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.

NOTE

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.

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

May 24, 2019,

as per the Current Report on Form

-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.

cash consideration was exchanged in the transaction. As consideration for the transaction, Rooter Hero will pay monthly royalties for the

sixty

(

) 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

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

for more information.

Additionally, on

June 27, 2019,

as per the Current Report on Form

-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

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

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

longer had a controlling financial interest in Old Mt. Melrose and was

longer considered Old Mt. Melrose’s primary beneficiary. Consequently, as of

November 1, 2018,

the Company

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

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.

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.

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.

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.

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

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

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

longer having a controlling financial interest. See Notes

and

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.

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

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

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.

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

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

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

May 18, 2018.

The terms of the promissory note provide for interest in the amount of

10%

annually, a repayment date

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

), Specialty Contracting Group, LLC prior to the divestiture transaction on

May 24, 2019 (

see Note

), 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.