10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended March 31, 2021

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

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.    [X] 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).    [X] 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 an emerging growth company. See the 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 in Rule 12b-2 of the Exchange Act).    ☐ Yes  ☒ No

The number of shares outstanding of the issuer’s Common Stock, $0.125 par value, as of May 12, 2021 is 2,647,383.

Table of Contents

	Page No.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
PART I
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets as of March 31, 2021 (Unaudited) and December 31, 2020	3
Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020	4
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020	5
Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020	6
Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3. Quantitative and Qualitative Disclosures About Market Risk	28
Item 4. Controls and Procedures	28
PART II
Item 1. Legal Proceedings	29
Item 1A. Risk Factors	29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3. Defaults Upon Senior Securities	29
Item 4. Mine Safety Disclosures	29
Item 5. Other Information	29
Item 6. Exhibits	29
Signatures	30

1

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including, without limitation, Part I, Item 2, “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, maintenance of strategic alliances, and other factors discussed elsewhere in this Form 10-Q, and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors.

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ENTERPRISE DIVERSIFIED, INC.

And Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2021 (unaudited)			December 31, 2020
Assets
Current Assets
Cash and cash equivalents	$	292,767		$	341,007
Accounts receivable, net		130,155			144,791
Other current assets		40,227			44,530
Current assets - held for resale		—			231
Total current assets		463,149			530,559
Long-term Assets
Real estate - held for investment, net		70,319			241,876
Real estate - held for resale, net		169,181			—
Property and equipment, net		12,696			13,707
Goodwill, net		212,445			212,445
Note receivable		169,650			210,879
Long-term investments		15,736,234			13,574,462
Other assets		73,076			73,252
Total long-term assets		16,443,601			14,326,621
Total assets	$	16,906,750		$	14,857,180
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	60,734		$	65,524
Accrued compensation		89,328			281,904
Accrued expenses		48,475			24,159
Deferred revenue		198,848			192,088
Notes payable, current		5,277			5,609
Total current liabilities		402,662			569,284
Long-term Liabilities
Notes payable, net of current portion		242,028			244,485
Total long-term liabilities		242,028			244,485
Total liabilities		644,690			813,769
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; 2,647,383 and 2,602,240 shares issued and outstanding		330,922			325,280
Additional paid-in capital		27,673,692			27,439,334
Accumulated deficit		(11,742,554	)		(13,721,203	)
Total stockholders’ equity		16,262,060			14,043,411
Total liabilities and stockholders’ equity	$	16,906,750		$	14,857,180

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

3

ENTERPRISE DIVERSIFIED, INC.

and Subsidiaries

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the three months ended
	March 31
	2021			2020
Revenues - asset management	$	2,193,854		$	(1,745,154	)
Revenues - real estate		9,736			187,149
Revenues - internet operations		232,266			253,559
Total revenues		2,435,856			(1,304,446	)
Cost of revenues - real estate		7,644			132,209
Cost of revenues - internet operations		71,963			87,188
Total cost of revenues		79,607			219,397
Gross profit (loss) - asset management		2,193,854			(1,745,154	)
Gross profit - real estate		2,092			54,940
Gross profit - internet operations		160,303			166,371
Total gross profit (loss)		2,356,249			(1,523,843	)
Selling, general, and administrative expenses
Insurance		6,603			24,133
Professional fees		143,505			210,134
Salaries and wages		182,954			161,349
Travel and meals		351			3,135
Other operating expenses		44,577			64,407
Total selling, general and administrative expenses		377,990			463,158
Income (loss) from operations		1,978,259			(1,987,001	)
Interest expense		(4,795	)		(7,082	)
Other income, net		4,542			12,159
Total other income (loss)		(253	)		5,077
Income (loss) from continuing operations before income taxes		1,978,006			(1,981,924	)
Income tax benefit (expense)		—			—
Income (loss) from continuing operations		1,978,006			(1,981,924	)
Income from discontinued operations, net of taxes		643			10,756
Net income (loss)	$	1,978,649		$	(1,971,168	)
Net income (loss) per share, basic and diluted		0.75			(0.76	)
Net income (loss) per share from continuing operations, basic and diluted		0.75			(0.77	)
Net income (loss) per share from discontinued operations, basic and diluted		0.00			0.00
Weighted average number of shares, basic		2,630,831			2,585,081
Weighted average number of shares, diluted		2,631,499			2,585,529

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

4

ENTERPRISE DIVERSIFIED, INC.

and Subsidiaries

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	Common Stock		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Equity
Balance December 31, 2020		2,602,240	$	325,280	$	27,439,334	$	(13,721,203	)	$	14,043,411
Net income (loss)		—		—		—		1,978,649			1,978,649
Stock issuance		45,143		5,642		234,358		—			240,000
Balance March 31, 2021		2,647,383	$	330,922	$	27,673,692	$	(11,742,554	)	$	16,262,060

	Common Stock		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Equity
Balance December 31, 2019		2,566,646	$	320,831	$	27,313,734	$	(17,000,607	)	$	10,633,958
Net income (loss)		—		—		—		(1,971,168	)		(1,971,168	)
Stock issuance		35,594		4,449		125,600		—			130,049
Balance March 31, 2020		2,602,240	$	325,280	$	27,439,334	$	(18,971,775	)	$	8,792,839

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

5

ENTERPRISE DIVERSIFIED, INC.

and Subsidiaries

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31, 2021 and 2020

	2021			2020
Cash flows from (used in) from operating activities:
Net income (loss) from continuing operations	$	1,978,006		$	(1,981,924	)
Adjustments to reconcile net income to net cash flows from (used in) operating activities:
Unrealized (gains) losses on long-term investments		(2,053,384	)		1,784,406
Gain on sale of real estate		—			(73,165	)
Depreciation and amortization		3,563			5,278
Bad debt expense		89			405
Accrued stock compensation expense		37,500			37,500
Accrued interest income on notes receivable		(4,650	)		(3,918	)
(Increase) decrease in:
Accounts receivable, net		14,547			17,186
Other current assets		4,772			13,455
Increase (decrease) in:
Accounts payable		(4,790	)		30,798
Accrued expenses		34,240			17,970
Deferred revenue		6,760			(3,530	)
Net cash flows from (used in) continuing operations		16,653			(155,539	)
Net cash flows from discontinued operations		874			11,018
Net cash flows from (used in) operating activities		17,527			(144,521	)
Cash flows from investing activities:
Purchases of investments		(62,978	)		(12,472	)
Proceeds from sale of real estate		—			172,000
Net cash flows from continuing operations		(62,978	)		159,528
Net cash flows from discontinued operations		—			—
Net cash flows from investing activities		(62,978	)		159,528
Cash flows from financing activities:
Principal payments on note payable		(2,789	)		(128,349	)
Net cash flows (used in) from continuing operations		(2,789	)		(128,349	)
Net cash flows (used in) from discontinued operations		—			—
Net cash flows (used in) financing activities		(2,789	)		(128,349	)
Net increase (decrease) in cash		(48,240	)		(113,342	)
Cash and cash equivalents at beginning of the period		341,007			666,810
Cash and cash equivalents at end of the period	$	292,767		$	553,468

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

6

ENTERPRISE DIVERSIFIED, INC.

and Subsidiaries

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

Three Months Ended March 31, 2021 and 2020

	2021		2020
Non-cash and other supplemental information:
Transfer of real estate held for investment to held for resale	$	169,181	$	43,917
Issuance of common stock per equity compensation plan	$	240,000	$	130,049
Accrued interest receivable converted to Triad Guaranty, Inc. stock	$	45,410	$	—
Continuing operations cash paid for interest	$	4,795	$	7,082

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

7

ENTERPRISE DIVERSIFIED, INC.

and Subsidiaries

NOTES TO UNAUDITED CONDENSED 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 three-month period ended March 31, 2021, the Company operated through four reportable segments: Asset Management Operations, Real Estate Operations, Internet 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. During periods prior to the quarter ended June 30, 2019, the Company also operated through a fifth reportable segment, Home Services Operations. However, for the three-month period ended March 31, 2021, 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.

Asset Management Operations

The Company operates its asset management operations business through its wholly owned subsidiaries, Willow Oak Asset Management, LLC (“Willow Oak”), Willow Oak Capital Management, LLC, Willow Oak Asset Management Affiliate Management Services, LLC (“Willow Oak AMS”) and Willow Oak Asset Management Fund Management Services, LLC (“Willow Oak FMS”).

In 2016, the Company made a seed investment, through Willow Oak, to assist in the launch of Alluvial Fund, LP, a private investment fund that was launched on January 1, 2017, by an 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. As a special limited partner, Willow Oak earns a share of management and performance fees earned. As of March 31, 2021, Willow Oak continues to hold its direct investment in Alluvial Fund. Investment gains and losses are reported as revenue on the accompanying unaudited condensed consolidated statements of operations.

In furtherance of establishing the asset management operations business, Willow Oak signed a fee share agreement in June 2017, with Coolidge Capital Management, LLC (“Coolidge”), whose sole member is Keith D. Smith, 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 launched by Willow Oak and managed by Coolidge. Under their agreement concerning Bonhoeffer Fund, LP, Willow Oak paid all start-up expenses and pays agreed-upon operating expenses that are not partnership expenses, Coolidge is responsible for all investment management, and Willow Oak receives 50% of all performance and management fees earned. Additionally, Willow Oak FMS earns a direct fee from the private limited partnership for the administrative, compliance, and tax and audit liaison services it renders.

On November 1, 2018, Willow Oak entered into a fund management services agreement with Arquitos Investment Manager, LP, which is managed by our Board chairman and principal executive officer, Steven L. Kiel, to provide Arquitos with Willow Oak’s Fund Management Services (“FMS”) consisting of the following services: strategic planning, investor relations, marketing, operations, compliance and legal coordination, accounting and bookkeeping, annual audit coordination, and liaison to third-party service providers. On November 1, 2020, this agreement was renewed with revised terms that include an exchange of services between Willow Oak and Arquitos. Willow Oak earns monthly and annual fees as consideration for these services.

On October 1, 2019, Willow Oak partnered with Geoff Gannon and Andrew Kuhn to form Focused Compounding Capital Management, LLC (“Focused Compounding”). This joint venture, of which Willow Oak Capital Management is a 10% beneficial owner, manages capital through separately managed accounts and a private investment fund launched January 1, 2020. Willow Oak provides ongoing FMS and operational support in addition to having covered all one-time expenses associated with the launch of Focused Compounding Fund, LP. As consideration for the arrangement, Willow Oak Capital Management is entitled to 10% of gross management and performance fees earned by Focused Compounding. Additionally, Willow Oak FMS earns a direct fee from the private limited partnership for the administrative, compliance, and tax and audit liaison services it renders.

On September 29, 2020, Willow Oak, through Willow Oak AMS, executed a strategic relationship agreement with SVN Capital, LLC to become a 20% beneficial owner of the firm in exchange for the provision of certain ongoing FMS and operational services offered through Willow Oak FMS. As a beneficial owner of SVN Capital, LLC, Willow Oak is entitled to 20% of gross management and performance fees earned by the firm. Additionally, Willow Oak FMS earns a direct fee from SVN Capital Fund, LP, a private investment fund launched by the firm’s managing member, for the administrative, compliance, and tax and audit liaison services it renders.

8

Real Estate Operations

As has been previously reported, in December 2017, ENDI created a wholly owned subsidiary named Mt Melrose, LLC, a Delaware limited liability company (“New Mt Melrose”), 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 in December 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. During January and June 2018, New Mt Melrose, consistent with the terms of the purchase agreement, completed two bundled acquisitions from Old Mt. Melrose of residential and other income-producing real properties located in Lexington, Kentucky. As has been previously reported, on June 27, 2019, the Company sold 65% of its membership interest in New Mt Melrose 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 New Mt Melrose and its real estate portfolio. As a result of no longer having a controlling financial interest, the Company deconsolidated the operations of New Mt Melrose as of June 27, 2019. See Note 4 for more information.

As has been previously reported, in July 2017, ENDI created a wholly owned real estate subsidiary named EDI Real Estate, LLC to hold ENDI’s legacy portfolio of real estate. As of March 31, 2021, through EDI Real Estate, LLC, ENDI owns a legacy real estate investment portfolio that includes four residential properties and vacant land. Subsequent to March 31, 2021, one residential property has been sold. Our real estate portfolio under EDI Real Estate, LLC is primarily located in Roanoke, 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 operations 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.

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 recent activities comprising other operations. Additional investment activity that is not specifically mentioned below is included in the accompanying consolidated financial statements.

Financing Arrangement Regarding Triad Guaranty, Inc.

In August 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 in April 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 in May 2018. The terms of the promissory note provided for interest in the amount of 10% annually and the issuance of warrants in Triad Guaranty, Inc. equal to 2.5% of the company. On December 31, 2020, the Company accepted a revision of terms to the original promissory note which include, among other things, an extension of the loan maturity date to December 31, 2022, an increase of interest to the amount of 12% annually, and a provision to settle all currently accrued interest through the issuance of Triad Guaranty, Inc. common shares. In line with the revision of note terms, during the three-month period ended March 31, 2021, the Company was issued 454,097 shares of Triad Guaranty, Inc. in lieu of interest accrued on the note receivable as of December 31, 2020.

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.

Discontinued Operations - Home Services Operations

Prior to May 24, 2019, the Company operated a home services operations segment through its former subsidiary, Specialty Contracting Group, LLC (formerly known as HVAC Value Fund, LLC). The Company had organized and launched this subsidiary in June 2016, initially with an unaffiliated third party. Specialty Contracting Group was focused on the management of HVAC and plumbing companies in Arizona.

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

Principles of Consolidation

The accompanying unaudited 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, Willow Oak Asset Management Affiliate Management Services, LLC, Willow Oak Asset Management Fund Management Services, LLC, Bonhoeffer Capital Management, LLC, Sitestar.net, Inc., and EDI Real Estate, LLC.

All intercompany accounts and transactions have been eliminated in consolidation.

9

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim consolidated financial statements are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all the information and footnotes required by U.S. Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. The December 31, 2020, consolidated balance sheet included herein was derived from audited consolidated financial statements as of that date. Certain information and footnote disclosure normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. We believe that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited interim consolidated financial statements are read in conjunction with the audited financial statements and notes previously filed in our Annual Report on Form 10-K for the year ended December 31, 2020. In the opinion of management, the unaudited interim consolidated financial statements reflect all the adjustments (consisting of normal recurring adjustments) necessary to state fairly the Company’s financial position as of March 31, 2021, and the results of operations for the three months ended March 31, 2021, and 2020.

Use of Estimates

In accordance with 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, accounts receivable, and notes 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 operations segments. Additionally, investments may 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 either not publicly traded, do not have published sales records, or do not routinely make current financial information available. These investments are remeasured to fair value on a recurring basis. See Note 5 for more information.

As of March 31, 2021, and December 31, 2020, the Company also holds its remaining equity investment in Mt Melrose, LLC through its real estate operations 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’s asset management operations segment records receivable amounts for fee shares and fund management services revenue earned on a monthly basis. Performance fee shares crystalize and are collected on an annual basis while management fee shares crystalize and are collected on either a monthly or quarterly basis as dictated by the respective partnership agreement. Fund management services receivables are collected monthly in line with ongoing performance. The Company historically has had no collection issues with fee share and fund management receivables, and the overall possibility for non-collection is extremely low. For these reasons, management has determined that it is not necessary to record an allowance against these receivables.

The Company also 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 operations 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 operations 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 March 31, 2021, and December 31, 2020, allowances offsetting gross accounts receivable on the accompanying condensed consolidated balance sheets totaled $509 and $421, respectively. For the quarterly periods ended March 31, 2021, and 2020, bad debt expense from continuing operations was $89 and $405, 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.

10

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

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 31, 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.

No impairment adjustments were recorded during the three-month periods ended March 31, 2021, and 2020.

Intangible assets (other than goodwill) consist of domain names attributed to the internet operations 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.

No impairment adjustments were recorded during the three-month periods ended March 31, 2021, and 2020.

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.

No impairment adjustments were recorded during the three-month periods ended March 31, 2021, and 2020.

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.

During the three-month periods ended March 31, 2021, and 2020, $169,181 and $43,917, respectively, of real estate held for investment was transferred to real estate held for resale. No improvements were made to existing real estate held for investment during the three-month periods ended March 31, 2021, and 2020.

Accrued Compensation

Accrued compensation represents performance-based incentives that have not yet been paid. Additional compensation can be paid in the form of cash or via the issuance of Company stock. Compensation 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 2020 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 compensation 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, professional fees, and other accrued taxes.

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Leases

The Company records right-of-use (ROU) assets and lease liabilities arising from both financing and operating leases that contain terms extending longer than one year. The Company does not recognize ROU assets or lease liabilities for short-term leases (those with original terms of 12 months or less). In making our determinations, the Company combines lease and non-lease elements of our leases.

Revenue Recognition

Asset Management Operations and Other Investment Revenue

The Company earns revenue from investments and through various fee share and consulting agreements, including realized and unrealized gains and losses, which may result in negative period or quarterly revenues. Management fees earned are recorded monthly and are included in revenue on the accompanying unaudited condensed consolidated statements of operations. Performance fees earned are accrued monthly, paid out annually, and are also included in revenue on the accompanying unaudited condensed consolidated statements of operations. Consulting fees are billed, paid, and recorded on a monthly basis. 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 unaudited condensed consolidated statements of operations.

A summary of revenue earned through the asset management operations segment for the three-month periods ended March 31, 2021, and 2020 is included below:

	For the three months ended
Asset Management Operations Revenue	March 31, 2021		March 31, 2020
Gains (losses) on investment activity	$	2,054,471	$	(1,784,406	)
Management and performance fee revenue		118,843		15,252
Fund management services revenue		20,540		24,000
Total revenue	$	2,193,854	$	(1,745,154	)

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 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 operations 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.

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Deferred Revenue

Deferred revenue represents collections from customers in advance of services to be performed. Revenue is recognized in the period service is provided. Total deferred revenue from continuing operations increased from $192,088 at December 31, 2020, to $198,848 at March 31, 2021. During the three-month periods ended March 31, 2021, and 2020, $119,312 and $127,957, respectively, of revenue from continuing operations 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, 2020, December 31, 2019, and December 31, 2018, 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.

The number of potentially dilutive shares for the three-month periods ended March 31, 2021. and 2020, consisting of common shares underlying common stock equity incentives, was 668. None of the potentially dilutive securities had a dilutive impact during the three-month periods ended March 31, 2021, and 2020 after rounding was applied.

Recently Issued Accounting Pronouncements

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 should 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, 2022, 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 ASSET SALE

On May 24, 2019, as has been previously reported, 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, all of Specialty Contracting Group’s personal property and customer lists and records were conveyed to Rooter Hero, excluding stock inventory and other current assets. As part of the transaction, Rooter Hero assumed Specialty Contracting Group’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 then-remaining customer accounts going forward. No cash consideration was exchanged in the transaction. Rather, as consideration for the transaction, Rooter Hero agreed to pay monthly royalties for the sixty (60) months following the closing calculated on the basis of any revenue actually received from the customer accounts transferred (7.5% of any monthly revenue generated from qualified sales during the first year, and 5% of any such monthly revenue during years two through five; in each case subject to reduction for pre-approved warranty-related costs concerning select customers).

The operations of Specialty Contracting Group, LLC had been considered a component of, and the divestiture reflected a strategic shift in, the Company’s business. As such, Specialty Contracting Group, LLC’s historical operations have been classified as discontinued operations in the Company’s financial statements. 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 “recovery from discontinued operations” on the statements of operations and will offset, or recover, the initial loss recorded. Accordingly, during the three-month periods ended March 31, 2021, and 2020, an offsetting $643 and $11,019, respectively, of royalties on discontinued operations were recognized within the reported $643 and $10,756 of recoveries from discontinued operations, respectively.

As of the year ended December 31, 2020, discontinued assets reported on the face of the accompanying condensed consolidated balance sheets totaled $231. No discontinued liabilities were reported as of the year-ended December 31, 2020. This compares to the three-month period ended March 31, 2021, when no discontinued assets or discontinued liabilities are reported on the face of the accompanying condensed consolidated balance sheets.

A reconciliation of discontinued operations as reported on the accompanying unaudited condensed consolidated statements of operations for the three-month periods ended March 31, 2021, and 2020, is as follows:

	For the three months ended
	March 31, 2021		March 31, 2020
Revenues	$	—	$	—
Cost of revenues		—		—
Gross profit		—		—
Selling, general, and administrative expenses		—		263
Recoveries from sale of subsidiary		643		11,019
Other income (expense), net		—		—
Income (loss) reported as discontinued operations	$	643	$	10,756

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NOTE 4. SALE OF CONTROLLING INTEREST IN REAL ESTATE SUBSIDIARY

Transaction

As has been previously reported, 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. 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 has disputed this assertion and maintains that it has retained its 35% membership interest.

In connection with this transaction, the Company and Woodmont also 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, including as to any distributions of cash to the 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 was 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. This arrangement was intended to allow the Company to maintain a passive management structure, while still owning a significant portion of the partnership.

While the operations of Mt Melrose, LLC have been 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.

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 previously had consolidated Mt Melrose under the “voting interests” (VOE) consolidation model.

By virtue of the A&R LLC Agreement, and the aforementioned standstill agreement, however, Woodmont is the sole “manager” responsible for all management and operating decisions of Mt Melrose. Accordingly, management determined that as of June 27, 2019, the Company no longer has a “controlling financial interest” in Mt Melrose and no longer should 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 our consolidated statements of operations for given prior reporting periods 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 our consolidated balance sheets. The Company’s membership interest in Mt Melrose is now 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 did 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 measures 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 was $53,846. This amount is included under the long-term investment amount on the accompanying consolidated balance sheets as of March 31, 2021, and December 31, 2020.

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NOTE 5. INVESTMENTS

Certain assets held through the Company, Willow Oak Asset Management, LLC, 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 (see Note 6). 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. The Company’s investment in Alluvial Fund is remeasured to fair value on a recurring basis and realized and unrealized gains and losses are recognized as revenue in the period of adjustment. Due to the nature of the Mt Melrose, LLC investment (subsequent to the Company’s transfer and relinquishment of control (see Note 4)), the investment is measured at cost basis, as fair value is not determinable until additional inputs and measurements become available. Due to the illiquid nature of Triad Guaranty, Inc. stock and the lack of available current financial information for the entity, the Company has measured its investment at cost basis, as fair value until additional inputs and measurements become available.

	Cost Basis		Unrealized Gain		Carrying Value
March 31, 2021
Alluvial Fund, LP (at fair value)	$	7,064,758	$	8,572,220	$	15,636,978
Mt Melrose, LLC (at cost)		53,846		—		53,846
Triad Guaranty, Inc. stock (at cost)		45,410		—		45,410
Total	$	7,164,014	$	8,572,220	$	15,736,234

	Cost Basis		Unrealized Gain		Carrying Value
December 31, 2020
Alluvial Fund, LP (at fair value)	$	7,064,758	$	6,455,858	$	13,520,616
Mt Melrose, LLC (at cost)		53,846		—		53,846
Total	$	7,118,604	$	6,455,858	$	13,574,462

Alluvial Fund is a private investment fund 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 three-month periods ended March 31, 2021, and 2020, the Company did not withdraw management or performance fees earned through the Alluvial Fund, and such fees were deemed reinvested. For the three-month periods ended March 31, 2021, and 2020, the total amounts of these reinvested fees were $62,978 and $8,326, respectively.

NOTE 6. 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 5 above.

	(Level 1)		(Level 2)		(Level 3)		(Excluded) (a)		Total at Fair Value
March 31, 2021
Alluvial Fund, LP	$	—	$	—	$	—	$	15,636,978	$	15,636,978
Total investments	$	—	$	—	$	—	$	15,636,978	$	15,636,978

	(Level 1)		(Level 2)		(Level 3)		(Excluded) (a)		Total at Fair Value
December 31, 2020
Alluvial Fund, LP	$	—	$	—	$	—	$	13,520,616	$	13,520,616
Total investments	$	—	$	—	$	—	$	13,520,616	$	13,520,616

^(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.

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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. No impairments were recorded during the three-month periods ended March 31, 2021, and 2020.

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. No impairments were recorded during the three-month periods ended March 31, 2021, and 2020.

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. No impairments were recorded during the three-month periods ended March 31, 2021, and 2020.

As discussed previously, the Company holds stock in Triad Guaranty, Inc. This stock was received in accordance with the December 31, 2020 revisions to the original promissory note, which included Triad stock to be issued in lieu of accrued interest. Due to the illiquid nature of Triad Guaranty, Inc. stock and the lack of available current financial information for the entity, the Company has measured its investment in the stock at cost basis. The Company’s costs basis in the stock is equal to the amount of accrued interest on the promissory note as of December 31, 2020. The Company will assess its investment in Triad for impairment at each balance sheet date, or when additional inputs and measurements become available. No impairments were recorded during the three-month period ended March 31, 2021.

NOTE 7. PROPERTY AND EQUIPMENT

The cost of property and equipment at March 31, 2021, and December 31, 2020, consisted of the following:

	March 31, 2021			December 31, 2020
Computers and equipment	$	17,330		$	17,330
Furniture and fixtures		10,850			10,850
		28,180			28,180
Less accumulated depreciation		(15,484	)		(14,473	)
Property and equipment, net	$	12,696		$	13,707

Depreciation expense from continuing operations was $1,012 for the three-month period ended March 31, 2021, and $1,012 for the three-month period ended March 31, 2020.

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NOTE 8. REAL ESTATE

EDI Real Estate, LLC

Through EDI Real Estate, as of March 31, 2021, and December 31, 2020, the Company identified the following units as held for resale or held for investment as noted below:

EDI Real Estate	March 31, 2021		December 31, 2020
Units occupied or available for rent		2		4
Vacant lots held for investment		3		3
Total units held for investment		5		7
Units held for resale		2		—
Vacant lots held for resale		—		—
Total units held for resale		2		—

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

The leases in effect as of March 31, 2021, 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	March 31, 2021			December 31, 2020
Total real estate held for investment	$	95,679		$	303,158
Accumulated depreciation		(25,360	)		(61,282	)
Real estate held for investment, net		70,319			241,876
Real estate held for resale, net	$	169,181		$	—

For the three-month period ended March 31, 2021, depreciation expense on the EDI Real Estate portfolio of properties was $2,377. This compares to the three-month period ended March 31, 2020, when depreciation expense on the EDI Real Estate portfolio of properties was $4,091.

No properties were sold during the three-month period ended March 31, 2021. Subsequent to March 31, 2021, one property held for resale has been sold. During the three-month period ended March 31, 2020, two properties held for resale were sold for gross proceeds of $172,000. Net proceeds totaled $34,749. This compares to their carrying value of $98,835, which resulted in a total gain of $73,165 for the period. No properties were purchased during the three-month periods ended March 31, 2021, and 2020 for the EDI Real Estate portfolio.

No impairment adjustments were recorded on the EDI Real Estate portfolio during the three-month periods ended March 31, 2021, and 2020.

Future Minimum Rental Revenues - EDI Real Estate, LLC

The future anticipated minimum rental revenues based on leases in place as of March 31, 2021, for EDI Real Estate, LLC are as follows:

2021	$	795
2022		—
Total	$	795

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NOTE 9. NOTES PAYABLE

Notes payable at March 31, 2021, and December 31, 2020, consist of the following:

	Interest Rates		Average Term	March 31, 2021			December 31, 2020
Interest-bearing amount due on promissory note through EDI Real Estate, LLC		5.60%	15 years	$	151,305		$	154,094
Interest-bearing amount due on real estate held for investment through EDI Real Estate, LLC		6.00%	5 years		96,000			96,000
Less current portion					(5,277	)		(5,609	)
Long-term portion				$	242,028		$	244,485

The timing of future payments of notes payable are as follows as of March 31, 2021:

2021	$	3,901
2022		101,507
2023		5,828
2024		6,145
2025 and thereafter		129,924
Total	$	247,305

During the quarterly period ended September 30, 2018, EDI Real Estate, LLC, as a borrower, issued a promissory note secured by certain 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. As of the three-month period ended March 31, 2021, the remaining note payable balance is secured by three of the remaining residential properties.

During the quarterly period 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.

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NOTE 10. SEGMENT INFORMATION

During the three-month period ended March 31, 2021, the Company operated through four business segments with separate management and reporting infrastructures that offer different products and services. The four business segments are as follows: Asset Management Operations, Real Estate Operations, Internet Operations, and Other Operations.

During periods prior to the quarter ended June 30, 2019, the Company also operated through a fifth reportable segment, Home Services Operations. However, as mentioned in Note 3, the Company completed a divestiture of its home services operations on May 24, 2019. As a result, as of the three-month period ended March 31, 2021, and for all prior periods presented, the Company’s former home services operations segment has been reported as discontinued operations.

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 operations segment includes (i) our equity in Mt Melrose, LLC, which manages properties held for investment and held for resale located in Lexington, Kentucky, and (ii) 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 operations segment includes revenue and expenses related to our sale of internet access, hosting, storage, and other ancillary services. Our internet segment includes revenue generated by operations in both the United States and Canada. For the three-month periods ended March 31, 2021, the internet segment generated revenue of $220,280 in the United States and revenue of $11,986 in Canada. This compares to the three-month period ended March 31, 2020, where the internet segment generated revenue of $240,622 in the United States and revenue of $12,937 in Canada. All assets reported under the internet segment for the periods ended March 31, 2021, and December 31, 2020, are located within the United States.

The other operations 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.

Summarized financial information concerning the Company’s reportable segments is shown in the following tables for the three-month periods ended March 31, 2021, and 2020.

Three Months Ended March 31, 2021	Asset Management		Real Estate			Internet		Other			Discontinued Operations - Home Services		Consolidated
Revenues	$	2,193,854	$	9,736		$	232,266	$	—		$	—	$	2,435,856
Cost of revenue		—		7,644			71,963		—			—		79,607
Operating expenses		117,711		6,485			46,541		207,253			—		377,990
Other income (expense)		—		(4,795	)		361		4,181			—		(253	)
Income (loss) from continuing operations		2,076,143		(9,188	)		114,123		(203,072	)		—		1,978,006
Income from discontinued operations		—		—			—		—			643		643
Goodwill		—		—			212,445		—			—		212,445
Identifiable assets	$	15,820,688	$	312,819		$	433,317	$	339,926		$	—	$	16,906,750

Three Months Ended March 31, 2020	Asset Management			Real Estate			Internet		Other			Discontinued Operations - Home Services		Consolidated
Revenues	$	(1,745,154	)	$	187,149		$	253,559	$	—		$	—	$	(1,304,446	)
Cost of revenue		—			132,209			87,188		—			—		219,397
Operating expenses		109,241			16,636			47,848		289,433			—		463,158
Other income (expense)		2,283			(1,268	)		370		3,692			—		5,077
Income (loss) from continuing operations		(1,852,112	)		37,036			118,893		(285,741	)		—		(1,981,924	)
Income from discontinued operations		—			—			—		—			10,756		10,756
Goodwill		—			—			212,445		—			—		212,445
Identifiable assets	$	8,399,068		$	457,145		$	468,024	$	543,702		$	321	$	9,868,260

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NOTE 11. COMMITMENTS AND CONTINGENCIES

Leases

As of March 31, 2021, and December 31, 2020, the Company has no remaining leases classified as operating leases and no financing leases.

The previous lease for office space for Willow Oak Asset Management, LLC expired on September 30, 2020, and has been renewed on a month-to-month basis beginning on October 1, 2020. The previous lease for warehouse space for corporate matters was a short-term lease, under 12 months, and expired in February 2020. In accordance with ongoing accounting policy elections, the Company does not recognize right-of-use (ROU) assets or lease liabilities for short-term or month-to-month leases. Total rental expenses attributed to these short-term leases for the three-month periods ended March 31, 2021, and 2020 were $5,250 and $13,434, respectively.

Lease costs for the three-month periods ended March 31, 2021, and 2020 consisted of the following:

	For the three months ended
	March 31, 2021		March 31, 2020
Finance lease costs:
Amortization of ROU assets	$	—	$	—
Interest on lease liabilities		—		—
Operating lease cost		—		28,888
Sublease income		—		—
Total lease costs from continuing operations		—		28,888
Total lease costs from discontinued operations		—		—
Total lease costs	$	—	$	28,888

As the Company has no remaining leases classified as operating leases or financing leases as of the periods ended March 31, 2021, and December 31, 2020, there are no future liabilities or maturities of lease obligations recognized on the accompanying consolidated balance sheets.

Other Commitments

As mentioned in Note 4, on June 27, 2019, the Company sold 65% of its membership interest in Mt Melrose, LLC to Woodmont. Under the terms of the parties’ membership interest purchase agreement, the Company agreed to indemnify Woodmont against certain losses actually incurred by Woodmont as a result of breaches of the Company’s representations and warranties made under the agreement. As has been previously reported, Woodmont has made several claims for indemnification under the agreement, all of which have been disputed by the Company.

Litigation & Legal Proceedings

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

As has been previously reported, 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

As has been previously reported, various disputes have arisen 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. 

As has been previously reported, 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 various repeated claims and demands and injurious conduct by Woodmont and its representative. 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. While management intends to vigorously prosecute the Company’s claims and defend the Company’s rights against Woodmont in these matters, the Company and Woodmont have agreed to engage in voluntary mediation concerning their various disputes through the Delaware Court of Chancery, which voluntary mediation commenced in March 2021. The Delaware Action remains pending in the Delaware Court of Chancery; however, it is currently stayed pending the outcome of the parties’ mediation and potential resolution of disputes.

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NOTE 12. STOCKHOLDERS’ EQUITY

Classes of Shares

As of March 31, 2021, 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 from time to time fixed by the Company’s Board of Directors in its sole discretion. As of March 31, 2021, the Company has not issued any shares of its preferred stock (including, without limitation, its Series A Preferred Stock).

As previously reported in the Company’s Current Report on Form 8-K filed with the SEC on July 29, 2020, the Company has adopted a certain stockholder rights agreement styled as the Tax Benefit Preservation Plan, dated as of July 24, 2020, by and between the Company and Colonial Stock Transfer Company, Inc., as rights agent. The Tax Benefit Preservation Plan was adopted as a means designed to safeguard against inadvertent diminution or limitation of the Company’s valuable tax assets. As previously reported, pursuant to the Tax Benefit Preservation Plan, as of July 24, 2020, the Company has designated a series of its preferred stock as the Series A Preferred Stock, consisting of 250,000 shares so designated.

Common Stock

As of March 31, 2021, 2,647,383 shares of the Company’s common stock were issued and outstanding.

NOTE 13. SUBSEQUENT EVENTS

Management has evaluated all subsequent events from March 31, 2021, through the date the unaudited condensed consolidated financial statements were issued. Management has concluded that no subsequent events have occurred that would require recognition or disclosure in the consolidated financial statements.

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Item 2. 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 unaudited condensed consolidated financial statements and related footnotes for the three-month period ended March 31, 2021. 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.

Overview

During the three-month period ended March 31, 2021, Enterprise Diversified, Inc. (“ENDI,” the “Company,” or “we”) operated through four 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 (i) our equity in Mt Melrose, LLC, which manages properties held for investment and held for resale located in Lexington, Kentucky, and (ii) 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; and

● Other Operations - this segment includes any revenue and expenses from nonrecurring or one-time strategic funding or similar activity that is not considered to be one of our primary lines of business, 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.

During periods prior to the quarter ended June 30, 2019, the Company also operated through a fifth reportable segment, Home Services Operations, comprised of former subsidiary Specialty Contracting Group, LLC’s operation of HVAC and plumbing companies in Arizona. However, for the three-month period ended March 31, 2021, 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.

Asset Management Operations

The Company operates its asset management operations business through its wholly owned subsidiaries, Willow Oak Asset Management, LLC (“Willow Oak”), Willow Oak Capital Management, LLC, Willow Oak Asset Management Affiliate Management Services, LLC ("Willow Oak AMS"), and Willow Oak Asset Management Fund Management Services, LLC (“Willow Oak FMS”).

In 2016, the Company made a seed investment, through Willow Oak, to assist in the launch of Alluvial Fund, LP, a private investment fund that was launched on January 1, 2017, by an 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. As a special limited partner, Willow Oak earns a share of management and performance fees earned. As of March 31, 2021, Willow Oak continues to hold its 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 in June 2017, with Coolidge Capital Management, LLC (“Coolidge”), whose sole member is Keith D. Smith, 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 launched by Willow Oak and managed by Coolidge. Under their agreement concerning Bonhoeffer Fund, LP, Willow Oak paid all start-up expenses and pays agreed-upon operating expenses that are not partnership expenses, Coolidge is responsible for all investment management, and Willow Oak receives 50% of all performance and management fees earned. Additionally, Willow Oak FMS earns a direct fee from the private limited partnership for the administrative, compliance, and tax and audit liaison services it renders.

On November 1, 2018, Willow Oak entered into a fund management services agreement with Arquitos Investment Manager, LP, which is managed by our Board chairman and principal executive officer, Steven L. Kiel, to provide Arquitos with Willow Oak’s Fund Management Services (“FMS”) consisting of the following services: strategic planning, investor relations, marketing, operations, compliance and legal coordination, accounting and bookkeeping, annual audit coordination, and liaison to third-party service providers. Willow Oak earns monthly and annual fees as consideration for these services.

On October 1, 2019, Willow Oak partnered with Geoff Gannon and Andrew Kuhn to form Focused Compounding Capital Management, LLC (“Focused Compounding”). This joint venture, of which Willow Oak Capital Management is a 10% beneficial owner, manages capital through separately managed accounts and a private investment fund launched January 1, 2020. Willow Oak provides ongoing FMS and operational support in addition to having covered all one-time expenses associated with the launch of Focused Compounding Fund, LP. As consideration for the arrangement, Willow Oak Capital Management is entitled to 10% of gross management and performance fees earned by Focused Compounding. Additionally, Willow Oak FMS earns a direct fee from the private limited partnership for the administrative, compliance, and tax and audit liaison services it renders.

On September 29, 2020, Willow Oak, through Willow Oak AMS, executed a strategic relationship agreement with SVN Capital, LLC to become a 20% beneficial owner of the firm in exchange for the provision of certain ongoing FMS and operational services offered through Willow Oak FMS. As a beneficial owner of SVN Capital, LLC, Willow Oak is entitled to 20% of gross management and performance fees earned by the firm. Additionally, Willow Oak FMS earns a direct fee from SVN Capital Fund, LP, a private investment fund launched by the firm’s managing member, for the administrative, compliance, and tax and audit liaison services it renders.

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Real Estate Operations

As has been previously reported, in December 2017, ENDI created New Mt Melrose, a wholly owned subsidiary at that time, 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 in December 2017 with the seller, Old Mt. Melrose. During January and June 2018, New Mt Melrose, consistent with the terms of the purchase agreement, completed two bundled acquisitions from Old Mt. Melrose of residential and other income-producing real properties located in Lexington, Kentucky. As has been previously reported, on June 27, 2019, the Company sold 65% of its membership interest in New Mt Melrose to Woodmont, which agreed to assume full responsibility for the management and operation of New Mt Melrose and its real estate portfolio. As a result of no longer having a controlling financial interest, the Company deconsolidated the operations of New Mt Melrose as of June 27, 2019. See Note 4 for more information.

As has been previously reported, in July 2017, ENDI created a wholly owned real estate subsidiary named EDI Real Estate, LLC, to hold ENDI’s legacy portfolio of real estate. As of March 31, 2021, through EDI Real Estate, LLC, ENDI owns a legacy real estate investment portfolio that includes four residential properties and vacant land. Subsequent to March 31, 2021, one residential property has been sold. Our real estate portfolio under EDI Real Estate, LLC is primarily located in Roanoke, Virginia. The portfolio includes occupied single-family homes that are managed by a third-party property management company. The leases in effect as of December 31, 2020, 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 in general and do not vary significantly throughout our real estate holding areas. State laws, including the Virginia Residential Landlord and Tenant Act, in addition to local ordinances, govern our rental properties and also do not vary significantly throughout our real estate holding areas.

Internet Operations

The Company operates its internet operations segment through Sitestar.net, a wholly owned subsidiary. Sitestar.net is an Internet Service Provider (ISP) that offers consumer and business-grade internet access, wholesale managed modem services, web hosting, third-party software as a reseller, 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), as well as 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, and 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 March 31, 2021, the focus of our internet operations 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 operations segment during the three-month period ended March 31, 2021.

Management routinely endeavors to identify 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.

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 recent activities comprising other operations.

Financing Arrangement Regarding Triad Guaranty, Inc.

In August 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 in April 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 in May 2018. The terms of the promissory note provided for interest in the amount of 10% annually and the issuance of warrants in Triad Guaranty, Inc. equal to 2.5% of the company. On December 31, 2020, the Company accepted a revision of terms to the original promissory note which includes, among other things, an extension of the loan maturity date to December 31, 2022, an increase of interest to the amount of 12% annually, and a provision to settle all currently accrued interest through the issuance of Triad Guaranty, Inc. common shares. In line with the revision of note terms, during the three-month period ended March 31, 2021, the Company was issued 454,097 shares of Triad Guaranty, Inc. in lieu of interest accrued on the note receivable as of December 31, 2020.

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.

Discontinued Operations - Home Services Operations

Prior to May 24, 2019, the Company operated its home services operations segment through its subsidiary, Specialty Contracting Group, LLC (formerly known as HVAC Value Fund, LLC). The Company had organized and launched this subsidiary in June 2016, initially with an unaffiliated third party. Specialty Contracting Group was focused on the management of HVAC and plumbing companies in Arizona.

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

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Summary of Financial Performance

Common stockholders’ equity increased from $14,043,411 at December 31, 2020, to $16,262,060 at March 31, 2021. This change was attributable to $2,076,143 of net income in the asset management operations segment and $114,123 of net income in the internet operations segment, and was partially offset by a net loss of $9,188 in the real estate operations segment, $203,072 in other segments, and $643 of recoveries resulting from discontinued operations under the former home services operations segment. Corporate expenses for the three-month period ended March 31, 2021, included in the net loss from other operations, totaled $207,253. Total comprehensive net income for the three-month period ended March 31, 2021, equaled $1,978,649.

Balance Sheet Analysis

This section provides an overview of changes in our assets, liabilities, and equity and should be read together with our accompanying unaudited 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.

	March 31, 2021		December 31, 2020		September 30, 2020		June 30, 2020		March 31, 2020
ASSETS
Cash and equivalents	$	292,767	$	341,007	$	337,149	$	425,985	$	553,468
Accounts receivables, net		130,155		144,791		49,824		28,394		35,298
Investments, at fair value		15,736,234		13,574,462		11,135,580		9,586,178		8,354,270
Real estate, total		239,500		241,876		378,698		383,128		376,499
Goodwill and other assets		508,094		555,044		524,772		545,407		548,725
Total assets	$	16,906,750	$	14,857,180	$	12,426,023	$	10,969,092	$	9,868,260
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	60,734	$	65,524	$	63,573	$	77,670	$	188,732
Accrued expenses		137,803		306,063		176,904		119,839		124,255
Deferred revenue		198,848		192,088		213,498		210,671		201,430
Notes payable and other liabilities		247,305		250,094		646,791		666,608		561,004
Total liabilities		644,690		813,769		1,100,766		1,074,788		1,075,421
Total stockholders’ equity		16,262,060		14,043,411		11,325,257		9,894,304		8,792,839
Total liabilities and stockholders’ equity	$	16,906,750	$	14,857,180	$	12,426,023	$	10,969,092	$	9,868,260

Results of Operations

Asset Management Operations

The Company operates its asset management operations business through its wholly owned subsidiaries, Willow Oak Asset Management, LLC (“Willow Oak”), Willow Oak Capital Management, LLC, Willow Oak Asset Management Affiliate Management Services, LLC (“Willow Oak AMS”), and Willow Oak Asset Management Fund Management Services, LLC (“Willow Oak FMS”). These subsidiaries were formed on October 10, 2016, May 24, 2018, and August 21, 2020, 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 beneficial owner. During the year ended December 31, 2020, we assisted in the launch of a new private investment fund, and two new wholly owned entities, Willow Oak AMS and Willow Oak FMS, were formed to advance strategic relationships with external investment firms. Additionally, Willow Oak formalized a new strategic relationship with an investment firm, becoming a non-managing beneficial owner in exchange for the provision of certain ongoing FMS and operational services.

As of March 31, 2021, Willow Oak continues to hold a direct investment in the Alluvial Fund, LP. The realized and unrealized investment gains and losses are reported as revenue on the accompanying unaudited condensed consolidated statements of operations. This treatment can result in reporting negative revenue figures for a given period.

Willow Oak continues to earn revenue through fee share arrangements, as well as through fund management services.

During the three-month period ended March 31, 2021, the asset management operations segment produced $2,193,854 of revenue. Cost of revenue was $0 and operating expenses totaled $117,711. Net income for the three-month period ended March 31, 2021, totaled $2,076,143. This compares to the three-month period ended March 31, 2020, when the asset management operations segment produced negative $1,745,154 of revenue, cost of revenue was $0, and operating expenses totaled $109,241. Additionally, other income for the three-month period ended March 31, 2020, was $2,283, and the total net loss was $1,852,112. Other income for the segment during the three-month period ended March 31, 2020, was primarily due to sublease rental income earned through the Company’s New York office space.

The increase in revenue for the three-month period ended March 31, 2021, is primarily due to market volatility and increased returns through the Company’s Alluvial Fund investment in addition to an increase in fee share revenues from the new affiliate and fund management services relationships. The increase in operating expenses is primarily due to higher payroll expenses.

As of March 31, 2021, the fair value of long-term investments held through the asset management operations segment totaled $15,636,978. This compares to the fair value of long-term investments held at December 31, 2020, which totaled $13,520,616. The increase in investments is attributable to positive Alluvial Fund performance during the three-month period ended March 31, 2021. Management notes that, while short-term market volatility can have a significant effect on reported revenue for a given period, the Company’s overall investment strategy is ultra-long-term focused.

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 quarterly periods designated below.

	For the three months ended
Asset Management Operations Revenue	March 31, 2021		March 31, 2020
Gains (losses) on investment activity	$	2,054,471	$	(1,784,406	)
Management and performance fee revenue		118,843		15,252
Fund management services revenue		20,540		24,000
Total revenue	$	2,193,854	$	(1,745,154	)

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Real Estate Operations

For the three-month period ended March 31, 2021, the real estate operations segment generated revenue of $9,736 and cost of revenues totaling $7,644. All revenues and cost of revenues for the current period are related to rental activities. Operating expenses for the three-month period ended March 31, 2021, were $6,485. Other expenses totaled $4,795 and the net loss for the three-month period ended March 31, 2021, totaled $9,188. This compares to the three-month period ended March 31, 2020, when the real estate operations segment generated revenue of $187,149, including $15,149 of rental revenue, and cost of revenues totaling $132,209, which included $16,347 of cost of rental revenues. Operating expenses for the three-month period ended March 31, 2020, were $16,636, other expenses totaled $1,268, and total reported net income was $37,036. Other expenses incurred during the three-month periods ended March 31, 2021, and 2020, were primarily interest-related expenses. The current period decreases in revenue, cost of revenue, operating expenses, and interest expense are primarily due to the sale of certain real estate properties held historically as rental properties.

EDI Real Estate Operations

As of March 31, 2021, and December 31, 2020, the EDI Real Estate portfolio of properties included the following units:

EDI Real Estate	March 31, 2021		December 31, 2020
Units occupied or available for rent		2		4
Vacant lots held for investment		3		3
Total units held for investment		5		7
Units held for resale		2		—
Vacant lots held for resale		—		—
Total units held for resale		2		—

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

The leases in effect, as of March 31, 2021, 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	March 31, 2021			December 31, 2020
Total real estate held for investment	$	95,679		$	303,158
Accumulated depreciation		(25,360	)		(61,282	)
Real estate held for investment, net		70,319			241,876
Real estate held for resale, net	$	169,181		$	—

For the three-month period ended March 31, 2021, depreciation expense on the EDI Real Estate portfolio of properties was $2,377. This compares to the three-month period ended March 31, 2020, when depreciation expense on the EDI Real Estate portfolio of properties was $4,091.

No properties were sold during the three-month period ended March 31, 2021. Subsequent to March 31, 2021, one property held for resale has been sold. During the three-month period ended March 31, 2020, two properties held for resale were sold for gross proceeds of $172,000. Net proceeds totaled $34,749. This compares to their carrying value of $98,835, which resulted in a total gain of $73,165 for the period. No properties were purchased during the three-month periods ended March 31, 2021, and 2020 for the EDI Real Estate portfolio.

During the three-month periods ended March 31, 2021, and 2020, $169,181 and $43,917, respectively, of real estate held for investment was transferred to real estate held for resale.

There were no impairment adjustments recorded during the three-month periods ended March 31, 2021, and 2020.

Mt Melrose Operations

For the periods ended March 31, 2021, and December 31, 2020, the Company’s remaining investment in Mt Melrose is carried on our condensed consolidated balance sheets for $53,846. This carrying value is reflective of the mechanics of the June 27, 2019, transaction, rather than management’s perceived value of the Company’s remaining interest. By way of the Mt Melrose transaction, further described in Note 4, the Company was able to significantly reduce direct and overhead expenses, improve net cash flows, and fully deconsolidate approximately $6.4 million of debt. Additionally, the Company was afforded the opportunity to refocus growth opportunities to its asset management operations segment. These circumstances, rather than the cash consideration received, are what strategically prompted the majority sale of the Mt Melrose entity. Additional debt restructurings and sales of previously inactive real estate properties have allowed the portfolio to continue its redirection, which management believes could provide long-term returns greater than its current carrying value.

26

Internet Operations

Revenue attributed to the internet operations segment during the three-month period ended March 31, 2021, totaled $232,266, and cost of revenue totaled $71,963. Operating expenses for the segment totaled $46,541 for the three-month period ended March 31, 2021, and other income totaled $361. Total net income for the internet operations segment was $114,123 for the three-month period ended March 31, 2021. This compares to the three-month period ended March 31, 2020, when revenue totaled $253,559, cost of revenues totaled $87,188, operating expenses were $47,848, other income was $370, and net income was $118,893. Other income for the segment is the result of refundable sales tax credits.

As of March 31, 2021, we have a total of 6,895 customer accounts across the U.S. and Canada. This compares to the three-month period ended March 31, 2020, when we had a total of 7,401 customer accounts. As of March 31, 2021, approximately 60% of our revenue is driven by internet access services, with the remaining 40% 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 $220,280, and revenue generated by our Canadian customers totaled $11,986 during the three-month period ended March 31, 2021. This compares to revenue generated by our U.S. customers of $240,622, and revenue generated by our Canadian customers of $12,937 during the three-month period ended March 31, 2020.

Other Operations

For the three-month period ended March 31, 2021, the Company’s other operations segment did not produce any revenue or cost of goods sold. Operating expenses totaled $207,253, and other income was $4,181 for the three-month period ended March 31, 2021. Corporate operating expenses accounted for the full $207,253 of reported operating expenses for our other operations. This resulted in a net loss of $203,072 for the three-month period ended March 31, 2021. This compares to the three-month period ended March 31, 2020, when the other operations segment again did not produce any revenue or cost of goods sold, but did incur corporate operating expenses of $289,433, other income of $3,692, and a net loss of $285,741 for the period. Corporate expenses were lower for the three-month period ended March 31, 2021, primarily due to a decrease in legal expenses.

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. Net income reported from discontinued operations related to the home services operations segment for the three-month period ended March 31, 2021, were $643. This compares to net income of $10,756 reported from discontinued operations related to the home services operations segment for the three-month period ended March 31, 2020.

Financial Condition, Liquidity, and Capital Resources

During the three-month period ended March 31, 2021, Enterprise Diversified carried out its business strategy in four operating segments: Asset Management Operations, Real Estate Operations, Internet Operations, and Other 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 $292,767 at the three-month period ended March 31, 2021, compared to $341,007 at year-end December 31, 2020. Real estate held for investment decreased to $70,319 at the period ended March 31, 2021, compared to $241,876 at year-end December 31, 2020, and real estate held for resale increased to $169,181 at the period ended March 31, 2021, compared to $0 at year-end December 31, 2020. Additionally, accrued compensation decreased from $281,904 at the year ended December 31, 2020, to $89,328 at the three-month period ended March 31, 2021. The fluctuations in real estate amounts are primarily due to the opportunistic sales of certain EDI Real Estate rental properties, and the decrease in accrued compensation is due to the issuance of common stock during the three-month period ended March 31, 2021. The Company does not expect to make significant reinvestments into property and equipment used in operating activities at this time.

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 March 31, 2021, and December 31, 2020 is as shown:

	March 31, 2021		December 31, 2020
Current	$	127,151	$	142,121
30 – 60 days		1,748		1,836
60 + days		1,256		834
Total	$	130,155	$	144,791

We have no material capital expenditure requirements.

27

Contractual Obligations

In 2016, the Company made a strategic determination to fund a seed investment, through Willow Oak, to assist in the launch of Alluvial Fund, LP, a private investment fund that was launched on January 1, 2017, by an 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. As of March 31, 2021, Willow Oak continues to hold its remaining direct investment in Alluvial Fund. Investment gains and losses are reported as revenue on the accompanying unaudited condensed consolidated statements of operations.

As has been previously reported, on June 27, 2019, the Company sold 65% of its membership interest in Mt Melrose, LLC to Woodmont. Under the terms of the parties’ membership interest purchase agreement, the Company agreed to indemnify Woodmont against certain losses actually incurred by Woodmont as a result of breaches of the Company’s representations and warranties made under the agreement. As has been previously reported, Woodmont has made several claims for indemnification under the agreement, all of which have been 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, which sets forth the general terms and conditions governing the arrangements between the two members; and, 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.

Off-balance Sheet Arrangements

We are not a party to any material off-balance sheet arrangements as of March 31, 2021, nor at any time from January 1, 2021, through March 31, 2021.

Discussion Regarding COVID-19 Potential Impacts

Due to the continuing uncertainty surrounding the COVID-19 pandemic, the Company has experienced, and continues to expect, market volatility as primarily related to its investment in the Alluvial Fund. As reported in prior periods, this volatility can create periods when the asset management operations segment produces negative revenue amounts. Due to the size of the investment, these negative revenue amounts can also have a sizable impact on the Company’s balance sheets at a given point in time. The nature of this investment has inherent market risks, and short-term results can be unpredictable.

Management continues to monitor and assess all Company operations for additional potential impacts of the COVID-19 pandemic. As of the three-month period ended March 31, 2021, the Company has not been forced to make significant operational changes as a result of the pandemic. Management does not anticipate additional challenges in meeting existing obligations, nor do we expect significant customer or vendor interruptions. However, the extent to which the continuing COVID-19 pandemic ultimately may impact our business, financial condition, liquidity, and results of operations likely will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the continuing pandemic, the direct and indirect impact of the continuing pandemic on our employees, customers, and service providers, as well as the U.S. economy, and the actions taken by governmental authorities and other third parties in response to the continuing pandemic.

Discussion Regarding the Company’s Status Under the Investment Company Act of 1940

As discussed above, the Company, directly and through our subsidiaries, currently is engaged primarily in asset management operations, real estate operations, and internet operations lines of business--that is, in businesses other than that of investing, reinvesting, owning, holding, or trading in securities. We are not engaged primarily, nor do we propose to engage primarily, in the business of investing, reinvesting, or trading in securities; nor does the Company propose to operate any of its businesses in a manner that would cause the Company to be subject to regulation as an “investment company” under the Investment Company Act of 1940 (the “1940 Act”).

However, as of the quarterly period ended March 31, 2021, management has determined that our ownership of “investment securities” (as defined in the 1940 Act) exceeds 40% of the value of the Company’s total assets (exclusive of government securities and cash items), as measured under the 1940 Act. Our ownership of “investment securities” is largely comprised of our investment and limited partnership interests in Alluvial Fund, LP. In this respect, as the composition of our assets has changed over recent time, including by virtue of our previous sale of membership interests in Mt Melrose, LLC and our previous divestiture of the former Home Services Operations segment, the impact of our long-standing Alluvial Fund investment to the composition of our total assets, as measured under the 1940 Act, has become more pronounced, albeit inadvertently. 

During the quarterly period ended March 31, 2021, representatives from the Securities and Exchange Commission (“SEC”) Division of Investment Management and the Company have engaged in several informal discussions and correspondence regarding a general inquiry by the SEC as to the Company’s current status under the 1940 Act, namely as a result of the apparent quantitative significance of the Company’s assets that may constitute “investment securities” in relation to the Company’s total assets, as noted above. 

As a result of such discussions and correspondence among the Company and the SEC, the Board of Directors of the Company has re-confirmed that the Company has a bona fide intent to be engaged primarily in lines of business not constituting that of investing, reinvesting or trading in securities, nor that of acquiring, owning or holding “investment securities,” and the Board has resolved to explore certain strategic options so as to eliminate as soon as is reasonably possible any uncertainty in regard to the Company’s status under the 1940 Act. In this respect, the Company is in the process of developing a strategic operational plan setting forth specific potential steps designed to grow certain operational lines of business and effect changes to the composition of our assets in the near future; although there can be no assurances, of course, that we will be successful in our formulation and/or carrying out of any such plan.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

This item is not required by smaller reporting companies.

Item 4. 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 March 31, 2021. 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. Because of inherent limitations, any controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance of achieving the desired control objective. 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 March 31, 2021.

Changes in Our Internal Control over Financial Reporting

No change in the Company’s internal control over financial reporting occurred during the fiscal quarter ended March 31, 2021, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting subsequent to the date of our most recent evaluation of the Company’s internal control over financial reporting.

28

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Pursuant to Item 103 of Regulation S-K, as amended, the information required by this item is provided by cross-reference to the Company’s legal proceedings disclosure located under the Litigation & Legal Proceedings heading in Note 11 to the accompanying unaudited consolidated financial statements (see page 21).

Item 1A. Risk Factors

This item is not required for smaller reporting companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On February 3, 2021, the Company issued a total of 45,143 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, pursuant to and in line with our previously reported Enterprise Diversified, Inc. 2020 Equity Incentive Plan, as amended. 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, 2021, which equaled $5.3166. 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 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit	Description
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
101	Pursuant to Rule 405 of Regulation S-T, the following materials from Enterprise Diversified, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020; (ii) Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2021, and 2020; (iii) Unaudited Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2021, and 2020; (iv) Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2021, and 2020; (v) Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021, and 2020; (vi) Notes to Unaudited Condensed Consolidated Financial Statements

29

SIGNATURES

Pursuant to the requirements 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.
Date: May 14, 2021	/s/ Steven L. Kiel
	Steven L. Kiel
	Executive Chairman
	(Principal Executive Officer)
Date: May 14, 2021	/s/ Alea A. Kleinhammer
	Alea A. Kleinhammer
	Chief Financial Officer
	(Principal Financial Officer)

30

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE EXECUTIVE CHAIRMAN

I, Steven L. Kiel, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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: May 14, 2021	By:	/s/  Steven L. Kiel
		Steven L. Kiel
		Executive Chairman

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

I, Alea A. Kleinhammer, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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: May 14, 2021	By:	/s/  Alea A. Kleinhammer
		Alea A. Kleinhammer
		Chief 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 Quarterly Report of Enterprise Diversified, Inc., (SYTE) on Form 10-Q for the quarter ended March 31, 2021, 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

May 14, 2021

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.

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2021	May 12, 2021
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 Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		2,647,383
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Mar. 31, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Current Assets
Cash and cash equivalents	$ 292,767	$ 341,007
Accounts receivable, net	130,155	144,791
Other current assets	40,227	44,530
Current assets - held for resale	0	231
Total current assets	463,149	530,559
Long-term Assets
Real estate - held for investment, net	70,319	241,876
Real estate - held for resale, net	169,181
Property and equipment, net	12,696	13,707
Goodwill, net	212,445	212,445
Note receivable	169,650	210,879
Long-term investments	15,736,234	13,574,462
Other assets	73,076	73,252
Total long-term assets	16,443,601	14,326,621
Total assets	16,906,750	14,857,180
Current Liabilities
Accounts payable	60,734	65,524
Accrued compensation	89,328	281,904
Accrued expenses	48,475	24,159
Deferred revenue	198,848	192,088
Notes payable, current	5,277	5,609
Total current liabilities	402,662	569,284
Long-term Liabilities
Notes payable, net of current portion	242,028	244,485
Total long-term liabilities	242,028	244,485
Total liabilities	644,690	813,769
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; 2,647,383 and 2,602,240 shares issued and outstanding	330,922	325,280
Additional paid-in capital	27,673,692	27,439,334
Accumulated deficit	(11,742,554)	(13,721,203)
Total stockholders’ equity	16,262,060	14,043,411
Total liabilities and stockholders’ equity	$ 16,906,750	$ 14,857,180

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Mar. 31, 2021	Dec. 31, 2020
Preferred Stock Par Value (in dollars per share)	$ 0.001	$ 0.001
Preferred Stock Shares Authorized (in shares)	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
Common stock, shares authorized (in shares)	2,800,000	2,800,000
Common stock, shares issued (in shares)	2,647,383	2,602,240
Common stock, shares outstanding (in shares)	2,647,383	2,602,240

XML

Unaudited Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenues	$ 2,435,856	$ (1,304,446)
Cost of revenues	79,607	219,397
Gross profit (loss) - asset management	2,356,249	(1,523,843)
Total gross profit (loss)	2,356,249	(1,523,843)
Selling, general, and administrative expenses
Insurance	6,603	24,133
Professional fees	143,505	210,134
Salaries and wages	182,954	161,349
Travel and meals	351	3,135
Other operating expenses	44,577	64,407
Total selling, general and administrative expenses	377,990	463,158
Income (loss) from operations	1,978,259	(1,987,001)
Interest expense	(4,795)	(7,082)
Other income, net	4,542	12,159
Total other income (loss)	(253)	5,077
Income (loss) from continuing operations before income taxes	1,978,006	(1,981,924)
Income tax benefit (expense)
Income (loss) from continuing operations	1,978,006	(1,981,924)
Income from discontinued operations, net of taxes	643	10,756
Net income (loss)	$ 1,978,649	$ (1,971,168)
Net income (loss) per share, basic and diluted (in dollars per share)	$ 0.75	$ (0.76)
Net income (loss) per share from continuing operations, basic and diluted (in dollars per share)	0.75	(0.77)
Net income (loss) per share from discontinued operations, basic and diluted (in dollars per share)	$ 0	$ 0
Weighted average number of shares, basic (in shares)	2,630,831	2,585,081
Weighted average number of shares, diluted (in shares)	2,631,499	2,585,529
Asset Management [Member]
Revenues	$ 2,193,854	$ (1,745,154)
Cost of revenues
Gross profit (loss) - asset management	2,193,854	(1,745,154)
Total gross profit (loss)	2,193,854	(1,745,154)
Selling, general, and administrative expenses
Total other income (loss)		2,283
Income (loss) from continuing operations	2,076,143	(1,852,112)
Income from discontinued operations, net of taxes
Real Estate [Member]
Revenues	9,736	187,149
Cost of revenues	7,644	132,209
Gross profit (loss) - asset management	2,092	54,940
Total gross profit (loss)	2,092	54,940
Selling, general, and administrative expenses
Total other income (loss)	(4,795)	(1,268)
Income (loss) from continuing operations	(9,188)	37,036
Income from discontinued operations, net of taxes
Internet Operations [Member]
Revenues	232,266	253,559
Cost of revenues	71,963	87,188
Gross profit (loss) - asset management	160,303	166,371
Total gross profit (loss)	160,303	166,371
Selling, general, and administrative expenses
Total other income (loss)	361	370
Income (loss) from continuing operations	114,123	118,893
Income from discontinued operations, net of taxes

XML

Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
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
Net income (loss)			(1,971,168)	(1,971,168)
Stock issuance (in shares)	35,594
Stock issuance	$ 4,449	125,600		130,049
Balance (in shares) at Mar. 31, 2020	2,602,240
Balance at Mar. 31, 2020	$ 325,280	27,439,334	(18,971,775)	8,792,839
Balance (in shares) at Dec. 31, 2020	2,602,240
Balance at Dec. 31, 2020	$ 325,280	27,439,334	(13,721,203)	14,043,411
Net income (loss)			1,978,649	1,978,649
Stock issuance (in shares)	45,143
Stock issuance	$ 5,642	234,358		240,000
Balance (in shares) at Mar. 31, 2021	2,647,383
Balance at Mar. 31, 2021	$ 330,922	$ 27,673,692	$ (11,742,554)	$ 16,262,060

XML

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash flows from (used in) from operating activities:
Net income (loss) from continuing operations	$ 1,978,006	$ (1,981,924)
Adjustments to reconcile net income to net cash flows from (used in) operating activities:
Unrealized (gains) losses on long-term investments	(2,053,384)	1,784,406
Gain on sale of real estate		(73,165)
Depreciation and amortization	3,563	5,278
Bad debt expense	89	405
Accrued stock compensation expense	37,500	37,500
Accrued interest income on notes receivable	(4,650)	(3,918)
(Increase) decrease in:
Accounts receivable, net	14,547	17,186
Other current assets	4,772	13,455
Accounts payable	(4,790)	30,798
Accrued expenses	34,240	17,970
Deferred revenue	6,760	(3,530)
Net cash flows from (used in) continuing operations	16,653	(155,539)
Net cash flows from discontinued operations	874	11,018
Net cash flows from (used in) operating activities	17,527	(144,521)
Cash flows from investing activities:
Purchases of investments	(62,978)	(12,472)
Proceeds from sale of real estate		172,000
Net cash flows from continuing operations	(62,978)	159,528
Net cash flows from discontinued operations
Net cash flows from investing activities	(62,978)	159,528
Cash flows from financing activities:
Principal payments on note payable	(2,789)	(128,349)
Net cash flows (used in) from continuing operations	(2,789)	(128,349)
Net cash flows (used in) from discontinued operations
Net cash flows (used in) financing activities	(2,789)	(128,349)
Net increase (decrease) in cash	(48,240)	(113,342)
Cash and cash equivalents at beginning of the period	341,007	666,810
Cash and cash equivalents at end of the period	292,767	553,468
Non-cash and other supplemental information:
Transfer of real estate held for investment to held for resale	169,181	43,917
Issuance of common stock per equity compensation plan	240,000	130,049
Accrued interest receivable converted to Triad Guaranty, Inc. stock	45,410
Continuing operations cash paid for interest	$ 4,795	$ 7,082

XML

Note 1 - Organization and Significant Accounting Policies

3 Months Ended

Mar. 31, 2021

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

three

-month period ended

March 31, 2021,

the Company operated through

four

reportable segments: Asset Management Operations, Real Estate Operations, Internet 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. During periods prior to the quarter ended

June 

30,

2019,

the Company also operated through a

fifth

reportable segment, Home Services Operations. However, for the

three

-month period ended

March 31, 2021,

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.

Asset Management Operations

The Company operates its asset management operations business through its wholly owned subsidiaries, Willow Oak Asset Management, LLC (“Willow Oak”), Willow Oak Capital Management, LLC, Willow Oak Asset Management Affiliate Management Services, LLC (“Willow Oak AMS”) and Willow Oak Asset Management Fund Management Services, LLC (“Willow Oak FMS”).

In

2016,

the Company made a seed investment, through Willow Oak, to assist in the launch of Alluvial Fund, LP, a private investment fund that was launched on

January 1, 2017,

by an 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. As a special limited partner, Willow Oak earns a share of management and performance fees earned. As of

March 31, 2021,

Willow Oak continues to hold its direct investment in Alluvial Fund. Investment gains and losses are reported as revenue on the accompanying unaudited condensed consolidated statements of operations.

In furtherance of establishing the asset management operations business, Willow Oak signed a fee share agreement in

June 

2017,

with Coolidge Capital Management, LLC (“Coolidge”), whose sole member is Keith D. Smith, 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 launched by Willow Oak and managed by Coolidge. Under their agreement concerning Bonhoeffer Fund, LP, Willow Oak paid all start-up expenses and pays agreed-upon operating expenses that are

not

partnership expenses, Coolidge is responsible for all investment management, and Willow Oak receives

50%

of all performance and management fees earned. Additionally, Willow Oak FMS earns a direct fee from the private limited partnership for the administrative, compliance, and tax and audit liaison services it renders.

On

November 1, 2018,

Willow Oak entered into a fund management services agreement with Arquitos Investment Manager, LP, which is managed by our Board chairman and principal executive officer, Steven L. Kiel, to provide Arquitos with Willow Oak's Fund Management Services (“FMS”) consisting of the following services: strategic planning, investor relations, marketing, operations, compliance and legal coordination, accounting and bookkeeping, annual audit coordination, and liaison to

third

-party service providers. On

November 1, 2020,

this agreement was renewed with revised terms that include an exchange of services between Willow Oak and Arquitos. Willow Oak earns monthly and annual fees as consideration for these services.

On

October 1, 2019,

Willow Oak partnered with Geoff Gannon and Andrew Kuhn to form Focused Compounding Capital Management, LLC (“Focused Compounding”). This joint venture, of which Willow Oak Capital Management is a

10%

beneficial owner, manages capital through separately managed accounts and a private investment fund launched

January 1, 2020.

Willow Oak provides ongoing FMS and operational support in addition to having covered all

one

-time expenses associated with the launch of Focused Compounding Fund, LP. As consideration for the arrangement, Willow Oak Capital Management is entitled to

10%

of gross management and performance fees earned by Focused Compounding. Additionally, Willow Oak FMS earns a direct fee from the private limited partnership for the administrative, compliance, and tax and audit liaison services it renders.

On

September 29, 2020,

Willow Oak, through Willow Oak AMS, executed a strategic relationship agreement with SVN Capital, LLC to become a

20%

beneficial owner of the firm in exchange for the provision of certain ongoing FMS and operational services offered through Willow Oak FMS. As a beneficial owner of SVN Capital, LLC, Willow Oak is entitled to

20%

of gross management and performance fees earned by the firm. Additionally, Willow Oak FMS earns a direct fee from SVN Capital Fund, LP, a private investment fund launched by the firm's managing member, for the administrative, compliance, and tax and audit liaison services it renders.

Real Estate Operations

As has been previously reported, in

December 2017,

ENDI created a wholly owned subsidiary named Mt Melrose, LLC, a Delaware limited liability company (“New Mt Melrose”), 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 in

December 

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. During 

January

and

June 

2018,

New Mt Melrose, consistent with the terms of the purchase agreement, completed

two

bundled acquisitions from Old Mt. Melrose of residential and other income-producing real properties located in Lexington, Kentucky. As has been previously reported, on

June 27, 2019,

the Company sold

65%

of its membership interest in New Mt Melrose 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 New Mt Melrose and its real estate portfolio. As a result of

no

longer having a controlling financial interest, the Company deconsolidated the operations of New Mt Melrose as of 

June 27, 2019.

See Note

4

for more information.

As has been previously reported, in

July 2017,

ENDI created a wholly owned real estate subsidiary named EDI Real Estate, LLC to hold ENDI's legacy portfolio of real estate. As of 

March 31, 2021,

through EDI Real Estate, LLC, ENDI owns a legacy real estate investment portfolio that includes

four

residential properties and vacant land. Subsequent to

March 31, 2021,

one

 residential property has been sold. Our real estate portfolio under EDI Real Estate, LLC is primarily located in Roanoke, 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 operations 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.

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 recent activities comprising other operations. Additional investment activity that is

not

specifically mentioned below is included in the accompanying consolidated financial statements.

Financing Arrangement Regarding Triad Guaranty, Inc.

In

August 

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 in

April 

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

in

May 

2018.

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

10%

annually and the issuance of warrants in Triad Guaranty, Inc. equal to

2.5%

of the company. On

December 31, 2020,

the Company accepted a revision of terms to the original promissory note which include, among other things, an extension of the loan maturity date to

December 31, 2022,

an increase of interest to the amount of

12%

annually, and a provision to settle all currently accrued interest through the issuance of Triad Guaranty, Inc. common shares. In line with the revision of note terms, during the

three

-month period ended

March 31, 2021,

the Company was issued

454,097

shares of Triad Guaranty, Inc. in lieu of interest accrued on the note receivable as of

December 31, 2020.

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.

Discontinued Operations - Home Services Operations

Prior to

May 24, 2019,

the Company operated a home services operations segment through its former subsidiary, Specialty Contracting Group, LLC (formerly known as HVAC Value Fund, LLC). The Company had organized and launched this subsidiary in

June 2016,

initially with an unaffiliated

third

party. Specialty Contracting Group was focused on the management of HVAC and plumbing companies in Arizona.

As has been previously reported, on

May 24, 2019,

the Company completed a divestiture of the home services operations to Rooter Hero. See Note

3

 for more information.

Principles of Consolidation

The accompanying unaudited 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, Willow Oak Asset Management Affiliate Management Services, LLC, Willow Oak Asset Management Fund Management Services, LLC, Bonhoeffer Capital Management, LLC, Sitestar.net, Inc., and EDI Real Estate, LLC.

All intercompany accounts and transactions have been eliminated in consolidation.

XML

Note 2 - Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Significant Accounting Policies [Text Block]

NOTE

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim consolidated financial statements are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do

not

include all the information and footnotes required by U.S. Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. The 

December 31, 2020,

consolidated balance sheet included herein was derived from audited consolidated financial statements as of that date. Certain information and footnote disclosure normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. We believe that the disclosures provided herein are adequate to make the information presented

not

misleading when these unaudited interim consolidated financial statements are read in conjunction with the audited financial statements and notes previously filed in our Annual Report on Form

10

-K for the year ended

December 31, 2020.

In the opinion of management, the unaudited interim consolidated financial statements reflect all the adjustments (consisting of normal recurring adjustments) necessary to state fairly the Company's financial position as of

March 31, 2021,

and the results of operations for the

three

months ended

March 31, 2021,

and

2020.

Use of Estimates

In accordance with 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, accounts receivable, and notes 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 operations segments. Additionally, investments

may

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 either

not

publicly traded, do

not

have published sales records, or do

not

routinely make current financial information available. These investments are remeasured to fair value on a recurring basis. See Note

5

 for more information.

As of

March 31, 2021,

and

December 31, 2020,

the Company also holds its remaining equity investment in Mt Melrose, LLC through its real estate operations 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's asset management operations segment records receivable amounts for fee shares and fund management services revenue earned on a monthly basis. Performance fee shares crystalize and are collected on an annual basis while management fee shares crystalize and are collected on either a monthly or quarterly basis as dictated by the respective partnership agreement. Fund management services receivables are collected monthly in line with ongoing performance. The Company historically has had

no

collection issues with fee share and fund management receivables, and the overall possibility for non-collection is extremely low. For these reasons, management has determined that it is

not

necessary to record an allowance against these receivables.

The Company also 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 operations 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 operations 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

March 31, 2021,

and

December 31, 2020, 

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

$509

 and

$421,

respectively. For the quarterly periods ended

March 31, 2021,

and

2020,

bad debt expense from continuing operations was

$89

 and

$405,

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.

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

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 31,

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.

No

impairment adjustments were recorded during the

three

-month periods ended

March 31, 2021,

and

2020.

Intangible assets (other than goodwill) consist of domain names attributed to the internet operations 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.

No

impairment adjustments were recorded during the

three

-month periods ended

March 31, 2021,

and

2020.

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.

No

impairment adjustments were recorded during the

three

-month periods ended

March 31, 2021,

and

2020.

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.

During the

three

-month periods ended

March 31, 2021,

and

2020,

$169,181

 and

$43,917,

respectively, of real estate held for investment was transferred to real estate held for resale.

No

improvements were made to existing real estate held for investment during the

three

-month periods ended

March 31, 2021,

and

2020.

Accrued Compensation

Accrued compensation represents performance-based incentives that have

not

yet been paid. Additional compensation can be paid in the form of cash or via the issuance of Company stock. Compensation 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

2020

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 compensation 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, professional fees, and other accrued taxes.

Leases

The Company records right-of-use (ROU) assets and lease liabilities arising from both financing and operating leases that contain terms extending longer than

one

year. The Company does

not

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

12

months or less). In making our determinations, the Company combines lease and non-lease elements of our leases.

Revenue Recognition

Asset Management Operations and Other Investment Revenue

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

may

result in negative period or quarterly revenues. Management fees earned are recorded monthly and are included in revenue on the accompanying unaudited condensed consolidated statements of operations. Performance fees earned are accrued monthly, paid out annually, and are also included in revenue on the accompanying unaudited condensed consolidated statements of operations. Consulting fees are billed, paid, and recorded on a monthly basis. 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 unaudited condensed consolidated statements of operations.

A summary of revenue earned through the asset management operations segment for the

three

-month periods ended

March 31, 2021,

and

2020

 is included below:

	For the three months ended
Asset Management Operations Revenue	March 31, 2021		March 31, 2020
Gains (losses) on investment activity	$	2,054,471	$	(1,784,406	)
Management and performance fee revenue		118,843		15,252
Fund management services revenue		20,540		24,000
Total revenue	$	2,193,854	$	(1,745,154	)

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 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 operations 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.

Deferred Revenue

Deferred revenue represents collections from customers in advance of services to be performed. Revenue is recognized in the period service is provided. Total deferred revenue from continuing operations increased from

$192,088

 at

December 31, 2020,

to

$198,848

 at

March 31, 2021.

During the

three

-month periods ended

March 31, 2021,

and

2020,

$119,312

 and

$127,957,

respectively, of revenue from continuing operations 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, 2020,

December 31, 2019,

and

December 31, 2018,

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.

The number of potentially dilutive shares for the

three

-month periods ended

March 31, 2021.

and

2020,

consisting of common shares underlying common stock equity incentives, was

668

.

None

of the potentially dilutive securities had a dilutive impact during the

three

-month periods ended

March 31, 2021,

and

2020

 after rounding was applied.

Recently Issued Accounting Pronouncements

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 should 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, 2022,

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 3 - Home Services Subsidiary Asset Sale

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

NOTE

3.

HOME SERVICES SUBSIDIARY ASSET SALE

On

May 24, 2019, 

as has been previously reported, 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, all of Specialty Contracting Group's personal property and customer lists and records were conveyed to Rooter Hero, excluding stock inventory and other current assets. As part of the transaction, Rooter Hero assumed Specialty Contracting Group'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 then-remaining customer accounts going forward. 

No

cash consideration was exchanged in the transaction. Rather, as consideration for the transaction, Rooter Hero agreed to pay monthly royalties for the

sixty

(

60

) months following the closing calculated on the basis of any revenue actually received from the customer accounts transferred (

7.5%

of any monthly revenue generated from qualified sales during the

first

year, and

5%

of any such monthly revenue during years

two

through five; in each case subject to reduction for pre-approved warranty-related costs concerning select customers).

The operations of Specialty Contracting Group, LLC had been considered a component of, and the divestiture reflected a strategic shift in, the Company's business. As such, Specialty Contracting Group, LLC's historical operations have been classified as discontinued operations in the Company's financial statements. 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 “recovery from discontinued operations” on the statements of operations and will offset, or recover, the initial loss recorded. Accordingly, during the

three

-month periods ended

March 31, 2021,

and

2020,

an offsetting

$643

 and

$11,019,

respectively, of royalties on discontinued operations were recognized within the reported

$643

 and

$10,756

of recoveries from discontinued operations, respectively.

As of the year ended

December 31, 2020,

discontinued assets reported on the face of the accompanying condensed consolidated balance sheets totaled

$231.

No

discontinued liabilities were reported as of the year-ended

December 31, 2020.

This compares to the

three

-month period ended

March 31, 2021,

when

no

discontinued assets or discontinued liabilities are reported on the face of the accompanying condensed consolidated balance sheets.

A reconciliation of discontinued operations as reported on the accompanying unaudited condensed consolidated statements of operations for the

three

-month periods ended

March 31, 2021,

and

2020,

is as follows:

	For the three months ended
	March 31, 2021		March 31, 2020
Revenues	$	—	$	—
Cost of revenues		—		—
Gross profit		—		—
Selling, general, and administrative expenses		—		263
Recoveries from sale of subsidiary		643		11,019
Other income (expense), net		—		—
Income (loss) reported as discontinued operations	$	643	$	10,756

XML

Note 4 - Sale of Controlling Interest in Real Estate Subsidiary

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Controlling Stock Sale of Real Estate Subsidiary [Text Block]

NOTE

4.

SALE OF CONTROLLING INTEREST IN REAL ESTATE SUBSIDIARY

Transaction

As has been previously reported, 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. 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 has disputed this assertion and maintains that it has retained its

35%

membership interest.

In connection with this transaction, the Company and Woodmont also 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, including as to any distributions of cash to the 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 was 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. This arrangement was intended to allow the Company to maintain a passive management structure, while still owning a significant portion of the partnership.

While the operations of Mt Melrose, LLC have been 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.

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 previously had consolidated Mt Melrose under the “voting interests” (VOE) consolidation model.

By virtue of the A&R LLC Agreement, and the aforementioned standstill agreement, however, Woodmont is the sole “manager” responsible for all management and operating decisions of Mt Melrose. Accordingly, management determined that as of

June 27, 2019,

the Company

no

longer has a “controlling financial interest” in Mt Melrose and

no

longer should 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 our consolidated statements of operations for given prior reporting periods 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 our consolidated balance sheets. The Company's membership interest in Mt Melrose is now 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 did

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 measures 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 was 

$53,846

.

 This amount is included under the long-term investment amount on the accompanying consolidated balance sheets as of

March 31, 2021,

and

December 31, 2020.

XML

Note 5 - Investments

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Investment Holdings [Text Block]

NOTE

5.

INVESTMENTS

Certain assets held through the Company, Willow Oak Asset Management, LLC, 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 (see Note

6

). 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. The Company's investment in Alluvial Fund is remeasured to fair value on a recurring basis and realized and unrealized gains and losses are recognized as revenue in the period of adjustment. Due to the nature of the Mt Melrose, LLC investment (subsequent to the Company's transfer and relinquishment of control (see Note

4

)), the investment is measured at cost basis, as fair value is

not

determinable until additional inputs and measurements become available. Due to the illiquid nature of Triad Guaranty, Inc. stock and the lack of available current financial information for the entity, the Company has measured its investment at cost basis, as fair value until additional inputs and measurements become available.

	Cost Basis		Unrealized Gain		Carrying Value
March 31, 2021
Alluvial Fund, LP (at fair value)	$	7,064,758	$	8,572,220	$	15,636,978
Mt Melrose, LLC (at cost)		53,846		—		53,846
Triad Guaranty, Inc. stock (at cost)		45,410		—		45,410
Total	$	7,164,014	$	8,572,220	$	15,736,234

	Cost Basis		Unrealized Gain		Carrying Value
December 31, 2020
Alluvial Fund, LP (at fair value)	$	7,064,758	$	6,455,858	$	13,520,616
Mt Melrose, LLC (at cost)		53,846		—		53,846
Total	$	7,118,604	$	6,455,858	$	13,574,462

Alluvial Fund is a private investment fund 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

three

-month periods ended

March 31, 2021,

and

2020,

the Company did

not

withdraw management or performance fees earned through the Alluvial Fund, and such fees were deemed reinvested. For the

three

-month periods ended

March 31, 2021,

and

2020,

the total amounts of these reinvested fees were

$62,978

 and

$8,326,

respectively.

XML

Note 6 - Fair Value of Assets and Liabilities

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE

6.

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

5

 above.

	(Level 1)		(Level 2)		(Level 3)		(Excluded) (a)		Total at Fair Value
March 31, 2021
Alluvial Fund, LP	$	—	$	—	$	—	$	15,636,978	$	15,636,978
Total investments	$	—	$	—	$	—	$	15,636,978	$	15,636,978

	(Level 1)		(Level 2)		(Level 3)		(Excluded) (a)		Total at Fair Value
December 31, 2020
Alluvial Fund, LP	$	—	$	—	$	—	$	13,520,616	$	13,520,616
Total investments	$	—	$	—	$	—	$	13,520,616	$	13,520,616

(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.

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. 

No

impairments were recorded during the

three

-month periods ended

March 31, 2021,

and

2020.

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.

No

impairments were recorded during the

three

-month periods ended

March 31, 2021,

and

2020.

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. 

No

impairments were recorded during the

three

-month periods ended

March 31, 2021,

and

2020.

As discussed previously, the Company holds stock in Triad Guaranty, Inc. This stock was received in accordance with the

December 31, 2020

revisions to the original promissory note, which included Triad stock to be issued in lieu of accrued interest. Due to the illiquid nature of Triad Guaranty, Inc. stock and the lack of available current financial information for the entity, the Company has measured its investment in the stock at cost basis. The Company's costs basis in the stock is equal to the amount of accrued interest on the promissory note as of

December 31, 2020.

The Company will assess its investment in Triad for impairment at each balance sheet date, or when additional inputs and measurements become available.

No

impairments were recorded during the

three

-month period ended

March 31, 2021.

XML

Note 7 - Property and Equipment

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE

7.

PROPERTY AND EQUIPMENT

The cost of property and equipment at

March 31, 2021,

and

December 31, 2020,

consisted of the following:

	March 31, 2021			December 31, 2020
Computers and equipment	$	17,330		$	17,330
Furniture and fixtures		10,850			10,850
		28,180			28,180
Less accumulated depreciation		(15,484	)		(14,473	)
Property and equipment, net	$	12,696		$	13,707

Depreciation expense from continuing operations was

$1,012

 for the

three

-month period ended 

March 31, 2021,

and

$1,012

for the

three

-month period ended

March 31, 2020.

XML

Note 8 - Real Estate

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Real Estate Disclosure [Text Block]

NOTE

8.

REAL ESTATE

EDI Real Estate, LLC

Through EDI Real Estate, as of 

March 31, 2021,

and 

December 31, 2020,

the Company identified the following units as held for resale or held for investment as noted below:

EDI Real Estate	March 31, 2021		December 31, 2020
Units occupied or available for rent		2		4
Vacant lots held for investment		3		3
Total units held for investment		5		7
Units held for resale		2		—
Vacant lots held for resale		—		—
Total units held for resale		2		—

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

The leases in effect as of

March 31, 2021,

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	March 31, 2021			December 31, 2020
Total real estate held for investment	$	95,679		$	303,158
Accumulated depreciation		(25,360	)		(61,282	)
Real estate held for investment, net		70,319			241,876
Real estate held for resale, net	$	169,181		$	—

For the

three

-month period ended

March 31, 2021,

depreciation expense on the EDI Real Estate portfolio of properties was

$2,377.

 This compares to the

three

-month period ended

March 31, 2020,

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

$4,091.

No

properties were sold during the

three

-month period ended

March 31, 2021.

Subsequent to

March 31, 2021,

one

 property held for resale has been sold. During the

three

-month period ended

March 31, 2020,

two

properties held for resale were sold for gross proceeds of

$172,000.

Net proceeds totaled

$34,749.

 This compares to their carrying value of

$98,835,

which resulted in a total gain of

$73,165

for the period.

No

properties were purchased during the

three

-month periods ended

March 31, 2021,

and 

2020

 for the EDI Real Estate portfolio.

No

impairment adjustments were recorded on the EDI Real Estate portfolio during the

three

-month periods ended

March 31, 2021,

and

2020.

Future Minimum Rental Revenues - EDI Real Estate, LLC

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

March 31, 2021,

for EDI Real Estate, LLC are as follows:

2021	$	795
2022		—
Total	$	795

XML

Note 9 - Notes Payable

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE

9.

NOTES PAYABLE

Notes payable at

March 31, 2021,

and

December 31, 2020,

consist of the following:

	Interest Rates		Average Term	March 31, 2021			December 31, 2020
Interest-bearing amount due on promissory note through EDI Real Estate, LLC		5.60%	15 years	$	151,305		$	154,094
Interest-bearing amount due on real estate held for investment through EDI Real Estate, LLC		6.00%	5 years		96,000			96,000
Less current portion					(5,277	)		(5,609	)
Long-term portion				$	242,028		$	244,485

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

March 31, 2021:

2021	$	3,901
2022		101,507
2023		5,828
2024		6,145
2025 and thereafter		129,924
Total	$	247,305

During the quarterly period ended

September 30, 2018,

EDI Real Estate, LLC, as a borrower, issued a promissory note secured by certain 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. As of the

three

-month period ended

March 31, 2021,

the remaining note payable balance is secured by

three

of the remaining residential properties.

During the quarterly period 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.

XML

Note 10 - Segment Information

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE

10.

SEGMENT INFORMATION

During the

three

-month period ended 

March 31, 2021,

the Company operated through

four

business segments with separate management and reporting infrastructures that offer different products and services. The

four

business segments are as follows: Asset Management Operations, Real Estate Operations, Internet Operations, and Other Operations.

During periods prior to the quarter ended

June 30, 2019,

the Company also operated through a

fifth

reportable segment, Home Services Operations. However, as mentioned in Note

3,

the Company completed a divestiture of its home services operations on

May 24, 2019.

As a result, as of the

three

-month period ended

March 31, 

2021,

and for all prior periods presented, the Company's former home services operations segment has been reported as discontinued operations.

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 operations segment includes (i) our equity in Mt Melrose, LLC, which manages properties held for investment and held for resale located in Lexington, Kentucky, and (ii) 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 operations segment includes revenue and expenses related to our sale of internet access, hosting, storage, and other ancillary services. Our internet segment includes revenue generated by operations in both the United States and Canada. For the

three

-month periods ended

March 31, 2021,

the internet segment generated revenue of

$220,280

 in the United States and revenue of

$11,986

 in Canada. This compares to the

three

-month period ended

March 31, 2020,

where the internet segment generated revenue of

$240,622

in the United States and revenue of

$12,937

in Canada. All assets reported under the internet segment for the periods ended

March 31, 2021,

and

December 31, 2020,

are located within the United States.

The other operations 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.

Summarized financial information concerning the Company's reportable segments is shown in the following tables for the

three

-month periods ended

March 31, 2021, 

and

2020.

Three Months Ended March 31, 2021	Asset Management		Real Estate			Internet		Other			Discontinued Operations - Home Services		Consolidated
Revenues	$	2,193,854	$	9,736		$	232,266	$	—		$	—	$	2,435,856
Cost of revenue		—		7,644			71,963		—			—		79,607
Operating expenses		117,711		6,485			46,541		207,253			—		377,990
Other income (expense)		—		(4,795	)		361		4,181			—		(253	)
Income (loss) from continuing operations		2,076,143		(9,188	)		114,123		(203,072	)		—		1,978,006
Income from discontinued operations		—		—			—		—			643		643
Goodwill		—		—			212,445		—			—		212,445
Identifiable assets	$	15,820,688	$	312,819		$	433,317	$	339,926		$	—	$	16,906,750

Three Months Ended March 31, 2020	Asset Management			Real Estate			Internet		Other			Discontinued Operations - Home Services		Consolidated
Revenues	$	(1,745,154	)	$	187,149		$	253,559	$	—		$	—	$	(1,304,446	)
Cost of revenue		—			132,209			87,188		—			—		219,397
Operating expenses		109,241			16,636			47,848		289,433			—		463,158
Other income (expense)		2,283			(1,268	)		370		3,692			—		5,077
Income (loss) from continuing operations		(1,852,112	)		37,036			118,893		(285,741	)		—		(1,981,924	)
Income from discontinued operations		—			—			—		—			10,756		10,756
Goodwill		—			—			212,445		—			—		212,445
Identifiable assets	$	8,399,068		$	457,145		$	468,024	$	543,702		$	321	$	9,868,260

XML

Note 11 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE

11.

COMMITMENTS AND CONTINGENCIES

Leases

As of

March 31, 2021,

and

December 31, 2020,

the Company has 

no

remaining leases classified as operating leases and

no

financing leases.

The previous lease for office space for Willow Oak Asset Management, LLC expired on

September 30, 2020,

and has been renewed on a month-to-month basis beginning on

October 1, 2020. 

The previous lease for warehouse space for corporate matters was a short-term lease, under

12

months, and expired in

February 2020.

In accordance with ongoing accounting policy elections, the Company does

not

recognize right-of-use (ROU) assets or lease liabilities for short-term or month-to-month leases. Total rental expenses attributed to these short-term leases for the

three

-month periods ended

March 31, 2021,

and

2020

were

$5,250

 and

$13,434,

respectively.

Lease costs for the

three

-month periods ended 

March 31, 2021,

and

2020

 consisted of the following:

	For the three months ended
	March 31, 2021		March 31, 2020
Finance lease costs:
Amortization of ROU assets	$	—	$	—
Interest on lease liabilities		—		—
Operating lease cost		—		28,888
Sublease income		—		—
Total lease costs from continuing operations		—		28,888
Total lease costs from discontinued operations		—		—
Total lease costs	$	—	$	28,888

As the Company has 

no

remaining leases classified as operating leases or financing leases as of the periods ended

March 31, 2021,

and

December 31, 2020,

there are

no

future liabilities or maturities of lease obligations recognized on the accompanying consolidated balance sheets.

Other Commitments

As mentioned in Note

4,

on

June 27, 2019,

the Company sold

65%

of its membership interest in Mt Melrose, LLC to Woodmont. Under the terms of the parties' membership interest purchase agreement, the Company agreed to indemnify Woodmont against certain losses actually incurred by Woodmont as a result of breaches of the Company's representations and warranties made under the agreement. As has been previously reported, Woodmont has made several claims for indemnification under the agreement, all of which have been disputed by the Company.

Litigation & Legal Proceedings

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

As has been previously reported, 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

As has been previously reported, various disputes have arisen 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. 

As has been previously reported, 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 various repeated claims and demands and injurious conduct by Woodmont and its representative. 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. While management intends to vigorously prosecute the Company's claims and defend the Company's rights against Woodmont in these matters, the Company and Woodmont have agreed to engage in voluntary mediation concerning their various disputes through the Delaware Court of Chancery, which voluntary mediation commenced in

March 2021. 

The Delaware Action remains pending in the Delaware Court of Chancery; however, it is currently stayed pending the outcome of the parties' mediation and potential resolution of disputes.

XML

Note 12 - Stockholders' Equity

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

12.

STOCKHOLDERS'

EQUITY

Classes of Shares

As of

March 31, 2021,

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 from time to time fixed by the Company's Board of Directors in its sole discretion. As of

March 31, 2021,

the Company has

not

issued any shares of its preferred stock (including, without limitation, its Series A Preferred Stock).

As previously reported in the Company's Current Report on Form

8

-K filed with the SEC on

July 29, 2020,

the Company has adopted a certain stockholder rights agreement styled as the Tax Benefit Preservation Plan, dated as of

July 24, 2020,

by and between the Company and Colonial Stock Transfer Company, Inc., as rights agent. The Tax Benefit Preservation Plan was adopted as a means designed to safeguard against inadvertent diminution or limitation of the Company's valuable tax assets. As previously reported, pursuant to the Tax Benefit Preservation Plan, as of

July 24, 2020,

the Company has designated a series of its preferred stock as the Series A Preferred Stock, consisting of

250,000

shares so designated.

Common Stock

As of

March 31, 2021,

2,647,383

 shares of the Company's common stock were issued and outstanding.

XML

Note 13 - Subsequent Events

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE

13.

SUBSEQUENT EVENTS

Management has evaluated all subsequent events from

March 31, 2021,

through the date the unaudited condensed consolidated financial statements were issued. Management has concluded that

no

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

XML

Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying interim consolidated financial statements are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do

not

include all the information and footnotes required by U.S. Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. The 

December 31, 2020 

consolidated balance sheet included herein was derived from audited consolidated financial statements as of that date. Certain information and footnote disclosure normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. We believe that the disclosures provided herein are adequate to make the information presented

not

misleading when these unaudited interim consolidated financial statements are read in conjunction with the audited financial statements and notes previously filed in our Annual Report on Form

10

-K for the year ended

December 31, 2020.

In the opinion of management, the unaudited interim consolidated financial statements reflect all the adjustments (consisting of normal recurring adjustments) necessary to state fairly the Company's financial position as of

March 31, 2021 

and the results of operations for the

three

months ended

March 31, 2021 

and

2020.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

In accordance with 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, accounts receivable, and notes 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 operations segments. Additionally, investments

may

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 either

not

publicly traded, do

not

have published sales records, or do

not

routinely make current financial information available. These investments are remeasured to fair value on a recurring basis. See Note

5

 for more information.

As of

March 31, 2021 

and

December 31, 2020,

the Company also holds its remaining equity investment in Mt Melrose, LLC through its real estate operations 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's asset management operations segment records receivable amounts for fee shares and fund management services revenue earned on a monthly basis. Performance fee shares crystalize and are collected on an annual basis while management fee shares crystalize and are collected on either a monthly or quarterly basis as dictated by the respective partnership agreement. Fund management services receivables are collected monthly in line with ongoing performance. The Company historically has had

no

collection issues with fee share and fund management receivables, and the overall possibility for non-collection is extremely low. For these reasons, management has determined that it is

not

necessary to record an allowance against these receivables.

The Company also 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 operations 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 operations 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

March 31, 2021,

and

December 31, 2020, 

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

$509

 and

$421,

respectively. For the quarterly periods ended

March 31, 2021,

and

2020,

bad debt expense from continuing operations was

$89

 and

$405,

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.

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

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 31,

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.

No

impairment adjustments were recorded during the

three

-month periods ended

March 31, 2021,

and

2020.

Intangible assets (other than goodwill) consist of domain names attributed to the internet operations 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.

No

impairment adjustments were recorded during the

three

-month periods ended

March 31, 2021,

and

2020.

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.

No

impairment adjustments were recorded during the

three

-month periods ended

March 31, 2021,

and

2020.

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.

During the

three

-month periods ended

March 31, 2021,

and

2020,

$169,181

 and

$43,917,

respectively, of real estate held for investment was transferred to real estate held for resale.

No

improvements were made to existing real estate held for investment during the

three

-month periods ended

March 31, 2021,

and

2020.

Accrued Expenses [Policy Text Block]

Accrued Compensation

Accrued compensation represents performance-based incentives that have

not

yet been paid. Additional compensation can be paid in the form of cash or via the issuance of Company stock. Compensation 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

2020

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 compensation 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, professional fees, and other accrued taxes.

Lessee, Leases [Policy Text Block]

Leases

The Company records right-of-use (ROU) assets and lease liabilities arising from both financing and operating leases that contain terms extending longer than

one

year. The Company does

not

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

12

months or less). In making our determinations, the Company combines lease and non-lease elements of our leases.

Revenue from Contract with Customer [Policy Text Block]

Revenue Recognition

Asset Management Operations and Other Investment Revenue

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

may

result in negative period or quarterly revenues. Management fees earned are recorded monthly and are included in revenue on the accompanying unaudited condensed consolidated statements of operations. Performance fees earned are accrued monthly, paid out annually, and are also included in revenue on the accompanying unaudited condensed consolidated statements of operations. Consulting fees are billed, paid, and recorded on a monthly basis. 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 unaudited condensed consolidated statements of operations.

A summary of revenue earned through the asset management operations segment for the

three

-month periods ended

March 31, 2021,

and

2020

 is included below:

	For the three months ended
Asset Management Operations Revenue	March 31, 2021		March 31, 2020
Gains (losses) on investment activity	$	2,054,471	$	(1,784,406	)
Management and performance fee revenue		118,843		15,252
Fund management services revenue		20,540		24,000
Total revenue	$	2,193,854	$	(1,745,154	)

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 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 operations 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.

Deferred Revenue

Deferred revenue represents collections from customers in advance of services to be performed. Revenue is recognized in the period service is provided. Total deferred revenue from continuing operations increased from

$192,088

 at

December 31, 2020,

to

$198,848

 at

March 31, 2021.

During the

three

-month periods ended

March 31, 2021,

and

2020,

$119,312

 and

$127,957,

respectively, of revenue from continuing operations 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, 2020,

December 31, 2019,

and

December 31, 2018,

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.

The number of potentially dilutive shares for the

three

-month periods ended

March 31, 2021.

and

2020,

consisting of common shares underlying common stock equity incentives, was

668

.

None

of the potentially dilutive securities had a dilutive impact during the

three

-month periods ended

March 31, 2021,

and

2020

 after rounding was applied.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Pronouncements

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 should 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, 2022,

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 2 - Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Schedule of Property, Plant and Equipment, Useful Life [Table Text Block]

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

Disaggregation of Revenue [Table Text Block]

	For the three months ended
Asset Management Operations Revenue	March 31, 2021		March 31, 2020
Gains (losses) on investment activity	$	2,054,471	$	(1,784,406	)
Management and performance fee revenue		118,843		15,252
Fund management services revenue		20,540		24,000
Total revenue	$	2,193,854	$	(1,745,154	)

XML

Note 3 - Home Services Subsidiary Asset Sale (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Disposal Groups, Including Discontinued Operations [Table Text Block]

	For the three months ended
	March 31, 2021		March 31, 2020
Revenues	$	—	$	—
Cost of revenues		—		—
Gross profit		—		—
Selling, general, and administrative expenses		—		263
Recoveries from sale of subsidiary		643		11,019
Other income (expense), net		—		—
Income (loss) reported as discontinued operations	$	643	$	10,756

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Note 5 - Investments (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Equity Securities without Readily Determinable Fair Value [Table Text Block]

	Cost Basis		Unrealized Gain		Carrying Value
March 31, 2021
Alluvial Fund, LP (at fair value)	$	7,064,758	$	8,572,220	$	15,636,978
Mt Melrose, LLC (at cost)		53,846		—		53,846
Triad Guaranty, Inc. stock (at cost)		45,410		—		45,410
Total	$	7,164,014	$	8,572,220	$	15,736,234

	Cost Basis		Unrealized Gain		Carrying Value
December 31, 2020
Alluvial Fund, LP (at fair value)	$	7,064,758	$	6,455,858	$	13,520,616
Mt Melrose, LLC (at cost)		53,846		—		53,846
Total	$	7,118,604	$	6,455,858	$	13,574,462

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Note 6 - Fair Value of Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2021

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
March 31, 2021
Alluvial Fund, LP	$	—	$	—	$	—	$	15,636,978	$	15,636,978
Total investments	$	—	$	—	$	—	$	15,636,978	$	15,636,978

	(Level 1)		(Level 2)		(Level 3)		(Excluded) (a)		Total at Fair Value
December 31, 2020
Alluvial Fund, LP	$	—	$	—	$	—	$	13,520,616	$	13,520,616
Total investments	$	—	$	—	$	—	$	13,520,616	$	13,520,616

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Note 7 - Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Property, Plant and Equipment [Table Text Block]

	March 31, 2021			December 31, 2020
Computers and equipment	$	17,330		$	17,330
Furniture and fixtures		10,850			10,850
		28,180			28,180
Less accumulated depreciation		(15,484	)		(14,473	)
Property and equipment, net	$	12,696		$	13,707

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Note 8 - Real Estate (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Schedule of Real Estate Properties [Table Text Block]

EDI Real Estate	March 31, 2021		December 31, 2020
Units occupied or available for rent		2		4
Vacant lots held for investment		3		3
Total units held for investment		5		7
Units held for resale		2		—
Vacant lots held for resale		—		—
Total units held for resale		2		—

Real Estate Properties, Disclosure [Table Text Block]

EDI Real Estate	March 31, 2021			December 31, 2020
Total real estate held for investment	$	95,679		$	303,158
Accumulated depreciation		(25,360	)		(61,282	)
Real estate held for investment, net		70,319			241,876
Real estate held for resale, net	$	169,181		$	—

Operating Leases, Future Minimum Payments Receivable [Table Text Block]

2021	$	795
2022		—
Total	$	795

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Note 9 - Notes Payable (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Schedule of Debt [Table Text Block]

	Interest Rates		Average Term	March 31, 2021			December 31, 2020
Interest-bearing amount due on promissory note through EDI Real Estate, LLC		5.60%	15 years	$	151,305		$	154,094
Interest-bearing amount due on real estate held for investment through EDI Real Estate, LLC		6.00%	5 years		96,000			96,000
Less current portion					(5,277	)		(5,609	)
Long-term portion				$	242,028		$	244,485

Schedule of Maturities of Long-term Debt [Table Text Block]

2021	$	3,901
2022		101,507
2023		5,828
2024		6,145
2025 and thereafter		129,924
Total	$	247,305

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Note 10 - Segment Information (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

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

Three Months Ended March 31, 2021	Asset Management		Real Estate			Internet		Other			Discontinued Operations - Home Services		Consolidated
Revenues	$	2,193,854	$	9,736		$	232,266	$	—		$	—	$	2,435,856
Cost of revenue		—		7,644			71,963		—			—		79,607
Operating expenses		117,711		6,485			46,541		207,253			—		377,990
Other income (expense)		—		(4,795	)		361		4,181			—		(253	)
Income (loss) from continuing operations		2,076,143		(9,188	)		114,123		(203,072	)		—		1,978,006
Income from discontinued operations		—		—			—		—			643		643
Goodwill		—		—			212,445		—			—		212,445
Identifiable assets	$	15,820,688	$	312,819		$	433,317	$	339,926		$	—	$	16,906,750

Three Months Ended March 31, 2020	Asset Management			Real Estate			Internet		Other			Discontinued Operations - Home Services		Consolidated
Revenues	$	(1,745,154	)	$	187,149		$	253,559	$	—		$	—	$	(1,304,446	)
Cost of revenue		—			132,209			87,188		—			—		219,397
Operating expenses		109,241			16,636			47,848		289,433			—		463,158
Other income (expense)		2,283			(1,268	)		370		3,692			—		5,077
Income (loss) from continuing operations		(1,852,112	)		37,036			118,893		(285,741	)		—		(1,981,924	)
Income from discontinued operations		—			—			—		—			10,756		10,756
Goodwill		—			—			212,445		—			—		212,445
Identifiable assets	$	8,399,068		$	457,145		$	468,024	$	543,702		$	321	$	9,868,260

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Note 11 - Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Lease, Cost [Table Text Block]

	For the three months ended
	March 31, 2021		March 31, 2020
Finance lease costs:
Amortization of ROU assets	$	—	$	—
Interest on lease liabilities		—		—
Operating lease cost		—		28,888
Sublease income		—		—
Total lease costs from continuing operations		—		28,888
Total lease costs from discontinued operations		—		—
Total lease costs	$	—	$	28,888

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Note 1 - Organization and Significant Accounting Policies (Details Textual)				1 Months Ended	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 27, 2019 USD ($)	May 18, 2018 USD ($)	Jun. 13, 2017	May 14, 2021	Mar. 31, 2021 shares	Jun. 30, 2018	Dec. 31, 2020	Sep. 29, 2020	Oct. 01, 2019	Aug. 24, 2017 USD ($)
Number of Reportable Segments					4
Stockholders' Equity Attributable to Noncontrolling Interest, Ending Balance	$ 0
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
Residential Properties [Member] | Subsequent Event [Member] | EDI Real Estate, LLC [Member]
Number of Real Estate Properties Sold				1
Triad Guaranty, Inc. [Member]
Equity Method Investments		$ 55,000								$ 100,000
Percentage of Annual Interest Rate on Promissory Note		10.00%					12.00%
Percentage Rate of Issuance of Warrants		2.50%
Equity Securities, Number of Shares Received in Lieu of Interest Accrued (in shares) | shares					454,097
Willow Oak Asset Management LLC [Member] | Alluvial Fund, LP [Member]
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] | SVN Capital, LLC [Member]
Investment Ownership Percentage								20.00%
Percentage of Gross Management and Performance Fees Earned								20.00%
Mt. Melrose LLC [Member] | Residential Properties [Member]
Real Estate Property Bundles Acquired						2

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Note 2 - Summary of Significant Accounting Policies (Details Textual)	3 Months Ended
	Mar. 31, 2021 USD ($) shares	Mar. 31, 2020 USD ($) shares	Dec. 31, 2020 USD ($)
Accounts Receivable, Allowance for Credit Loss, Ending Balance	$ 509		$ 421
Accounts Receivable, Credit Loss Expense (Reversal)	89	$ 405
Goodwill, Impairment Loss	$ 0	0
Number of Domain Names Owned	228
Number of Domain Names Available for Sale	106
Transfer of Real Estate Held for Investment to Held for Resale	$ 169,181	43,917
Contract with Customer, Liability, Current	198,848		$ 192,088
Contract with Customer, Liability, Revenue Recognized	$ 119,312	$ 127,957
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | shares	668	668
Real Estate, Held For Sale [Member]
SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation, Cost Capitalized Subsequent to Acquisition, Improvements, Total	$ 0	$ 0

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Note 2 - Summary of Significant Accounting Policies - Property and Equipment Useful Life (Details)	3 Months Ended
	Mar. 31, 2021
Furniture and Fixtures [Member]
Property and Equipment, Useful Life (Year)	5 years
Equipment [Member]
Property and Equipment, Useful Life (Year)	7 years
Building Improvements [Member]
Property and Equipment, Useful Life (Year)	15 years
Building [Member]
Property and Equipment, Useful Life (Year)	27 years 182 days

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Note 2 - Summary of Significant Accounting Policies - Revenue From Asset Management Operations (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Investment Performance [Member]
Total revenue	$ 2,054,471	$ (1,784,406)
Management and Performance Fee Revenue [Member]
Total revenue	118,843	15,252
Fund Management Services Revenue [Member]
Total revenue	20,540	24,000
Asset Management [Member]
Total revenue	$ 2,193,854	$ (1,745,154)

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Note 3 - Home Services Subsidiary Asset Sale (Details Textual) - USD ($)		3 Months Ended
	May 24, 2019	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Income (Loss) from Discontinued Operations, Net of Tax, Offsetting Amount from Probable Royalties		$ 643	$ 11,019
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total		643	$ 10,756
Disposal Group, Including Discontinued Operation, Assets, Current, Total		0		$ 231
Disposal Group, Including Discontinued Operation, Liabilities, Current, Total		$ 0		$ 0
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%

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Note 3 - Home Services Divesture - Discontinued Operations (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total	$ 643	$ 10,756
Discontinued Operations, Held-for-sale [Member]
Revenues
Cost of revenues
Gross profit
Selling, general, and administrative expenses		263
Recoveries from sale of subsidiary	643	11,019
Other income (expense), net
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total	$ 643	$ 10,756

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Note 4 - Sale of Controlling Interest in Real Estate Subsidiary (Details Textual) - USD ($)	Jun. 27, 2019	Mar. 31, 2021	Dec. 31, 2020	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%
Equity Method Investment, Ownership Percentage				20.80%
Equity Method Investment, Underlying Equity in Net Assets	$ 53,846	$ 53,846	$ 53,846
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

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Note 5 - Investments (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Alluvial Fund, LP [Member]
Investment Income, Reinvested Amount	$ 62,978	$ 8,326

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Note 5 - Investments - Summary of Investments (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Cost Basis	$ 7,164,014	$ 7,118,604
Accrued Fees	8,572,220	6,455,858
Unrealized Gain	15,736,234	13,574,462
Alluvial Fund, LP [Member]
Cost Basis	7,064,758	7,064,758
Accrued Fees	8,572,220	6,455,858
Unrealized Gain	15,636,978	13,520,616
Mt. Melrose LLC [Member]
Cost Basis	53,846	53,846
Accrued Fees
Unrealized Gain	53,846	$ 53,846
Triad Guaranty, Inc. [Member]
Cost Basis	45,410
Accrued Fees
Unrealized Gain	$ 45,410

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Note 6 - Fair Value of Assets and Liabilities (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Goodwill, Impairment Loss	$ 0	$ 0
Mt. Melrose LLC [Member]
Equity Securities without Readily Determinable Fair Value, Impairment Loss, Annual Amount	0	0
Triad Guaranty, Inc. [Member]
Equity Securities without Readily Determinable Fair Value, Impairment Loss, Annual Amount	0
Real Estate, Held For Sale [Member]
Impairment of Real Estate	$ 0	$ 0

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Note 6 - Fair Value of Assets and Liabilities - Schedule of Marketable Securities at Fair Value (Details) - USD ($)		Mar. 31, 2021	Dec. 31, 2020
Fair Value		$ 15,636,978	$ 13,520,616
Alluvial Fund, LP [Member]
Fair Value		15,636,978	13,520,616
Fair Value, Inputs, Level 1 [Member]
Fair Value
Fair Value, Inputs, Level 1 [Member] | Alluvial Fund, LP [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 3 [Member]
Fair Value
Fair Value, Inputs, Level 3 [Member] | Alluvial Fund, LP [Member]
Fair Value
Fair Value Measured at Net Asset Value Per Share [Member]
Fair Value	[1]	15,636,978	13,520,616
Fair Value Measured at Net Asset Value Per Share [Member] | Alluvial Fund, LP [Member]
Fair Value	[1]	$ 15,636,978	$ 13,520,616

[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.

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Note 7 - Property and Equipment (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Depreciation, Total	$ 1,012	$ 1,012

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Note 7 - Property and Equipment - Schedule of Cost of Property and Equipment (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Property and equipment, gross	$ 28,180	$ 28,180
Less accumulated depreciation	(15,484)	(14,473)
Property and equipment, net	12,696	13,707
Computer Equipment [Member]
Property and equipment, gross	17,330	17,330
Furniture and Fixtures [Member]
Property and equipment, gross	$ 10,850	$ 10,850

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Note 8 - Real Estate (Details Textual)	1 Months Ended	3 Months Ended
	May 14, 2021	Mar. 31, 2021 USD ($)	Mar. 31, 2020 USD ($)	Dec. 31, 2020 USD ($)
Depreciation, Total		$ 1,012	$ 1,012
Gains (Losses) on Sales of Investment Real Estate			73,165
Proceeds from Sale of Real Estate Held-for-investment, Total			172,000
Real Estate, Held For Sale [Member]
Impairment of Real Estate		0	0
EDI Real Estate, LLC [Member]
Depreciation, Total		2,377	$ 4,091
Real Estate Investment Property, Net, Total		$ 70,319		$ 241,876
Number of Real Estate Properties Acquired		0	0
Impairment of Real Estate		$ 0	$ 0
EDI Real Estate, LLC [Member] | Real Estate, Held For Sale [Member]
Gains (Losses) on Sales of Investment Real Estate		$ 0	$ 73,165
Number of Real Estate Properties Sold			2
Proceeds from Sale of Real Estate Held-for-investment, Total			$ 172,000
Proceeds from Sale of Real Estate Held-for-investment, Net			34,749
Real Estate Investment Property, Net, Total			$ 98,835
EDI Real Estate, LLC [Member] | Real Estate, Held For Sale [Member] | Subsequent Event [Member]
Number of Real Estate Properties Sold	1

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Note 8 - Real Estate - Portfolio of Properties in Units (Details) - EDI Real Estate, LLC [Member]	Mar. 31, 2021	Dec. 31, 2020
Real Estate Occupied or Available to Rent, Held For Investment [Member]
Number of Real Estate Properties	2	4
Vacant Real Estate Being Prepared or to Be Prepared to Market to Tenants, Held For Investment [Member]
Number of Real Estate Properties	3	3
Real Estate Held For Investment [Member]
Number of Real Estate Properties	5	7
Real Estate, Units Held For Sale [Member]
Number of Real Estate Properties	2
Real Estate Held For Sale, Vacant Lots [Member]
Number of Real Estate Properties
Real Estate, Held For Sale [Member]
Number of Real Estate Properties	2

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Note 8 - Real Estate - Schedule of Carrying Amount of Real Estate Properties (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Real estate held for resale, net	$ 169,181
EDI Real Estate, LLC [Member]
Total real estate held for investment	95,679	303,158
Accumulated depreciation, held for investment	(25,360)	(61,282)
Real estate held for investment, net	70,319	241,876
Real estate held for resale, net	$ 169,181

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Note 8 - Real Estate - Minimum Rental Revenues (Details)	Mar. 31, 2021 USD ($)
2021	$ 795
2022
Total	$ 795

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Note 9 - Notes Payable (Details Textual) - EDI Real Estate, LLC [Member] - Real Estate Held For Investment [Member]		3 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2020
Promissory Notes due September 1, 2033 [Member]
Debt Instrument, Interest Rate, Stated Percentage	5.60%	5.60%
Debt Instrument Rate, Subject to Change, Term (Year)	5 years
US Treasury Security, Term (Year)		5 years
Debt Instrument, Investment Properties Securing Debt, Number of Properties Sold				3
Debt Instrument, Maturity Date		Sep. 01, 2033
Promissory Notes due September 1, 2033 [Member] | Index Rate [Member]
Debt Instrument, Basis Spread on Variable Rate		2.75%
Promissory Notes due September 15, 2022 [Member]
Debt Instrument, Interest Rate, Stated Percentage			6.00%
Number Of Promissory Notes			2
Debt Instrument, Maturity Date			Sep. 15, 2022

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Note 9 - Notes Payable - Summary of Notes Payable (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Less current portion	$ (5,277)	$ (5,609)
Long-term portion	$ 242,028	244,485
Interest Bearing Notes Payable [Member] | EDI Real Estate, LLC [Member]
Notes payable, interest rate	5.60%
Notes payable, term (Year)	15 years
Notes payable	$ 151,305	154,094
Notes payable	$ 151,305	154,094
Interest Bearing Notes Payable [Member] | EDI Real Estate, LLC [Member] | Real Estate Held For Investment [Member]
Notes payable, interest rate	6.00%
Notes payable, term (Year)	5 years
Notes payable	$ 96,000	96,000
Notes payable	$ 96,000	$ 96,000

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Note 9 - Notes Payable - Future Payments on Notes Payable (Details)	Mar. 31, 2021 USD ($)
2021	$ 3,901
2022	101,507
2023	5,828
2024	6,145
2025 and thereafter	129,924
Total	$ 247,305

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Note 10 - Segment Information (Details Textual)	3 Months Ended		6 Months Ended
	Mar. 31, 2021 USD ($)	Mar. 31, 2020 USD ($)	Jun. 30, 2019
Number of Operating Segments	4		5
Internet Operations [Member] | UNITED STATES
Revenue from Contract with Customer, Including Assessed Tax	$ 220,280	$ 240,622
Internet Operations [Member] | CANADA
Revenue from Contract with Customer, Including Assessed Tax	$ 11,986	$ 12,937

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Note 10 - Segment Information - Summary of Financial Information Concerning Company's Reportable Segments (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Revenues	$ 2,435,856	$ (1,304,446)
Cost of revenue	79,607	219,397
Operating expenses	377,990	463,158
Other income (expense)	(253)	5,077
Income (loss) from continuing operations	1,978,006	(1,981,924)
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total	643	10,756
Goodwill	212,445	212,445	$ 212,445
Identifiable assets	16,906,750	9,868,260	$ 14,857,180
Asset Management [Member]
Revenues	2,193,854	(1,745,154)
Cost of revenue
Operating expenses	117,711	109,241
Other income (expense)		2,283
Income (loss) from continuing operations	2,076,143	(1,852,112)
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total
Goodwill
Identifiable assets	15,820,688	8,399,068
Real Estate [Member]
Revenues	9,736	187,149
Cost of revenue	7,644	132,209
Operating expenses	6,485	16,636
Other income (expense)	(4,795)	(1,268)
Income (loss) from continuing operations	(9,188)	37,036
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total
Goodwill
Identifiable assets	312,819	457,145
Internet Operations [Member]
Revenues	232,266	253,559
Cost of revenue	71,963	87,188
Operating expenses	46,541	47,848
Other income (expense)	361	370
Income (loss) from continuing operations	114,123	118,893
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total
Goodwill	212,445	212,445
Identifiable assets	433,317	468,024
Product and Service, Other [Member]
Revenues
Cost of revenue
Operating expenses	207,253	289,433
Other income (expense)	4,181	3,692
Income (loss) from continuing operations	(203,072)	(285,741)
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total
Goodwill
Identifiable assets	339,926	543,702
Home Service [Member] | Discontinued Operations [Member]
Revenues
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	643	10,756
Goodwill
Identifiable assets		$ 321

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Note 11 - Commitments and Contingencies (Details Textual) - USD ($)			3 Months Ended
	Jun. 27, 2019	Apr. 12, 2016	Mar. 31, 2021	Mar. 31, 2020
Operating Lease, Expense			$ 5,250	$ 13,434
Civil Action Complaint Against Frank Erhartic, Jr. [Member]
Loss Contingency, Damages Sought, Value		$ 350,000
Woodmont [Member] | Mt. Melrose LLC [Member]
Percentage of Membership Interest in Subsidiary Sold	65.00%
Ownership Interest, Sold, Percent	65.00%

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Note 11 - Commitments and Contingencies - Lease Expenses (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Amortization of ROU assets
Interest on lease liabilities
Operating lease cost		28,888
Sublease income
Total lease costs from continuing operations		28,888
Total lease costs from discontinued operations
Total lease costs		$ 28,888

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Note 12 - Stockholders' Equity (Details Textual) - $ / shares	Mar. 31, 2021	Dec. 31, 2020	Jul. 24, 2020
Preferred Stock and Common Stock, Shares Authorized (in shares)	32,800,000
Preferred Stock, Shares Authorized (in shares)	30,000,000	30,000,000
Preferred Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.001	$ 0.001
Common Stock, Shares Authorized (in shares)	2,800,000	2,800,000
Common Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.125	$ 0.125
Common Stock, Shares, Issued, Total (in shares)	2,647,383	2,602,240
Common Stock, Shares, Outstanding, Ending Balance (in shares)	2,647,383	2,602,240
Series A Preferred Stock [Member]
Preferred Stock, Shares Authorized (in shares)			250,000