Equity Investment in Unconsolidated Subsidiary

3 Months Ended

Mar. 31, 2022

Equity Method Investments And Joint Ventures [Abstract]

Equity Investment in Unconsolidated Subsidiary

C. Equity Investment in Unconsolidated Subsidiary

In November 2019, the Company made its initial investment of $3,350,000 in the Sponsor of the SPAC and subscribed to an additional investment of $2,725,000 in March 2021, which was funded in May 2021. The incremental investment was part of the Sponsor syndication to participate in a private placement in connection with the IronNet Business Combination. As previously discussed, the SPAC completed a merger with its target company on August 26, 2021 and the combined company began trading its common stock on the NYSE under the symbol “IRNT.”

On September 14, 2021, as a result of its Sponsor investment, the Company received 1,572,529 shares of IRNT common stock and 2,065,000 IRNT private warrants exchangeable into shares of IRNT common stock, representing an aggregate fair value of $65.3 million. On October 1, 2021, the Company exercised its 2,065,000 private warrants on a cashless basis and received 1,271,406 shares of IRNT common stock upon exercise. To date, the Company has disposed of 1,555,315 shares of its 2,843,935 shares of IRNT common stock and received related proceeds of approximately $19 million. At March 31, 2022, 1,288,620 shares of IRNT common stock remain in our portfolio. While LGL continues to hold an interest in the Sponsor, it is immaterial.

Subsequent to the September 14, 2021 Sponsor distribution, the Company’s IRNT common stock and warrants have been classified as marketable securities under ASC 321, Investments – Equity Securities (“ASC 321”), with the change in fair value of period end holdings reported as an unrealized gain or loss. See Note D - Marketable Securities.