On November 16, 2021, the Company entered into an agreement with Tigress Holdings, LLC, (“Tigress”), a Delaware limited liability company. Refer to Note 10 – Equity Method Investment in Related Party in the Company’s 2021 Form 10-K for further information regarding the material terms of this agreement and the corresponding accounting treatment.

For the three months ended September 30, 2022 and 2021, the loss recognized from the Company’s investment in Tigress was $151,000 and $0, respectively. For the nine months ended September 30, 2022 and 2021, the earnings recognized from the Company’s investment in Tigress was $46,000 and $0, respectively. For the three and nine months ended September 30, 2022, the Company received cash distributions from Tigress of $172,000. The Company did not receive any cash distributions from Tigress in 2021; however, RISE made a distribution of $156,000 to SFC in 2021 in lieu of a corresponding distribution from Tigress.

As of September 30, 2022 and December 31, 2021, the carrying amount of the investment in Tigress was $7,874,000 and $8,156,000, respectively. The Company evaluates its equity method investments for impairment when events or changes indicate the carrying value may not be recoverable. If the impairment is determined to be other-than-temporary, the Company will recognize an impairment loss equal to the difference between the expected realizable value and the carrying value of the investment.

There were no events or circumstances suggesting the carrying amount of the investment may be impaired as of September 30, 2022 and December 31, 2021.

Below is a table showing the summary from the consolidated statements of operations and financial condition for Tigress for the periods indicated (unaudited):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2022			2021			2022		2021
Revenue	$	1,213,000		$	3,816,000	$	6,945,000	$	11,211,000
Operating income (loss)	$	(627,000	)	$	1,375,000	$	196,000	$	4,027,000
Net income (loss)	$	(627,000	)	$	1,375,000	$	196,000	$	4,027,000

	As of
	September 30, 2022		December 31, 2021
Assets	$	10,127,000	$	10,793,000
Liabilities	$	5,270,000	$	6,096,000
Stockholders’ Equity	$	4,857,000	$	4,697,000

-13-

Transaction with Hedge Connection

On January 21, 2022, RISE entered into an agreement to acquire a minority stake in Hedge Connection, a Florida corporation and a woman-owned fintech company founded by Lisa Vioni that provides capital introduction software solutions for the prime brokerage industry. Refer to Note 25 – Subsequent Events in the Company’s 2021 Form 10-K for additional details.

For the three months ended September 30, 2022 and 2021, the earnings recognized from the Company’s investment in Hedge Connection was $3,000 and $0, respectively. For the nine months ended September 30, 2022 and 2021, the earnings recognized from the Company’s investment in Hedge Connection was $20,000 and $0, respectively. The Company has not received any cash distributions from Hedge Connection for the three and nine months ended September 30, 2022 and 2021.

As of September 30, 2022 and December 31, 2021, the carrying amount of the investment in Hedge Connection was $1,020,000 and $0, respectively. The Company evaluates its equity method investments for impairment when events or changes indicate the carrying value may not be recoverable. If the impairment is determined to be other-than-temporary, the Company will recognize an impairment loss equal to the difference between the expected realizable value and the carrying value of the investment. There were no events or circumstances suggesting the carrying amount of the investment may be impaired as of September 30, 2022.

The Company incurred no expenses from Hedge Connection for licensing and consulting fees for the three months ended September 30, 2022 and 2021. The Company incurred expenses from Hedge Connection for licensing and consulting fees in an aggregate amount of $186,000 and $0 for the nine months ended September 30, 2022 and 2021, respectively.

The Company entered into several arrangements in the fourth quarter of 2022 that will impact its ownership interests of RISE, Tigress, and Hedge Connection and as well as various arrangements with these entities. Refer to Note 20 – Subsequent Events for further detail.