     Beneficiary Designation. Each Participant under the Plan may, from time to time, name one or more beneficiaries by whom any right under the Plan is to be exercised in case of such Participant’s death. Each designation will revoke all prior designations by the same Participant, shall be in a form reasonably prescribed by the Committee, and shall be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the event that a Participant fails to name a beneficiary under this Section 14.14, or if any designation made is not effective, the beneficiary shall be the spouse of the Participant if any, and if none, the then living adult and competent descendants of the Participants (who, in the case of the exercise of any discretionary right of the Participant, shall act by majority), and if none, the estate of the Participant acting by and through its duly qualified personal representative.

14.15     Expenses. The costs of administering the Plan shall be paid by the Company.

14.16     Severability. If any of the provisions of the Plan or any Award Agreement is held to be invalid, illegal or unenforceable, whether in whole or in part, such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining provisions shall not be affected thereby.

14.17     Plan Headings. The headings in the Plan are for purposes of convenience only and are not intended to define or limit the construction of the provisions hereof.

14.18     Non-Uniform Treatment. The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among persons who are eligible to receive, or actually receive, Awards. Without limiting the generality of the foregoing, the Committee shall be entitled to make non-uniform and selective determinations, amendments and adjustments, and to enter into non-uniform and selective Award Agreements.

Section 15.     Reserved.

Section 16.     Termination or Suspension of the Plan. Unless earlier terminated by the Board, the Plan shall terminate automatically on the date that the Company has issued shares of Common Stock under the Plan equal in number to the Total Share Reserve. The Board at any time, and from time to time, may suspend the Plan, and the Board may terminate the Plan as of any date. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated.

Section 17.     Governing Law. The laws of the State of Nevada shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to such state’s conflict of law rules.

* * * * *

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Note 5 - Asset Acquisition of Real Estate Properties (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

Land	$	800,328
Buildings		3,201,311
Total Value	$	4,001,639

Land	$	1,036,423
Buildings		4,145,692
Total Value	$	5,182,115

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Note 13 - Stockholders' Equity

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

13.

STOCKHOLDERS’ EQUITY

Classes of Shares

As of

December 31, 2019,

the Company’s Articles of Incorporation, as amended, authorize 

32,800,000

shares of capital stock of the Company, consisting of

30,000,000

authorized shares of serial preferred stock, par value of

$0.001

per share, and

2,800,000

authorized shares of common stock, par value of

$0.125

per share.

Preferred Stock

Preferred stock, any series, shall have the powers, preferences, rights, qualifications, limitations, and restrictions as fixed by the Company’s Board of Directors in its sole discretion. As of

December 31, 2019,

the Company has

not

issued any preferred stock.

Common Stock

As of

December 31, 2019, 

2,566,646

 

shares of common stock were issued and outstanding.

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Note 17 - Subsequent Events

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE

17.

SUBSEQUENT EVENTS

Management has evaluated all subsequent events from

December 31, 2019,

through

March 30, 2020,

the date the consolidated financial statements were issued. Management concluded that

no

subsequent events have occurred that would require recognition or disclosure in the consolidated financial statements.

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Note 11 - Segment Information - Summary of Financial Information Concerning Company's Reportable Segments (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2019	Dec. 31, 2018
Revenue from Contract with Customer, Including Assessed Tax		$ 3,589,899	$ 1,332,743
Cost of revenue		816,113	978,626
Operating expenses		2,072,467	2,323,773
Other income (expense)		(4,569,481)	(1,336,303)
Income (loss) from continuing operations		(3,868,162)	(3,305,959)
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total		(1,510,475)	(915,163)
Goodwill		212,445	212,445
Identifiable assets		11,899,644	24,519,452
Asset Management [Member]
Revenue from Contract with Customer, Including Assessed Tax		1,773,276	(775,249)
Cost of revenue
Operating expenses		410,226	286,283
Other income (expense)		36,565	41,632
Income (loss) from continuing operations		1,399,615	(1,019,900)
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total
Goodwill
Identifiable assets		10,186,353	8,496,917
Real Estate [Member]
Revenue from Contract with Customer, Including Assessed Tax		537,763	778,657
Cost of revenue		485,459	450,859
Operating expenses		338,025	920,309
Other income (expense)		(4,712,766)	(1,416,257)
Income (loss) from continuing operations		(4,998,487)	(2,008,768)
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total
Goodwill
Identifiable assets		556,994	12,550,571
Internet Operations [Member]
Revenue from Contract with Customer, Including Assessed Tax		1,066,229	1,168,843
Cost of revenue		330,654	325,234
Operating expenses		223,118	241,654
Other income (expense)		10,169	35,649
Income (loss) from continuing operations		522,626	637,604
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total
Goodwill		212,445	212,445
Identifiable assets		414,935	430,503
Product and Service, Other [Member]
Revenue from Contract with Customer, Including Assessed Tax	$ 212,631	212,631	160,492
Cost of revenue			202,533
Operating expenses		1,101,098	875,527
Other income (expense)		96,551	2,673
Income (loss) from continuing operations		(791,916)	(914,895)
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total
Goodwill
Identifiable assets		740,934	1,508,601
Home Service [Member] | Discontinued Operations [Member]
Revenue from Contract with Customer, Including Assessed Tax
Cost of revenue
Operating expenses
Other income (expense)
Income (loss) from continuing operations
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total		(1,510,475)	(915,163)
Goodwill
Identifiable assets		$ 428	$ 1,532,860

XML

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Cash flows (used in) from operating activities:
Net income (loss) from continuing operations	$ (3,868,162)	$ (3,305,959)
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Deconsolidation of assets and liabilities from sale of subsidiary	(149,425)	275,740
Loss on sale of subsidiary	4,157,809
Impairment of long-term assets	154,015	1,028,781
Depreciation and amortization	161,130	245,764
(Gain) loss on long-term investments	(1,820,074)	834,014
Bad debt expense	88,511	32,803
Collection of operating notes receivable		226,000
(Gain) loss on sale of real estate	(73,399)	(50,694)
(Gain) loss on disposal of property and equipment	4,088	5,171
(Gain) on foreign currency reclassification	(3,054)
(Increase) decrease in:
Accounts receivable, net	(32,614)	(121,750)
Inventory	4,160	(120,940)
Other current assets	(10,980)	(9,027)
Notes receivable	(15,715)
Other assets		3,508
Increase (decrease) in:
Accounts payable	1,976	(106,087)
Accrued expenses	33,303	(75,613)
Deferred revenue	(5,252)	(102,902)
Accrued interest	103,909	134,623
Net cash flows (used in) from continuing operations	(1,269,774)	(1,106,568)
Net cash flows (used in) from discontinued operations	(66,595)	400,536
Net cash flows (used in) operating activities	(1,336,369)	(706,032)
Cash flows from (used in) investing activities:
Proceeds from sale of investments	35,515	281,250
Proceeds from maturity of investments	681,381
Purchases of investments	(53,942)	(21,600)
Proceeds from sale of real estate	1,774,317	194,282
Purchases of real estate		(459,544)
Improvements to real estate	(105,186)	(1,707,080)
Proceeds from sale of subsidiary	100,000
Proceeds from sale of property and equipment		5,623
Issuance of line of credit	(10,000)
Issuance of notes receivable		(169,406)
Purchases of property and equipment		(1,003,131)
Subsidiary acquisitions		(552,644)
Net cash flows from (used in) continuing operations	2,422,085	(3,432,250)
Net cash flows from (used in) discontinued operations		1,950
Net cash flows from (used in) investing activities	2,422,085	(3,430,300)
Cash flows from financing activities:
Principal payments on note payable	(1,121,987)	(399,347)
Proceeds from notes payable	300,000	1,775,746
Proceeds from issuance of common stock		180,283
Capitalized loan fees		(10,591)
Net cash flows (used in) from continuing operations	(821,987)	1,546,091
Net cash flows (used in) from discontinued operations	(32,645)	(271,092)
Net cash flows (used in) from financing activities	(854,632)	1,274,999
Net increase (decrease) in cash	231,084	(2,861,333)
Cash and cash equivalents at beginning of the period	435,726	3,297,059
Cash and cash equivalents at end of the period	666,810	435,726
Non-cash and other supplemental information:
Transfer of property, plant, and equipment held for use to held for resale	822,829	73,212
Transfer of land to held for investment	145,000
Transfer of real estate held for investment to held for resale	193,835	2,468,969
Repayment of loan via issuance of common stock	100,000
Effects of adoption of new lease guidance	46,435
Continuing operations cash paid for interest	312,745	539,263
Discontinued operations cash paid for interest	7,754	12,943
Effects of adoption of new lease guidance on discontinued operations	50,110
Assumption of debt in subsidiary acquisition		4,565,277
Asset acquisition equity activity		4,065,835
Real estate held for investment and land acquired through debt obligations		1,435,043
Equipment acquired through debt obligations of discontinued operations		$ 60,752

XML

Consolidated Balance Sheets (Parentheticals) - $ / shares	Dec. 31, 2019	Dec. 30, 2019	Dec. 31, 2018	May 22, 2018
Preferred Stock Par Value (in dollars per share)	$ 0.001		$ 0.001	$ 0.001
Preferred Stock Shares Authorized (in shares)	30,000,000		30,000,000	30,000,000
Preferred Stock Shares Issued (in shares)	0		0
Common Stock, Par Value (in dollars per share)	$ 0.125		$ 0.125	$ 0.001
Common Stock, Shares Authorized (in shares)	2,800,000		2,800,000	350,000,000
Common Stock, Shares Issued (in shares)	2,566,646		2,625,282
Common Stock, Shares Outstanding (in shares)	2,566,646		2,544,776
Common Shares Treasury Stock (in shares)	0	80,506	80,506

XML

Note 13 - Stockholders' Equity (Details Textual) - $ / shares	Dec. 31, 2019	Dec. 31, 2018	May 22, 2018
Preferred Stock and Common Stock, Shares Authorized	32,800,000
Preferred Stock, Shares Authorized	30,000,000	30,000,000	30,000,000
Preferred Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001	$ 0.001
Common Stock, Shares Authorized	2,800,000	2,800,000	350,000,000
Common Stock, Par or Stated Value Per Share	$ 0.125	$ 0.125	$ 0.001
Preferred Stock, Shares Issued, Total	0	0
Common Stock, Shares, Issued, Total	2,566,646	2,625,282
Common Stock, Shares, Outstanding, Ending Balance	2,566,646	2,544,776

XML

Note 5 - Asset Acquisition of Real Estate Properties - Summary of Purchase Price Allocated to Land and Buildings Acquired Based On Relative Fair Values (Details) - Mt. Melrose LLC [Member] - USD ($)	Jun. 29, 2018	Jan. 10, 2018
Land	$ 1,036,423	$ 800,328
Buildings	4,145,692	3,201,311
Total Value	$ 5,182,115	$ 4,001,639

XML

Note 3 - Home Services Subsidiary Divestiture (Details Textual) - USD ($)		12 Months Ended
	May 24, 2019	Dec. 31, 2019	Dec. 31, 2018
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total		$ (1,510,475)	$ (915,163)
Income (Loss) from Discontinued Operations, Net of Tax, Offsetting Amount from Probable Royalties		21,629
Discontinued Operations, Held-for-sale [Member]
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total		(1,510,475)	$ (915,163)
Home Service [Member] | Discontinued Operations, Held-for-sale [Member]
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total		$ (1,158,732)
Rooter Hero [Member]
Proceeds from Sale of Productive Assets, Total	$ 0
Royalty Agreement, Percent of Revenue in First Year	7.50%
Royalty Agreement, Percent of Revenue in Year Two Through Five	5.00%

XML

Note 7 - Fair Value of Assets and Liabilities - Schedule of Marketable Securities at Fair Value (Details) - USD ($)		Dec. 31, 2019	Dec. 31, 2018
Fair Value		$ 10,072,358	$ 8,915,238
Alluvial Fund, LP [Member]
Fair Value		10,072,358	8,446,488
Huckleberry Real Estate Fund II, LLC [Member]
Fair Value			468,750
Fair Value, Inputs, Level 1 [Member]
Fair Value
Fair Value, Inputs, Level 1 [Member] | Alluvial Fund, LP [Member]
Fair Value
Fair Value, Inputs, Level 1 [Member] | Huckleberry Real Estate Fund II, LLC [Member]
Fair Value
Fair Value, Inputs, Level 2 [Member]
Fair Value
Fair Value, Inputs, Level 2 [Member] | Alluvial Fund, LP [Member]
Fair Value
Fair Value, Inputs, Level 2 [Member] | Huckleberry Real Estate Fund II, LLC [Member]
Fair Value
Fair Value, Inputs, Level 3 [Member]
Fair Value			468,750
Fair Value, Inputs, Level 3 [Member] | Alluvial Fund, LP [Member]
Fair Value
Fair Value, Inputs, Level 3 [Member] | Huckleberry Real Estate Fund II, LLC [Member]
Fair Value			468,750
Fair Value Measured at Net Asset Value Per Share [Member]
Fair Value	[1]	10,072,358	8,446,488
Fair Value Measured at Net Asset Value Per Share [Member] | Alluvial Fund, LP [Member]
Fair Value	[1]	$ 10,072,358	8,446,488
Fair Value Measured at Net Asset Value Per Share [Member] | Huckleberry Real Estate Fund II, LLC [Member]
Fair Value	[1]

[1] Certain investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.

XML

Note 10 - Notes Payable (Details Textual)		3 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2019	Dec. 31, 2018
Vehicle Loans [Member]
Debt Instrument, Interest Rate, Effective Percentage				5.99%
Promissory Notes due September 15, 2022 [Member] | EDI Real Estate, LLC [Member] | Real Estate Held For Investment [Member]
Number Of Promissory Notes			2
Debt Instrument, Interest Rate, Stated Percentage			6.00%
Debt Instrument, Maturity Date			Sep. 15, 2022
Promissory Notes due September 1, 2033 [Member] | EDI Real Estate, LLC [Member] | Real Estate Held For Investment [Member]
Debt Instrument, Interest Rate, Stated Percentage	5.60%	5.60%
Debt Instrument Rate, Subject to Change, Term	5 years
US Treasury Security, Term		5 years
Debt Instrument, Maturity Date		Sep. 01, 2033
Promissory Notes due September 1, 2033 [Member] | EDI Real Estate, LLC [Member] | Real Estate Held For Investment [Member] | Index Rate [Member]
Debt Instrument, Basis Spread on Variable Rate		2.75%
Interest-bearing Notes Payable Secured by Commercial Warehouse Held for Resale [Member]
Debt Instrument, Interest Rate, Stated Percentage				8.00%
Debt Secured By Properties Acquired by Mt Melrose, LLC [Member] | Real Estate Held For Investment [Member]
Number Of Promissory Notes				0
Debt Secured By Properties Acquired by Mt Melrose, LLC [Member] | Real Estate Held For Investment [Member] | Minimum [Member]
Debt Instrument, Interest Rate, Effective Percentage					4.375%
Debt Secured By Properties Acquired by Mt Melrose, LLC [Member] | Real Estate Held For Investment [Member] | Maximum [Member]
Debt Instrument, Interest Rate, Effective Percentage					13.00%

XML

Note 7 - Fair Value of Assets and Liabilities - Summary of Activity Related to Level 3 Investment (Details) - Huckleberry Real Estate Fund II, LLC [Member] - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Beginning investment balance	$ 468,750	$ 750,000
Realized gain	212,631
Redemptions received	(681,381)	(281,250)
Ending investment balance		$ 468,750

XML

Note 9 - Real Estate (Details Textual)	6 Months Ended	12 Months Ended
	Jun. 27, 2019 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Depreciation, Total		$ 27,284	$ 135,397
Proceeds from Sale of Real Estate Held-for-investment, Total		1,774,317	194,282
Gains (Losses) on Sales of Investment Real Estate		73,399	50,694
Payments to Acquire Real Estate Held-for-investment			459,544
Real Estate Held For Investment [Member]
Depreciation, Total		110,978	159,514
EDI Real Estate, LLC [Member]
Real Estate Investment Property, Net, Total		$ 380,515	$ 602,446
Number of Real Estate Properties Transferred from Held for Investment to Held for Sale			0
Number of Real Estate Properties Acquired		0
EDI Real Estate, LLC [Member] | Real Estate Held For Investment [Member]
Number of Real Estate Properties		6	9
Impairment of Real Estate		$ 26,170	$ 64,038
EDI Real Estate, LLC [Member] | Real Estate, Units Held For Sale [Member]
Number of Real Estate Properties		2
EDI Real Estate, LLC [Member] | Real Estate Held For Sale, Vacant Lots [Member]
Number of Real Estate Properties		3
EDI Real Estate, LLC [Member] | Hard Money Loans on Real Estate Held for Investment [Member]
Depreciation, Total		$ 22,161	$ 21,215
EDI Real Estate, LLC [Member] | Real Estate, Held For Sale [Member]
Number of Real Estate Properties		5	3
Number of Real Estate Properties Sold		1
Proceeds from Sale of Real Estate Held-for-investment, Total		$ 95,000
Proceeds from Sale of Real Estate Held-for-investment, Net		85,037
Real Estate Investment Property, Net, Total		95,000
Gains (Losses) on Sales of Investment Real Estate		0
Impairment of Real Estate		26,170	$ 64,038
EDI Real Estate, LLC [Member] | Residential Properties [Member]
Number of Real Estate Properties Sold			2
EDI Real Estate, LLC [Member] | Commercial Properties [Member]
Number of Real Estate Properties Sold			1
Proceeds from Sale of Real Estate Held-for-investment, Total			$ 88,000
Proceeds from Sale of Real Estate Held-for-investment, Net			82,656
EDI Real Estate, LLC [Member] | Residential Properties and Commercial Property Sold [Member]
Real Estate Investment Property, Net, Total			95,033
Gains (Losses) on Sales of Investment Real Estate			7,033
Mt. Melrose LLC [Member]
Real Estate Investment Property, Net, Total			$ 8,890,431
Mt. Melrose LLC [Member] | Real Estate Held For Investment [Member]
Number of Real Estate Properties			113
Number of Real Estate Properties Sold	19
Number of Real Estate Properties Acquired	0		61
Payments to Acquire Real Estate Held-for-investment			$ 2,585,463
Mt. Melrose LLC [Member] | Real Estate Held For Sale, Vacant Lots [Member]
Number of Real Estate Properties			9
Mt. Melrose LLC [Member] | Real Estate, Held For Sale [Member]
Number of Real Estate Properties			57
Number of Real Estate Properties Transferred from Held for Investment to Held for Sale			62
Impairment of Real Estate		$ 126,827	$ 964,743
Mt. Melrose LLC [Member] | Vacant Lots [Member]
Number of Real Estate Properties Sold	5
Proceeds from Sale of Real Estate Held-for-investment, Total	$ 775,850
Proceeds from Sale of Real Estate Held-for-investment, Net	151,672
Gains (Losses) on Sales of Investment Real Estate	16,932
Mt. Melrose LLC [Member] | Residential Properties Sold [Member]
Number of Real Estate Properties Sold			3
Proceeds from Sale of Real Estate Held-for-investment, Total			$ 295,000
Proceeds from Sale of Real Estate Held-for-investment, Net			113,734
Real Estate Investment Property, Net, Total	$ 755,918		237,273
Gains (Losses) on Sales of Investment Real Estate			$ 57,727
Mt. Melrose LLC [Member] | Real Estate Available for Rent and Occupied, Held For Investment [Member]
Number of Real Estate Properties Sold			5

XML

Note 12 - Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Lease, Cost [Table Text Block]

Finance lease costs:
Amortization of ROU assets	$	—
Interest on lease liabilities		—
Operating lease cost		64,092
Sublease income		(28,405	)
Total lease costs from continuing operations		35,687
Total lease costs from discontinued operations		64,901
Total lease costs	$	100,588

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

2020	$	86,380
2021		16,634
2022		—
Total		103,014
Discount factor		(6,469	)
Lease liability		96,545
Less lease liability from discontinuing operations		(50,110	)
Amounts due within 12 months		(46,435	)
Long-term lease liability	$	—

XML

Note 8 - Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Property, Plant and Equipment [Table Text Block]

	2019			2018
Building	$	—		$	836,827
Computers and equipment		17,330			17,330
Furniture and fixtures		10,850			90,919
Land		—			145,000
		28,180			1,090,076
Less accumulated depreciation		(10,427	)		(70,334	)
Property and equipment, net	$	17,753		$	1,019,742

Disclosure of Long Lived Assets Held-for-sale [Table Text Block]

	December 31, 2019		December 31, 2018
Real estate held for resale	$	98,910	$	2,318,912
Equipment and vehicles held for resale		—		73,212
Total assets held for resale	$	98,910	$	2,392,124

XML

Note 2 - Summary of Significant Accounting Policies - Property and Equipment Useful Life (Details)	12 Months Ended
	Dec. 31, 2019
Furniture and Fixtures [Member]
Property and Equipment (Year)	5 years
Equipment [Member]
Property and Equipment (Year)	7 years
Building Improvements [Member]
Property and Equipment (Year)	15 years
Building [Member]
Property and Equipment (Year)	27 years 182 days

XML

Note 5 - Asset Acquisition of Real Estate Properties

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Asset Acquisitions of Real Estate Properties Disclosure [Text Block]

NOTE

5.

ASSET ACQUISITION OF REAL ESTATE PROPERTIES

Historical Acquisition

On

December 10, 2017,

the Company entered into a certain Master Real Estate Asset Purchase Agreement (the “Purchase Agreement”) with Mt. Melrose, LLC, a Kentucky limited liability company (“Old Mt. Melrose”), that owned and managed a portfolio of residential real estate in Lexington, Kentucky. Old Mt. Melrose was owned by Jeffrey I. Moore (“Moore”), a former Company director.

On

January 10, 2018,

the Company’s wholly-owned subsidiary, Mt Melrose, LLC (“New Mt Melrose”), completed the

first

acquisition of

44

residential and other income-producing real properties under the Purchase Agreement for a total purchase price of

$3,956,389,

which consisted of

$500,000

in cash,

120,602

shares of common stock valued at

$1,658,270,

and the assumption of

$1,798,119

of existing debt.

The Company accounted for the initial purchase of properties as an asset acquisition (consisting of a concentrated group of similarly identifiable assets, including land, buildings, improvements, and in-place leases) following the guidance contained in ASU

No.

2017

-

01.

The total purchase price, along with approximately

$45,250

of transaction expenses, was allocated to the land and buildings acquired based on their relative fair values, as follows:

Land	$	800,328
Buildings		3,201,311
Total Value	$	4,001,639

On

June 29, 2018,

New Mt Melrose completed the

second

acquisition of

69

residential and other income-producing real properties under the Purchase Agreement for a total purchase price of

$5,174,722,

which consisted of

148,158

shares of common stock valued at

$2,407,564,

and the assumption of

$2,767,158

of existing debt.

The Company accounted for the

second

 purchase of properties as an asset acquisition (consisting of a concentrated group of similarly identifiable assets, including land, buildings, improvements, and in-place leases). The total purchase price, along with approximately

$7,393

 of transaction expenses, was allocated to the land and buildings acquired based on their relative fair values, as follows:

Land	$	1,036,423
Buildings		4,145,692
Total Value	$	5,182,115

Pursuant to that certain Termination of Master Real Estate Asset Purchase Agreement entered into effective

November 1, 2018,

between the Company and Old Mt. Melrose, the parties mutually agreed to terminate the Purchase Agreement as of

November 1, 2018. 

Accordingly, neither the Company nor New Mt Melrose had any further rights or obligations concerning additional acquisitions of real properties from Old Mt. Melrose under the Purchase Agreement as of that time. A

third

-party property manager was engaged as of

November 1, 2018,

to manage certain of the real properties previously acquired. Management also determined that it was necessary to right-size New Mt Melrose operations to reduce its level of high-interest debt. Accordingly, New Mt Melrose began to immediately sell various properties with an emphasis on selling properties that had high-interest-rate loans and did 

not

produce income. 

In an effort to expedite the optimization of the Mt Melrose portfolio, management subsequently determined that a dedicated operator was necessary to manage the subsidiary. On

June 27, 2019,

as per the Current Report on Form

8

-K filed with the SEC on

July 3, 2019,

the Company sold

65%

of its membership interest in Mt Melrose, LLC to an unaffiliated

third

-party purchaser, Woodmont Lexington, LLC (“Woodmont”). As consideration for the transaction, Woodmont paid the Company

$100,000

and agreed to assume full responsibility for the management and operation of Mt Melrose and its real estate portfolio. See Note

4

for more information.

Historical Variable Interests

As of the quarterly periods ended

March 31, 2018,

June 30, 2018,

and

September 30, 2018,

the Company had determined that Old Mt. Melrose was a “variable interest entity” because the seller’s equity interests in Old Mt. Melrose were 

not

effective in determining whether the seller or New Mt Melrose had a controlling financial interest, and that New Mt Melrose’s rights under a certain Cash Flow Agreement that had been entered into on

January 10, 2018

with Old Mt. Melrose (the “Cash Flow Agreement”) were deemed to be variable interests in Old Mt. Melrose. At those times, the Company had determined that New Mt Melrose was the primary beneficiary of Old Mt. Melrose since substantially all of Old Mt. Melrose’s activities had been conducted on behalf of New Mt Melrose and because New Mt Melrose

may

have been required to provide financial support to Old Mt. Melrose under the Cash Flow Agreement. As its primary beneficiary, New Mt Melrose previously consolidated Old Mt. Melrose’s financial results beginning on

January 10, 2018.

The fair values of the assets and liabilities of Old Mt. Melrose had been consolidated accordingly on the unaudited consolidated balance sheets for the quarterly periods ended

March 31, 2018,

June 30, 2018,

and

September 30, 2018.

As noted on the unaudited consolidated statements of stockholders’ equity during those quarters, the ending noncontrolling interest allocated to the variable interest entity represented the remaining equity held by Old Mt. Melrose for properties that had

not

yet been acquired under the Purchase Agreement. The ending noncontrolling interest amount also included any income or loss generated by the remaining properties that were to be acquired under the Purchase Agreement for the period then ended.

As of

November 1, 2018, 

pursuant to the termination of the Master Real Estate Asset Purchase Agreement and Cash Flow Agreement noted above, New Mt Melrose was 

no

longer the primary beneficiary of Old Mt. Melrose. Additionally, as of

November 1, 2018,

New Mt Melrose

no

longer had a controlling financial interest in Old Mt. Melrose. Consequently, as of

November 1, 2018,

the Company

no

longer consolidated the fair values of the assets, liabilities, or operating results of Old Mt. Melrose, and the balance of noncontrolling interest as of 

December 31, 2019

and

2018,

is zero.

XML

Note 9 - Real Estate

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Real Estate Disclosure [Text Block]

NOTE

9.

REAL ESTATE

EDI Real Estate, LLC

Through EDI Real Estate, as of

December 31, 2019,

the Company owns a total of

eleven

 units consisting of

six

units held for investment,

two

units held for resale, and

three

 vacant lots held for resale as noted below:

EDI Real Estate	December 31, 2019	December 31, 2018
Units occupied or available for rent	6	6
Vacant units being prepared for rent	—	3
Total units held for investment	6	9
Units held for resale	2	—
Vacant lots held for resale	3	3
Total units held for resale	5	3

Units held for investment consist of single-family residential rental units.

The leases in effect, as of

December 31, 2019,

are based on annual time periods and typically include month-to-month provisions after the completion of the initial term. An outside property management company manages these rental properties on behalf of the Company. The property management company has introduced updated and renewed leases for existing rental properties.

EDI Real Estate	December 31, 2019			December 31, 2018
Total real estate held for investment	$	484,590		$	710,022
Accumulated depreciation		(104,075	)		(107,576	)
Real estate held for investment, net		380,515			602,446
Real estate held for resale	$	98,910		$	40,047

For the year ended

December 31, 2019,

depreciation expense on the EDI Real Estate portfolio of properties was

$22,161.

 This compares to depreciation expense for the year ended

December 31, 2018,

when depreciation expense on the EDI Real Estate portfolio of properties was

$21,215.

During the year ended

December 31, 2019,

one

property held for resale was sold for gross proceeds of

$95,000.

Net proceeds totaled

$85,037.

 This compares to its carrying value of

$95,000,

which resulted in

no

gain or loss being recognized on the transaction. This compares to the year ended

December 31, 2018,

when

two

residential properties and

one

commercial property held for resale were sold for gross proceeds of

$88,000.

 Net proceeds totaled

$82,656.

This compares to their carrying value of

$95,033,

which resulted in a loss of

$7,033.

No

properties were purchased during the year ended

December 31, 2019

or

2018

for the EDI Real Estate portfolio.

During the year ended

December 31, 2019,

net impairment adjustments of

$26,170

 

were recorded on real estate held for resale through EDI Real Estate, LLC in order to properly reflect sales activity throughout the year. During the year ended

December 31, 2018,

an impairment adjustment of

$64,038

was recorded to real estate held for resale through EDI Real Estate, LLC in order to properly reflect market value for those properties held during the year.

Mt Melrose, LLC

Management has determined that the Company

no

longer has a controlling financial interest in Mt Melrose and is

no

longer the primary beneficiary as of

June 27, 2019. 

All activity prior to the deconsolidation event has been included on the accompanying consolidated statements of operations for the year ended

December 31, 2019,

under the real estate segment. Simultaneously, as of

June 27, 2019,

all previously consolidated assets and liabilities of Mt Melrose, LLC have been removed from the accompanying consolidated balance sheets. Note that this deconsolidation event is separate from the deconsolidation event that took place on

November 1, 2018,

related to the change in variable interest reporting. As of

December 31, 2018,

the Company did have a controlling financial interest in Mt Melrose and was the primary beneficiary. The consolidated Mt Melrose assets as of

December 31, 2018, 

included the following units:

Mt Melrose	December 31, 2018
Units occupied or available for rent		98
Vacant units being prepared for rent		15
Total units - held for investment		113
Residential and commercial units		48
Vacant lots		9
Total units - held for resale		57

As of

December 31, 2018,

units held for investment consisted of single-family and multi-family residential rental units. The leases in effect for the occupied Mt Melrose units as of 

December 31, 2018, 

were based on either annual or multi-year time periods. Month-to-month leases were reserved for special circumstances. Units held for resale consisted of single-family units, multi-family units, commercial properties, and undeveloped lots of land.

As of

December 31, 2018,

the Mt Melrose portfolio of properties was carried at the following amounts on the accompanying consolidated balance sheets:

Mt Melrose	December 31, 2018
Total real estate held for investment	$	9,049,945
Accumulated depreciation		(159,514	)
Real estate held for investment, net		8,890,431
Real estate held for resale	$	2,278,865

During the period ended

June 27, 2019,

depreciation expense on the Mt Melrose portfolio of properties totaled

$110,978.

This compares to the year ended

December 31, 2018,

when depreciation expense on the Mt Melrose portfolio of properties was

$159,514.

No

purchases were made during the period ended

June 27, 2019.

During the year ended

December 31, 2018,

Mt Melrose purchased a total of

61

 properties, outside of the original purchase agreement, for a gross purchase price of

$2,585,463.

The majority of these purchases resulted in a note payable. 

During the period ended

June 27, 2019,

Mt Melrose sold

nineteen

 residential properties and

five

vacant lots for gross proceeds of

$775,850.

 Net proceeds totaled

$151,672.

 This compares to their carrying value of

$755,918,

which resulted in a net gain of

$16,932.

During the year ended

December 31, 2018,

Mt Melrose sold

three

 residential properties consisting of

five

rental units for gross proceeds of

$295,000

and net proceeds of 

$113,734.

This compares to their carrying value of

$237,273,

which resulted in a net gain of

$57,727.

During the year ended

December 31, 2019,

an impairment adjustment of

$126,827

was recorded on a commercial warehouse held for resale in order to properly reflect market value at that time. During the year ended

December 31, 2018,

an impairment adjustment of

$964,743

was recorded to real estate held for resale through Mt Melrose, LLC in order to properly reflect market value for those properties held at the end of the year. This adjustment was the result of

62

 properties being transitioned to “held for resale” from “held for investment” as part of a portfolio redirection intended to reduce high-interest debt.

Future Minimum Rental Revenues

The future anticipated minimum rental revenues based on leases in place as of

December 31, 2019,

for EDI Real Estate, LLC are as follows:

2020	$	34,660
2021		2,000
2022		—
Total	$	36,660

XML

Note 8 - Property and Equipment (Details Textual) - USD ($)		12 Months Ended
	Dec. 24, 2019	Dec. 31, 2019	Dec. 31, 2018
Depreciation, Total		$ 27,284	$ 135,397
Assets Held-for-sale, Not Part of Disposal Group, Total		98,910	2,318,912
Disposal Group, Including Discontinued Operation, Property, Plant and Equipment, Noncurrent			73,212
Proceeds from Sale of Property, Plant, and Equipment, Total			5,623
Gain (Loss) on Disposition of Property Plant Equipment, Total		(4,088)	(5,171)
Personal Property Used in Real Estate Segment Rental Operations [Member]
Depreciation, Total		$ 9,310	$ 32,001
Commercial Real Estate, Held For Resale in Lexington Kentucky [Member]
Assets Held-for-sale, Not Part of Disposal Group, Total	$ 850,000
Proceeds from Sale of Property, Plant, and Equipment, Total	487,944
Gain (Loss) on Disposition of Property Plant Equipment, Total	$ (56,467)

XML

Note 9 - Real Estate - Portfolio of Properties in Units (Details)	Dec. 31, 2019	Dec. 31, 2018
EDI Real Estate, LLC [Member] | Real Estate Occupied or Available to Rent, Held For Investment [Member]
Number of Real Estate Properties	6	6
EDI Real Estate, LLC [Member] | Vacant Real Estate Being Prepared or to Be Prepared to Market to Tenants, Held For Investment [Member]
Number of Real Estate Properties		3
EDI Real Estate, LLC [Member] | Real Estate Held For Investment [Member]
Number of Real Estate Properties	6	9
EDI Real Estate, LLC [Member] | Real Estate, Units Held For Sale [Member]
Number of Real Estate Properties	2
EDI Real Estate, LLC [Member] | Commercial Real Estate, Held For Resale [Member]
Number of Real Estate Properties	3	3
EDI Real Estate, LLC [Member] | Real Estate Held For Sale, Vacant Lots [Member]
Number of Real Estate Properties	3
EDI Real Estate, LLC [Member] | Real Estate, Held For Sale [Member]
Number of Real Estate Properties	5	3
Mt. Melrose LLC [Member] | Real Estate Occupied or Available to Rent, Held For Investment [Member]
Number of Real Estate Properties		98
Mt. Melrose LLC [Member] | Vacant Real Estate Being Prepared or to Be Prepared to Market to Tenants, Held For Investment [Member]
Number of Real Estate Properties		15
Mt. Melrose LLC [Member] | Real Estate Held For Investment [Member]
Number of Real Estate Properties		113
Mt. Melrose LLC [Member] | Real Estate Held For Sale, Residential and Commercial Properties [Member]
Number of Real Estate Properties		48
Mt. Melrose LLC [Member] | Real Estate Held For Sale, Vacant Lots [Member]
Number of Real Estate Properties		9
Mt. Melrose LLC [Member] | Real Estate, Held For Sale [Member]
Number of Real Estate Properties		57

XML

Note 10 - Notes Payable - Summary of Notes Payable (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Less notes related to discontinued operations		$ (209,436)
Less accrued interest		(134,623)
Less current portion	(11,453)	(1,002,965)
Long-term portion	$ 499,572	6,518,854
Interest Bearing Notes Payable [Member]
Notes payable, interest rate	10.00%
Notes payable, term (Year)	1 year
Notes payable		131,279
Notes payable		131,279
Interest Bearing Notes Payable [Member] | EDI Real Estate, LLC [Member]
Notes payable, interest rate	5.60%
Notes payable, term (Year)	15 years
Notes payable	$ 373,425	384,304
Notes payable	$ 373,425	384,304
Interest Bearing Notes Payable [Member] | Traditional Mortgages on Real Estate Held for Investment [Member]
Notes payable, term (Year)	14 years
Notes payable		4,505,139
Notes payable		4,505,139
Interest Bearing Notes Payable [Member] | Hard Money Loans on Real Estate Held for Investment [Member]
Notes payable, term (Year)	2 years
Notes payable		2,379,851
Notes payable		2,379,851
Interest Bearing Notes Payable [Member] | Real Estate Held For Investment [Member] | EDI Real Estate, LLC [Member]
Notes payable, interest rate	6.00%
Notes payable, term (Year)	5 years
Notes payable	$ 137,600	137,600
Notes payable	$ 137,600	137,600
Non-Interest Bearing Notes Payable [Member]
Notes payable, interest rate	0.00%
Notes payable, term (Year)	1 year
Notes payable		218,270
Notes payable		218,270
Equipment and Vehicle Capital Leases and Loans [Member]
Notes payable, term (Year)	5 years
Notes payable		55,797
Notes payable		55,797
Vehicle Loans [Member]
Notes payable, interest rate	5.99%
Notes payable, term (Year)	5 years
Notes payable		53,638
Notes payable		$ 53,638
Minimum [Member] | Interest Bearing Notes Payable [Member] | Traditional Mortgages on Real Estate Held for Investment [Member]
Notes payable, interest rate	4.38%
Minimum [Member] | Interest Bearing Notes Payable [Member] | Hard Money Loans on Real Estate Held for Investment [Member]
Notes payable, interest rate	10.00%
Minimum [Member] | Equipment and Vehicle Capital Leases and Loans [Member]
Notes payable, interest rate	0.00%
Maximum [Member] | Interest Bearing Notes Payable [Member] | Traditional Mortgages on Real Estate Held for Investment [Member]
Notes payable, interest rate	5.75%
Maximum [Member] | Interest Bearing Notes Payable [Member] | Hard Money Loans on Real Estate Held for Investment [Member]
Notes payable, interest rate	13.00%
Maximum [Member] | Equipment and Vehicle Capital Leases and Loans [Member]
Notes payable, interest rate	4.90%

XML

Note 2 - Summary of Significant Accounting Policies (Details Textual)	6 Months Ended	12 Months Ended
	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($) shares	Dec. 31, 2018 USD ($) shares	Jan. 01, 2019 USD ($)
Accounts Receivable, Allowance for Credit Loss, Ending Balance		$ 307	$ 26,830
Accounts Receivable, Credit Loss Expense (Reversal)		88,511	32,803
Inventory Write-down		$ 0	0
Number of Domain Names Owned		228
Number of Domain Names Available for Sale		106
Operating Lease, Right-of-Use Asset		$ 45,056
Operating Lease, Liability, Total		96,545
Contract with Customer, Liability, Current		204,960	210,212
Contract with Customer, Liability, Revenue Recognized		$ 206,520	$ 214,142
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | shares		70,000	0
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset				$ 184,000
Operating Lease, Liability, Total				$ 186,000
EDI Real Estate, LLC [Member]
Number of Real Estate Properties Transferred from Held for Investment to Held for Sale			0
Real Estate, Held For Sale [Member] | EDI Real Estate, LLC [Member]
Impairment of Real Estate		$ 26,170	$ 64,038
Real Estate, Held For Sale [Member] | Mt. Melrose LLC [Member]
Impairment of Real Estate		126,827	$ 964,743
Number of Real Estate Properties Transferred from Held for Investment to Held for Sale			62
Commercial Real Estate, Held For Resale [Member]
Impairment of Real Estate		126,827
Home Service [Member]
Goodwill, Impairment Loss	$ 1,024,591	$ 1,024,591	$ 754,958

XML

Note 11 - Segment Information (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

Year Ended December 31, 2019		Asset Management		Real Estate			Internet		Other			Discontinued Operations - Home Services			Consolidated
Revenues	$	1,773,276	$	537,763		$	1,066,229	$	212,631		$	—		$	3,589,899
Cost of revenue		—		485,459			330,654		—			—			816,113
Operating expenses		410,226		338,025			223,118		1,101,098			—			2,072,467
Other income (expense)		36,565		(4,712,766	)		10,169		96,551			—			(4,569,481	)
Income (loss) from continuing operations		1,399,615		(4,998,487	)		522,626		(791,916	)		—			(3,868,162	)
Income (loss) from discontinued operations		—		—			—		—			(1,510,475	)		(1,510,475	)
Goodwill		—		—			212,445		—			—			212,445
Identifiable assets	$	10,186,353	$	556,994		$	414,935	$	740,934		$	428		$	11,899,644

Year Ended December 31, 2018		Asset Management			Real Estate			Internet		Other			Discontinued Operations - Home Services			Consolidated
Revenues	$	(775,249	)	$	778,657		$	1,168,843	$	160,492		$	—		$	1,332,743
Cost of revenue		—			450,859			325,234		202,533			—			978,626
Operating expenses		286,283			920,309			241,654		875,527			—			2,323,773
Other income (expense)		41,632			(1,416,257	)		35,649		2,673			—			(1,336,303	)
Income (loss) from continuing operations		(1,019,900	)		(2,008,768	)		637,604		(914,895	)		—			(3,305,959	)
Income (loss) from discontinued operations		—			—			—		—			(915,163	)		(915,163	)
Goodwill		—			—			212,445		—			—			212,445
Identifiable assets	$	8,496,917		$	12,550,571		$	430,503	$	1,508,601		$	1,532,860		$	24,519,452

XML

Note 7 - Fair Value of Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	(Level 1)		(Level 2)		(Level 3)		(Excluded) (a)		Total at Fair Value
December 31, 2019
Alluvial Fund, LP	$	—	$	—	$	—	$	10,072,358	$	10,072,358
Total investments	$	—	$	—	$	—	$	10,072,358	$	10,072,358

	(Level 1)		(Level 2)		(Level 3)		(Excluded) (a)		Total at Fair Value
December 31, 2018
Alluvial Fund, LP	$	—	$	—	$	—	$	8,446,488	$	8,446,488
Huckleberry Real Estate Fund II, LLC		—		—		468,750		—		468,750
Total investments	$	—	$	—	$	468,750	$	8,446,488	$	8,915,238

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	Year ended December 31, 2019			Year ended December 31, 2018
Huckleberry Real Estate Fund II, LLC
Beginning investment balance	$	468,750		$	750,000
Realized gain		212,631			—
Redemptions received		(681,381	)		(281,250	)
Ending investment balance	$	—		$	468,750

XML

Note 6 - Investments

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Investment Holdings [Text Block]

NOTE

6.

INVESTMENTS

Certain assets held through Willow Oak Asset Management, LLC, Enterprise Diversified, Inc., or EDI Real Estate, LLC do

not

have a readily determinable value, as these investments are

not

publicly traded, nor do they have published sales records. The investment in Alluvial Fund, LP is measured using net asset value (NAV) as the practical expedient and is exempt from the fair value hierarchy. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and allocated based on total fund contributions. Due to the nature of the Mt Melrose, LLC (subsequent to the loss of control (see Note

4

)) and Huckleberry Real Estate Fund II, LLC investments, the investments are measured at cost basis as fair value is

not

determinable until additional inputs and measurements become available. As the inputs for these investments are

not

readily observable, these investments are valued using Level

3

inputs (see Note

7

). The following investments are remeasured to fair value on a recurring basis and realized and unrealized gains and losses are recognized as revenue in the period of adjustment. Included in the fair value is the cost basis of the investment, as well as any accrued management fees.

	Cost Basis		Unrealized Gain		Fair Value
December 31, 2019
Alluvial Fund, LP	$	7,042,732	$	3,029,626	$	10,072,358
Mt Melrose, LLC		53,846		—		53,846
Total	$	7,096,578	$	3,029,626	$	10,126,204

	Cost Basis		Unrealized Gain		Fair Value
December 31, 2018
Alluvial Fund, LP	$	7,023,676	$	1,422,812	$	8,446,488
Huckleberry Real Estate Fund II, LLC		468,750		—		468,750
Total	$	7,492,426	$	1,422,812	$	8,915,238

During the year ended

December 31, 2019,

the Company recognized

$76,810

 

of realized gains, primarily related to the Company

’

s sale of its Triad Guaranty, Inc. stock. This compares to 

the year ended

December 31, 2018,

when the Company recognized

$885

of realized losses. These realized

losses were 

the result of reinvested management fee shares earned through various fee share agreements.

Alluvial Fund is a private investment partnership that focuses on investing in what it believes are deeply mispriced securities in the United States and abroad. Alluvial Fund focuses on small companies, thinly traded issues, and special situations, seeking to identify value that its management believes the market has yet to recognize. During the years ended

December 31, 2019

and

2018,

the Company did

not

withdraw management or performance fees earned through the Alluvial Fund. The total amount of these reinvested fees were

$19,056

and

$21,595,

respectively.

XML

Note 10 - Notes Payable

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE

10.

NOTES PAYABLE

Notes payable at

December 31, 2019 

and

2018,

 consist of the following:

	Interest Rates	Average Term	2019			2018
Interest-bearing amounts due on traditional mortgages on real estate held through Mt Melrose, LLC	4.38% - 5.75%	14 years	$	—		$	4,505,139
Interest-bearing amounts due on hard money loans on real estate held through Mt Melrose, LLC	10.00% - 13.00%	2 years		—			2,379,851
Interest-bearing amounts due on promissory notes	10.00%	1 year		—			131,279
Non-interest-bearing amount due on promissory notes	0.00%	1 year		—			218,270
Equipment and vehicle capital leases and loans acquired by HVAC Value Fund, LLC	0.00% - 4.90%	5 years		—			55,797
Vehicle loans through HVAC Value Fund, LLC	5.99%	5 years		—			53,638
Interest-bearing amount due on promissory note through EDI Real Estate, LLC	5.60%	15 years		373,425			384,304
Interest-bearing amount due on real estate held for investment through EDI Real Estate, LLC	6.00%	5 years		137,600			137,600
Less notes related to discontinued operations				—			(209,436	)
Less accrued interest				—			(134,623	)
Less current portion				(11,453	)		(1,002,965	)
Long-term portion			$	499,572		$	6,518,854

The timing of future payments of notes payable are as follows as of

December 31, 2019:

2020	$	11,453
2021		12,181
2022		12,891
2023		151,242
2024 and thereafter		323,258
Total	$	511,025

As of

December 31, 2019,

no

lines of credit remain open through the home services segment. The line of credit that existed as of

December 31, 2018

through the home services segment was held with Steven L. Kiel, an ENDI director and our principal executive officer. The Company assumed this debt, which was paid off during the year ended

December 31, 2019

through the issuance of Company stock. Additional debt held through the home services segment as of

December 31, 2018, 

included loans for various vehicles and equipment. Two vehicle loans were entered into during the quarter ended

March 31, 2018.

These loans required monthly payments through

May 2023

and held annual interest rates of

5.99%.

As of

December 31, 2019,

all of these loans have been assumed by Rooter Hero, as a result of the divestiture of the home services segment. See Note

3

for more information.

During the quarter ended

September 30, 2017,

EDI Real Estate, LLC, as a borrower, issued 

two

promissory notes, each secured by a property held for investment. These notes carry annual interest rates of

6%,

pay interest quarterly, and are due

September 15, 2022

,

with early payoff permitted. Additionally, during the quarter ended

September 30, 2018,

EDI Real Estate, LLC issued a promissory note secured by additional properties held for investment. This note carries an annual interest rate of

5.6%

and fully matures on

September 1, 2033

,

with early payoff permitted. The interest rate on this note is subject to change once each

five

-year period based on an index rate plus a margin of

2.750

percentage points. The index rate is calculated as a monthly average yield on U.S. Treasury Securities, adjusted to a constant maturity of

five

years.

During the quarter ended

March 31, 2019,

the Company issued a promissory note secured by the commercial warehouse held for resale. The note carried an annual interest rate of

8%,

paid interest quarterly, and was due upon successful sale of the warehouse with early payoff permitted. Accordingly, this note was paid off during

December 2019,

in conjunction with the sale of the warehouse.

With respect to outstanding debt secured by the real properties acquired by Mt Melrose, LLC, these notes began to mature during the quarter ended

March 31, 2019,

with the last note extending until

January 2042.

Some of these loans were interest only while others accrued interest that is due in full with a final balloon payment. As of

December 31, 2018,

the debt secured by the real properties had varying annual interest rates from

4.375%

to

13%.

As mentioned in Note

4,

because the Company

no

longer has a controlling financial interest in Mt Melrose, it

no

longer consolidates Mt Melrose, LLC’s assets, liabilities (including notes payable), or results of operations. This results in

zero

notes payable reported under Mt Melrose, LLC as of

December 31, 2019.

XML

Note 14 - Share Adjustment, Cancellation and Sale of Treasury Shares, and Reverse Stock Split

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Share Adjustment, Cancellation of Treasury Shares, and Reverse Stock Split [Text Block]

NOTE

14.

 SHARE ADJUSTMENT, CANCELLATION AND SALE OF TREASURY SHARES, AND REVERSE STOCK SPLIT

Cancellation and Sale of Treasury Shares

On

May 26, 2018,

the Company signed a stock purchase agreement with an unaffiliated

third

party to sell

1,633,500

shares of the Company’s common stock held as treasury shares to such party for

$0.11036586

per share. The settlement date for the sale was

July 31, 2018.

The number of shares transferred on the settlement date was adjusted for the Company’s reverse stock split to

13,068

shares. To the extent that this sale of previously registered shares held as treasury shares required an exemption from registration, this sale of shares of common stock of the Company was exempt from registration under the Securities Act of

1933

(the “Securities Act”), in reliance upon Section

4

(a)(

2

) of the Securities Act and Regulation D Rule

506,

as a transaction by an issuer

not

involving a public offering.

On

December 30, 2019,

the Company completed the cancellation of the remaining

80,506

treasury shares upon resolution from the Board of Directors.

Reverse Stock Split

As previously reported in our Current Report on Form

8

-K filed with the SEC on

June 7, 2018,

the Board of Directors of the Company previously approved, on

March 29, 2018,

a reverse stock split of all of the Company’s Common Stock, pursuant to which every

125

shares of Common Stock of the Company were reverse split, reconstituted, and converted into

one

(

1

) share of Common Stock of the Company (the “Reverse Stock Split”). To effectuate the aforesaid Reverse Stock Split, the Company previously filed on

May 23, 2018,

a Certificate of Change Pursuant to Nevada Revised Statutes (“NRS”) Section

78.209

(the “Certificate of Change”) with the Secretary of State of the State of Nevada, with a specified effective filing date of

June 1, 2018.

The Company submitted an Issuer Company Related Action Notification regarding the Reverse Stock Split to the Financial Industry Regulatory Authority (“FINRA”) on

May 22, 2018. 

FINRA declared the Reverse Stock Split effective in the marketplace

July 23, 2018 (

the “FINRA Effective Date”). Accordingly, while the Certificate of Change became effective under Nevada state corporate law on

June 1, 2018, 

the Reverse Stock Split did

not

become effective as to shareholders or the marketplace until the FINRA Effective Date.

Split Adjustment

On the FINRA Effective Date, the total number of shares of the Company’s Common Stock held by each stockholder converted automatically into the number of whole shares of Common Stock equal to (i) the number of shares of Common Stock held by such stockholder immediately prior to the Reverse Stock Split, divided by (ii)

one hundred twenty

five

(

125

).

No

fractional shares were issued, and

no

cash or other consideration was paid. Rather, any fraction of a share of Common Stock that otherwise would have resulted from the Reverse Stock Split were rounded up to the next whole share of Common Stock. That is, stockholders who otherwise would have been entitled to receive fractional shares because they held a number of pre-Reverse Stock Split shares of the Company’s Common Stock

not

evenly divisible by

one hundred twenty

five

(

125

), had the number of post-Reverse Stock Split shares of the Company’s Common Stock to which they were entitled rounded up to the next whole number of shares of the Company’s Common Stock. Stockholders’ equity and all references to share and per-share amounts in the accompanying consolidated financial statements have been retroactively adjusted to reflect the Reverse Stock Split for all periods presented.

Ownership Unchanged

Immediately after the Reverse Stock Split, each stockholder’s percentage ownership interest in the Company and proportional voting power remained unchanged except for minor adjustments resulting from the Company’s election to round up any fraction of a share of Common Stock that otherwise would have resulted from the Reverse Stock Split. The rights and privileges of the holders of shares of Common Stock of the Company were substantially unaffected by the Reverse Stock Split.

Capitalization

Immediately prior to the Certificate of Change becoming effective, the aggregate number of shares which the Company had the authority to issue was

three hundred fifty million

(

350,000,000

) shares of Common Stock at

$.001

par value, and

thirty million

(

30,000,000

) shares of Serial Preferred Stock at

$.001

par value. As a result of the Certificate of Change and Reverse Stock Split, the aggregate number of shares which the Company has the authority to issue is

two million eight hundred thousand

(

2,800,000

) shares of Common Stock at

$.125

par value, and

thirty million

(

30,000,000

) shares (unchanged) of Serial Preferred Stock at

$.001

par value. 

XML

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

In accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”), the preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.

On an ongoing basis, management evaluates its estimates and judgments, including, among other items, those related to fair value of investments, revenue recognition, accrued expenses, financing operations, fair value of goodwill, fixed asset lives and impairment, lease right-of-use assets and impairment, deferred tax assets, liabilities and valuation allowance, other assets, the present value of lease liabilities, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are

not

readily apparent from other sources. Actual results

may

differ from these estimates under different assumptions and conditions. These accounting policies are described at relevant sections in the notes to the consolidated financial statements.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash, cash equivalents, and accounts receivable. The Company places its cash with high-quality financial institutions and, at times,

may

exceed the FDIC and CDIC insurance limit. The Company extends credit based on an evaluation of customers’ financial condition, generally without collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company defines cash equivalents as all highly liquid instruments purchased with a maturity of

three

months or less.

Investment, Policy [Policy Text Block]

Investments

The Company holds various investments through its asset management operations and real estate segments. Additionally, investments can be held and reported under the Company’s “other” segment. Assets held through these segments do

not

have a readily determinable value as these investments are

not

publicly traded, nor do they have published sales records. These investments are remeasured to fair value on a recurring basis. See Note

6

 for more information.

As of

December 31, 2019,

the Company also holds its remaining equity investment in Mt Melrose, LLC through its real estate segment. The Company has determined that its remaining equity investment does

not

have a readily determinable fair value, and the Company will account for the investment at cost, less any impairment, as adjusted for changes resulting from observable price changes. When fair value becomes determinable, the investment will be marked to fair value on a periodic basis.

Accounts Receivable [Policy Text Block]

Accounts Receivable

The Company grants credit in the form of unsecured accounts receivable to its customers. The estimate of the allowance for doubtful accounts, which is the recorded allowance for doubtful accounts and bad debt expense, is based on management’s assessment of current economic conditions and historical collection experience with each customer. Specific customer receivables are considered past due when they are outstanding beyond their contractual terms and are written off from the allowance for doubtful accounts when an account or invoice is individually determined to be uncollectible.

Real estate segment rental accounts are typically paid by tenants via cash or check

no

later than the

fifth

of the month. Any accounts collected after the

fifth

are charged either a flat-rate late fee or a daily-rate late fee based upon the lease agreement. If payments are

not

provided in a timely manner, then the amount due is designated as an account receivable. If accounts remain uncollected, then standard operating procedures are followed to commence a notice process for the tenant to either pay the amount due or vacate the property. Accounts receivable from rental revenue are generally considered unrecoverable after

90

days unless the Company reasonably believes that recovery is probable. These procedures typically result in low amounts of past due receivables.

The internet segment attempts to reduce the risk of non-collection by including a late-payment fee and a manual-processing-payment fee to customer accounts. Receivables more than

90

days past due are

no

longer included in accounts receivable and are turned over to a collection agency. Accounts receivable more than

30

days are considered past due. 

As of

December 31, 2019

and

2018,

 allowances offsetting gross accounts receivable on the accompanying consolidated balance sheets totaled

$307

and

$26,830,

respectively. For the year ended

December 31, 2019

and

2018,

bad debt expense from continuing operations was

$88,511

 and

$32,803,

respectively.

Notes Receivable, Policy [Policy Text Block]

Notes Receivable

The Company does

not

routinely issue notes receivable in the ordinary course of business, but when a business opportunity arises, a subsidiary

may

issue a note if it appears to be favorable to the Company. Notes receivable are recorded at their principal amount and interest is accrued quarterly based on the applicable interest rate. The Company makes an assessment of the ultimate collectability of each note receivable on an annual basis based upon the financial condition of the borrower.

Inventory, Policy [Policy Text Block]

Inventory

Inventory is carried on the balance sheet at the lower of purchased cost or net realizable value. Inventory is evaluated periodically for any obsolete or damaged stock. As of

December 31, 2019

and

2018,

there was

no

obsolescence allowance recorded against inventory held on the consolidated balance sheets.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Property and equipment are recorded at cost. Expenditures for maintenance and repairs are charged to operations as incurred, while renewals and betterments are capitalized. Gains and losses on disposals are included in the results of operations. Depreciation is computed using the straight-line method based on the estimated useful lives for each of the following asset classifications:

Furniture and fixtures	5
Equipment (in years)	7
Building improvements (in years)	15
Buildings (in years)	27.5

Property and equipment are analyzed for impairment whenever events or changes in circumstances indicate that the related carrying amounts

may

not

be recoverable.

The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, then the Company uses estimated future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are

not

expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. Property and equipment to be disposed are reported at the lower of carrying amount or fair value of the asset less cost to sell.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill and Other Intangible Assets

Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations accounted for under the acquisition method of accounting. The Company tests its goodwill annually as of

December

31st

 or more often if events and circumstances indicate that those assets might

not

be recoverable.

Impairment testing of goodwill is required at the reporting-unit level (operating segment or

one

level below operating segment). The impairment test involves calculating the impairment of goodwill based solely on the excess of the carrying value of the reporting unit over the fair value of the reporting unit. Prior to performing the impairment test, the Company

may

make a qualitative assessment of the likelihood of goodwill impairment to determine whether a detailed quantitative analysis is required. The Company estimates the fair value of its reporting units using discounted expected future cash flows.

During the year ended

December 31, 2018,

an impairment adjustment of

$754,958

was recorded to goodwill held through the home services segment. As noted above, various qualitative factors were considered before preparing a quantitative analysis. Qualitatively, a general underperformance of previously acquired home services businesses triggered the quantitative analysis. As part of the quantitative analysis, management estimated the fair value of the home services segment at the enterprise level using a discounted cash flow approach. The results were then tested for reasonableness using a market approach by analyzing comparable firms’ growth rates, margins, capital expenditures, and working capital requirements. During the period ended

June 30, 2019,

an additional impairment of the remaining home services segment goodwill of

$1,024,592

was recognized and reported as a component of the loss on the divestiture of Specialty Contracting Group, LLC’s assets.

Intangible assets (other than goodwill) consist of domain names attributed to the internet segment. The Company owns

228

domain names, of which

106

 are available for sale. These domains are valued at historical cost. When management determines that material intangible assets are acquired in conjunction with the purchase of a business, the Company determines the fair values of the identifiable intangible assets by taking into account internal and external appraisals. Intangible assets determined to have definite lives are amortized over their estimated useful lives. The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, then the Company uses estimated future undiscounted cash flows of the related intangible asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are

not

expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value.

Real Estate, Policy [Policy Text Block]

Real Estate

Real estate properties held for resale are carried at the lower of cost or fair value. All costs directly related to the improvement and carrying of real estate are capitalized, including renovations and property taxes, to the extent the capitalized costs of the property do

not

exceed the estimated fair value of the property. If the cost of the real estate exceeds the estimated fair value, then the excess is charged to expense. Fair value is estimated based on comparable sales in the geographic area in which the real estate is located. Fair value is evaluated annually by management or when events or changes in circumstances indicate the carrying value of the real estate

may

not

be recoverable.

During the year ended

December 31, 2019,

net impairment adjustments of

$26,170

were recorded on real estate held for resale through EDI Real Estate, LLC in order to properly reflect sales activity throughout the year. During the year ended

December 31, 2018,

an impairment adjustment of

$64,038

was recorded to real estate held for resale through EDI Real Estate, LLC in order to properly reflect market value for those properties held during the year. This adjustment was primarily the result of a deteriorating building purchased by prior management in

1998.

 

During the year ended

December 31, 2019,

an impairment adjustment of

$126,827

was recorded on the Company’s commercial warehouse held for resale in order to properly reflect market value at that time. During the year ended

December 31, 2018,

an impairment adjustment of

$964,743

was recorded to real estate held for resale through Mt Melrose, LLC in order to properly reflect market value for those properties held at the end of the year. This adjustment was the result of

62

properties being transitioned to “held for resale” from “held for investment” as part of a portfolio redirection. See Note

5

 for more information. Recent tax assessments, valuations, and local real estate agents were used to value this portfolio of held-for-resale properties.

Real estate properties held for investment are carried at the cost basis plus additional costs where the cost extended the life of or added value to the property. Otherwise, the cost is expensed as incurred. Properties categorized as real estate held for investment are

not

expected by management to be sold in the next

12

months. This determination is periodically reviewed by management.

Accrued Expenses [Policy Text Block]

Accrued Bonus

Accrued bonuses represent performance-based incentives that have

not

yet been paid. Bonuses can be paid in the form of cash or via the issuance of Company stock. Bonus structures for employees are a pre-approved part of a formal employment agreement or arrangement. Stock based compensation, issued as part of the Company’s Equity Incentive Plan, is reserved for board members and members of senior management. The compensation accrual amount is based on the final value of Company stock that has been approved to be issued by the Governance, Compensation, and Nomination Committee of the Board of Directors. These bonus amounts are accrued when earned and able to be estimated and are paid or issued annually after financial records are finalized.

Other Accrued Expenses [Policy Text Block]

Other Accrued Expenses

Other accrued expenses represent incurred but

not

-yet-paid expenses from payroll accruals, vacation accruals, professional fees, and other accrued taxes.

Lessee, Leases [Policy Text Block]

Leases

On

January 1, 2019, 

the Company adopted ASU

No.

2016

-

02,

“Leases” (Topic

842

). The guidance in ASU

No.

2016

-

02

supersedes the lease recognition requirements in ASC Topic

840

and established ASC Topic

842.

ASU

No.

2016

-

02

requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU

No.

2016

-

02

is effective for fiscal years beginning after

December 15, 2018,

with early adoption permitted. The Company adopted this guidance using the following practical expedients:

● the Company did not reassess if any expired or existing contracts are leases or contain leases;

● the Company did not reassess the classification of any expired or existing leases; and

● the Company did not reassess whether the classification of existing costs associated with expired or existing leases should be classified as initial direct costs.

Additionally, the Company made ongoing accounting policy elections whereby it (i) does

not

recognize right-of-use (ROU) assets or lease liabilities for short-term leases (those with original terms of

12

months or less) and (ii) combines lease and non-lease elements of our leases. 

Upon adoption of the new guidance on

January 1, 2019,

the Company recorded an ROU asset of approximately

$184,000

(net of existing deferred rent liability) and recognized a lease liability of approximately

$186,000,

with

no

resulting cumulative effect adjustment to retained earnings.

Revenue from Contract with Customer [Policy Text Block]

Revenue Recognition

Asset Management and Other Investment Revenue

The Company earns revenue from investments through various fee share and consulting agreements, as well as through realized and unrealized gains and losses, which

may

result in negative period or quarterly revenues. Management fees earned are recorded and paid out monthly and are included in revenue on the accompanying consolidated statements of operations. Performance fees earned are accrued monthly, paid out annually, and are also included in revenue on the accompanying consolidated statements of operations. Consulting fees are billed out monthly after services have been performed. Long-term investments are marked to market at the end of each reporting period. Realized and unrealized gains and losses are recognized as revenue in the period of adjustment.

Management notes that the structure of these arrangements leaves a very low possibility for nonperformance. While the amount of revenue varies from month to month, collectability is very high.

No

contract assets or liabilities are recognized or incurred.

Additionally, the Company earns revenue from direct participation in various private investment funds, primarily the Alluvial Fund. This results in the realized and unrealized gains and losses within a fund such as the Alluvial Fund being recognized as revenue, or a decrease in revenue, on the accompanying consolidated statements of operations.

A summary of revenue earned through asset management operations for the years ended

December 31, 2019

and

2018

is included below:

Asset Management Operations Revenue	Year Ended December 31, 2019		Year Ended December 31, 2018
Realized and unrealized gains (losses) on investment activity	$	1,607,644	$	(834,014	)
Management and performance fee revenue		65,171		41,151
Fund management services revenue		100,461		17,614
Total revenue	$	1,773,276	$	(775,249	)

Real Estate Revenue

The Company earns real estate revenue through rental agreements on real estate held for investment, as well as through the sale of real estate held for resale.

Rental revenue from real estate held for investment is recognized when it is earned, generally on the last day of each month or at another regular period agreed upon by the Company and the tenant. Tenants generally provide a security deposit at the time of possession. This deposit is held separately from revenue and only applied to revenue when rental payment comparable to the security deposit amount is

not

provided in a timely manner and considered unlikely to be recovered. Otherwise, the security deposit is returned in a timely manner after the property is surrendered back to the Company. Management has concluded that the nature of the performance obligation is cyclical and predictable with a very low possibility for nonperformance.

No

contract assets or liabilities are recognized or incurred.

Revenue from real estate held for resale is recognized upon closing of the sale (transfer of control), as all conditions for full revenue recognition have been met at that time. All costs associated with the property sold are removed from the consolidated balance sheets and charged to cost of revenue at that time.

Internet Revenue

The Company sells internet services under annual and monthly contracts. Under the annual contracts, the subscriber pays a

one

-time annual fee, which is recognized as revenue ratably over the life of the contract. Under the monthly contracts, the subscriber is billed monthly and revenue is recognized for the period to which the service relates. Domain name registration revenue is recognized at the point of registration. Sales of computer hardware are recognized as revenue upon delivery and acceptance of the product by the customer. Sales are adjusted for any returns or allowances. Management has concluded that the nature of the performance obligation is cyclical with a very low possibility for nonperformance. Contract liabilities (deferred revenue) were recognized in the amount of collections received in advance of services to be performed.

No

contract assets were recognized or incurred.

The Company generates revenue in its internet segment from consumer and business-grade internet access, wholesale managed modem services for downstream ISPs, web hosting,

third

-party software as a reseller, and various ancillary services in the United States and Canada. Services include narrow-band (dial-up and ISDN) and broadband services (DSL, fiber-optic, and wireless), web hosting, and additional related services to consumers and businesses. Customers

may

also subscribe to web hosting plans to include email access and storage. Internet revenue is affected by the changing composition of revenue sources. In some years, this shift can be significant.

Home Services Revenue

Prior to the divestiture transaction on 

May 24, 2019,

the Company performed HVAC and plumbing service repairs and installed HVAC units for its customers through its home services segment. Revenue was recognized upon completion of the installation or service call. Sales were adjusted for any returns or allowances. A return or allowance situation would arise based on the

two

-year workmanship warranty that typically conveyed with the installation of a new unit. There was also a

two

-year assurance warranty on newly installed parts and equipment that was honored by the manufacturer. If an installation was performed over multiple days, then it was accounted for using work-in-process (WIP) accounting. Contract progress was measured by comparing materials and labor hours incurred to materials and labor hours expected per the contract. These types of contracts were typically completed within

one

month’s time. A small portion of revenue was from the sale of annual service agreements. Revenue attributable to these agreements was recognized over the life of the agreement.

If payment was received prior to contract completion, then the amount of revenue attributable to the unperformed work was designated as unearned revenue. If payment was 

not

provided in advance or at the time of service or installation completion, then the amount due was recognized as revenue and as an account receivable.

Management has acknowledged that these performance obligations were recognized at designated points in time during the contract, including the completion of the contract. As the customer controlled the asset and had the right to use it during the contract, the Company had the right to payment for performance completed to date. Contract liabilities (deferred revenue) were recognized in the amount of collections received in advance of services to be performed.

No

contract assets were recognized or incurred.

Deferred Revenue

Deferred revenue represents collections from customers in advance of internet or home services to be performed. Revenue is recognized in the period service is provided. Total deferred revenue decreased from

$210,212

at

December 31, 2018

to

$204,960

at

December 31, 2019.

During the years ended

December 31, 2019

and

2018,

$206,520

and

$214,142

, respectively, of revenue was recognized from prior-year contract liabilities (deferred revenue).

Income Tax, Policy [Policy Text Block]

Income Taxes

Income taxes are accounted for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax benefits or consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment, inclusive of the recent tax reform act. The most recent

three

tax years, fiscal years ended 

December 31, 2019,

2018,

and 

2017,

are open to potential IRS examination.

Earnings Per Share, Policy [Policy Text Block]

Income (Loss) Per Share

Basic income (loss) per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period.

In periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all potentially dilutive common shares is anti-dilutive. In periods of net income, diluted earnings per share is computed using the more dilutive of the “two class method” or the “treasury method.” Dilutive earnings per share under the “two class method” is calculated by dividing net income available to common stockholders as adjusted for the participating securities, by the weighted-average number of shares outstanding plus the dilutive impact of all other potentially dilutive common shares, consisting primarily of common shares underlying common stock equity incentives. Dilutive earnings per share under the “treasury method” are calculated by dividing net income available to common stockholders by the weighted-average number of shares outstanding plus the dilutive impact of all potentially dilutive common shares, consisting primarily of common shares underlying common stock equity incentives.

None

of the potentially dilutive securities had a dilutive impact during the years ended

December 31, 2019

and

2018.

The number of anti-dilutive shares for the years ended

December 31, 2019

and

2018,

consisting of common shares underlying common stock equity incentives, which have been excluded from the computation of diluted income (loss) per share, was

70,000

shares and

zero

shares, respectively.

Comprehensive Income, Policy [Policy Text Block]

Other Comprehensive Income

Other comprehensive income is the result of the impact of foreign currency translations related to the Company’s internet segment operations in Canada.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Pronouncements

In

August 2018,

the FASB issued ASU

No.

2018

-

13,

“Fair Value Measurement” (Topic

820

). The guidance intends to improve the effectiveness of the disclosures relating to recurring and nonrecurring fair value measurements. The guidance is effective for fiscal years beginning after

December 15, 2019.

Portions of the guidance are to be adopted prospectively while other portions are to be adopted retroactively. Early adoption is permitted. The adoption of this guidance is

not

expected to have a material impact on our consolidated financial statements.

In

June 2016,

the FASB issued ASU

No.

2016

-

13,

“Financial Instruments - Credit Losses” (Topic

326

). The guidance eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial instruments. The credit loss estimate can now reflect an entity’s current estimate of all future expected credit losses. Under the previous guidance, an entity only considered past events and current conditions. In

April 2019,

the FASB further clarified the scope of the credit losses standard and addressed issues related to accrued interest receivable balances, recoveries, variable interest rates, and prepayments. In

May 2019,

the FASB issued further guidance to provide entities with an option to irrevocably elect the fair value option applied on an instrument-by-instrument basis for eligible financial instruments. In

November 2019,

the FASB issued further guidance on expected recoveries for purchased financial assets with credit deterioration, and transition refiled for troubled debt restructurings, disclosures related to accrued interest receivables, and financial assets secured by collateral maintenance provisions. The guidance is effective for fiscal years beginning after

December 15, 2019,

including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. The adoption of certain amendments of this guidance must be applied on a modified retrospective basis and the adoption of the remaining amendments must be applied on a prospective basis. The Company currently expects that the adoption of this guidance

may

change the way we assess the collectability of our receivables and recoverability of other financial instruments. The Company will adopt this guidance as of

January 1, 2023.

The adoption of this guidance is

not

expected to have a material impact on our consolidated financial statements.

The Company does

not

believe that any other recently issued effective standards, or standards issued but

not

yet effective, if adopted, would have a material effect on the accompanying consolidated financial statements. 

XML

Note 6 - Investments (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Equity Securities without Readily Determinable Fair Value [Table Text Block]

	Cost Basis		Unrealized Gain		Fair Value
December 31, 2019
Alluvial Fund, LP	$	7,042,732	$	3,029,626	$	10,072,358
Mt Melrose, LLC		53,846		—		53,846
Total	$	7,096,578	$	3,029,626	$	10,126,204

	Cost Basis		Unrealized Gain		Fair Value
December 31, 2018
Alluvial Fund, LP	$	7,023,676	$	1,422,812	$	8,446,488
Huckleberry Real Estate Fund II, LLC		468,750		—		468,750
Total	$	7,492,426	$	1,422,812	$	8,915,238

XML

Consolidated Statements of Changes in Stockholders' Equity - USD ($)	Common Stock Outstanding [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Noncontrolling Interest [Member]	Total
Balance at Dec. 31, 2017	$ 294,527	$ 23,538,493	$ (544,571)	$ 3,054	$ (7,400,848)		$ 15,890,655
Net income (loss)					(3,840,685)	(380,437)	(4,221,122)
Stock issuance (in shares)	268,760
Stock issuance	$ 33,595	4,032,240					4,065,835
Balance (in shares) at Dec. 31, 2018	2,544,776
Balance at Dec. 31, 2018	$ 328,160	27,718,308	(511,901)	3,054	(11,621,970)		15,915,651
Balance (in shares) at Dec. 31, 2017	2,262,672
Initial accounting of VIE						4,047,623	4,047,623
Net equity distribution for asset acquisition						(3,878,025)	(3,878,025)
Adjustment for rounding of reverse stock split (in shares)	276
Adjustment for rounding of reverse stock split	$ 38	(38)
Sale of treasury stock (in shares)	13,068
Sale of treasury stock		147,613	32,670				180,283
Effects of deconsolidation with noncontrolling interest					(380,437)	210,839	$ (169,598)
Balance (in shares) at Dec. 31, 2018	2,544,776						2,625,282
Net income (loss)					(5,378,637)		$ (5,378,637)
Stock issuance (in shares)	21,870
Stock issuance	$ 2,734	97,264					99,998
Cancellation of treasury stock	(10,063)	(501,838)	511,901
Foreign currency translation reclassification to current earnings				(3,054)			(3,054)
Balance (in shares) at Dec. 31, 2019	2,566,646
Balance at Dec. 31, 2019	$ 320,831	$ 27,313,734			$ (17,000,607)		$ 10,633,958
Balance (in shares) at Dec. 31, 2019							2,566,646

XML

Note 12 - Commitments and Contingencies (Details Textual) - USD ($)	Jan. 07, 2020	Jun. 27, 2019	Apr. 12, 2016	Dec. 31, 2019	Dec. 05, 2019	Aug. 29, 2019
Operating Lease, Weighted Average Remaining Lease Term				1 year 73 days
Lessee, Operating Lease, Discount Rate				6.70%
The Company's Delaware Action [Member]
Property, Plant, and Equipment, Held-for-sale					$ 850,000
Civil Action Complaint Against Frank Erhartic, Jr. [Member]
Loss Contingency, Damages Sought, Value			$ 350,000
Mt. Melrose LLC [Member]
Equity Method Investment, Ownership Percentage		35.00%		35.00%		20.80%
Mt. Melrose LLC [Member] | Woodmont [Member]
Equity Method Investment, Ownership Percentage						79.20%
Mt. Melrose LLC [Member] | Woodmont [Member] | The Company's Delaware Action [Member] | Subsequent Event [Member]
Investment Income, Dividend	$ 600,000
Woodmont [Member] | Mt. Melrose LLC [Member]
Percentage of Membership Interest in Subsidiary Sold		65.00%
Proceeds from Divestiture of Interest in Consolidated Subsidiaries		$ 100,000
Ownership Interest, Sold, Percent		65.00%
Equity Method Investment, Ownership Percentage						20.80%

XML

Note 14 - Share Adjustment, Cancellation and Sale of Treasury Shares, and Reverse Stock Split (Details Textual)			12 Months Ended
	Jul. 31, 2018 shares	May 26, 2018 $ / shares shares	Mar. 29, 2019	Dec. 31, 2019 $ / shares shares	Dec. 30, 2019 shares	Dec. 31, 2018 $ / shares shares	May 22, 2018 $ / shares shares
Stock Issued During Period, Shares, Treasury Stock Reissued	13,068
Shares Issued, Price Per Share | $ / shares		$ 0.11036586
Treasury Stock, Shares, Ending Balance				0	80,506	80,506
Common Stock, Shares Authorized				2,800,000		2,800,000	350,000,000
Common Stock, Par or Stated Value Per Share | $ / shares				$ 0.125		$ 0.125	$ 0.001
Preferred Stock, Shares Authorized				30,000,000		30,000,000	30,000,000
Preferred Stock, Par or Stated Value Per Share | $ / shares				$ 0.001		$ 0.001	$ 0.001
Reverse Stock Split [Member ]
Stockholders' Equity Note, Stock Split, Conversion Ratio			125
Before Reverse Stock Split [Member]
Stock Issued During Period, Shares, Treasury Stock Reissued		1,633,500

XML

Consolidated Balance Sheets - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Current Assets
Cash and cash equivalents	$ 666,810	$ 435,726
Accounts receivable, net	52,889	58,263
Inventory		120,940
Other current assets	29,555	95,095
Current assets - held for resale	428	232,363
Total current assets	749,682	942,387
Long-term Assets
Real estate - held for investment, net	380,515	9,492,877
Real estate held for resale	98,910	2,318,912
Property and equipment, net	17,753	1,019,742
Property and equipment - held for resale		73,212
Goodwill, net	212,445	212,445
Note receivable	195,121	169,406
Long-term investments, at fair value or net asset value	10,126,204	8,915,238
Lease right-of-use assets	45,056
Other assets	73,958	74,664
Long-term assets - held for resale		1,300,569
Total long-term assets	11,149,962	23,577,065
Total assets	11,899,644	24,519,452
Current Liabilities
Accounts payable	157,934	165,495
Accrued bonus	175,259	90,444
Accrued expenses	23,115	112,983
Accrued interest		134,623
Deferred revenue	204,960	210,212
Lease liability, current	46,435
Notes payable, current	11,453	1,002,965
Other current liabilities - held for resale	146,958	317,487
Total current liabilities	766,114	2,034,209
Long-term Liabilities
Notes payable, net of current portion	499,572	6,518,854
Other long-term liabilities - held for resale		50,738
Total long-term liabilities	499,572	6,569,592
Total liabilities	1,265,686	8,603,801
Stockholders’ Equity
Preferred stock, $0.001 par value, 30,000,000 shares authorized; none issued
Common stock, $0.125 par value, 2,800,000 shares authorized; 2,566,646 and 2,625,282 shares issued; 2,566,646 and 2,544,776 shares outstanding	320,831	328,160
Additional paid-in capital	27,313,734	27,718,308
Treasury stock, at cost, 0 and 80,506 common shares		(511,901)
Accumulated other comprehensive income		3,054
Accumulated deficit	(17,000,607)	(11,621,970)
Total stockholders’ equity	10,633,958	15,915,651
Total liabilities and stockholders’ equity	$ 11,899,644	$ 24,519,452

XML

Note 7 - Fair Value of Assets and Liabilities (Details Textual)	1 Months Ended		6 Months Ended	12 Months Ended
	Jun. 30, 2018 USD ($)	Jan. 31, 2018 USD ($)	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Mt. Melrose LLC [Member] | Residential Properties [Member]
Number of Real Estate Properties	69	44
Business Combination, Consideration Transferred, Total	$ 5,174,722	$ 3,956,389
EDI Real Estate, LLC [Member]
Number of Real Estate Properties Transferred from Held for Investment to Held for Sale					0
Real Estate, Held For Sale [Member] | Mt. Melrose LLC [Member]
Impairment of Real Estate				$ 126,827	$ 964,743
Number of Real Estate Properties Transferred from Held for Investment to Held for Sale					62
Number of Real Estate Properties					57
Real Estate, Held For Sale [Member] | EDI Real Estate, LLC [Member]
Impairment of Real Estate				$ 26,170	$ 64,038
Number of Real Estate Properties				5	3
Home Service [Member]
Goodwill, Impairment Loss			$ 1,024,591	$ 1,024,591	$ 754,958

XML

Note 5 - Asset Acquisition of Real Estate Properties (Details Textual)				12 Months Ended
	Jun. 27, 2019 USD ($)	Jun. 29, 2018 USD ($) shares	Jan. 10, 2018 USD ($) shares	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Payments to Acquire Businesses, Gross					$ 552,644
Mt. Melrose LLC [Member] | Woodmont [Member]
Percentage of Membership Interest in Subsidiary Sold	65.00%
Proceeds from Divestiture of Interest in Consolidated Subsidiaries	$ 100,000
Mt. Melrose LLC [Member]
Payments to Acquire Businesses, Gross			$ 500,000
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | shares		148,158	120,602
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable		$ 2,407,564	$ 1,658,270
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Long-term Debt		2,767,158	1,798,119
Mt. Melrose LLC [Member] | Land, Buildings and Improvements [Member]
Business Acquisition, Transaction Costs		$ 7,393	$ 45,250
Mt. Melrose LLC [Member] | Residential Properties [Member]
Number of Real Estate Properties		69	44
Business Combination, Consideration Transferred, Total		$ 5,174,722	$ 3,956,389

XML

Note 2 - Summary of Significant Accounting Policies - Revenue From Asset Management Operations (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Total revenue	$ 3,589,899	$ 1,332,743
Investment Performance [Member]
Total revenue	1,607,644	(834,014)
Management and Performance Fee Revenue [Member]
Total revenue	65,171	41,151
Fund Management Services Revenue [Member]
Total revenue	100,461	17,614
Asset Management [Member]
Total revenue	$ 1,773,276	$ (775,249)

XML

Note 8 - Property and Equipment - Schedule of Assets Held for Sale (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Real estate held for resale	$ 98,910	$ 2,318,912
Disposal Group, Including Discontinued Operation, Property, Plant and Equipment, Noncurrent		73,212
Total assets held for resale	$ 98,910	$ 2,392,124

XML

Note 9 - Real Estate - Minimum Rental Revenues (Details)	Dec. 31, 2019 USD ($)
2020	$ 34,660
2021	2,000
2022
Total	$ 36,660

XML

Note 15 - Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Carrying value differences	$ 232,030	$ 498,863
Net operating loss carryforward	2,927,848	1,333,361
Tax credits	6,250	6,250
Other
Subtotal	3,166,128	1,838,474
Valuation allowance	(2,732,064)	(1,539,716)
Net deferred tax assets	434,064	298,758
Net unrealized gains on appreciated investments	(434,064)	(298,758)
Net deferreds

XML

Note 12 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE

12.

COMMITMENTS AND CONTINGENCIES

Leases

As of

December 31, 2019,

the Company has 

three

 leases classified as operating leases and

no

finance leases. The previously reported finance leases as of the period ended

March 31, 2019,

were assumed by Rooter Hero as part of the home services divestiture that took place on

May 24, 2019. 

See Note

3

for more information.

The operating leases correspond to the warehouse and office facilities for Specialty Contracting Group, LLC, which did

not

convey with the divestiture; office space for Willow Oak Asset Management, LLC; and warehouse space for corporate matters. The lease for warehouse space for corporate matters is a short-term lease, under

12

months, and in accordance with ongoing accounting policy elections, the Company does

not

recognize right-of-use (ROU) assets or lease liabilities for short-term leases. The leases have remaining terms expiring from

2019

through

2021

 and a weighted average remaining lease term of

1.2

 years

. The right-of-use assets and corresponding lease liabilities for the Company’s operating leases are reported separately on the accompanying consolidated balance sheets. Discount rates used in the calculation of our lease liability was approximately

6.7%.

With respect to the leased facilities for Specialty Contracting Group, LLC, possession of the premises was surrendered to the landlord, in connection with the dissolution and winding up of Specialty Contracting Group, in default of that lease. In addition, the Company is the lessor for facility space in New York that it sublets to other tenants; the remaining

two

subleases of which expired on

December 31, 2019.

Lease costs for the year ended 

December 31, 2019 

consisted of the following:

Finance lease costs:
Amortization of ROU assets	$	—
Interest on lease liabilities		—
Operating lease cost		64,092
Sublease income		(28,405	)
Total lease costs from continuing operations		35,687
Total lease costs from discontinued operations		64,901
Total lease costs	$	100,588

A maturity analysis of our operating leases is as follows:

2020	$	86,380
2021		16,634
2022		—
Total		103,014
Discount factor		(6,469	)
Lease liability		96,545
Less lease liability from discontinuing operations		(50,110	)
Amounts due within 12 months		(46,435	)
Long-term lease liability	$	—

Other Commitments

As mentioned in Note

4,

on

June 27, 2019,

the Company sold

65%

of its membership interest in Mt Melrose, LLC to an unaffiliated

third

-party purchaser, Woodmont Lexington, LLC. As consideration for the transaction, Woodmont paid the Company

$100,000

and agreed to assume full responsibility for the management and operation of Mt Melrose and its real estate portfolio. Under the terms of the parties’ membership interest purchase agreement, the Company agreed to indemnify Woodmont against any losses actually incurred as a result of breaches of the Company’s representations and warranties made under the agreement. To date, Woodmont has made

four

claims for indemnification under the agreement, all of which have been rejected and disputed by the Company.

Litigation

Enterprise Diversified, Inc. (f/k/a Sitestar Corporation) v. Frank Erhartic, Jr.

On

April 12, 2016,

the Company filed a civil action complaint against Frank Erhartic, Jr. (the “Former Erhartic CEO”), the Company’s former CEO and director (prior to

December 14, 2015) 

and currently an owner of record or beneficially of more than

5%

of the Company’s Common Stock, alleging, among other things, that the Former Erhartic CEO engaged in, and caused the Company to engage in to its detriment, a series of unauthorized and wrongful related party transactions, including causing the Company to borrow certain amounts from the Former Erhartic CEO’s mother unnecessarily and at a commercially unreasonable rate of interest, converting certain funds of the Company for personal rent payments to the Former Erhartic CEO, commingling in land trusts certain real properties owned by the Company and real properties owned by the Former Erhartic CEO, causing the Company to pay certain amounts to the Former Erhartic CEO for lease payments under an unauthorized lease as to a storage facility owned by the Former Erhartic CEO, causing the Company to pay rent on its corporate headquarters owned by the Former Erhartic CEO’s ex-wife in amounts commercially unreasonable and excessive, and to make real estate tax payments thereon for the personal benefit of the Former Erhartic CEO, converting to the Former Erhartic CEO and/or absconding with

five

motor vehicles owned by the Company, causing the Company to pay real property and personal property taxes on numerous properties owned personally by the Former Erhartic CEO, causing the Company to pay personal credit card debt of the Former Erhartic CEO, causing the Company to significantly overpay the Former Erhartic CEO’s health and dental insurance for the benefit of the Former Erhartic CEO, and causing the Company to pay the Former Erhartic CEO’s personal automobile insurance. The Company is seeking, among other relief available, monetary damages in excess of

$350,000.

This litigation matter is currently pending in the Circuit Court for the City of Lynchburg (Lynchburg, Virginia).

Other: Mt Melrose-related Proceedings

Various disputes have arisen and are continuing between the Company and Woodmont Lexington, LLC (“

Woodmont

”), the entity to whom the Company sold, on

June 27, 2019,

65%

of the Company’s membership interest in Mt Melrose, LLC (“

Mt Melrose

”). 

In undertaking a sale of its membership interests in Mt Melrose, the Company had sought to partner with an operator who, in exchange for being granted a substantial equity interest at a significant discount to the amounts the Company had invested in Mt Melrose, would assume full responsibility for the management and operation of Mt Melrose and its real estate portfolio and endeavor in good faith to generate favorable returns inuring to the long-term best interests of the Company and its shareholders.

Shortly following the closing of the Mt Melrose transaction, however, the relationship between the Company and Woodmont soured. Woodmont, by its representative, Tice Brown, unexpectedly proceeded to make numerous claims and demands upon the Company, which the Company determined to be unfounded and frivolous, if

not

disingenuous to the parties’ understandings. During the year ended

December 31, 2019,

Woodmont also has submitte

d

three

 fo

rmal claims for indemnification under the parties’ purchase agreement, each of which were considered by the Company and then rejected and disputed in short order as unfounded. An additional claim has been submitted, considered, and disputed subsequent to

December 31, 2019.

In addition, Woodmont, acting as the sole manager of Mt Melrose, purported to unilaterally amend and restate as of

August 29, 2019

the Mt Melrose limited liability company agreement among the parties, purporting to change the terms of the distribution waterfall the parties had expressly agreed to and purporting to reallocate the parties’ respective interests in Mt Melrose – unilaterally reducing the Company’s percentage membership interest from

35%

to

20.8%

while increasing Woodmont’s percentage membership interest from

65%

to

79.2%.

 The Company has rejected and disputed these purported changes and Woodmont’s conduct.

In connection with the primary disputes between the Company and Woodmont and following the Company’s Delaware Action (as defined below), on

December 5, 2019,

Woodmont also filed a verified complaint in the Fayette County, Kentucky Circuit Court against the Company and a

third

party who was then-under contract with the Company for such party’s purchase of the Company’s warehouse and associated real property located in Lexington, Kentucky –

see

 

Woodmont Lexington, LLC, et al. v. Enterprise Diversified, et al.

, Fayette Circuit Court, Civil Action

No.

19

-CI-

04304

(the “

Kentucky Action

”). The Court in the Kentucky Action enjoined the Company and the warehouse purchaser from removing or cleaning out the various items of building materials and salvage owned by Mt Melrose that had been placed in the warehouse premises, and required the Company and the warehouse purchaser to provide rent-free access so that Woodmont and Mt Melrose could realize “full value” on their liquidation of the stored personal property until

February 1, 2020. 

The Company believes that Woodmont’s attempt to hold up the sale of an

$850,000

warehouse and property because it wanted to store spare toilets, doors, floor tiles and other residential building materials there, rent free, for more than

six

months, was disingenuous and intentionally injurious to the Company. On

December 27, 2019,

the Company filed verified counter-claims in the Kentucky Action against Woodmont, alleging, among other things, Woodmont’s tortious interference with the Company’s business and Woodmont’s unjust enrichment. The Company is seeking, among other relief available against Woodmont, declaratory relief; trial by jury on all issues; money damages, including all special and consequential damages, in amounts to be determined at trial; and the Company’s costs and expenses, including attorneys’ fees; together with pre- and post-judgement interest. The parties to the Kentucky Action have recently engaged in settlement negotiations, although they have

not

been successful. This action remains pending in the Fayette County, Kentucky Circuit Court.

All the while, since the closing of the Mt Melrose transaction, Woodmont, by its representative, Tice Brown, has made repeated “low ball” offers to buy out the Company’s remaining interest in Mt Melrose, insisting that the Company relinquish its Mt Melrose interest in order to avoid further claims and demands and in order to avoid threatened public disparagement (including by way of statements made on various social media by Woodmont’s representative, Tice Brown). All such offers have been rejected or

not

responded to by the Company, as being unfavorable, undesirable and

not

in the long-term best interests of the Company and its shareholders.

On

January 7, 2020,

Woodmont, acting as the sole manager of Mt Melrose, also caused Mt Melrose to distribute a

$600,000

cash dividend directly to Woodmont. Woodmont expressly excluded the Company from receiving any portion of this distribution. The Company has rejected and disputed the propriety of this distribution and Woodmont’s conduct.

The Company believes that Woodmont, directly and by its representative, Tice Brown, has engaged, and continues to engage, in intentionally injurious and harassing conduct concerning Mt Melrose that runs counter to the long-term best interests of the Company and its shareholders. Accordingly, as previously reported in the Company’s Current Report on Form

8

-K filed with the SEC on

November 20, 2019,

the Company filed a verified complaint in the Court of Chancery of the State of Delaware on

November 20, 2019,

commencing a civil action against Woodmont –

see

Civil Action

No.

2019

-

0928

-JTL

(the “

Delaware Action

”). The Delaware Action was filed by the Company in response to the repeated claims and demands and injurious conduct by Woodmont and its representative, Tice Brown. On

March 9, 2020,

the Company filed further an amended verified complaint against Woodmont in the Delaware Action, expanding its claims against Woodmont. The Company is seeking, among other relief available against Woodmont, injunctive, declaratory and equitable relief, and relief for, among other things, Woodmont’s breaches of contract and unjust enrichment, along with attorneys’ fees and expenses. This action remains pending in the Delaware Court of Chancery.

Management intends to vigorously prosecute the Company’s claims, and defend the Company’s rights, against Woodmont and its representative, Tice Brown, in all of these Mt Melrose-related proceedings.

XML

Note 4 - Sale of Controlling Interest in Real Estate Subsidiary

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Controlling Stock Sale of Real Estate Subsidiary [Text Block]

NOTE

4.

SALE OF CONTROLLING INTEREST IN REAL ESTATE SUBSIDIARY

Transaction

On

June 27, 2019,

the Company sold

65%

of its membership interest in Mt Melrose, LLC to an unaffiliated

third

-party purchaser, Woodmont Lexington, LLC, a Delaware limited liability company (“Woodmont”). As consideration for the transaction, Woodmont paid the Company

$100,000

and agreed to assume full responsibility for the management and operation of Mt Melrose and its real estate portfolio. The Company retained a

35%

membership interest in Mt Melrose, with Woodmont owning the other

65%

membership interest. Subsequent to the transaction, however, Woodmont, as the manager of Mt Melrose, has purported that the Company’s membership interest in Mt Melrose has been diluted to

20.8%.

The Company disputes this assertion and maintains that it has retained its

35%

membership interest.

Prior to this transaction, the Company had grown uncomfortable with the extreme amounts of high-priced debt that the Mt Melrose subsidiary had taken on. There were significant principal payments due over the next

12

months at the subsidiary level that the portfolio’s cash flows could

not

offset and the Company was unwilling to subsidize. As reported in previous quarterly and annual reports, on

November 

1,

2018,

management implemented a right-sizing strategy for the Mt Melrose portfolio. This strategy included the hiring of a dedicated

third

-party property manager, a restructuring of overhead expenses, the divestiture of non-cash-flowing properties, and a focus on refinancing high-interest debt. The property manager was responsible for all day-to-day operations including, but

not

limited to: tenant relations and communications, property repairs and renovations, vacancy marketing, and turnover procedures. This allowed management to remain passive operationally and focus on property sales and refinancing opportunities. Subsequent to the sale on

June 27, 2019,

the property manager continues to fulfill the day-to-day operational responsibilities, and, to management’s knowledge, Woodmont continues to act on management’s previous right-sizing efforts by liquidating non-cash-flowing properties and pursuing refinancing options.

In connection with this transaction, the Company and Woodmont entered into a certain Amended and Restated Limited Liability Company Agreement of Mt Melrose, LLC (the “A&R LLC Agreement”). The A&R LLC Agreement sets forth the general terms and conditions governing the arrangements between the

two

members. The A&R LLC Agreement provides that the business and affairs of Mt Melrose will be managed exclusively by

one

or more managers; and Woodmont is designated as the sole manager. In addition, the Company has expressly agreed to a

three

-year “standstill” arrangement, during which time the Company will

not

in any way participate, directly or indirectly, in the management or control of Mt Melrose; and with respect to any matters requiring a vote of the members, the Company will vote with (i.e., the same as) Woodmont. This arrangement allows the Company to maintain its passive management structure, while still owning a significant portion of the partnership.

Under the terms of the A&R LLC Agreement, distributions of cash, from whatever source,

may

be made to the members at such times, and in such amounts, as the manager, Woodmont, determines; provided, however, that any such distributions will be made in accordance with the following priorities: (i) distribution of amounts up to a cumulative total of

$2,000,000

will be made

pro rata

in accordance with the members’ respective percentage interests (as expressly specified in the A&R LLC Agreement); (ii) then, distribution of cumulative amounts in excess of

$2,000,000

and up to

$3,000,000

will be made

67%

to the Company and

33%

to Woodmont; and (iii) thereafter, distribution of cumulative amounts in excess of

$3,000,000

will be made

pro rata

in accordance with the members’ respective percentage interests (as expressly specified in the A&R LLC Agreement).

Deconsolidation Due to Transfer of Control

Prior to the sale of

65%

of its Mt Melrose interest, the Company owned

100%

of the membership interests in Mt Melrose, LLC and controlled the entity by virtue of its voting interests. As a result, the Company consolidated Mt Melrose under the “voting interests” (“VOE”) consolidation model.

By virtue of the A&R LLC Agreement, and the aforementioned standstill agreement, Woodmont is the sole “manager” responsible for all management and operating decisions of Mt Melrose. Management determined that as of

June 27, 2019,

the Company

no

longer has a “controlling financial interest” in Mt Melrose and will

no

longer consolidate Mt Melrose. Furthermore, the Company has concluded that Mt Melrose does

not

qualify as a “variable interest entity” as Mt Melrose has sufficient equity at risk to permit operations and the Company is

not

the primary beneficiary of Mt Melrose’s activities. All activity prior to the deconsolidation event has been included on the accompanying consolidated statements of operations for the year ended

December 31, 2019,

in continuing operations, and under the real estate segment. As of

June 27, 2019,

all previously consolidated assets and liabilities of Mt Melrose, LLC have been removed from the accompanying consolidated balance sheets. The Company’s membership interest in Mt Melrose will now be accounted for as an investment in the equity of Mt Melrose in the Company’s reported financial statements. 

Accounting for Remaining Mt Melrose Investment

The Company adopted ASU

2016

-

01

effective

January 1, 2018. 

ASU

2016

-

01

generally requires entities to measure equity investments at fair value and recognize any changes in fair value in net income. However, entities are able to elect a measurement alternative for equity investments that do

not

have a “readily determinable fair value.” The Company has determined that its equity investment in Mt Melrose does

not

have a readily determinable fair value at the time of deconsolidation. The Company’s inability to “exercise significant influence” due to the previously mentioned standstill agreement, also supports the use of the measurement alternative. Under this alternative, the Company will measure the Mt Melrose investment at its implied fair value and assess it for impairment at each reporting date, or more often if indication of a potential impairment exists. When fair value becomes determinable, from observable price changes in orderly transactions, the Company’s investment will be marked to fair value on a periodic basis. Future dividends will be recognized as income and returns of capital recognized as a reduction in the Company’s investment when and if received.

Using the

$100,000

transaction price for a

65%

interest in Mt Melrose, LLC, the implied value of the retained

35%

interest at the time of the transaction is

$53,846.

 This amount is included under the long-term investment amount on the accompanying consolidated balance sheet as of

December 31, 2019.

Effective on

June 27, 2019,

the Company recognized a loss on the partial sale of Mt Melrose in the amount of

$4,157,809,

which has been reported separately on the accompanying consolidated statements of operations in continuing operations and under the real estate segment for the year ended

December 31, 2019.

The amount of the loss is based upon the value of the Company’s remaining interest in the subsidiary, less the Company’s previous carrying value of the subsidiary. 

XML

Note 8 - Property and Equipment

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE

8.

PROPERTY AND EQUIPMENT

The cost of property and equipment at

December 31, 2019,

and

December 31, 2018,

consisted of the following:

	2019			2018
Building	$	—		$	836,827
Computers and equipment		17,330			17,330
Furniture and fixtures		10,850			90,919
Land		—			145,000
		28,180			1,090,076
Less accumulated depreciation		(10,427	)		(70,334	)
Property and equipment, net	$	17,753		$	1,019,742

Depreciation expense was

$27,284

 for the year ended 

December 31, 2019,

an

d

$135,397

 fo

r the year ended

December 31, 2018.

Included in these amounts are

$9,310

 and

$32,001

 for the years ended 

December 31, 2019

and

2018,

respectively, of depreciation expense related to personal property used in real estate segment rental operations. The depreciation expense related to personal property is included in the real estate segment cost-of-goods-sold amount on the accompanying consolidated statements of operations.

As of

December 31, 2019,

management has identified 

two

residential real estate properties and several vacant lots as real estate held for resale. These properties are carried at

$98,910

on the accompanying consolidated balance sheets as of

December 31, 2019.

This compares to the year ended

December 31, 2018,

when management reported

$73,212

of vehicles and equipment as held for resale and

$2,318,912

of real estate as held for resale.

A summary of total assets held for resale as of

December 31, 2019,

and

December 31, 2018,

is as follows:

	December 31, 2019		December 31, 2018
Real estate held for resale	$	98,910	$	2,318,912
Equipment and vehicles held for resale		—		73,212
Total assets held for resale	$	98,910	$	2,392,124

On

December 24, 2019,

the Company completed the sale of a commercial warehouse space held for resale located in Lexington, Kentucky. The property was sold at its carrying value of

$850,000.

Net proceeds totaled

$487,944

after repayment of the attached promissory note. The sale resulted in a loss of

$56,467,

which is included in other expenses under the real estate segment for the year ended

December 31, 2019.

XML

Note 15 - Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	2019			2018
Current benefit (provision):
Federal	$	—		$	—
State		—			—
Deferred benefit:
Federal		1,097,146			1,262,452
State		95,202			322,027
Valuation allowance		(1,192,348	)		(1,584,479	)
Total income tax provision	$	—		$	—

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	2019			2018
Deferred tax assets:
Carrying value differences	$	232,030		$	498,863
Net operating loss carryforward		2,927,848			1,333,361
Tax credits		6,250			6,250
Other		—			—
Subtotal		3,166,128			1,838,474
Valuation allowance		(2,732,064	)		(1,539,716	)
Net deferred tax assets		434,064			298,758
Deferred tax liabilities:
Net unrealized gains on appreciated investments		(434,064	)		(298,758	)
Net deferreds	$	—		$	—

XML

Note 9 - Real Estate (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Real Estate Properties [Table Text Block]

EDI Real Estate	December 31, 2019	December 31, 2018
Units occupied or available for rent	6	6
Vacant units being prepared for rent	—	3
Total units held for investment	6	9
Units held for resale	2	—
Vacant lots held for resale	3	3
Total units held for resale	5	3

Mt Melrose	December 31, 2018
Units occupied or available for rent		98
Vacant units being prepared for rent		15
Total units - held for investment		113
Residential and commercial units		48
Vacant lots		9
Total units - held for resale		57

Real Estate Properties, Disclosure [Table Text Block]

EDI Real Estate	December 31, 2019			December 31, 2018
Total real estate held for investment	$	484,590		$	710,022
Accumulated depreciation		(104,075	)		(107,576	)
Real estate held for investment, net		380,515			602,446
Real estate held for resale	$	98,910		$	40,047

Mt Melrose	December 31, 2018
Total real estate held for investment	$	9,049,945
Accumulated depreciation		(159,514	)
Real estate held for investment, net		8,890,431
Real estate held for resale	$	2,278,865

Operating Leases, Future Minimum Payments Receivable [Table Text Block]

2020	$	34,660
2021		2,000
2022		—
Total	$	36,660

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Note 16 - Related Party Transactions

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

NOTE

16.

RELATED PARTY TRANSACTIONS

Former CEO, Erhartic

As of the year ended

December 31, 2015,

the Company previously purported to lease its office building in Lynchburg, Virginia, from the Former CEO, Frank Erhartic, of the Company. Public records indicate that the owner of this property from at least

January 1, 2014,

through

December 31, 2015,

was the Former CEO’s ex-wife. The Company has filed a lawsuit against the Former CEO, Erhartic, in order to recover, among other amounts, the payments made to the Former CEO. Additional information on this lawsuit can be found in Note

12.

The Company vacated the building as of

January 15, 2016.

The Company also leased a storage facility in Salem, Virginia, from the Former CEO, Erhartic. The Company is attempting to recover the payments made to the Former CEO related to this facility. The lease was

not

approved by the process required by the Company’s Code of Ethics. The Former CEO has refused to provide access to the storage facility to management and has

not

returned Company-owned equipment located at the storage facility. The value of this equipment is also included in the lawsuit. Additional information can be found in Note

12.

The Former CEO, Erhartic, created several land trusts and designated the Company as the trustee. The Former CEO and, the Company believes, the Former CFO placed personally owned properties within these land trusts. This activity was

not

approved by the process required by the Company’s Code of Ethics. This activity is the subject of litigation involving the Former CEO, Erhartic. Additional information can be found in Note

12.

Bonhoeffer Fund, LP

The Company’s subsidiary, Willow Oak Asset Management, LLC, signed a fee share agreement on

June 13, 2017,

with Coolidge Capital Management, LLC (“Coolidge”), whose sole member is Keith D. Smith, also an ENDI director. Willow Oak is the sole member of Bonhoeffer Capital Management LLC, the general partner to Bonhoeffer Fund, LP, a private investment partnership. Under their agreement, Willow Oak pays all start-up and operating expenses that are

not

partnership expenses under the limited partnership agreement. Willow Oak receives

50%

of all performance and management fees earned by the general partner. During the years ended

December 31, 2019 

and

2018,

the Company earned

$38,599

 and

$26,196,

respectively, of revenue through this Bonhoeffer Fund arrangement.

Willow Oak Capital Management, LLC

On

August 1, 2018,

Willow Oak, through a wholly-owned Company subsidiary, Willow Oak Capital Management, LLC (“Willow Oak Capital Management”), launched a newly organized private investment partnership, Willow Oak Select Fund, LP (“Select Fund”). Willow Oak Capital Management served as the general partner of Select Fund. During the year ended

December 31, 2018,

Willow Oak Capital Management entered into fee share arrangements related to the Select Fund initiative with each of the following related party funds or managers: (i) Steven Kiel, a director of the Company, pursuant to a fee share agreement dated

June 25, 2018; (

ii) JDP Capital Management, LLC, pursuant to a fee share agreement dated

June 15, 2018 (

the counterparty was affiliated with Jeremy Deal, a director of the Company); and (iii) Coolidge Capital Management, LLC, pursuant to a fee share agreement dated

June 25, 2018 (

the counterparty was affiliated with Keith Smith, a director of the Company). These related party transactions were considered and approved by the Audit Committee of the Board of Directors of the Company, acting unanimously, on

May 19, 2018.

However, Select Fund ultimately dissolved in

June 2019

so that other joint ventures and partnerships could be pursued, and these related party arrangements terminated accordingly. During the years ended

December 31, 2019

and

2018,

the Company earned

$1,521

and

$610,

respectively, of revenue through this Select Fund arrangement.

Willow Oak Asset Management, LLC

On

October 1, 2017,

Willow Oak Asset Management, LLC entered into sub-lease agreements with Arquitos Capital Management, LLC, which is managed by our director and principal executive officer, Steven L. Kiel, JDP Capital Management, LLC, which is managed by our director and vice-chairman, Jeremy K. Deal, and B.E. Capital Management, LLC, which is managed by our director, Thomas Braziel. At the commencement of the sub-lease arrangement, neither Jeremy K. Deal nor Tomas Braziel met the criteria for a related party. Upon Jeremy K. Deal’s board appointment on

April 3, 2018

and Thomas Braziel’s appointment on

May 5, 2019,

the sub-lease arrangements qualify as related party transactions. During the years ended

December 31, 2019

and

2018,

the Company earned

$28,405

and

$41,632,

respectively, of sub-lease revenue through these arrangements. Willow Oak’s sub-lease agreement with Arquitos Capital Management, LLC expired on

October 31, 2018,

and as of

December 31, 2019,

the remaining

two

sub-lease arrangements have also expired.

On

November 1, 2018,

Willow Oak Asset Management, LLC entered into a fund management services agreement with Arquitos Investment Manager, LP, which is managed by our director and principal executive officer, Steven L. Kiel, to provide Arquitos with Willow Oak Fund Management Services (“FMS”) consisting of the following services: investor relations, marketing, administration, legal, accounting and bookkeeping, annual audit coordination, and liaison to

third

-party service providers. As considerations for the services, Arquitos pays Willow Oak a fixed monthly fee and a performance-based fee. During the years ended

December 31, 2019 

and

2018,

the Company earned

$100,461

and

$17,614,

respectively, of revenue through this fund management services arrangement.

Mt Melrose Transaction

The Company’s and its Mt Melrose subsidiary’s transactions with Old Mt. Melrose and Jeffrey I. Moore, a former director of the Company, were related party transactions and are set out in Notes

5

 and

9,

respectively.

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Note 3 - Home Services Subsidiary Divestiture (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Disposal Groups, Including Discontinued Operations [Table Text Block]

	December 31, 2019		December 31, 2018
Cash and cash equivalents	$	428	$	23,954
Accounts receivable		—		136,785
Other current assets		—		71,624
Total current assets - held for resale		428		232,363
Property and equipment, net		—		270,603
Goodwill		—		1,024,591
Other long-term assets		—		5,375
Total long-term assets - held for resale		—		1,300,569
Accounts payable		96,848		75,208
Accrued expenses		—		81,213
Lease liabilities		50,110		—
Other current liabilities		—		2,368
Notes payable, current		—		158,698
Total current liabilities - held for resale		146,958		317,487
Notes payable, long term - held for resale		—		50,738
Total long-term liabilities - held for resale	$	—	$	50,738

Sale of vehicles, equipment, and furniture, net of depreciation	$	230,578
Impairment of remaining goodwill		1,024,591
Total carrying value of assets sold		1,255,169
Vehicle and equipment notes payable assumed by the buyer		76,791
Service agreements assumed by the buyer		19,646
Total carrying value of liabilities assumed		96,437
Net loss on sale of subsidiary, pre-tax	$	1,158,732

	For the year ended
	December 31, 2019			December 31, 2018
Revenues	$	675,963		$	3,077,631
Cost of revenues		432,872			2,003,876
Gross profit		243,091			1,073,755
Selling, general, and administrative expenses		535,650			1,235,346
Loss on sale of subsidiary, net of recoveries		(1,125,364	)		—
Other income (expense), net		(92,552	)		(753,572	)
Net income (loss) reported as discontinued operations	$	(1,510,475	)	$	(915,163	)

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Note 6 - Investments (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Equity Securities without Readily Determinable Fair Value, Realized Gains (Losses)	$ 76,810	$ (885)
Alluvial Fund, LP [Member]
Investment Income, Net, Total	$ 19,056	$ 21,595

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Note 3 - Home Services Subsidiary Asset Sale - Discontinued Assets and Liabilities (Details) - USD ($)		12 Months Ended
	May 24, 2019	Dec. 31, 2019	Dec. 31, 2018
Total current assets - held for resale		$ 428	$ 232,363
Disposal Group, Including Discontinued Operation, Property, Plant and Equipment, Noncurrent			73,212
Total current liabilities - held for resale		146,958	317,487
Total long-term liabilities - held for resale			50,738
Loss on sale of subsidiary, net of recoveries		(4,157,809)
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total		(1,510,475)	(915,163)
Discontinued Operations, Held-for-sale [Member]
Cash and cash equivalents		428	23,954
Accounts receivable			136,785
Other current assets			71,624
Total current assets - held for resale		428	232,363
Disposal Group, Including Discontinued Operation, Property, Plant and Equipment, Noncurrent			270,603
Goodwill			1,024,591
Other long-term assets			5,375
Total long-term assets - held for resale			1,300,569
Accounts payable		96,848	75,208
Accrued expenses			81,213
Lease liabilities		50,110
Other current liabilities			2,368
Notes payable, current			158,698
Total current liabilities - held for resale		146,958	317,487
Notes payable, long term - held for resale			50,738
Total long-term liabilities - held for resale			50,738
Sale of vehicles, equipment, and furniture, net of depreciation	$ 230,578
Impairment of remaining goodwill	1,024,591
Total carrying value of assets sold	1,255,169
Vehicle and equipment notes payable assumed by the buyer	76,791
Service agreements assumed by the buyer	19,646
Total carrying value of liabilities assumed	96,437
Net loss on sale of subsidiary, pre-tax	$ 1,158,732
Revenues		675,963	3,077,631
Cost of revenues		432,872	2,003,876
Gross profit		243,091	1,073,755
Selling, general, and administrative expenses		535,650	1,235,346
Loss on sale of subsidiary, net of recoveries		(1,125,364)
Other income (expense), net		(92,552)	(753,572)
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total		$ (1,510,475)	$ (915,163)

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Note 1 - Organization and Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

NOTE

1.

ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization and Lines of Business

Enterprise Diversified, Inc. (formerly White Dove Systems, Inc., Interfoods Consolidated, Inc., and then Sitestar Corporation) was incorporated in Nevada on

December 17, 1992.

On

June 1, 2018,

the Company amended its Articles of Incorporation to change the name of the Company to “Enterprise Diversified, Inc.” Unless the context otherwise requires, and when used in this Report, the “Company,” “ENDI,” “we,” “our,” or “us” refers to Enterprise Diversified, Inc. and its subsidiaries.

During the year ended

December 31, 2019,

the Company operated through

five

reportable segments: Asset Management Operations, Real Estate Operations, Internet Operations, Home Services Operations, and Other Operations. Other Operations include corporate operations and nonrecurring or

one

-time strategic funding or similar activity that is

not

considered to be

one

of our primary lines of business. As of

January 1, 2019,

legacy real estate operations, previously reported under Other Operations, are being reported under the Real Estate Operations segment. As of the year ended

December 31, 2019,

and for all prior periods presented, Home Services Operations are reported as discontinued operations. The management of the Company also continually reviews various business opportunities for the Company, including those in other lines of business.

Note Regarding Recent Transactions

On

May 24, 2019,

as per the Current Report on Form

8

-K filed with the SEC on

May 28, 2019,

the Company completed a divestiture of its Home Services Operations, via its subsidiary, Specialty Contracting Group, LLC (formerly known as HVAC Value Fund, LLC), to an unaffiliated

third

-party purchaser, Rooter Hero Plumbing, Inc. (“Rooter Hero”). In the transaction, the Company sold and conveyed all of the subsidiary’s personal property and customer lists and records, excluding stock inventory and other current assets. As part of the transaction, Rooter Hero assumed the subsidiary’s obligations under lease and/or loan agreements for all outstanding vehicles and equipment, as well as the obligations to service all of the subsidiary’s remaining customer accounts going forward. 

No

cash consideration was exchanged in the transaction. As consideration for the transaction, Rooter Hero will pay monthly royalties for the

sixty

(

60

) months following the closing, calculated on the basis of any revenue received from the customer accounts transferred. Under such royalty arrangements, the Company will receive

7.5%

of any monthly revenue generated from qualified sales during the

first

year, and

5%

of any monthly revenue during years

two

through five. Royalties received will be reduced by pre-approved warranty-related costs for select customers. The operations of Specialty Contracting Group, LLC have been considered a component of, and the sale reflects a major strategic shift in, the Company’s business. As such, Specialty Contracting Group, LLC historical operations are now classified as “discontinued operations” in the Company’s financial statements. See Note

3

 for more information.

Additionally, on

June 27, 2019,

as per the Current Report on Form

8

-K filed with the SEC on

July 3, 2019,

the Company sold

65%

of its membership interest in Mt Melrose, LLC to an unaffiliated

third

-party purchaser, Woodmont Lexington, LLC (“Woodmont”). As consideration for the transaction, Woodmont paid the Company

$100,000

and agreed to assume full responsibility for the management and operation of Mt Melrose and its real estate portfolio. While the operations of Mt Melrose, LLC are considered a component of the Company’s business, the sale did

not

represent a major strategic shift in the Company’s business. While we deconsolidated the operations of Mt Melrose, LLC on

June 27, 2019,

as a result of

no

longer having a controlling financial interest, Mt Melrose, LLC’s historical operations continue to be reflected as “continuing operations” in the Company’s financial statements. See Note

4

 for more information.

Note Regarding Historic Consolidation of Old Mt. Melrose

Previously, as of the quarterly periods ended

March 31, 2018,

June 30, 2018,

and

September 30, 2018,

the Company had determined that Old Mt. Melrose (as defined below) was a “variable interest entity” because the seller’s equity interests in Old Mt. Melrose were 

not

effective in determining whether the seller or New Mt Melrose (as defined below) had a controlling financial interest, and that New Mt Melrose’s rights under the Cash Flow Agreement were deemed to be variable interests in Old Mt. Melrose. As its primary beneficiary, New Mt Melrose previously consolidated Old Mt. Melrose’s financial results beginning on

January 10, 2018.

The fair values of the assets and liabilities of Old Mt. Melrose had been consolidated accordingly on the unaudited consolidated balance sheets for the quarterly periods ended

March 31, 2018,

June 30, 2018,

and

September 30, 2018.

However, as of

November 1, 2018, 

pursuant to a certain Termination of Master Real Estate Asset Purchase Agreement and Cash Flow Agreement, New Mt Melrose

no

longer had a controlling financial interest in Old Mt. Melrose and was 

no

longer considered Old Mt. Melrose’s primary beneficiary. Consequently, as of

November 1, 2018,

the Company

no

longer consolidates the assets, liabilities, or operating results of Old Mt. Melrose, and the balance of noncontrolling interest as of

December 31, 2019

and

2018,

 is zero. See Note

5

 for additional information.

Restatement of Prior Interim Period Information

For the quarters ended

September 30

and

June 30, 2019,

the Company previously reported the net loss recognized on the sale of our controlling interest in our Mt Melrose subsidiary as an other expense under Other Operations. As of

December 31, 2019, 

the Company has found it appropriate to report this loss under the Real Estate segment. For all reported segment activity, this reclassification has been made as of

June 30, 2019.

The loss on the sale continues to show separately on the consolidated statements of operations for the year ended

December 31, 2019.

Additionally, an entry has been made to combine the deconsolidation activity previously reported on the consolidated statements of stockholders’ equity, in the amount of

$

638,749

,

with the net loss on the sale reported on the statements of operations for the period ended

June 30, 2019.

Total ending stockholder’s equity for the period ended

June 30, 2019,

remains unchanged.

Asset Management Operations

The Company operates its asset management operations business through Willow Oak.

In

2016,

the Company made a strategic determination to fund a seed investment totaling

$10

million through Willow Oak to assist in the launch of Alluvial Fund, LP, a private investment partnership that was launched on

January 1, 2017

by unaffiliated sponsor and general partner, Alluvial Capital Management, LLC. The Company had determined that Willow Oak’s support of Alluvial Capital Management, LLC and its direct investment in Alluvial Fund were both beneficial and necessary undertakings in conjunction with establishing an asset management operations business and gaining credibility within that industry. Under a side letter agreement with Alluvial Fund’s general partner, Willow Oak agreed

not

to fully withdraw its capital account prior to a date

five

years after the effective date of the side letter agreement. However, on

December 31, 2017,

pursuant to an amendment to the side letter agreement dated

December 15, 2017,

the Company caused

$3.0

million to be withdrawn from Alluvial Fund in order to partially fund the Company’s acquisitions of real estate in the

2018

Mt Melrose transactions. As of 

December 31, 2019,

Willow Oak continues to hold its remaining direct investment in Alluvial Fund. Investment gains and losses are reported as revenue on the accompanying consolidated statements of operations.

In furtherance of establishing the asset management operations business, Willow Oak signed a fee share agreement on

June 13, 2017,

with Coolidge Capital Management, LLC (“Coolidge”), whose sole member is Keith D. Smith, who is also an ENDI director. Willow Oak is the sole member of Bonhoeffer Capital Management, LLC, the general partner to Bonhoeffer Fund, LP, a private investment partnership. Under their agreement, Willow Oak paid all start-up expense and pays agreed-upon operating expenses that are

not

partnership expenses, and Willow Oak receives

50%

of all performance and management fees earned by the general partner.

On

August 1, 2018,

Willow Oak, through a wholly-owned Company subsidiary, Willow Oak Capital Management, LLC (“Willow Oak Capital Management”), launched a newly organized private investment partnership, Willow Oak Select Fund, LP (“Select Fund”). Willow Oak Capital Management served as the general partner of Select Fund. Select Fund ultimately dissolved in

June 2019

so that other joint ventures and partnerships could be pursued.

On

November 1, 2018,

Willow Oak also entered into a fund management services agreement with Arquitos Investment Manager, LP, which is managed by our chairman and principal executive officer, Steven L. Kiel, to provide Arquitos with Willow Oak’s Fund Management Services (“FMS”) consisting of the following services: investor relations, marketing, administration, legal, accounting and bookkeeping, annual audit coordination, and liaison to

third

-party service providers. As consideration for the services, Arquitos pays Willow Oak a fixed fee and a performance-based fee.

On

October 1, 2019,

Willow Oak partnered with Geoff Gannon and Andrew Kuhn to form Focused Compounding Capital Management, LLC (“Focused Compounding”). This new joint venture, of which Willow Oak Capital Management, LLC is a

10%

owner, manages capital through separately managed accounts and a private partnership launched

January 1, 2020.

As a member of the general partner, Willow Oak provides ongoing FMS and operational support in addition to covering all

one

-time expenses associated with the launch of Focused Compounding Fund, LP. As consideration for the arrangement, Willow Oak is entitled to

10%

of gross management and performance fees earned by Focused Compounding. In addition to hosting a popular investing podcast, the individual principals of Focused Compounding share investment news and advice through a subscription-based service. 

Real Estate Operations

ENDI created a wholly-owned subsidiary named Mt Melrose, LLC, a Delaware limited liability company (“New Mt Melrose”), on

December 14, 2017,

to acquire a portfolio of residential and other income-producing real estate in Lexington, Kentucky, pursuant to a certain Master Real Estate Asset Purchase Agreement entered into on

December 10, 2017,

with a like-named seller, Mt. Melrose, LLC (“Old Mt. Melrose”), a Kentucky limited liability company owned by Jeff Moore, then an ENDI director. On

January 10, 2018,

New Mt Melrose, consistent with the terms of the purchase agreement, completed a

first

acquisition from Old Mt. Melrose of

44

residential and other income-producing real properties located in Lexington, Kentucky. On

June 29, 2018,

New Mt Melrose, consistent with the terms of the purchase agreement, completed a

second

acquisition from Old Mt. Melrose of an additional

69

residential and other income-producing real properties located in Lexington, Kentucky. The Company accounted for the

first

and

second

purchases of properties as an asset acquisition (consisting of a concentrated group of similar identifiable assets, including land, buildings, improvements, and in-place leases). As has been reported, on

June 27, 2019,

the Company sold

65%

of its membership interest in New Mt Melrose, LLC to Woodmont. The Company deconsolidated the operations of New Mt Melrose, LLC on

June 27, 2019,

as a result of

no

longer having a controlling financial interest. See Notes

4

and

5

for more information.

ENDI created a wholly-owned real estate subsidiary on

July 10, 2017,

named EDI Real Estate, LLC, to hold ENDI’s legacy portfolio of real estate. As of 

December 31, 2019,

through EDI Real Estate, LLC, ENDI owns a legacy real estate investment portfolio that includes

eight

residential properties and vacant land. Our real estate portfolio under EDI Real Estate, LLC is primarily focused in the Roanoke area of Virginia. The portfolio includes single-family homes, both rented and vacant, that are managed by a

third

-party property management company.

Internet Operations

The Company operates its internet segment through Sitestar.net, a wholly-owned subsidiary that offers consumer and business-grade internet access, wholesale managed modem services, web hosting,

third

-party software as a reseller, and various ancillary services. Sitestar.net provides services to customers in the United States and Canada.

Discontinued Operations - Home Services Operations

Prior to

May 24, 2019,

the Company operated its home services segment through its wholly-owned subsidiary, Specialty Contracting Group, LLC (formerly known as HVAC Value Fund, LLC). The Company, along with JNJ Investments, LLC, an unaffiliated

third

party, organized and launched Specialty Contracting Group, LLC on

June 13, 2016.

On

May 18, 2018,

the Company terminated its operating agreement with JNJ Investments, LLC, dated

June 13, 2016.

Specialty Contracting Group was focused on the management of HVAC and plumbing companies in Arizona. 

As has been reported, on

May 24, 2019,

the Company completed its divestiture of the home services operations to Rooter Hero. See Note

3

 for more information.

Other Operations

Other operations include nonrecurring or

one

-time strategic funding or similar activity and other corporate operations that are 

not

considered to be

one

of the Company’s primary lines of business. Below are the main activities that comprise other operations. Additional investment activity that is

not

specifically mentioned below is included in the accompanying consolidated financial statements.

Huckleberry Real Estate Fund

On

January 30, 2017,

the Company, through Willow Oak, committed to make a capital contribution to Huckleberry Real Estate Fund II, LLC, a private investment fund, in the aggregate amount of

$750,000.

On

May 14, 2018,

Willow Oak transferred the Huckleberry investment to EDI Real Estate, LLC, another wholly-owned subsidiary of the Company. Under the fund’s operating agreement, the fund’s managing member has sole discretion regarding the amounts and timing of any distributions to the members of the fund.

The carrying value of the Huckleberry Real Estate Fund investment is included in long-term investments under other operations in the accompanying consolidated balance sheets. As of

December 31, 2019,

and

December 31, 2018,

the carrying value for this investment is

$0

and

$468,750,

respectively. The decrease in carrying value period over period was due to return of capital that was received prior to

June 30, 2019.

During the quarter ended

March 31, 2019,

a gain of

$212,631

was recognized as revenue through the Other Operations segment on the accompanying consolidated statements of operations.

Triad DIP Investors

On

August 24, 2017,

the Company entered into an agreement with several independent

third

parties to provide debtor-in-possession financing to an unaffiliated

third

party, Triad Guaranty, Inc., through Triad DIP Investors, LLC. The Company initially contributed

$100,000.

Triad Guaranty, Inc. exited bankruptcy on

April 27, 2018,

and the Company subsequently entered into an amended and restated promissory note. As part of the amended and restated promissory note, the Company provided an additional contribution in the amount of

$55,000

on

May 18, 2018.

The terms of the promissory note provide for interest in the amount of

10%

annually, a repayment date

no

later than 

April 29, 2020,

and the issuance of warrants in Triad Guaranty, Inc. equal to

2.5%

of the company. Accordingly, on

April 28, 2018,

the Company was issued warrants to purchase

450,000

shares for

$0.01

per share. On

November 12, 2019,

the Company exercised its warrants and purchased

450,000

shares of Triad Guaranty, Inc. Subsequently, on

December 30, 2019

the Company sold all

450,000

shares at a price of

$0.18/share.

A realized gain of

$76,500

is included as other income through other segments on the accompanying consolidated statements of operations for the year ended

December 31, 2019.

Corporate Operations

Corporate operations include any revenue or expenses derived from corporate office operations, as well as expenses related to public company reporting, the oversight of subsidiaries, and other items that affect the overall Company.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, and those entities in which it otherwise has a controlling financial interest, including: Willow Oak Asset Management, LLC, Willow Oak Capital Management, LLC, Mt Melrose, LLC (“New Mt Melrose”) prior to the loss of control resulting from the sale of

65%

of the equity in New Mt. Melrose on 

June 27, 2019 (

see Note

4

), Specialty Contracting Group, LLC prior to the divestiture transaction on

May 24, 2019 (

see Note

3

), Sitestar.net, Inc., and EDI Real Estate, LLC. Additionally, during the period from

January 10, 2018,

through

September 30, 2018,

the accompanying consolidated financial statements include the accounts of Old Mt. Melrose, which was, at that time, determined to be a variable interest entity in which the Company was the primary beneficiary.

All intercompany accounts and transactions have been eliminated in consolidation.

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Note 15 - Income Taxes - Provision for Income Taxes (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Federal
State
Federal	1,097,146	1,262,452
State	95,202	322,027
Valuation allowance	(1,192,348)	(1,584,479)
Total income tax provision

XML

Consolidated Statements of Operations - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Revenues	$ 3,589,899	$ 1,332,743
Cost of revenues	816,113	978,626
Gross profit (loss)	2,773,786	354,117
Insurance	94,785	166,013
Professional fees	726,274	617,451
Salaries and wages	786,797	1,086,424
Travel and meals	34,732	66,736
Other operating expenses	429,879	387,149
Total selling, general and administrative expenses	2,072,467	2,323,773
Income (loss) from operations	701,319	(1,969,656)
Impairment expense	(199,626)	(964,743)
Interest expense	(312,745)	(539,263)
Investment income	92,594
Loss on sale of subsidiary	(4,157,809)
Other income (loss), net	8,105	167,703
Total other income (loss)	(4,569,481)	(1,336,303)
Income (loss) from continuing operations before income taxes	(3,868,162)	(3,305,959)
Income tax benefit (expense)
Income (loss) from continuing operations	(3,868,162)	(3,305,959)
Income (loss) from discontinued operations, net of taxes	(1,510,475)	(915,163)
Net income (loss)	(5,378,637)	(4,221,122)
Less: net income (loss) attributable to the noncontrolling interest		(380,437)
Net income (loss) attributable to Enterprise Diversified, Inc. stockholders	$ (5,378,637)	$ (3,840,685)
Net income (loss) per share, basic and diluted (in dollars per share)	$ (2.11)	$ (1.56)
Net income (loss) per share from continuing operations, basic and diluted (in dollars per share)	(1.52)	(1.34)
Net income (loss) per share from discontinued operations, basic and diluted (in dollars per share)	$ (0.59)	$ (0.37)
Weighted average number of shares, basic (in shares)	2,544,896	2,461,428
Weighted average number of shares, diluted (in shares)	2,614,896	2,461,428
Asset Management [Member]
Revenues	$ 1,773,276	$ (775,249)
Cost of revenues
Gross profit (loss)	1,773,276	(775,249)
Total other income (loss)	36,565	41,632
Income (loss) from continuing operations	1,399,615	(1,019,900)
Income (loss) from discontinued operations, net of taxes
Real Estate [Member]
Revenues	537,763	778,657
Cost of revenues	485,459	450,859
Gross profit (loss)	52,304	327,798
Total other income (loss)	(4,712,766)	(1,416,257)
Income (loss) from continuing operations	(4,998,487)	(2,008,768)
Income (loss) from discontinued operations, net of taxes
Internet Operations [Member]
Revenues	1,066,229	1,168,843
Cost of revenues	330,654	325,234
Gross profit (loss)	735,575	843,609
Total other income (loss)	10,169	35,649
Income (loss) from continuing operations	522,626	637,604
Income (loss) from discontinued operations, net of taxes
Product and Service, Other [Member]
Revenues	212,631	160,492
Cost of revenues		202,533
Gross profit (loss)	212,631	(42,041)
Total other income (loss)	96,551	2,673
Income (loss) from continuing operations	(791,916)	(914,895)
Income (loss) from discontinued operations, net of taxes

XML

Note 11 - Segment Information (Details Textual)		12 Months Ended
	Jun. 27, 2019	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Number of Business Units		5
Number of Reportable Segments		5	6
Revenue from Contract with Customer, Including Assessed Tax		$ 3,589,899	$ 1,332,743
Internet Operations [Member] | UNITED STATES
Revenue from Contract with Customer, Including Assessed Tax		1,011,407	1,101,999
Internet Operations [Member] | CANADA
Revenue from Contract with Customer, Including Assessed Tax		$ 54,822	$ 66,844
Mt. Melrose LLC [Member] | Woodmont [Member]
Percentage of Membership Interest in Subsidiary Sold	65.00%

XML

Note 12 - Commitments and Contingencies - Maturities of Operating Lease Liabilities (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
2020	$ 86,380
2021	16,634
2022
Total	103,014
Discount factor	(6,469)
Lease liability	96,545
Less lease liability from discontinuing operations	(50,110)
Amounts due within 12 months	(46,435)
Long-term Liabilities [Member]
Long-term lease liability

XML

Note 15 - Income Taxes

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

15.

INCOME TAXES

The provision for federal and state income taxes for the years ended

December 31, 2019 

and

2018

 included the following:

	2019			2018
Current benefit (provision):
Federal	$	—		$	—
State		—			—
Deferred benefit:
Federal		1,097,146			1,262,452
State		95,202			322,027
Valuation allowance		(1,192,348	)		(1,584,479	)
Total income tax provision	$	—		$	—

Deferred tax assets and liabilities reflect the net effect of temporary differences between the carrying amount of assets and liabilities used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at

December 31, 2019 

and

2018

 are as follows:

	2019			2018
Deferred tax assets:
Carrying value differences	$	232,030		$	498,863
Net operating loss carryforward		2,927,848			1,333,361
Tax credits		6,250			6,250
Other		—			—
Subtotal		3,166,128			1,838,474
Valuation allowance		(2,732,064	)		(1,539,716	)
Net deferred tax assets		434,064			298,758
Deferred tax liabilities:
Net unrealized gains on appreciated investments		(434,064	)		(298,758	)
Net deferreds	$	—		$	—

GAAP provides for the recognition of deferred tax assets if realization of such assets is more likely than

not.

 Based on the weight of available evidence, which includes the Company’s historical operational performance and the reported cumulative losses in the

three

-year period preceding

2019,

the Company has provided a full valuation allowance against its net deferred tax assets. The deferred tax liability results from gains on appreciated investments that are realized for financial accounting purposes but

not

for tax purposes.

As of

December 31, 2019,

the Company had federal net operating loss carryforwards of approximately

$11.8

 million

 and state net operating loss carryforwards of approximately

$10.0

 million

. These carryforwards will expire in various amounts beginning in

2032.

 Internal Revenue Code Section

382

limits the use of net operating loss carryforwards in certain situations where changes occur in the stock ownership of a company. The Company believes that an ownership change did occur in

August 2016. 

Net operating losses that arose prior to that ownership change will have limited availability to offset taxable income arising in periods following the ownership change.

The Company is required to recognize in the financial statements the impact of a tax position, if that position is

not

more likely than

not

of being sustained on audit, based on the technical merits of the position. The Company’s policy is to record interest and penalties related to unrecognized tax benefits in income tax expense. The unrecognized tax benefit wa

s

$0

 a

s of 

December 31, 2019.

The Company does

not

expect that its uncertain tax positions will materially change in the next

12

 months.

No

liability related to uncertain tax positions is recorded on the financial statements related to uncertain tax positions.

The Company operates in various tax jurisdictions and is subject to audit by various tax authorities. To the extent of the Company’s tax loss carryovers, the Company’s federal and state tax returns will be subject to examination by the tax authorities from the earliest years in which such tax attributes arise. While the amount of those tax loss carryovers continues to be subject to adjustment, any assessment of additional tax for those prior years is generally barred, except for the

three

most recent years (federal) or

four

most recent years (state). Tax contingencies are based upon their technical merits, relative law, and the specific facts and circumstances as of each reporting period. Changes in facts and circumstances could result in material changes to the amounts recorded for such tax contingencies.

XML

Note 2 - Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Property, Plant and Equipment, Useful Life [Table Text Block]

Furniture and fixtures	5
Equipment (in years)	7
Building improvements (in years)	15
Buildings (in years)	27.5

Disaggregation of Revenue [Table Text Block]

Asset Management Operations Revenue	Year Ended December 31, 2019		Year Ended December 31, 2018
Realized and unrealized gains (losses) on investment activity	$	1,607,644	$	(834,014	)
Management and performance fee revenue		65,171		41,151
Fund management services revenue		100,461		17,614
Total revenue	$	1,773,276	$	(775,249	)

XML

Note 6 - Investments - Summary of Investments (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Cost Basis	$ 7,096,578	$ 7,492,426
Accrued Fees	3,029,626	1,422,812
Unrealized Gain	10,126,204	8,915,238
Alluvial Fund, LP [Member]
Cost Basis	7,042,732	7,023,676
Accrued Fees	3,029,626	1,422,812
Unrealized Gain	10,072,358	8,446,488
Mt. Melrose LLC [Member]
Cost Basis	53,846
Accrued Fees
Unrealized Gain	$ 53,846
Huckleberry Real Estate Fund II, LLC [Member]
Cost Basis		468,750
Accrued Fees
Unrealized Gain		$ 468,750

XML

Note 4 - Sale of Controlling Interest in Real Estate Subsidiary (Details Textual) - USD ($)	Jun. 27, 2019	Dec. 31, 2019	Aug. 29, 2019	Jun. 26, 2019
Mt. Melrose LLC [Member]
Noncontrolling Interest, Ownership Percentage by Parent				100.00%
Mt. Melrose LLC [Member]
Equity Method Investment, Ownership Percentage	35.00%	35.00%	20.80%
Distribution Made to Limited Liability Company (LLC) Member, Percentage of Distribution	67.00%
Equity Method Investment, Underlying Equity in Net Assets	$ 53,846
Equity Method Investment, Realized Gain (Loss) on Disposal, Total	$ (4,157,809)
Mt. Melrose LLC [Member] | Woodmont [Member]
Equity Method Investment, Ownership Percentage			79.20%
Distribution Made to Limited Liability Company (LLC) Member, Percentage of Distribution	33.00%
Mt. Melrose LLC [Member] | Minimum [Member]
Distribution Made to Limited Liability Company (LLC) Member, Cumulative Amount For Percentage Range	$ 2,000,000
Mt. Melrose LLC [Member] | Maximum [Member]
Distribution Made to Limited Liability Company (LLC) Member, Cumulative Amount For Percentage Range	$ 3,000,000
Mt. Melrose LLC [Member] | Woodmont [Member]
Percentage of Membership Interest in Subsidiary Sold	65.00%
Proceeds from Divestiture of Interest in Consolidated Subsidiaries	$ 100,000
Equity Method Investment, Ownership Percentage			20.80%

XML

Note 10 - Notes Payable - Future Payments on Notes Payable (Details)	Dec. 31, 2019 USD ($)
2020	$ 11,453
2021	12,181
2022	12,891
2023	151,242
2024 and thereafter	323,258
Total	$ 511,025

XML

Consolidated Statements of Comprehensive Income - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Net income (loss)	$ (5,378,637)	$ (4,221,122)
Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustments	(3,054)
Comprehensive income (loss)	(5,381,691)	(4,221,122)
Less: comprehensive loss attributable to the noncontrolling interest		(380,437)
Comprehensive income (loss) attributable to Enterprise Diversified, Inc. stockholders	$ (5,381,691)	$ (3,840,685)

XML

Document And Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2019	Mar. 27, 2020	Jun. 28, 2019
Document Information [Line Items]
Entity Registrant Name	ENTERPRISE DIVERSIFIED, INC.
Entity Central Index Key	0001096934
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		5,602,240
Entity Public Float			$ 7,937,500
Entity Shell Company	false
Document Type	10-K
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false
Title of 12(g) Security	Common Stock, $0.125 par value

XML

Note 12 - Commitments and Contingencies - Lease Expenses (Details)	12 Months Ended
	Dec. 31, 2019 USD ($)
Amortization of ROU assets
Interest on lease liabilities
Operating lease cost	64,092
Sublease income	(28,405)
Total lease costs from continuing operations	35,687
Total lease costs from discontinued operations	64,901
Total lease costs	$ 100,588

XML

Note 2 - Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Significant Accounting Policies [Text Block]

NOTE

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

In accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”), the preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.

On an ongoing basis, management evaluates its estimates and judgments, including, among other items, those related to fair value of investments, revenue recognition, accrued expenses, financing operations, fair value of goodwill, fixed asset lives and impairment, lease right-of-use assets and impairment, deferred tax assets, liabilities and valuation allowance, other assets, the present value of lease liabilities, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are

not

readily apparent from other sources. Actual results

may

differ from these estimates under different assumptions and conditions. These accounting policies are described at relevant sections in the notes to the consolidated financial statements.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash, cash equivalents, and accounts receivable. The Company places its cash with high-quality financial institutions and, at times,

may

exceed the FDIC and CDIC insurance limit. The Company extends credit based on an evaluation of customers’ financial condition, generally without collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company defines cash equivalents as all highly liquid instruments purchased with a maturity of

three

months or less.

Investments

The Company holds various investments through its asset management operations and real estate segments. Additionally, investments can be held and reported under the Company’s “other” segment. Assets held through these segments do

not

have a readily determinable value as these investments are

not

publicly traded, nor do they have published sales records. These investments are remeasured to fair value on a recurring basis. See Note

6

 for more information.

As of

December 31, 2019,

the Company also holds its remaining equity investment in Mt Melrose, LLC through its real estate segment. The Company has determined that its remaining equity investment does

not

have a readily determinable fair value, and the Company will account for the investment at cost, less any impairment, as adjusted for changes resulting from observable price changes. When fair value becomes determinable, the investment will be marked to fair value on a periodic basis.

Accounts Receivable

The Company grants credit in the form of unsecured accounts receivable to its customers. The estimate of the allowance for doubtful accounts, which is the recorded allowance for doubtful accounts and bad debt expense, is based on management’s assessment of current economic conditions and historical collection experience with each customer. Specific customer receivables are considered past due when they are outstanding beyond their contractual terms and are written off from the allowance for doubtful accounts when an account or invoice is individually determined to be uncollectible.

Real estate segment rental accounts are typically paid by tenants via cash or check

no

later than the

fifth

of the month. Any accounts collected after the

fifth

are charged either a flat-rate late fee or a daily-rate late fee based upon the lease agreement. If payments are

not

provided in a timely manner, then the amount due is designated as an account receivable. If accounts remain uncollected, then standard operating procedures are followed to commence a notice process for the tenant to either pay the amount due or vacate the property. Accounts receivable from rental revenue are generally considered unrecoverable after

90

days unless the Company reasonably believes that recovery is probable. These procedures typically result in low amounts of past due receivables.

The internet segment attempts to reduce the risk of non-collection by including a late-payment fee and a manual-processing-payment fee to customer accounts. Receivables more than

90

days past due are

no

longer included in accounts receivable and are turned over to a collection agency. Accounts receivable more than

30

days are considered past due. 

As of

December 31, 2019

and

2018,

 allowances offsetting gross accounts receivable on the accompanying consolidated balance sheets totaled

$307

and

$26,830,

respectively. For the years ended

December 31, 2019

and

2018,

bad debt expense from continuing operations was

$88,511

 and

$32,803,

respectively.

Notes Receivable

The Company does

not

routinely issue notes receivable in the ordinary course of business, but when a business opportunity arises, a subsidiary

may

issue a note if it appears to be favorable to the Company. Notes receivable are recorded at their principal amount and interest is accrued quarterly based on the applicable interest rate. The Company makes an assessment of the ultimate collectability of each note receivable on an annual basis based upon the financial condition of the borrower.

Inventory

Inventory is carried on the balance sheet at the lower of purchased cost or net realizable value. Inventory is evaluated periodically for any obsolete or damaged stock. As of

December 31, 2019

and

2018,

there was

no

obsolescence allowance recorded against inventory held on the consolidated balance sheets.

Property and Equipment

Property and equipment are recorded at cost. Expenditures for maintenance and repairs are charged to operations as incurred, while renewals and betterments are capitalized. Gains and losses on disposals are included in the results of operations. Depreciation is computed using the straight-line method based on the estimated useful lives for each of the following asset classifications:

Furniture and fixtures	5
Equipment (in years)	7
Building improvements (in years)	15
Buildings (in years)	27.5

Property and equipment are analyzed for impairment whenever events or changes in circumstances indicate that the related carrying amounts

may

not

be recoverable.

The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, then the Company uses estimated future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are

not

expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. Property and equipment to be disposed are reported at the lower of carrying amount or fair value of the asset less cost to sell.

Goodwill and Other Intangible Assets

Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations accounted for under the acquisition method of accounting. The Company tests its goodwill annually as of

December

31st

 or more often if events and circumstances indicate that those assets might

not

be recoverable.

Impairment testing of goodwill is required at the reporting-unit level (operating segment or

one

level below operating segment). The impairment test involves calculating the impairment of goodwill based solely on the excess of the carrying value of the reporting unit over the fair value of the reporting unit. Prior to performing the impairment test, the Company

may

make a qualitative assessment of the likelihood of goodwill impairment to determine whether a detailed quantitative analysis is required. The Company estimates the fair value of its reporting units using discounted expected future cash flows.

During the year ended

December 31, 2018,

an impairment adjustment of

$754,958

was recorded to goodwill held through the home services segment. As noted above, various qualitative factors were considered before preparing a quantitative analysis. Qualitatively, a general underperformance of previously acquired home services businesses triggered the quantitative analysis. As part of the quantitative analysis, management estimated the fair value of the home services segment at the enterprise level using a discounted cash flow approach. The results were then tested for reasonableness using a market approach by analyzing comparable firms’ growth rates, margins, capital expenditures, and working capital requirements. During the period ended

June 30, 2019,

an additional impairment of the remaining home services segment goodwill of

$1,024,591

 was recognized and reported as a component of the loss on the divestiture of Specialty Contracting Group, LLC’s assets.

Intangible assets (other than goodwill) consist of domain names attributed to the internet segment. The Company owns

228

domain names, of which

106

 are available for sale. These domains are valued at historical cost. When management determines that material intangible assets are acquired in conjunction with the purchase of a business, the Company determines the fair values of the identifiable intangible assets by taking into account internal and external appraisals. Intangible assets determined to have definite lives are amortized over their estimated useful lives. The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, then the Company uses estimated future undiscounted cash flows of the related intangible asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are

not

expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value.

Real Estate

Real estate properties held for resale are carried at the lower of cost or fair value. All costs directly related to the improvement and carrying of real estate are capitalized, including renovations and property taxes, to the extent the capitalized costs of the property do

not

exceed the estimated fair value of the property. If the cost of the real estate exceeds the estimated fair value, then the excess is charged to expense. Fair value is estimated based on comparable sales in the geographic area in which the real estate is located. Fair value is evaluated annually by management or when events or changes in circumstances indicate the carrying value of the real estate

may

not

be recoverable.

During the year ended

December 31, 2019,

net impairment adjustments of

$26,170

were recorded on real estate held for resale through EDI Real Estate, LLC in order to properly reflect sales activity throughout the year. During the year ended

December 31, 2018,

an impairment adjustment of

$64,038

was recorded to real estate held for resale through EDI Real Estate, LLC in order to properly reflect market value for those properties held during the year. This adjustment was primarily the result of a deteriorating building purchased by prior management in

1998.

 

During the year ended

December 31, 2019,

an impairment adjustment of

$126,827

was recorded on the Company’s commercial warehouse held for resale in order to properly reflect market value at that time. During the year ended

December 31, 2018,

an impairment adjustment of

$964,743

was recorded to real estate held for resale through Mt Melrose, LLC in order to properly reflect market value for those properties held at the end of the year. This adjustment was the result of

62

properties being transitioned to “held for resale” from “held for investment” as part of a portfolio redirection. See Note

5

 for more information. Recent tax assessments, valuations, and local real estate agents were used to value this portfolio of held-for-resale properties.

Real estate properties held for investment are carried at the cost basis plus additional costs where the cost extended the life of or added value to the property. Otherwise, the cost is expensed as incurred. Properties categorized as real estate held for investment are

not

expected by management to be sold in the next

12

months. This determination is periodically reviewed by management.

Accrued Bonus

Accrued bonuses represent performance-based incentives that have

not

yet been paid. Bonuses can be paid in the form of cash or via the issuance of Company stock. Bonus structures for employees are a pre-approved part of a formal employment agreement or arrangement. Stock based compensation, issued as part of the Company’s Equity Incentive Plan, is reserved for board members and members of senior management. The compensation accrual amount is based on the final value of Company stock that has been approved to be issued by the Governance, Compensation, and Nomination Committee of the Board of Directors. These bonus amounts are accrued when earned and able to be estimated and are paid or issued annually after financial records are finalized.

Other Accrued Expenses

Other accrued expenses represent incurred but

not

-yet-paid expenses from payroll accruals, vacation accruals, professional fees, and other accrued taxes.

Leases

On

January 1, 2019, 

the Company adopted ASU

No.

2016

-

02,

“Leases” (Topic

842

). The guidance in ASU

No.

2016

-

02

supersedes the lease recognition requirements in ASC Topic

840

and established ASC Topic

842.

ASU

No.

2016

-

02

requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU

No.

2016

-

02

is effective for fiscal years beginning after

December 15, 2018,

with early adoption permitted. The Company adopted this guidance using the following practical expedients:

● the Company did not reassess if any expired or existing contracts are leases or contain leases;

● the Company did not reassess the classification of any expired or existing leases; and

● the Company did not reassess whether the classification of existing costs associated with expired or existing leases should be classified as initial direct costs.

Additionally, the Company made ongoing accounting policy elections whereby it (i) does

not

recognize right-of-use (ROU) assets or lease liabilities for short-term leases (those with original terms of

12

months or less) and (ii) combines lease and non-lease elements of our leases. 

Upon adoption of the new guidance on

January 1, 2019,

the Company recorded an ROU asset of approximately

$184,000

(net of existing deferred rent liability) and recognized a lease liability of approximately

$186,000,

with

no

resulting cumulative effect adjustment to retained earnings.

Revenue Recognition

Asset Management and Other Investment Revenue

The Company earns revenue from investments through various fee share and consulting agreements, as well as through realized and unrealized gains and losses, which

may

result in negative period or quarterly revenues. Management fees earned are recorded and paid out monthly and are included in revenue on the accompanying consolidated statements of operations. Performance fees earned are accrued monthly, paid out annually, and are also included in revenue on the accompanying consolidated statements of operations. Consulting fees are billed out monthly after services have been performed. Long-term investments are marked to market at the end of each reporting period. Realized and unrealized gains and losses are recognized as revenue in the period of adjustment.

Management notes that the structure of these arrangements leaves a very low possibility for nonperformance. While the amount of revenue varies from month to month, collectability is very high.

No

contract assets or liabilities are recognized or incurred.

Additionally, the Company earns revenue from direct participation in various private investment funds, primarily the Alluvial Fund. This results in the realized and unrealized gains and losses within a fund such as the Alluvial Fund being recognized as revenue, or a decrease in revenue, on the accompanying consolidated statements of operations.

A summary of revenue earned through asset management operations for the years ended

December 31, 2019

and

2018

is included below:

Asset Management Operations Revenue	Year Ended December 31, 2019		Year Ended December 31, 2018
Realized and unrealized gains (losses) on investment activity	$	1,607,644	$	(834,014	)
Management and performance fee revenue		65,171		41,151
Fund management services revenue		100,461		17,614
Total revenue	$	1,773,276	$	(775,249	)

Real Estate Revenue

The Company earns real estate revenue through rental agreements on real estate held for investment, as well as through the sale of real estate held for resale.

Rental revenue from real estate held for investment is recognized when it is earned, generally on the last day of each month or at another regular period agreed upon by the Company and the tenant. Tenants generally provide a security deposit at the time of possession. This deposit is held separately from revenue and only applied to revenue when rental payment comparable to the security deposit amount is

not

provided in a timely manner and considered unlikely to be recovered. Otherwise, the security deposit is returned in a timely manner after the property is surrendered back to the Company. Management has concluded that the nature of the performance obligation is cyclical and predictable with a very low possibility for nonperformance.

No

contract assets or liabilities are recognized or incurred.

Revenue from real estate held for resale is recognized upon closing of the sale (transfer of control), as all conditions for full revenue recognition have been met at that time. All costs associated with the property sold are removed from the consolidated balance sheets and charged to cost of revenue at that time.

Internet Revenue

The Company sells internet services under annual and monthly contracts. Under the annual contracts, the subscriber pays a

one

-time annual fee, which is recognized as revenue ratably over the life of the contract. Under the monthly contracts, the subscriber is billed monthly and revenue is recognized for the period to which the service relates. Domain name registration revenue is recognized at the point of registration. Sales of computer hardware are recognized as revenue upon delivery and acceptance of the product by the customer. Sales are adjusted for any returns or allowances. Management has concluded that the nature of the performance obligation is cyclical with a very low possibility for nonperformance. Contract liabilities (deferred revenue) were recognized in the amount of collections received in advance of services to be performed.

No

contract assets were recognized or incurred.

The Company generates revenue in its internet segment from consumer and business-grade internet access, wholesale managed modem services for downstream ISPs, web hosting,

third

-party software as a reseller, and various ancillary services in the United States and Canada. Services include narrow-band (dial-up and ISDN) and broadband services (DSL, fiber-optic, and wireless), web hosting, and additional related services to consumers and businesses. Customers

may

also subscribe to web hosting plans to include email access and storage. Internet revenue is affected by the changing composition of revenue sources. In some years, this shift can be significant.

Home Services Revenue

Prior to the divestiture transaction on 

May 24, 2019,

the Company performed HVAC and plumbing service repairs and installed HVAC units for its customers through its home services segment. Revenue was recognized upon completion of the installation or service call. Sales were adjusted for any returns or allowances. A return or allowance situation would arise based on the

two

-year workmanship warranty that typically conveyed with the installation of a new unit. There was also a

two

-year assurance warranty on newly installed parts and equipment that was honored by the manufacturer. If an installation was performed over multiple days, then it was accounted for using work-in-process (WIP) accounting. Contract progress was measured by comparing materials and labor hours incurred to materials and labor hours expected per the contract. These types of contracts were typically completed within

one

month’s time. A small portion of revenue was from the sale of annual service agreements. Revenue attributable to these agreements was recognized over the life of the agreement.

If payment was received prior to contract completion, then the amount of revenue attributable to the unperformed work was designated as unearned revenue. If payment was 

not

provided in advance or at the time of service or installation completion, then the amount due was recognized as revenue and as an account receivable.

Management has acknowledged that these performance obligations were recognized at designated points in time during the contract, including the completion of the contract. As the customer controlled the asset and had the right to use it during the contract, the Company had the right to payment for performance completed to date. Contract liabilities (deferred revenue) were recognized in the amount of collections received in advance of services to be performed.

No

contract assets were recognized or incurred.

Deferred Revenue

Deferred revenue represents collections from customers in advance of internet or home services to be performed. Revenue is recognized in the period service is provided. Total deferred revenue decreased from

$210,212

at

December 31, 2018

to

$204,960

at

December 31, 2019.

During the years ended

December 31, 2019

and

2018,

$206,520

and

$214,142

, respectively, of revenue was recognized from prior-year contract liabilities (deferred revenue).

Income Taxes

Income taxes are accounted for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax benefits or consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment, inclusive of the recent tax reform act. The most recent

three

tax years, fiscal years ended 

December 31, 2019,

2018,

and 

2017,

are open to potential IRS examination.

Income (Loss) Per Share

Basic income (loss) per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period.

In periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all potentially dilutive common shares is anti-dilutive. In periods of net income, diluted earnings per share is computed using the more dilutive of the “two class method” or the “treasury method.” Dilutive earnings per share under the “two class method” is calculated by dividing net income available to common stockholders as adjusted for the participating securities, by the weighted-average number of shares outstanding plus the dilutive impact of all other potentially dilutive common shares, consisting primarily of common shares underlying common stock equity incentives. Dilutive earnings per share under the “treasury method” are calculated by dividing net income available to common stockholders by the weighted-average number of shares outstanding plus the dilutive impact of all potentially dilutive common shares, consisting primarily of common shares underlying common stock equity incentives.

None

of the potentially dilutive securities had a dilutive impact during the years ended

December 31, 2019

and

2018.

The number of anti-dilutive shares for the years ended

December 31, 2019

and

2018,

consisting of common shares underlying common stock equity incentives, which have been excluded from the computation of diluted income (loss) per share, was

70,000

shares and

zero

shares, respectively.

Other Comprehensive Income

Other comprehensive income is the result of the impact of foreign currency translations related to the Company’s internet segment operations in Canada.

Recently Issued Accounting Pronouncements

In

August 2018,

the FASB issued ASU

No.

2018

-

13,

“Fair Value Measurement” (Topic

820

). The guidance intends to improve the effectiveness of the disclosures relating to recurring and nonrecurring fair value measurements. The guidance is effective for fiscal years beginning after

December 15, 2019.

Portions of the guidance are to be adopted prospectively while other portions are to be adopted retroactively. Early adoption is permitted. The adoption of this guidance is

not

expected to have a material impact on our consolidated financial statements.

In

June 2016,

the FASB issued ASU

No.

2016

-

13,

“Financial Instruments - Credit Losses” (Topic

326

). The guidance eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial instruments. The credit loss estimate can now reflect an entity’s current estimate of all future expected credit losses. Under the previous guidance, an entity only considered past events and current conditions. In

April 2019,

the FASB further clarified the scope of the credit losses standard and addressed issues related to accrued interest receivable balances, recoveries, variable interest rates, and prepayments. In

May 2019,

the FASB issued further guidance to provide entities with an option to irrevocably elect the fair value option applied on an instrument-by-instrument basis for eligible financial instruments. In

November 2019,

the FASB issued further guidance on expected recoveries for purchased financial assets with credit deterioration, and transition refiled for troubled debt restructurings, disclosures related to accrued interest receivables, and financial assets secured by collateral maintenance provisions. The guidance is effective for fiscal years beginning after

December 15, 2019,

including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. The adoption of certain amendments of this guidance must be applied on a modified retrospective basis and the adoption of the remaining amendments must be applied on a prospective basis. The Company currently expects that the adoption of this guidance

may

change the way we assess the collectability of our receivables and recoverability of other financial instruments. The Company will adopt this guidance as of

January 1, 2023.

The adoption of this guidance is

not

expected to have a material impact on our consolidated financial statements.

The Company does

not

believe that any other recently issued effective standards, or standards issued but

not

yet effective, if adopted, would have a material effect on the accompanying consolidated financial statements. 

XML

Note 15 - Income Taxes (Details Textual) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Operating Loss Carryforwards Expiration Start Year	2032
Unrecognized Tax Benefits, Ending Balance	$ 0
Domestic Tax Authority [Member]
Operating Loss Carryforwards, Total	11,800
State and Local Jurisdiction [Member]
Operating Loss Carryforwards, Total	$ 10,000

XML

Note 8 - Property and Equipment - Schedule of Cost of Property and Equipment (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Property and equipment, gross	$ 28,180	$ 1,090,076
Less accumulated depreciation	(10,427)	(70,334)
Property and equipment, net	17,753	1,019,742
Building [Member]
Property and equipment, gross		836,827
Computer Equipment [Member]
Property and equipment, gross	17,330	17,330
Furniture and Fixtures [Member]
Property and equipment, gross	10,850	90,919
Land [Member]
Property and equipment, gross		$ 145,000

XML

Note 9 - Real Estate - Schedule of Carrying Amount of Real Estate Properties (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Real estate held for resale	$ 98,910	$ 2,318,912
EDI Real Estate, LLC [Member]
Total real estate held for investment	484,590	710,022
Accumulated depreciation	(104,075)	(107,576)
Real estate held for investment, net	380,515	602,446
Real estate held for resale	$ 98,910	40,047
Mt. Melrose LLC [Member]
Total real estate held for investment		9,049,945
Accumulated depreciation		(159,514)
Real estate held for investment, net		8,890,431
Real estate held for resale		$ 2,278,865

XML

Note 16 - Related Party Transactions (Details Textual) - USD ($)		12 Months Ended
	Jun. 13, 2017	Dec. 31, 2019	Dec. 31, 2018
Bonhoeffer Fund, LP [Member]
Revenue from Related Parties		$ 38,599	$ 26,196
Willow Oak Capital Management, LLC [Member]
Revenue from Related Parties		1,521	610
Arquitos Capital Management, LLC [Member]
Revenue from Related Parties		28,405	41,632
Arquitos Investment Manager, LP [Member]
Revenue from Related Parties		$ 100,461	$ 17,614
Willow Oak Asset Management LLC [Member]
Percentage of Performance and Management Fees Earned	50.00%

XML

Note 3 - Home Services Subsidiary Divestiture

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

NOTE

3.

HOME SERVICES SUBSIDIARY DIVESTITURE

On

May 24, 2019, 

as per the Current Report on Form

8

-K filed with the SEC on

May 28, 2019, 

the Company completed a divestiture of its Home Services Operations, via its subsidiary, Specialty Contracting Group, LLC (formerly known as HVAC Value Fund, LLC), to an unaffiliated

third

-party purchaser, Rooter Hero Plumbing, Inc. (“Rooter Hero”). In the transaction, the Company sold and conveyed all of the subsidiary’s personal property and customer lists and records, excluding stock inventory and other current assets. As part of the transaction, Rooter Hero assumed the subsidiary’s obligations under lease and/or loan agreements for all outstanding vehicles and equipment, as well as the obligations to service all of the subsidiary’s remaining customer accounts going forward. 

No

cash consideration was exchanged in the transaction. As consideration for the transaction, Rooter Hero will pay monthly royalties for the

sixty

(

60

) months following the closing, calculated on the basis of any revenue received from the customer accounts transferred. Under such royalty arrangements, the Company will receive

7.5%

of any monthly revenue generated from qualified sales during the

first

year, and

5%

of any monthly revenue during years

two

through five. Royalties received will be reduced by pre-approved warranty-related costs for select customers.

As reported in prior periods, the home services subsidiary had failed to meet approved budgets and had underperformed since its inception in

2016.

Management noted that the largely decentralized management approach was

not

a good fit for this industry, and the extensive operating requirements were

not

conducive to smaller company capacities. The cyclical nature of the business also resulted in unpredictable cash flows, which created immediate and significant needs for additional Company resources. Due to the past performance of the company, management determined that additional resources should

not

be allocated to this subsidiary. 

The decision was made to exit the business during the quarter ended

June 30, 2019. 

The operations of Specialty Contracting Group, LLC were considered a component of, and the sale reflects a strategic shift in, the Company’s business. As such, Specialty Contracting Group, LLC’s historical operations are now classified as discontinued operations in the Company’s financial statements. The divestiture of the home services subsidiary resulted in an initial pre-tax loss of

$1,158,732,

which has been included on the accompanying consolidated statements of operations in discontinued operations and under the home services segment for the year ended

December 31, 2019.

The loss from discontinued operations has been determined using a loss recovery approach, as the collection of future royalties is uncertain and a reasonable estimate could

not

be made. This approach requires that the contingent consideration, the future royalties to be received, be valued at the lesser of the amount of the “probable,” defined as a greater than

50%

likelihood, future proceeds or the carrying value of the disposed assets. Due to the unpredictability of the contingent consideration, and management’s inherent lack of control over the buyer’s operations, management determined it would

not

be reasonable to attempt to value the contingent consideration. This resulted in assigning the contingent consideration a current valuation of zero. As and to the extent any royalties are deemed probable, they will be subsequently recognized as a “gain from discontinued operations” on the statements of operations and will offset, or recover, the initial loss recorded. Accordingly, during the year ended

December 31, 2019,

an offsetting

$21,629

 gain on discontinued operations is included within the

$1,510,475

 reported loss on discontinued operations.

A breakdown of discontinued assets and liabilities as reported on the face of the accompanying consolidated financial statements for the years ended

December 31, 2019

and

2018,

is as follows:

	December 31, 2019		December 31, 2018
Cash and cash equivalents	$	428	$	23,954
Accounts receivable		—		136,785
Other current assets		—		71,624
Total current assets - held for resale		428		232,363
Property and equipment, net		—		270,603
Goodwill		—		1,024,591
Other long-term assets		—		5,375
Total long-term assets - held for resale		—		1,300,569
Accounts payable		96,848		75,208
Accrued expenses		—		81,213
Lease liabilities		50,110		—
Other current liabilities		—		2,368
Notes payable, current		—		158,698
Total current liabilities - held for resale		146,958		317,487
Notes payable, long term - held for resale		—		50,738
Total long-term liabilities - held for resale	$	—	$	50,738

A breakdown of the initial recorded pre-tax loss as reported on the accompanying consolidated statements of operations as of the year ended

December 31, 2019

is presented below. Asset and liability values used in the calculation represent the Company’s carrying value as of the date of sale,

May 24, 2019.

Sale of vehicles, equipment, and furniture, net of depreciation	$	230,578
Impairment of remaining goodwill		1,024,591
Total carrying value of assets sold		1,255,169
Vehicle and equipment notes payable assumed by the buyer		76,791
Service agreements assumed by the buyer		19,646
Total carrying value of liabilities assumed		96,437
Net loss on sale of subsidiary, pre-tax	$	1,158,732

A reconciliation of discontinued operations as reported on the accompanying consolidated statements of operations for the years ended

December 31, 2019

and

2018,

is as follows:

	For the year ended
	December 31, 2019			December 31, 2018
Revenues	$	675,963		$	3,077,631
Cost of revenues		432,872			2,003,876
Gross profit		243,091			1,073,755
Selling, general, and administrative expenses		535,650			1,235,346
Loss on sale of subsidiary, net of recoveries		(1,125,364	)		—
Other income (expense), net		(92,552	)		(753,572	)
Net income (loss) reported as discontinued operations	$	(1,510,475	)	$	(915,163	)

XML

Note 7 - Fair Value of Assets and Liabilities

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE

7.

FAIR VALUE OF ASSETS AND LIABILITIES

GAAP defines fair value as the amount that would be received from the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants at the measurement date, and establishes a hierarchy for disclosing assets and liabilities measured at fair value based on the inputs used to value them. The fair value hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are based on market pricing data obtained from sources independent of the Company. Unobservable inputs reflect management’s judgment about the assumptions market participants would use in pricing the asset or liability. The fair value hierarchy includes

three

levels based on the objectivity of the inputs as follows:

● Level 1 - inputs are quoted prices in active markets as of the measurement date for identical assets and liabilities that the Company has the ability to access; this category includes exchange-traded mutual funds and equity securities;

● Level 2 - inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates or yield curves, that are observable at commonly quoted intervals; this category includes mortgage-backed securities, asset-backed securities, corporate debt securities, certificates of deposit, commercial paper, U.S. agency and municipal debt securities, U.S. Treasury securities, and derivative contracts; and

● Level 3 - inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability; the measurements are highly subjective.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company values its investments at fair value at the end of each reporting period. See description of these investments in Note

6

 above.

	(Level 1)		(Level 2)		(Level 3)		(Excluded) (a)		Total at Fair Value
December 31, 2019
Alluvial Fund, LP	$	—	$	—	$	—	$	10,072,358	$	10,072,358
Total investments	$	—	$	—	$	—	$	10,072,358	$	10,072,358

	(Level 1)		(Level 2)		(Level 3)		(Excluded) (a)		Total at Fair Value
December 31, 2018
Alluvial Fund, LP	$	—	$	—	$	—	$	8,446,488	$	8,446,488
Huckleberry Real Estate Fund II, LLC		—		—		468,750		—		468,750
Total investments	$	—	$	—	$	468,750	$	8,446,488	$	8,915,238

(a) Certain investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.

See below for a summary of activity related to the Company’s Level

3

investment, Huckleberry Real Estate Fund II, LLC, for the years ended

December 31, 2019

and

2018.

The realized gain noted below has been included as revenue under other operations on the consolidated statements of operations for the year ended

December 31, 2019.

	Year ended December 31, 2019			Year ended December 31, 2018
Huckleberry Real Estate Fund II, LLC
Beginning investment balance	$	468,750		$	750,000
Realized gain		212,631			—
Redemptions received		(681,381	)		(281,250	)
Ending investment balance	$	—		$	468,750

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company analyzes goodwill on an annual basis or more often if events or changes in circumstances indicate potential impairments. During the year ended

December 31, 2018,

an impairment adjustment of

$754,958

was recorded to goodwill held in the home services segment. As described further in Note

1,

this adjustment was the result of a general underperformance of previously acquired HVAC and plumbing businesses. During the period ended

June 30, 2019,

an additional impairment of the remaining home services segment goodwill of

$1,024,591

 was recognized and reported as a component of the loss on the divestiture of Specialty Contracting Group, LLC’s assets.

The Company values real estate held on the balance sheet on an annual basis or whenever events or changes in circumstances indicate an impairment

may

have occurred. During the year ended

December 31, 2019,

an impairment adjustment of

$126,827

was recorded on a commercial warehouse held for resale in order to properly reflect market value at that time. During the year ended

December 31, 2018,

an impairment adjustment of

$964,743

was recorded to real estate held for resale through Mt Melrose, LLC in order to properly reflect market value for those properties held at the end of the year. This adjustment was the result of

62

properties being transitioned to “held for resale” from “held for investment” as part of a portfolio redirection intended to reduce high-interest debt. See Note

5

 for more information.

During the year ended

December 31, 2019,

net impairment adjustments of

$26,170

were recorded on real estate held for resale through EDI Real Estate, LLC in order to properly reflect market value at that time. During the year ended

December 31, 2018,

an impairment adjustment of

$64,038

was recorded to real estate held for resale through EDI Real Estate, LLC in order to properly reflect market value for those properties held during the year. This adjustment was primarily the result of a deteriorating building purchased by prior management in

1998.

 

As discussed in Note

5,

in

January 2018,

Mt Melrose, LLC completed its 

first

acquisition of

44

residential and other income-producing real properties for a total purchase price of

$3,956,389.

Additionally, in

June 2018,

Mt Melrose, LLC completed its 

second

acquisition of

69

residential and other income-producing real properties for a total purchase price of

$5,174,722.

The total purchase price, along with transaction expenses, was allocated to the land and buildings acquired based on their relative fair values. The fair values of the land and buildings were determined using Level

3

inputs, namely comparable properties within the Lexington, Kentucky region.

As discussed in Note

4,

the Company’s ongoing equity investment in Mt Melrose, LLC is carried at its implied cost under the alternative approach and will be assessed for impairment at each balance sheet date.

XML

Note 11 - Segment Information

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE

11.

SEGMENT INFORMATION

During the year ended 

December 31, 2019,

the Company operated through

five

business segments with separate management and reporting infrastructures that offer different products and services. The

five

business segments are as follows: Asset Management Operations, Real Estate Operations, Internet Operations, Home Services Operations, and Other Operations. As of the year ended

December 31, 2019,

and for all prior periods presented, Home Services Operations are reported as discontinued operations.

In previous periods, the Company reported under the following

six

business segments: Asset Management, Mt Melrose, HVAC, Internet, Real Estate, and Corporate. In an effort to highlight the direction of the Company and increase segment transparency, these historical segments were reorganized during the quarter ended

June 30, 2018.

Additional reorganizations were made as of

January 1, 2019,

in order to appropriately reflect the similarities in the Company’s real estate operations. The “Mt Melrose” and legacy “Real Estate” segments are referred to collectively as “Real Estate,” and the “HVAC” segment is referred to as “Home Services.” “Corporate” and other additional investments are combined under “Other Operations.” The “Asset Management” and “Internet” segments remain unchanged. See below for additional information on the activity included in each respective segment report.

As mentioned in Note

3,

on 

May 24, 2019,

the Company completed a divestiture of its Home Services Operations, via its subsidiary, Specialty Contracting Group, LLC, to an unaffiliated

third

-party purchaser, Rooter Hero Plumbing, Inc. (“Rooter Hero”). In the transaction, the Company sold and conveyed all of the subsidiary’s personal property and customer lists and records, excluding stock inventory and other current assets. As part of the transaction, Rooter Hero assumed the subsidiary’s obligations under lease and/or loan agreements for all outstanding vehicles and equipment, as well as the obligations to service all of the subsidiary’s remaining customer accounts going forward. The current and comparative results of the home services segment have been reported as discontinued on the accompanying consolidated financial statements for the year ended

December 31, 2019.

As mentioned in Note

4,

on

June 27, 2019, 

the Company sold

65%

of its membership interest in Mt Melrose, LLC to an unaffiliated

third

-party purchaser, Woodmont Lexington, LLC.

Management determined that as of

June 27, 2019,

the Company

no

longer has a “controlling financial interest” in Mt Melrose; therefore, the Company

no

longer consolidates Mt Melrose. All activity prior to the deconsolidation event has been included on the accompanying consolidated statements of operations for the year ended

December 31, 2019,

under the real estate segment. As of

June 27, 2019,

all previously consolidated assets and liabilities of Mt Melrose, LLC have been removed from the accompanying consolidated balance sheets for the year ended

December 31, 2019.

The asset management operations segment includes revenues and expenses derived from various joint ventures, service offerings, and initiatives undertaken in the asset management industry. The real estate segment includes revenue and expenses related to the management of properties held for investment and held for resale through Mt Melrose (prior to the sale of

65%

of our equity in Mt Melrose on

June 27, 2019)

located in Lexington, Kentucky, and revenue and expenses related to the management of legacy properties held for investment and held for resale through EDI Real Estate located in Roanoke, Virginia. The internet segment includes revenue and expenses related to our sale of internet access, hosting, storage, and other ancillary services. The home services segment includes discontinued revenue and expenses derived from our former operation of HVAC and plumbing companies in Arizona. The other segment includes revenue and expenses from nonrecurring or

one

-time strategic funding or similar activity and any revenue or expenses derived from corporate office operations, as well as expenses related to public company reporting, the oversight of subsidiaries, and other items that affect the overall Company.

The internet segment includes revenue generated by operations in both the United States and Canada. In the year ended

December 31, 2019,

the internet segment generated revenue of

$1,011,407

 in the United States and revenue of

$54,822

 in Canada. This compares to the year ended

December 31, 2018,

where the internet segment generated revenue of

$1,101,999

in the United States and revenue of

$66,844

 in Canada. All assets reported under the internet segment for the years ended

December 31, 2019

and

2018,

are located within the United States.

Summarized financial information concerning the Company’s reportable segments is shown in the following tables for the years ended

December 31, 2019 

and

2018.

Year Ended December 31, 2019		Asset Management		Real Estate			Internet		Other			Discontinued Operations - Home Services			Consolidated
Revenues	$	1,773,276	$	537,763		$	1,066,229	$	212,631		$	—		$	3,589,899
Cost of revenue		—		485,459			330,654		—			—			816,113
Operating expenses		410,226		338,025			223,118		1,101,098			—			2,072,467
Other income (expense)		36,565		(4,712,766	)		10,169		96,551			—			(4,569,481	)
Income (loss) from continuing operations		1,399,615		(4,998,487	)		522,626		(791,916	)		—			(3,868,162	)
Income (loss) from discontinued operations		—		—			—		—			(1,510,475	)		(1,510,475	)
Goodwill		—		—			212,445		—			—			212,445
Identifiable assets	$	10,186,353	$	556,994		$	414,935	$	740,934		$	428		$	11,899,644

Year Ended December 31, 2018		Asset Management			Real Estate			Internet		Other			Discontinued Operations - Home Services			Consolidated
Revenues	$	(775,249	)	$	778,657		$	1,168,843	$	160,492		$	—		$	1,332,743
Cost of revenue		—			450,859			325,234		202,533			—			978,626
Operating expenses		286,283			920,309			241,654		875,527			—			2,323,773
Other income (expense)		41,632			(1,416,257	)		35,649		2,673			—			(1,336,303	)
Income (loss) from continuing operations		(1,019,900	)		(2,008,768	)		637,604		(914,895	)		—			(3,305,959	)
Income (loss) from discontinued operations		—			—			—		—			(915,163	)		(915,163	)
Goodwill		—			—			212,445		—			—			212,445
Identifiable assets	$	8,496,917		$	12,550,571		$	430,503	$	1,508,601		$	1,532,860		$	24,519,452

XML

Note 1 - Organization and Significant Accounting Policies (Details Textual)									3 Months Ended	6 Months Ended	12 Months Ended
	Dec. 30, 2019 $ / shares shares	Jun. 27, 2019 USD ($)	May 24, 2019 USD ($)	May 18, 2018 USD ($)	Jan. 01, 2018 USD ($)	Jun. 13, 2017	Jan. 30, 2017 USD ($)	Jan. 01, 2017 USD ($)	Mar. 31, 2019 USD ($)	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Nov. 12, 2019 shares	Oct. 01, 2019	Jun. 29, 2018	Apr. 28, 2018 $ / shares shares	Jan. 10, 2018	Aug. 24, 2017 USD ($)
Number of Reportable Segments											5	6
Stockholders' Equity Attributable to Noncontrolling Interest, Ending Balance											$ 0	$ 0
Equity Securities without Readily Determinable Fair Value, Amount											10,072,358	8,915,238
Revenue from Contract with Customer, Including Assessed Tax											3,589,899	1,332,743
Product and Service, Other [Member]
Revenue from Contract with Customer, Including Assessed Tax									$ 212,631		212,631	160,492
Triad Guaranty, Inc. [Member]
Equity Method Investments				$ 55,000														$ 100,000
Percentage of Annual Interest Rate on Promissory Note				10.00%
Percentage Rate of Issuance of Warrants				2.50%
Investment Warrants, Number of Securities Called By Warrants | shares																450,000
Investment Warrants, Purchase Price of Warrants | $ / shares																$ 0.01
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares													450,000
Sale of Stock, Number of Shares Issued in Transaction | shares	450,000
Sale of Stock, Price Per Share | $ / shares	$ 0.18
Triad Guaranty, Inc. [Member] | Other Segments [Member] | Other Operating Income (Expense) [Member]
Equity Method Investment, Realized Gain (Loss) on Disposal, Total											76,500
Willow Oak Asset Management LLC [Member]
Percentage of Performance and Management Fees Earned						50.00%
Willow Oak Asset Management LLC [Member] | Alluvial Fund, LP [Member]
Financial Instruments, Owned, Principal Investments, at Fair Value								$ 10,000,000
Period Before Full Withdrawal From Capital Account Permitted								5 years
Financial Instruments, Withdrawal from Capital Amount					$ 3,000,000
Percentage of Performance and Management Fees Earned						50.00%
Willow Oak Asset Management LLC [Member] | Focused Compounding Capital Management, LLC [Member]
Investment Ownership Percentage														10.00%
Percentage of Gross Management and Performance Fees Earned														10.00%
Willow Oak Asset Management LLC [Member] | Huckleberry Real Estate Fund II, LLC [Member]
Contributed Capital, Amount							$ 750,000
Equity Securities without Readily Determinable Fair Value, Amount											$ 0	$ 468,750
Mt. Melrose LLC [Member] | Residential Properties [Member]
Number of Real Estate Properties															69		44
Restatement Adjustment [Member]
Equity Effects of Deconsolidation										$ 638,749
Deconsolidation, Gain (Loss), Amount										$ (638,749)
Mt. Melrose LLC [Member]
Equity Method Investment, Realized Gain (Loss) on Disposal, Total		$ (4,157,809)
Rooter Hero [Member]
Proceeds from Sale of Productive Assets, Total			$ 0
Royalty Agreement, Percent of Revenue in First Year			7.50%
Royalty Agreement, Percent of Revenue in Year Two Through Five			5.00%
Woodmont [Member] | Mt. Melrose LLC [Member]
Ownership Interest, Sold, Percent		65.00%
Proceeds from Divestiture of Interest in Consolidated Subsidiaries		$ 100,000

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Note 10 - Notes Payable (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Debt [Table Text Block]

	Interest Rates	Average Term	2019			2018
Interest-bearing amounts due on traditional mortgages on real estate held through Mt Melrose, LLC	4.38% - 5.75%	14 years	$	—		$	4,505,139
Interest-bearing amounts due on hard money loans on real estate held through Mt Melrose, LLC	10.00% - 13.00%	2 years		—			2,379,851
Interest-bearing amounts due on promissory notes	10.00%	1 year		—			131,279
Non-interest-bearing amount due on promissory notes	0.00%	1 year		—			218,270
Equipment and vehicle capital leases and loans acquired by HVAC Value Fund, LLC	0.00% - 4.90%	5 years		—			55,797
Vehicle loans through HVAC Value Fund, LLC	5.99%	5 years		—			53,638
Interest-bearing amount due on promissory note through EDI Real Estate, LLC	5.60%	15 years		373,425			384,304
Interest-bearing amount due on real estate held for investment through EDI Real Estate, LLC	6.00%	5 years		137,600			137,600
Less notes related to discontinued operations				—			(209,436	)
Less accrued interest				—			(134,623	)
Less current portion				(11,453	)		(1,002,965	)
Long-term portion			$	499,572		$	6,518,854

Schedule of Maturities of Long-term Debt [Table Text Block]

2020	$	11,453
2021		12,181
2022		12,891
2023		151,242
2024 and thereafter		323,258
Total	$	511,025