Equity Method Investment in Related Party

9 Months Ended

Sep. 30, 2023

Equity Method Investment in Related Party [Abstract]

Equity Method Investment in Related Party

12. 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%. 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 following the reorganization agreement. Therefore, the Company continued to account for this investment under the equity method of accounting through the Company’s sale of its interest in Tigress on July 10, 2023.

On July 10, 2023, the Company entered into a Share Redemption Agreement with Cynthia DiBartolo, pursuant to the Share Redemption Agreement, the Company repurchased from Ms. DiBartolo one million (1,000,000) of its common stock held by Ms. DiBartolo in exchange for conveying to Ms. DiBartolo the Company’s 17% interest in Tigress. The Company has accounted for the Share Redemption Agreement as a sale of a financial asset in accordance with ASC 860. As the one million shares of Company common stock that the Company received from Ms. DiBartolo had a fair value equal to the fair value of the Company’s 17% interest in Tigress sold to Ms. DiBartolo, no gain or loss was recognized as a result of the transaction. Following the transaction, the Company had no remaining interest in Tigress.

For the three months ended September 30, 2023 and 2022, the loss recognized from the Company’s investment in Tigress was $0 and $148,000, respectively. For the nine months ended September 30, 2023 and 2022, the earnings recognized from the Company’s investment in Tigress were $111,000 and $67,000, respectively. The Company received cash distributions from Tigress of $0 and $172,000 during the three and nine months ended September 30, 2022, respectively.

As of September 30, 2023 and December 31, 2022, the carrying amount of the Company’s investment in Tigress was $0 and $2,584,000, respectively.

Below is a table showing the summary of the consolidated statements of operations and financial condition for Tigress based on the most recent financials prior to the transaction on July 10, 2023 (unaudited):

	Six Months Ended June 30,
	2023		2022
Revenue	$	4,025,000	$	5,732,000
Operating income	$	650,000	$	823,000
Net income	$	650,000	$	823,000

	As of
	June 30, 2023		December 31, 2022
Assets	$	8,795,000	$	8,169,000
Liabilities	$	5,821,000	$	5,301,000
Stockholders’ Equity	$	2,974,000	$	2,868,000