4. Revenue Recognition

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

4. Revenue Recognition

On January 1, 2018, we adopted the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606 by applying the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period.

The adoption of FASB ASC Topic 606 did not have an impact on the recognition of our primary sources of revenue such as principal transactions, commissions and fees, as well as margin interest, marketing and distribution fees. The timing of recognition of substantially all of our remaining revenue was also not impacted, and we therefore did not record any cumulative effect adjustment to opening equity.

Disaggregation of Revenue

Below is a breakdown of the Company’s revenue:

		Three Months Ended June 30,				Six Months Ended June 30,
Revenue Stream	Statements of Operations Classification	2018		2017		2018		2017
Revenue from Principal transactions:
Principal transactions – non StockCross	Principal transactions	$	505,000	$	98,000	$	1,077,000	$	206,000
Principal transactions attributed to assets acquired from StockCross	Principal transactions		1,758,000		—		4,127,000		—
Total revenue from Principal transactions			2,263,000		98,000		5,204,000		206,000
Revenue from Commissions and fees:
Commissions and fees – non StockCross	Commissions and fees		2,162,000		1,037,000		4,117,000		2,219,000
Commissions and fees attributed to assets acquired from StockCross	Commissions and fees		350,000		—		1,069,000		—
Total revenue from Commissions and fees			2,512,000		1,037,000		5,186,000		2,219,000
Revenue from Margin interest, marketing and distribution fees:
Margin interest, marketing and distribution fees – non StockCross	Margin interest, marketing and distribution fees		2,312,000		1,545,000		4,640,000		2,626,000
Margin interest, marketing and distribution fees attributed to assets acquired from StockCross	Margin interest, marketing and distribution fees		375,000		—		582,000		—
Total revenue from Margin interest, marketing and distribution fees	Margin interest, marketing and distribution fees		2,687,000		1,545,000		5,222,000		2,626,000
Other revenue:
Interest and dividends – non StockCross	Interest and dividends		24,000		3,000		35,000		5,000
Advisory fees – non StockCross	Advisory fees		2,000		6,000		18,000		12,000
Total Revenue	Total Revenue	$	7,488,000	$	2,689,000	$	15,665,000	$	5,068,000

Principal transactions are recorded on a trade-date basis and primarily represent riskless principal transactions in which the Company, after receiving an order, buys or sells securities as principal and at the same time buys or sells the securities with a markup or markdown to complete the order.

Commission and fees, margin interest, marketing and distribution fees, and related clearing expenses are recorded on a trade-date basis. Fees, consisting primarily of revenue participation with the Company’s clearing brokers in distribution fees and interest are recorded as earned.

Advisory fees are earned typically on a quarterly basis in accordance with the terms of the client agreements.

Interest is recorded on the accrual basis. Dividends are recorded as of the ex-dividend date.