Equity Method Investment in Related Party

3 Months Ended

Mar. 31, 2023

Equity Method Investment in Related Party [Abstract]

Equity Method Investment in Related Party

11. Equity Method Investment in Related Party

Transaction with Tigress

On November 16, 2021, the Company entered into an agreement with Tigress and a subsequent reorganization agreement with Tigress on October 18, 2022. Refer to Note 3 – Transactions with Tigress and Hedge Connection in the Company’s 2022 Form 10-K for further detail.

As a result of the reorganization agreement with Tigress on October 18, 2022, the Company’s ownership interest of Tigress decreased from 24% to 17%, and the Company reassessed whether it had significant influence over Tigress. Based on the level of the Company’s ownership of Tigress, the Company concluded that it was still able to exercise significant influence over Tigress through March 31, 2023. Therefore, the Company continues to account for this investment under the equity method of accounting as of March 31, 2023.

For the three months ended March 31, 2023 and 2022, the earnings recognized from the Company’s investment in Tigress were $38,000 and $165,000, respectively. For the three months ended March 31, 2023 and 2022, the Company received cash distributions from Tigress of $0 and $156,000, respectively.

As of March 31, 2023 and December 31, 2022, the carrying amount of the investment in Tigress was $2,622,000 and $2,584,000, respectively.

There were no events or circumstances suggesting the carrying amount of the investment may be impaired as of March 31, 2023 and December 31, 2022.

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 March 31,
	2023		2022
Revenue	$	1,845,000	$	3,399,000
Operating income	$	221,000	$	689,000
Net income	$	221,000	$	689,000

	As of
	March 31, 2023		December 31, 2022
Assets	$	8,575,000	$	8,169,000
Liabilities	$	5,886,000	$	5,301,000
Stockholders’ Equity	$	2,689,000	$	2,868,000

Transaction with Hedge Connection

On January 21, 2022, RISE entered into an agreement with Hedge Connection, and a subsequent termination agreement with Hedge Connection on October 18, 2022. Refer to Note 3 – Transactions with Tigress and Hedge Connection in the Company’s 2022 Form 10-K for further detail.

The earnings recognized from the Company’s investment in Hedge Connection for the three months ended March 31, 2023 and 2022 were $0 and $36,000, respectively. The Company did not receive any cash distributions from Hedge Connection for the three months ended March 31, 2023 and 2022.

The carrying amount of the investment in Hedge Connection was $0 as of both March 31, 2023 and December 31, 2022.

The Company paid Hedge Connection for licensing and consulting fees related to this agreement in an aggregate amount of $0 and $108,000 for the three months ended March 31, 2023 and 2022, respectively.