Form 10-Q
Table of Contents
Temporary equity classification is required for redeemable instruments for which redemption triggers are outside of the issuer’s control. ETFS Capital has the right to redeem all the Preferred Shares specified to be converted during the period of time specified in the Certificate of Designations in the event that: (a) the number of shares of the Company’s common stock authorized by its certificate of incorporation is insufficient to permit the Company to convert all of the Preferred Shares requested by ETFS Capital to be converted; or (b) ETFS Capital does not, upon completion of a change of control of the Company, receive the same amount per Preferred Share as it would have received had each outstanding Preferred Share been converted into common stock immediately prior to the change of control. However, the Company will not be obligated to make any such redemption payments to the extent such payments would be a breach of any covenant or obligation the Company owes to any of its secured creditors or is otherwise prohibited by applicable law.falseQ10000880631--12-31Redemption price of $7.70: The Company may redeem for cash all or any portion of the notes, at its option, on or after June 20, 2021 and on or prior to the 55th scheduled trading day immediately preceding the maturity date, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days, including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding the redemption date. No sinking fund is provided for the Convertible Notes.P5DP10DExcludes 15,025 participating securities and 16 potentially dilutive non-participating common stock equivalents for the three months ended March 31, 2020 as the Company reported a net loss for the period (shares herein are reported in thousands).Includes amortization of the issuance costs allocated to the Convertible Notes and amortization of the premium associated with the Additional Notes. The effective interest rate prior to January 1, 2021 also included amortization of the discount arising from the bifurcation of the conversion option.Unamortized discount reduced by $4,207 and unamortized issuance costs increased by $119 upon the early adoption of ASU 2020-06, Debt – Debt with Conversion and Other Options, on January 1, 2021. The discount previously arose from the bifurcation of the conversion option which occurred prior to the adoption of ASU 2020-06. The unamortized issuance costs are reported net of the unamortized premium on the Additional Notes.Recorded as an income tax benefit of $5,171 during the three months ended March 31, 2021, along with an equal and offsetting amount recorded in other losses, net, to recognize a reduction in the indemnification asset. 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Table of Contents
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
Form
10-Q
 
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
or
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
    
        
    
    
to
    
    
    
        
.
Commission File Number
001-10932
 
 
WisdomTree Investments, Inc.
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
 
13-3487784
(State or other jurisdiction of
incorporation or organization)
 
(IRS Employer
Identification No.)
 
245 Park Avenue, 35
th
Floor
New York, New York
 
10167
(Address of principal executive offices)
 
(Zip Code)
212-801-2080
(Registrant’s telephone number, including area code)
 
 
Securities registered pursuant to Section 12(b) of the Exchange Act:
 
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Common Stock, $0.01 par value
 
WETF
 
The NASDAQ Stock Market LLC
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    ☒  Yes    ☐  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
 
Large accelerated filer      Accelerated filer  
       
Non-accelerated
filer
     Smaller reporting company  
       
         Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).    Yes  ☐    No  
As of April 2
3
, 2021, there were 149,591,742 shares of the registrant’s Common Stock, $0.01 par value per share, outstanding.
 
 
 

Table of Contents
WISDOMTREE INVESTMENTS, INC.
Form
10-Q
For the Quarterly Period Ended March 31, 2021
TABLE OF CONTENTS
 
 
  
Page

Number
 
  
 
4
 
   
  
 
4
 
   
  
 
30
 
   
  
 
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46
 
   
  
 
46
 
   
  
 
46
 
   
  
 
46
 
   
  
 
46
 
   
  
 
47
 
   
  
 
47
 
   
  
 
47
 
   
  
 
48
 
Unless otherwise indicated, references to “the Company,” “we,” “us,” “our” and “WisdomTree” mean WisdomTree Investments, Inc. and its subsidiaries.
WisdomTree
®
and Modern Alpha
®
are trademarks of WisdomTree Investments, Inc. in the United States and in other countries. All other trademarks are the property of their respective owners.
 
2

Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form
10-Q
contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect our results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed in the section entitled “Risk Factors” included in our Annual Report on Form
10-K
for the fiscal year ended December 31, 2020. If one or more of these or other risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this Report and the documents that we reference in this Report and have filed with the Securities and Exchange Commission, or the SEC, as exhibits to this Report, completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements.
In particular, forward-looking statements in this Report may include statements about:
 
   
the ultimate duration of the
COVID-19
pandemic and its short-term and long-term impact on our business and the global economy;
 
   
anticipated trends, conditions and investor sentiment in the global markets and exchange traded products, or ETPs;
 
   
anticipated levels of inflows into and outflows out of our ETPs;
 
   
our ability to deliver favorable rates of return to investors;
 
   
competition in our business;
 
   
our ability to develop new products and services;
 
   
our ability to maintain current vendors or find new vendors to provide services to us at favorable costs;
 
   
our ability to successfully operate and expand our business in
non-U.S.
markets; and
 
   
the effect of laws and regulations that apply to our business.
The forward-looking statements in this Report represent our views as of the date of this Report. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. Therefore, these forward-looking statements do not represent our views as of any date other than the date of this Report.
 
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PART I: FINANCIAL INFORMATION
 
ITEM 1.
FINANCIAL STATEMENTS
WisdomTree Investments, Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Per Share Amounts)
 
  
March 31,

2021
 
 
December 31,

2020
 
 
  
(unaudited)
 
 
 
 
Assets
                
Current assets:
                
Cash and cash equivalents
   $ 62,302     $ 73,425  
Securities owned, at fair value (including $23,626 and $23,932 invested in WisdomTree ETFs at March 31, 2021 and December 31, 2020, respectively)
     34,771       34,895  
Accounts receivable (including $27,258 and $26,884 due from related parties at March 31, 2021 and December 31, 2020, respectively)
     30,341       29,455  
Income taxes receivable
     126        
Prepaid expenses
     4,187       3,827  
Other current assets
     237       259  
    
 
 
   
 
 
 
Total current assets
     131,964       141,861  
Fixed assets, net
     7,432       7,579  
Indemnification receivable (Note 19)
     22,222       27,016  
Securities
held-to-maturity
     411       451  
Deferred tax assets, net
     6,215       8,063  
Investments (Note 7)
     13,849       8,112  
Right of use assets – operating leases (Note 12)
     15,841       16,327  
Goodwill (Note 21)
     85,856       85,856  
Intangible assets (Note 21)
     601,247       601,247  
Other noncurrent assets
     180       180  
    
 
 
   
 
 
 
Total assets
   $ 885,217     $ 896,692  
    
 
 
   
 
 
 
Liabilities and stockholders’ equity
                
Liabilities
                
Current liabilities:
                
Fund management and administration payable
   $ 17,980     $ 19,564  
Compensation and benefits payable
     8,568       22,803  
Deferred consideration – gold payments (Note 9)
     15,637       17,374  
Operating lease liabilities (Note 12)
     2,958       3,135  
Income taxes payable
           916  
Accounts payable and other liabilities
     11,415       10,207  
    
 
 
   
 
 
 
Total current liabilities
     56,558       73,999  
Convertible notes (Note 10)
     171,163       166,646  
Deferred consideration – gold payments (Note 9)
     211,509       212,763  
Operating lease liabilities (Note 12)
     17,012       17,434  
Other noncurrent liabilities (Note 19)
     22,222       27,016  
Total liabilities
     478,464       497,858  
 
 
 
 
 
 
 
 
 
    
 
 
   
 
 
 
Preferred stock – Series A
Non-Voting
Convertible, par value $0.01; 14.750 shares authorized, issued and outstanding; redemption value of $88,642 and $72,667 at March 31, 2021 and December 31, 2020, respectively) (Note 11)
     132,569       132,569  
    
 
 
   
 
 
 
Contingencies (Note
13
)
            
Stockholders’ equity
                
Preferred stock, par value $0.01; 2,000 shares authorized:
            
Common stock, par value $0.01; 250,000 shares authorized; issued and outstanding: 149,811 and 148,716 at March 31, 2021 and December 31, 2020, respectively
     1,498       1,487  
Additional
paid-in
capital
     314,274       317,075  
Accumulated other comprehensive income
     985       1,102  
Accumulated deficit
     (42,573     (53,399
    
 
 
   
 
 
 
Total stockholders’ equity
     274,184       266,265  
    
 
 
   
 
 
 
Total liabilities and stockholders’ equity
   $ 885,217     $ 896,692  
    
 
 
   
 
 
 
The accompanying notes are an integral part of these consolidated financial statements
 
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WisdomTree Investments, Inc. and Subsidiaries
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
                 
    
Three Months Ended March 31,
 
    
2021
   
2020
 
Operating Revenues:
                
Advisory fees
   $ 71,616     $ 62,950  
Other income
     1,214       924  
    
 
 
   
 
 
 
Total revenues
     72,830       63,874  
Operating Expenses:
                
Compensation and benefits
     22,627       17,295  
Fund management and administration
     15,521       14,485  
Marketing and advertising
     3,006       2,468  
Sales and business development
     2,145       3,417  
Contractual gold payments (Note 9)
     4,270       3,760  
Professional fees
     2,013       1,273  
Occupancy, communications and equipment
     1,475       1,551  
Depreciation and amortization
     252       256  
Third-party distribution fees
     1,343       1,355  
Acquisition and disposition-related costs
           383  
Other
     1,571       1,997  
    
 
 
   
 
 
 
Total operating expenses
     54,223       48,240  
    
 
 
   
 
 
 
Operating income
     18,607       15,634  
Other Income/(Expenses):
                
Interest expense
     (2,296     (2,419
Gain/(loss) on revaluation of deferred consideration – gold payments (Note 9)
     2,832       (2,208
Interest income
     231       163  
Impairments (Notes 12 and 22)
     (303     (19,672
Other losses, net
     (5,893     (2,507
    
 
 
   
 
 
 
Income/(loss) before income taxes
     13,178       (11,009
Income tax benefit
     (1,969     (2,371
    
 
 
   
 
 
 
Net income/(loss)
   $ 15,147     $ (8,638
    
 
 
   
 
 
 
Earnings/(loss) per share – basic (Note 18)
   $ 0.09     $ (0.06
    
 
 
   
 
 
 
Earnings/(loss) per share – diluted (Note 18)
   $ 0.09     $ (0.06
    
 
 
   
 
 
 
Weighted-average common shares – basic (Note 18)
     145,649       152,519  
    
 
 
   
 
 
 
Weighted-average common shares – diluted (Note 18)
     161,831       152,519  
    
 
 
   
 
 
 
Cash dividends declared per common share
   $ 0.03     $ 0.03  
    
 
 
   
 
 
 
The accompanying notes are an integral part of these consolidated financial statements
 
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WisdomTree Investments, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income/(Loss)
(In Thousands)
(Unaudited)
                 
    
Three Months Ended March 31,
 
    
2021
   
2020
 
Net income/(loss)
   $ 15,147     $ (8,638
Other comprehensive loss
                
Reclassification of
foreign currency
translation adjustment to other losses, net, upon the sale of WisdomTree Asset Management Canada, Inc. (“WTAMC” or “Canadian ETF business”) (Note 22)
           (167
Foreign currency translation adjustment, net of income taxes
     (117     (686
    
 
 
   
 
 
 
Other comprehensive loss
     (117     (853
    
 
 
   
 
 
 
Comprehensive income/(loss)
   $ 15,030     $ (9,491
    
 
 
   
 
 
 
The accompanying notes are an integral part of these consolidated financial statements
 
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WisdomTree Investments, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity
(In Thousands)
(Unaudited)
 
 
  
For the Three Months Ended March 31, 2021
 
 
  
Common Stock
 
 
Additional

Paid-In

Capital
 
 
Accumulated
Other
 
 
Accumulated

Deficit
 
 
Total
 
 
  
Shares

Issued
 
 
Par

Value
 
 
Comprehensive

Income
 
Balance—January 1, 2021
     148,716     $ 1,487     $ 317,075     $ 1,102     $ (53,399   $ 266,265  
Reclassification of equity component related to convertible notes, net
of
deferred taxes of $1,022, upon the implementation of
ASU
2020-06
(Note 10)
                 (3,682           616       (3,066
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance—January 1, 2021 (as adjusted)
     148,716     $ 1,487     $ 313,393     $ 1,102     $ (52,783   $ 263,199  
Restricted stock issued and vesting of restricted stock units, net
     1,510       15       (15                  
Shares repurchased
     (490     (5     (2,625                 (2,630
Exercise of stock options, net
     75       1       378                   379  
Stock-based compensation
                 3,143                   3,143  
Other comprehensive loss
                       (117           (117
Dividends
                             (4,937     (4,937
Net income
                             15,147       15,147  
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance—March 31, 2021
     149,811     $ 1,498     $ 314,274     $ 985     $ (42,573   $ 274,184  
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
 
  
For the Three Months Ended March 31, 2020
 
 
  
Common Stock
 
 
Additional

Paid-In

Capital
 
 
Accumulated
Other
 
 
Accumulated

Deficit
 
 
Total
 
 
  
Shares

Issued
 
 
Par

Value
 
 
Comprehensive

Income
 
Balance—January 1, 2020
     155,264     $ 1,553     $ 352,658     $ 945     $ (17,744   $ 337,412  
Restricted stock issued and vesting of restricted stock units, net
     1,438       14       (14                  
Shares repurchased
     (385     (3     (1,492                 (1,495
Exercise of stock options, net
     107             240                   240  
Stock-based compensation
                 3,239                   3,239  
Other comprehensive loss
                       (853           (853
Dividends
                 (5,136                 (5,136
Net income
                             (8,638     (8,638
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance—March 31, 2020
     156,424     $ 1,564     $ 349,495     $ 92     $ (26,382   $ 324,769  
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these consolidated financial statements
 
7
WisdomTree Investments, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
 
  
Three Months Ended March 31,
 
 
  
2021
 
 
2020
 
Cash flows from operating activities:
  
     
 
     
Net income/(loss)
   $ 15,147     $ (8,638
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
                
Advisory fees received in gold, other precious metals and bitcoin
     (19,757     (13,860
Contractual gold payments
     4,270       3,760  
Stock-based compensation
     3,143       3,239  
Deferred income taxes
     2,904       4,526  
(Gain)/loss on revaluation of deferred consideration – gold payments
     (2,832     2,208  
Amortization of right of use asset
     697       798  
Amortization of issuance costs – convertible notes
     429        
Impairments
     303       19,672  
Depreciation and amortization
     252       256  
Gain on sale – Canadian ETF business
           (2,877
Amortization of issuance costs - former credit facility
           723  
Other
     (235     (31
Changes in operating assets and liabilities:
                
Securities owned, at fair value
     124       (2,942
Accounts receivable
     290       5,850  
Prepaid expenses
     (362     (616
Gold, other precious metals and bitcoin
     14,166       9,838  
Other assets
     5       139  
Fund management and administration payable
     (1,470     537  
Compensation and benefits payable
     (14,245     (22,688
Income taxes receivable/payable
     (1,028     (2,032
Securities sold, but not yet purchased, at fair value
           (112
Operating lease liabilities
     (918     (926
Accounts payable and other liabilities
     982       542  
    
 
 
   
 
 
 
Net cash provided by/(used in) operating activities
     1,865       (2,634
    
 
 
   
 
 
 
Cash flows from investing activities:
                
Purchase of investments
     (5,500      
Purchase of fixed assets
     (103     (50
Proceeds from
held-to-maturity
securities maturing or called prior to maturity
     38       6,030  
Proceeds from sale of Canadian ETF business, net
           2,774  
    
 
 
   
 
 
 
Net cash (used in)/provided by investing activities
     (5,565     8,754  
    
 
 
   
 
 
 
Cash flows from financing activities:
                
Dividends paid
     (4,937     (5,136
Shares repurchased
     (2,630     (1,495
Repayment of debt
           (5,000
Proceeds from exercise of stock options
     379       240  
    
 
 
   
 
 
 
Net cash used in financing activities
     (7,188     (11,391
    
 
 
   
 
 
 
Decrease in cash flow due to changes in foreign exchange rate
     (235     (1,272
    
 
 
   
 
 
 
Decrease in cash and cash equivalents
     (11,123     (6,543
Cash and cash equivalents—beginning of year
     73,425       74,972  
    
 
 
   
 
 
 
Cash and cash equivalents—end of period
   $ 62,302     $ 68,429  
Supplemental disclosure of cash flow information:
                
Cash paid for taxes
   $ 1,278     $ 1,147  
    
 
 
   
 
 
 
Cash paid for interest
   $     $ 2,312  
    
 
 
   
 
 
 
NON-CASH
ACTIVITIES
On January 1, 2021, the Company reclassified the equity component related to the convertible notes, net of deferred taxes, increasing retained earnings by $616, increasing the carrying value of the convertible notes by $4,088, reducing additional
 paid-in capital by
$3,682 and reducing deferred tax liabilities by $1,022, upon the implementation of Accounting Standards Update (“ASU”)
2020-06,
Debt – Debt with Conversion and Other Options
(Note 10).
The accompanying notes are an integral part of these consolidated financial statements
 
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Table of Contents
WisdomTree Investments, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In Thousands, Except Share and Per Share Amounts)
1. Organization and Description of Business
WisdomTree Investments, Inc., through its global subsidiaries (collectively, “WisdomTree” or the “Company”), is an exchange traded product (“ETP”) sponsor and asset manager headquartered in New York. WisdomTree offers ETPs covering equity, commodity, fixed income,
leveraged-and-inverse,
currency, cryptocurrency and alternative strategies. The Company has the following wholly-owned operating subsidiaries:
 
   
WisdomTree Asset Management, Inc.
is a New York based investment adviser registered with the SEC, providing investment advisory and other management services to the WisdomTree Trust (“WTT”) and WisdomTree exchange-traded funds (“ETFs”). The WisdomTree ETFs are issued in the U.S. by WTT. WTT, a
non-consolidated
third party, is a Delaware statutory trust registered with the SEC as an
open-end
management investment company. The Company has licensed to WTT the use of certain of its own indexes on an exclusive basis for the WisdomTree ETFs in the U.S.
 
   
WisdomTree Management Jersey Limited
(“ManJer”) is a Jersey based management company providing management services to seven issuers (the “ManJer Issuers”) in respect of the ETPs issued and listed by the ManJer Issuers covering commodity, currency, cryptocurrency and
leveraged-and-inverse
strategies.
 
   
WisdomTree Multi Asset Management Limited
(“WTMAML”) is a Jersey based management company providing management services to WisdomTree Multi Asset Issuer PLC (“WMAI”) in respect of the ETPs issued by WMAI. WMAI, a
non-consolidated
third party, is a public limited company domiciled in Ireland.
 
   
WisdomTree Management Limited
(“WML”)
is an Ireland based management company providing management services to WisdomTree Issuer ICAV (“WTI”) in respect of the WisdomTree UCITS ETFs issued by WTI. WTI, a
non-consolidated
third party, is a public limited company domiciled in Ireland.
 
   
WisdomTree UK Limited
(“WTUK”)
is a U.K. based company registered with the Financial Conduct Authority currently providing distribution and support services to ManJer, WTMAML and WML.
 
   
WisdomTree Europe Limited
is a U.K. based company which is the legacy distributor of the WMAI ETPs and WisdomTree UCITS ETFs. These services are now provided directly by WTUK. WisdomTree Europe Limited is no longer r
e
gulated and does not provide any regulated services.
 
   
WisdomTree Ireland Limited
is an Ireland based company authorized by the Central Bank of Ireland providing distribution services to ManJer, WTMAML and WML.
 
   
WisdomTree Commodity Services, LLC
(“WTCS”) is a New York based company that served as the managing owner and commodity pool operator of the WisdomTree Continuous Commodity Index Fund (“GCC”) until December 2020 when GCC was reorganized into the WisdomTree Enhanced Commodity Strategy Fund under WTT.
2. Significant Accounting Policies
Basis of Presentation
These consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and in the opinion of management reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of financial condition, results of operations, and cash flows for the periods presented. The consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Consolidation
The Company consolidates entities in which it has a controlling financial interest. The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity (“VOE”) or a variable interest entity (“VIE”). The usual condition for a controlling financial interest in a VOE is ownership of a majority voting interest. If the Company has a majority voting interest in a VOE, the entity is consolidated. The Company has a controlling financial interest in a VIE when the Company has a variable interest that provides it with (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.
The Company reassesses its evaluation of whether an entity is a VIE when certain reconsideration events occur.
 
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Segment and Geographic Information
The Company, through its subsidiaries in the U.S. and Europe, conducts business as a single operating segment as an ETP sponsor and asset manager which is based upon the Company’s current organizational and management structure, as well as information used by the chief operating decision maker to allocate resources and other factors.
Foreign Currency Translation
Assets and liabilities of subsidiaries whose functional currency is not the U.S. dollar are translated based on the end of period exchange rates from local currency to U.S. dollars. Results of operations are translated at the average exchange rates in effect during the period. The impact of the foreign currency translation adjustment is included in the Consolidated Statements of Comprehensive Income/(Loss) as a component of other comprehensive income/(loss).
Use of Estimates
The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet dates and the reported amounts of revenues and expenses for the periods presented. Actual results could differ materially from those estimates.
Revenue Recognition
The Company earns substantially all of its revenue in the form of advisory fees from its ETPs and recognizes this revenue over time, as the performance obligation is satisfied. Advisory fees are based on a percentage of the ETPs’ average daily net assets. Progress is measured using the practical expedient under the output method resulting in the recognition of revenue in the amount for which the Company has a right to invoice.
Contractual Gold Payments
Contractual gold payments are measured and paid monthly based upon the average daily spot price of gold (Note 9).
Marketing and Advertising
Marketing and advertising costs, including media advertising and production costs, are expensed when incurred.
Depreciation and Amortization
Depreciation is provided for using the straight-line method over the estimated useful lives of the related assets as follows:
 
Equipment    5 years     
Furniture and fixtures    15 years     
Leasehold improvements are amortized over the term of their respective leases or service lives of the improvements, whichever is shorter. Fixed assets are recorded at cost less accumulated depreciation and amortization.
Stock-Based Awards
Accounting for stock-based compensation requires the measurement and recognition of compensation expense for all equity awards based on estimated fair values. Stock-based compensation is measured based on the grant-date fair value of the award and is amortized over the relevant service period. Forfeitures are recognized when they occur.
Third-Party Distribution Fees
The Company pays a percentage of its advisory fee revenues based on incremental growth in assets under management (“AUM”), subject to caps or minimums, to marketing agents to sell WisdomTree ETFs and for including WisdomTree ETFs on third-party customer platforms and recognizes these expenses as incurred.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be classified as cash equivalents. The Company maintains deposits with financial institutions in an amount that is in excess of federally insured limits.
 
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Accounts Receivable
Accounts receivable are customer and other obligations due under normal trade terms. The Company measures credit losses, if any, by applying historical loss rates, adjusted for current conditions and reasonable and supportable forecasts to amounts outstanding using the aging method.
Impairment of Long-Lived Assets
The Company performs a review for the impairment of long-lived assets when events or changes in circumstances indicate that the estimated undiscounted future cash flows expected to be generated by the assets are less than their carrying amounts or when other events occur which may indicate that the carrying amount of an asset may not be recoverable.
Securities Owned and Securities Sold, but not yet Purchased (at fair value)
Securities owned and securities sold, but not yet purchased are securities classified as either trading or available-for-sale (“AFS”). These securities are recorded on their trade date and are measured at fair value. All equity securities are classified by the Company as trading. Debt securities are classified based primarily on the Company’s intent to hold or sell the security. Changes in the fair value of debt securities classified as trading and AFS are reported in other income and other comprehensive income, respectively, in the period the change occurs. Debt securities classified as AFS are assessed for impairment on a quarterly basis and an estimate for credit loss is provided when the fair value of the AFS debt security is below its amortized cost basis. Credit-related impairments are recognized in earnings with a corresponding adjustment to the security’s amortized cost basis if the Company intends to sell the impaired AFS debt security or it is more likely than not the Company will be required to sell the security before recovering its amortized cost basis. Other credit-related impairments are recognized as an allowance with a corresponding adjustment to earnings. Impairments resulting from noncredit-related factors are recognized in other comprehensive income. Amounts recorded in other comprehensive income are reclassified into earnings upon sale of the AFS debt security using the specific identification method.
Securities
Held-to-Maturity
The Company accounts for certain of its securities as
held-to-maturity
on a trade date basis, which are recorded at amortized cost. For
held-to-maturity
securities, the Company has the intent and ability to hold these securities to maturity and it is not
more-likely-than-not
that the Company will be required to sell these securities before recovery of their amortized cost bases, which may be maturity.
Held-to-maturity
securities are placed on
non-accrual
status when the Company is in receipt of information indicating collection of interest is doubtful. Cash received on
held-to-maturity
securities placed on
non-accrual
status is recognized on a cash basis as interest income if and when received.
The Company reviews its portfolio of
held-to-maturity
securities for impairment on a quarterly basis, recognizing an allowance, if any, by applying an estimated loss rate after consideration for the nature of collateral securing the financial asset as well as potential future changes in collateral values and historical loss information for financial assets secured with similar collateral.
Investments in pass-through government-sponsored enterprises (“GSEs”) are determined to have an estimated loss rate of zero due to an implicit U.S. government guarantee.
Investments
The Company accounts for equity investments that do not have a readily determinable fair value under the measurement alternative prescribed within Accounting Standards Update (“ASU”)
2016-01,
Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities
, to the extent such investments are not subject to consolidation or the equity method. Under the measurement alternative, these financial instruments are carried at cost, less any impairment (assessed quarterly), plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. In addition, income is recognized when dividends are received only to the extent they are distributed from net accumulated earnings of the investee. Otherwise, such distributions are considered returns of investment and are recorded as a reduction of the cost of the investment.
Goodwill
Goodwill is the excess of the purchase price over the fair values of the identifiable net assets at the acquisition date. The Company tests goodwill for impairment at least annually and at the time of a triggering event requiring
re-evaluation,
if one were to occur. Goodwill is considered impaired when the estimated fair value of the reporting unit that was allocated the goodwill is less than its carrying value. If the estimated fair value of such reporting unit is less than its carrying value, goodwill impairment is recognized based on that difference, not to exceed the carrying amount of goodwill. A reporting unit is an operating segment or a component of an operating segment provided that the component constitutes a business for which discrete financial information is available and management regularly reviews the operating results of that component.
 
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Table of Contents
Goodwill is allocated to the Company’s U.S. Business and European Business components. For impairment testing purposes, these components are aggregated as a single reporting unit as they fall under the same operating segment and have similar economic characteristics.
Goodwill is assessed for impairment annually on November 30
th
. When performing its goodwill impairment test, the Company considers a qualitative assessment, when appropriate, and a quantitative assessment using the market approach and its market capitalization when determining the fair value of the reporting unit.
Intangible Assets
Indefinite-lived intangible assets are tested for impairment at least annually and are also reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Indefinite-lived intangible assets are impaired if their estimated fair values are less than their carrying values.
Finite-lived intangible assets, if any, are amortized over their estimated useful life, which is the period over which the assets are expected to contribute directly or indirectly to the future cash flows of the Company. These intangible assets are tested for impairment at the time of a triggering event, if one were to occur. Finite-lived intangible assets may be impaired when the estimated undiscounted future cash flows generated from the assets are less than their carrying amounts.
The Company may rely on a qualitative assessment when performing its intangible asset impairment test. Otherwise, the impairment evaluation is performed at the lowest level of reasonably identifiable cash flows independent of other assets. The annual impairment testing date for all of the Company’s intangible assets is November 30
th
.
Leases
The Company accounts for its lease obligations in accordance with Accounting Standards Codification (“ASC”) Topic 842,
Leases
(ASC 842), which requires the recognition of both (i) a lease liability equal to the present value of the remaining lease payments and (ii) an offsetting
right-of-use
asset. The remaining lease payments are discounted using the rate implicit in the lease, if known, or otherwise the Company’s incremental borrowing rate. After lease commencement,
right-of-use
assets are assessed for impairment and otherwise are amortized over the remaining lease term on a straight-line basis. These recognition requirements are not applied to short-term leases which are those with a lease term of 12 months or less. Instead, lease payments associated with short-term leases are recognized as an expense on a straight-line basis over the lease term.
ASC 842 also provides a practical expedient which allows for consideration in a contract to be accounted for as a single lease component rather than allocated between lease and
non-lease
components. The Company has elected to apply this practical expedient to all lease contracts, where applicable.
Deferred Consideration – Gold Payments
Deferred consideration represents the present value of an obligation to pay gold to a third party into perpetuity and is measured using forward-looking gold prices observed on the CMX exchange, a selected discount rate and perpetual growth rate (Note 9). Changes in the fair value of this obligation are reported as gain/(loss) on revaluation of deferred consideration – gold payments on the Company’s Consolidated Statements of Operations.
Convertible Notes
Convertible notes are carried at amortized cost, net of issuance costs. Effective January 1, 2021, the Company early adopted ASU
2020-06
Debt – Debt with Conversion and Other Options
under the modified retrospective approach. ASU
2020-06
provides for convertible instruments being reported as a single liability (applicable to the convertible notes) or equity with no separate accounting for embedded conversion features unless the conversion feature meets the criteria for accounting under the substantial premium model or does not qualify for a derivative scope exception. Previously, the convertible notes were required to be separated into their liability and equity components by allocating the issuance proceeds to each of those components. The liability component was allocated proceeds equal to the estimated fair value of similar debt instruments without the conversion option. The difference between the gross proceeds received from the issuance of the convertible notes and the proceeds allocated to the liability component represented the residual amount that was recorded in additional
paid-in
capital. Interest expense is recognized using the effective interest method and includes amortization of issuance costs over the life of the debt.
Contingencies
The Company may be subject to reviews, inspections and investigations by regulatory authorities as well as legal proceedings arising in the ordinary course of business. The Company evaluates the likelihood of an unfavorable outcome of all legal or regulatory proceedings to which it is a party and accrues a loss contingency when the loss is probable and reasonably estimable.
 
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Table of Contents
Contingent Payments
The Company recognizes contingent payments when the contingency is resolved and the gain is realized.
Earnings per Share
Basic earnings per share (“EPS”) is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding for the period. Net income available to common stockholders represents net income of the Company reduced by an allocation of earnings to participating securities. The Series A
non-voting
convertible preferred stock (Note 18) and unvested share-based payment awards that contain
non-forfeitable
rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of EPS pursuant to the
two-class
method. Share-based payment awards that do not contain such rights are not deemed participating securities and are included in diluted shares outstanding (if dilutive).
Diluted EPS is calculated under the treasury stock method and the
two-class
method. The calculation that results in the lowest diluted EPS amount for the common stock is reported in the Company’s consolidated financial statements. The treasury stock method includes the dilutive effect of potential common shares including unvested stock-based awards, the Series A
non-voting
convertible preferred stock and the convertible notes, if any. Potential common shares associated with the Series A
non-voting
convertible preferred stock and the convertible notes are co
m
puted under the
if-converted
method. Potential common shares associated with the conversion option embedded in the convertible notes are dilutive when the Company’s average stock price exceeds the conversion price.
Income Taxes
The Company accounts for income taxes using the liability method, which requires the determination of deferred tax assets and liabilities based on the differences between the financial and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is
more-likely-than-not
that some portion or all the deferred tax assets will not be realized.
Tax positions are evaluated utilizing a
two-step
process. The Company first determines whether any of its tax positions are
more-likely-than-not
to be sustained upon examination, based solely on the technical merits of the position. Once it is determined that a position meets this recognition threshold, the position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company records interest expense and penalties related to tax expenses as income tax expense.
The Global Intangible
Low-Taxed
Income (“GILTI”) provisions of the Tax Reform Act requires the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. An accounting policy election is available to either account for the tax effects of GILTI in the period that is subject to such taxes or to provide deferred taxes for book and tax basis differences that upon reversal may be subject to such taxes. The Company accounts for the tax effects of these provisions in the period that is subject to such tax.
Non-income
based taxes are recorded as part of other liabilities and other expenses.
Recently Adopted Accounting Pronouncements
On January 1, 202
1
, the Company early adopted ASU
2020-06,
Debt – Debt with Conversion and Other Options
(ASU
2020-06)
under the modified retrospective approach. Under the ASU, the accounting for convertible instruments was simplified by removing major separation models required under current GAAP. Accordingly, more convertible instruments are reported as a single liability or equity with no separate accounting for embedded conversion features. Certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception are removed and, as a result, more equity contracts will qualify for the scope exception. The ASU also simplifies the diluted
earnings-per-share
calculation in certain areas. Upon the adoption of this
ASU,
 
the Company reclassified the equity component related to the convertible notes, net of deferred taxes, increasing retained earnings by $616, increasing the carrying value of the convertible notes by $4,088, reducing additional
paid-in capital 
by $3,682 and reducing deferred tax liabilities by $1,022. These updates also reduced interest expense recognized on the Company’s convertible notes by approximately $420 per quarter (Note 10).
On January 1, 2021, the Company adopted ASU
2019-12,
Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes
(ASU
2019-12).
The main objective of the standard is to reduce complexity in the accounting for income taxes by removing the following exceptions: (1) exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items (for example, discontinued operations or other comprehensive income); (2) exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; (3) exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; and (4) exception to the general methodology for calculating income taxes in an interim period when a
year-to-date
loss exceeds the anticipated loss for the year. The standard also simplifies the accounting for income taxes by enacting the following: (a) requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and accoun
t
 for any incremental amount as a
non-income-based
tax; (b) requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered as a separate transaction; (c) specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements; and (d) requiring that an entity reflect the enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The Company has determined that the adoption of this standard did not have a material impact on its financial statements.
 
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Table of Contents
3. Cash and Cash Equivalents
Of the total cash and cash equivalents of $62,302 and $73,425 at March 31, 2021 and December 31, 2020, respectively, $59,919 and $70,911 were held at two financial institutions. At March 31, 2021 and December 31, 2020, cash equivalents were approximately $502 and $660, respectively.
Certain of the Company’s international subsidiaries are required to maintain a minimum level of regulatory capital,
which was $12,222 
and $10,745 at March 31, 2021 and December 31, 2020, respectively. These requirements are generally satisfied by cash on hand.
In addition, the Company collateralized its U.S. office lease through a standby letter of credit totaling $1,384 which is restricted from further use.
4. Fair Value Measurements
The fair value of financial instruments is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., “the exit price”) in an orderly transaction between market participants at the measurement date. ASC 820,
Fair Value Measurement
, establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs reflect assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the transparency of inputs as follows:
 
Level 1  –
 
Quoted prices for identical instruments in active markets.
   
Level 2  –
 
Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
   
Level 3  –
 
Instruments whose significant drivers are unobservable.
The availability of observable inputs can vary from product to product and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by management in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The tables below summarize the categorization of the Company’s assets and liabilities measured at fair value. During the three months ended March 31, 2021 and 2020 there were no transfers between Levels 2 and 3.
 
    
March 31, 2021
 
    
Total
    
Level 1
    
Level 2
    
Level 3
 
Assets:
                                   
Recurring fair value measurements:
                                   
Cash equivalents
   $ 502      $ 502      $      $  
Securities owned, at fair value
                                   
ETFs
     23,862        23,862                
Pass-through GSEs
     8,832               8,832         
Corporate bonds
     2,077               2,077         
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 35,273      $ 24,364      $ 10,909      $  
    
 
 
    
 
 
    
 
 
    
 
 
 
Non-recurring
fair value measurements:
  
     
  
     
  
     
  
     
Securrency, Inc. – Series A convertible preferred stock
(1)
  
$
8,349
 
  
$
—  
 
  
$
—  
 
  
$
8,349
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Liabilities:
  
     
  
     
  
     
  
     
Recurring fair value measurements:
  
     
  
     
  
     
  
     
Deferred consideration (Note 9)
  
$
227,146
 
  
$
—  
 
  
$
—  
 
  
$
227,146
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
(1)
Fair value determined on March 8, 2021 (Note 7).
 
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Table of Contents
    
December 31, 2020
 
    
Total
    
Level 1
    
Level 2
    
Level 3
 
Assets:
                                   
Recurring fair value measurements:
                                   
Cash equivalents
   $ 660      $ 660      $      $  
Securities owned, at fair value
                                   
ETFs
     24,165        24,165                
Pass-through GSEs
     8,613               8,613         
Corporate bonds
     2,117               2,117         
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 35,555      $ 24,825      $ 10,730      $  
    
 
 
    
 
 
    
 
 
    
 
 
 
Non-recurring
fair value measurements:
                                   
AdvisorEngine Inc. (“AdvisorEngine”) – Financial interests
(1)
   $      $      $      $  
Thesys Group, Inc. (“Thesys”) – Series Y Preferred Stock
(1)
                           
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $      $      $      $  
    
 
 
    
 
 
    
 
 
    
 
 
 
Liabilities:
                                   
Recurring fair value measurements:
                                   
Deferred consideration (Note 12)
   $ 230,137      $      $      $ 230,137  
    
 
 
    
 
 
    
 
 
    
 
 
 
Non-recurring
fair value measurements:
                                   
Convertible notes
(2)
   $ 170,191      $      $ 170,191      $  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
(1)
The fair value of the AdvisorEngine financial interests of $9,592 was determined on May 4, 2020, the date in which these financial interests were sold (Note 22). Thesys was written down to zero on September 30, 2020.
 
(2)
Fair value of $145,847 and $24,344 determined on June 16, 2020 and August 13, 2020, respectively (Note 10).
Recurring Fair Value Measurements - Methodology
Cash Equivalents (Note 3)
– These financial assets represent cash invested in highly liquid investments with ori
g
inal maturities of less than 90 days. These investments are valued at par, which approximates fair value, and are classified as Level 1 in the fair value hierarchy.
Securities Owned (Note 5)
– Securities owned are investments in ETFs, pass-through GSEs and corporate bonds. ETFs are generally traded in active, quoted and highly liquid markets and are therefore classified as Level 1 in the fair value hierarchy. Pricing of pass-through GSEs and corporate bonds include consideration given to collateral characteristics and market assumptions related to yields, credit risk and prepayments and are therefore classified as Level 2 in the fair value hierarchy.
Deferred Consideration (Note 9)
– Deferred consideration represents the present value of an obligation to pay gold into perpetuity.
The following table presents a reconciliation of beginning and ending balances of recurring fair value measurements classified as Level 3:
 
    
Three Months Ended

March 31,
 
    
2021
    
2020
 
Deferred consideration (Note 9)
                 
Beginning balance
   $ 230,137      $ 173,024  
Net realized losses
(1)
     4,270        3,760  
Net unrealized (gains)/losses
(2)
     (2,832      2,208  
Settlements
     (4,429      (3,692
    
 
 
    
 
 
 
Ending balanc
e
   $ 227,146      $ 175,300  
    
 
 
    
 
 
 
 
(1)
Recorded as contractual gold payments expense on the Company’s Consolidated Statements of Operations.
 
(2)
Recorded as gain/(loss) on revaluation of deferred consideration – gold payments on the Company’s Consolidated Statements of Operations.
 
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Table of Contents
5. Securities Owned
These securities consist of the following:
 
    
March 31,

2021
    
December 31,
2020
 
Securities Owned
                 
Trading securities
   $ 34,771      $ 34,895  
    
 
 
    
 
 
 
During the three months ended March 31, 2021 and 2020, the Company recognized trading losses of $561 and $196,
 
respectively on securities owned that were still held at the reporting dates.
The Company had no AFS debt securities at March 31, 2021 and December 31, 2020.
6. Securities
Held-to-Maturity
The following table is a summary of the Company’s securities
held-to-maturity:
 
    
March 31,

2021
    
December 31,

2020
 
Debt instruments: Pass-through GSEs (amortized cost)
   $ 411      $ 451  
    
 
 
    
 
 
 
During the three months ended March 31, 2021 and 2020, the Company received proceeds of $38 and $6,030, respectively, from
held-to-maturity
securities maturing or being called prior to maturity.
The following table summarizes unrealized gains, losses, and fair value (classified as Level 2 within the fair value hierarchy) of securities
held-to-maturity:
 
    
March 31,

2021
    
December 31,

2020
 
Cost/amortized cost
   $ 411      $ 451  
Gross unrealized gains
     20        30  
Gross unrealized losses
     (1      (12
    
 
 
    
 
 
 
Fair value
   $ 430      $ 469  
    
 
 
    
 
 
 
An allowance for credit losses was not provided on the Company’s
held-to-maturity
securities as all securities are investments in pass-through GSEs which are determined to have an estimated loss rate of zero due to an implicit U.S. government guarantee.
The following table sets forth the maturity profile of the securities
held-to-maturity;
however, these securities may be called prior to maturity date:
 
    
March 31,

2021
    
December 31,

2020
 
Due within one year
   $      $  
Due one year through five years
             
Due five years through ten years
             
Due over ten years
     411        451  
    
 
 
    
 
 
 
Total
   $ 411      $ 451  
    
 
 
    
 
 
 
 
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Table of Contents
7. Investments
The following table sets forth the Company’s investments:
 
    
March 31, 2021
    
December 31, 2020
 
    
Carrying
Value
    
Cost
    
Carrying
Value
    
Cost
 
Securrency, Inc. – Series A convertible preferred stock
   $ 8,349      $ 8,112      $ 8,112      $ 8,112  
Securrency, Inc. – Series B convertible preferred stock
     5,500        5,500                
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 13,849      $ 13,612      $ 8,112      $ 8,112  
    
 
 
    
 
 
    
 
 
    
 
 
 
Securrency, Inc. – Preferred Stock
The Company owns approximately 25% (or 20% on a fully-diluted basis) of the capital stock of Securrency, Inc. (“Securrency”), a leading developer of institutional-grade blockchain-based financial and regulatory technology, issued as a result of strategic investments totaling $13,612. In consideration of such investments, the Company received 5,178,488 shares of Series A convertible preferred stock (“Series A Shares”) and 2,004,665 shares of Series B convertible preferred stock (“Series B Shares”). The Series B Shares contain a liquidation preference that is pari passu with shares of Series
B-1
convertible preferred stock (which is substantially the same as the Series B Shares except that it has l
i
mited voting rights) and senior to that of the holders of the Series A Shares, which is senior to the holders of common stock. Otherwise, the Series A Shares and Series B Shares have substantially the same
terms
, are convertible into common stock at the option of the Company and contain various rights and protections including a
non-cumulative
6.0% dividend, payable if and when declared by the board of directors of Securrency. In addition, the Series A Shares and Series B Shares (together with the Series
B-1
convertible preferred stock) are separately redeemable, with respect to all of the shares outstanding of the applicable series of preferred stock (
subject to certain regulatory restrictions of certain investors), for the original issue price thereof, plus all declared and unpaid dividends, upon approval by holders of at least 
60%
 of the Series A Shares (at any time on or after December 31, 2029) and 
90%
 
of the Series B Shares (at any time on or after March 31, 2031).
The investment is accounted for under the measurement alternative prescribed within ASU
2016-01,
as it does not have a readily determinable fair value and is not considered to be
in-substance
common stock. The investment is assessed for impairment and similar observable transactions on a quarterly basis. On March 8, 2021, the Company recognized a gain of $237
 on its Series A Shares, which was re-measured to fair value upon the issuance of Securrency’s Series B Shares. Fair value was determined using the backsolve method, a valuation approach that determines the value of shares for companies with complex capital structures based upon the price paid for shares recently issued. Fair value is allocated across the capital structure using the Black-Scholes option pricing model. 
The table below presents the inputs used in backsolve valuation approach (classified as Level 3 in the fair value hierarchy): 
 
Inputs (Initial Recognition – March 8, 2021)
 
Expected volatility
     55
Time to exit (in years)
     5  
There was no impairment recognized during the three months ended March 31, 2020 based upon a qualitative assessment.
8. Fixed Assets, net
The following table summarizes fixed assets:
 
    
March 31,

2021
    
December 31,

2020
 
Equipment
   $ 2,959      $ 2,836  
Furniture and fixtures
     2,225        2,225  
Leasehold improvements
     11,021        11,012  
Less: accumulated depreciation and amortization
     (8,773      (8,494
    
 
 
    
 
 
 
Total
   $ 7,432      $ 7,579  
    
 
 
    
 
 
 
 
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Table of Contents
9. Deferred Consideration
Deferred consideration represents an obligation the Company assumed in connection with its acquisition of the European exchange-traded commodity, currency and
leveraged-and-inverse
business of ETFS Capital Limited (“ETFS Capital”) which occurred on April 11, 2018 (“ETFS Acquisition”). The obligation is for fixed payments to ETFS Capital of physical gold bullion equating to 9,500 ounces of gold per year through March 31, 2058 and then subsequently reduced to 6,333 ounces of gold continuing into perpetuity (“Contractual Gold Payments”).
The Contractual Gold Payments are paid from advisory fee income generated by any Company-sponsored financial product backed by physical gold and are subject to adjustment and reduction for declines in advisory fee income generated by such products, with any reduction remaining due and payable until paid in full. ETFS Capital’s recourse is limited to such advisory fee income and it has no recourse back to the Company for any unpaid amounts that exceed advisory fees earned. ETFS Capital ultimately has the right to claw back Gold Bullion Securities Ltd. (a physically backed gold ETP issuer) if the Company fails to remit any amounts due.
The Company determined the present value of the deferred consideration of $227,146 and $230,137 at March 31, 2021 and December 31, 2020 using the following assumptions:
 
    
March 31,

2021
   
December 31,

2020
 
Forward-looking gold price (low) – per ounce
   $ 1,717     $ 1,903  
Forward-looking gold price (high) – per ounce
   $ 3,201     $ 2,662  
Forward-looking gold price (weighted average) – per ounce
   $ 2,136     $ 2,117  
Discount rate
     9.0
%
 
      9.0
%
 
 
Perpetual growth rate
     1.7
%
 
      0.9
%
 
 
The forward-looking gold prices at March 31, 2021 were extrapolated from the last observable CMX exchange price (beyond 2026) and the weighted-average price per ounce was derived from the relative present values of the annual payment obligations. The perpetual growth rate was determined based upon the increase in observable forward-looking gold prices through 2026. This obligation is classified as Level 3 as the discount rate and extrapolated forward-looking gold prices are significant unobservable inputs. An increase in spot gold prices, forward-looking gold prices and the perpetual growth rate would result in an increase in deferred consideration, whereas an increase in the discount rate would reduce the fair value.
Current amounts payable were $15,637 and $17,374 and long-term amounts payable were $211,509 and $212,763, respectively, at March 31, 2021 and December 31, 2020, respectively.
During the three months ended March 31, 2021 and 2020, the Company recognized the following in respect of deferred consideration:
 
    
Three Months Ended

March 31,
 
    
2021
    
2020
 
Contractual Gold Payments
   $ 4,270      $ 3,760  
Contractual Gold Payments – gold ounces paid
     2,375        2,375  
Gain/(loss) on revaluation of deferred consideration – gold payments(1)
   $ 2,832      $ (2,208
 
(1)
Gains on revaluation of deferred consideration – gold payments result from a decrease in spot gold prices, a decrease in the forward-looking price of gold, a decrease in the perpetual growth rate and an increase in the discount rate used to compute the present value of the annual payment obligations. Losses on revaluation of deferred consideration – gold payments result from an increase in spot gold prices, an increase in the forward-looking price of gold, an increase in the perpetual growth rate and a decrease in the discount rate used to compute the annual payment obligations. 
10. Convertible Notes
On June 16, 2020, the
Company issued and sold $150,000 in aggregate principal amount of 4.25% Convertible Senior Notes due 2023
 
(the “Existing Notes”) pursuant to an Indenture (the “Indenture”), dated June 16, 2020, between the Company and U.S. Bank National Association, as trustee (the “Trustee”), in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. On August 13, 2020, the Company issued and sold $25,000 in aggregate principal amount of 4.25% Convertible Senior Notes due
 
2023 (the “Additional Notes”) at a price equal to 101% of the principal amount thereof, plus interest deemed to have accrued since June 16, 2020, and constitute a further issuance of, and form a single series with, the Company’s Existing Notes (the Additional Notes and together with the Existing Notes, the “Convertible Notes”). After the issuance of the Additional Notes, the Company had
 
$175,000
aggregate principal amount of Convertible Notes outstanding. 
 
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Key terms of the Convertible Notes are as follows:
 
   
Maturity date
:
 
June 15, 2023, unless earlier converted, repurchased or redeemed.
 
   
Interest rate of 4.25%
: Payable semiannually in arrears on June 15 and December 15 of each year, beginning on December 15, 2020.
 
   
Conversion price of $5.92
:
 
Convertible at an initial conversion rate of 168.9189 shares of the Company’s common stock, per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $5.92 per share).
 
   
Conversion
:
Holders may convert at their option at any time prior to the close of business on the business day immediately preceding March 15, 2023 only under the following circumstances: (i) if the last reported sale price of the Company’s common stock for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (ii) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sales price of the Company’s common stock and the conversion rate on each such trading day; (iii) upon a notice of redemption delivered by the Company in accordance with the terms
of
the Indenture but only with respect to the Convertible Notes called (or deemed called) for redemption; or (iv) upon the occurrence of specified corporate events. On or after March 15, 2023 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Convertible Notes at any time, regardless of the foregoing circumstances.
 
   
Cash settlement of principal amount
: Upon conversion, the Company will pay cash up to the aggregate principal amount of the Convertible Notes to be converted. At its election, the Company will also settle its conversion obligation in excess of the aggregate principal amount
of
the Convertible Notes being converted in either cash, shares of its common stock or a combination of cash and shares of its common stock.
 
   
Redemption price of $7
.
70
: The Company may redeem for cash all or any portion of the notes, at its option, on or after June 20, 2021 and on or prior to the 55
th
scheduled trading day immediately preceding the maturity date, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days, including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding the redemption date. No sinking fund is provided for the Convertible Notes.
 
   
Limited investor put rights
: Holders of the Convertible Notes have the right to require the Company to repurchase for cash all or a portion of their notes at 100% of their principal amount, plus any accrued and unpaid interest, upon the occurrence of certain change of control transactions or liquidation, dissolution or common stock delisting events.
 
   
Conversion rate increase in certain customary circumstances
: In certain circumstances, conversions in connection with a “make-whole fundamental change” (as defined in the Indenture) or conversions of Convertible Notes called (or deemed called) for redemption may result in an increase to the conversion rate, provided that the conversion rate will not exceed 270.2702 shares of the Company’s common stock per $1,000 principal amount of the Convertible Notes (the equivalent of 47,297,285 shares of the Company’s common stock), subject to adjustment.
 
   
Seniority and Security
: The Convertible Notes are the Company’s senior unsecured obligations, but are subordinated in right of payment to the Company’s obligations to make certain redemption payments (if and when due) in respect of its Series A
Non-Voting
Convertible Preferred Stock (Note 11).
The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Convertible Notes outstanding may declare the entire principal amount of all the Convertible Notes to be repurchased, plus any accrued special interest, if any, to be immediately due and payable.
The following table provides a summary of the carrying value of the Convertible Notes at March 31, 2021 and December 31, 2020:
 
    
March 31,

2021
    
December 31,

2020
 
Principal amount
   $ 175,000      $ 175,000  
Plus: premium on Additional Notes
     250        250  
    
 
 
    
 
 
 
Gross proceeds
     175,250        175,250  
Less: Unamortized discount
(1)
            (4,207
Less: Unamortized issuance costs
(1)
     (4,087     (4,397
    
 
 
   
 
 
 
Carrying amount
   $ 171,163     $ 166,646  
    
 
 
   
 
 
 
Effective interest rate
(2)
     5.30     6.29
    
 
 
   
 
 
 
 
(1)
Unamortized discount
 was
reduced by $4,207 and unamortized issuance costs increased by $119 upon the early adoption of ASU
2020-06
 on January 1, 2021. The discount previously arose from the bifurcation of the conversion option which occurred prior to the adoption of ASU
2020-06.
The unamortized issuance costs are reported net of the unamortized premium on the Additional Notes.
 
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(2)
Includes amortization of the issuance costs allocated to the Convertible Notes and amortization of the premium associated with the Additional Notes. The effective interest rate prior to January 1, 2021 also included amortization of the discount arising from the bifurcation of the conversion option.
On January 1, 2021, the Company early adopted ASU
2020-06,
which simplified the accounting for convertible instruments by providing for such instruments being reported as a single liability (applicable to the convertible notes) or equity with no separate accounting for the embedded conversion features unless the conversion feature meets the criteria for accounting under the substantial premium model or does not qualify for a derivative scope exception. Previously, convertible instruments were required to be separated into their liability and equity components by allocating the issuance proceeds to each of those components. The discount arising from the recognition of the equity component was amortized as interest expense over the life of the Convertible Notes.
Interest expense on the convertible notes during the three months ended March 31, 2021 was $2,296. Interest expense during the three months ended March 31, 2020 of $2,419 was attributable to our former credit facility which was terminated on June 16, 2020. Interest payable of $2,209 and $342 at March 31, 2021 and December 31, 2020 is included in accounts payable and other liabilities on the Consolidated Balance Sheets.
The fair value of the Convertible Notes (classified as Level 2 in the fair value hierarchy) was $214,972 at March 31, 2021. The
if-converted
value of the Convertible Notes was $184,755 at March 31, 2021.
11. Preferred Shares
On April 10, 2018, the Company filed a Certificate of Designations of Series A
Non-Voting
Convertible Preferred Stock with the Secretary of State of the State of Delaware establishing the rights, preferences, privileges, qualifications, restrictions, and limitations relating to the Preferred Shares (defined below). The Preferred Shares are intended to provide ETFS Capital with economic rights equivalent to the Company’s common stock on an
as-converted
basis. The Preferred Shares have no voting rights, are not transferable and have the same priority with regard to dividends, distributions and payments as the common stock.
As described in the Certificate of Designations, the Company will not issue, and ETFS Capital does not have the right to require the Company to issue, any shares of common stock upon conversion of the Preferred Shares, if, as a result of such conversion, ETFS Capital (together with certain attribution parties) would beneficially own more than 9.99% of the Company’s outstanding common stock immediately after giving effect to such conversion.
In connection with the completion of the ETFS Acquisition, the Company issued 14,750 shares of Series A
Non-Voting
Convertible Preferred Stock (the “Preferred Shares”), which are convertible into an aggregate of 14,750,000 shares of common stock. The fair value of this consideration was $132,750, based on the closing price of the Company’s common stock on April 10, 2018 of $9.00 per share, the trading day prior to the closing of the acquisition.
The following is a summary of the Preferred Share balance:
 
    
March 31,

2021
    
December 31,

2020
 
Issuance of Preferred Shares
   $ 132,750      $ 132,750  
Less: Issuance costs
     (181      (181
    
 
 
    
 
 
 
Preferred Shares – carrying value
   $ 132,569      $ 132,569  
    
 
 
    
 
 
 
Temporary equity classification is required for redeemable instruments for which redemption triggers are outside of the issuer’s control. ETFS Capital has the right to redeem all the Preferred Shares specified to be converted during the period of time specified in the Certificate of Designations in the event that: (a) the number of shares of the Company’s common stock authorized by its certificate of incorporation is insufficient to permit the Company to convert all of the Preferred Shares requested by ETFS Capital to be converted; or (b) ETFS Capital does not, upon completion of a change of control of the Company, receive the same amount per Preferred Share as it would have received had each outstanding Preferred Share been converted into common stock immediately prior
 
to the change of control. However, the Company will not be obligated to make any such redemption payments to the extent such payments would be a breach of any covenant or obligation the Company owes to any of its secured creditors or is otherwise prohibited by applicable law.
 
 
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Any such redemption will be at a price per Preferred Share equal to the dollar volume-weighted average price for a share of common stock for the
30-trading
day period ending on the date of such attempted conversion or change of control, as applicable, multiplied by 1,000. Such redemption payment will be made in one payment no later than 10 business days following the last day of the Company’s first fiscal quarter that begins on a date following the date ETFS Capital exercises such redemption right. The redemption value of the Preferred Shares was $88,642 and $72,667 at March 31, 2021 and December 31, 2020, respectively.
The carrying amount of the Preferred Shares was not adjusted as it was not probable that the Preferred Shares would become redeemable.
12. Leases
The Company has entered into operating leases for its corporate headquarters and other office facilities, financial data terminals and equipment. The Company has no finance leases.
The following table provides additional information regarding the Company’s leases:
 
 
  
Three Months Ended March 31,
 
 
  
2021
 
 
2020
 
Lease cost:
  
     
 
     
Operating lease cost
   $ 697      $ 798  
Short-term lease cost
     295        342  
    
 
 
    
 
 
 
Total lease cost
   $ 992      $ 1,140  
    
 
 
    
 
 
 
Other information:
                 
Cash paid for amounts included in the measurement of operating liabilities (operating leases)
   $ 918      $ 926  
    
 
 
    
 
 
 
Right-of-use
assets obtained in exchange for new operating lease liabilities
     n/a        n/a  
    
 
 
    
 
 
 
Weighted-average remaining lease term (in years) – operating leases
     8.9        9.2  
    
 
 
    
 
 
 
Weighted-average discount rate – operating leases
     6.3
%
 
     6.3
%
 
    
 
 
    
 
 
 
None of the Company’s leases include variable payments, residual value guarantees or any restrictions or covenants relating to the Company’s ability to pay dividends or incur additional financing obligations.
The Company’s lease of its headquarters, which expires
in
August 2029, includes an option to extend for an additional five years. Rent payable under the option is equal to the fair market rent of the premises as determined by the landlord approximately six months prior to the commencement of the extension term. The lease also includes a cancellation option which is effective on August 21, 2024 and requires notice to be provided to the landlord at least 12 months prior. Triggering this option requires a cancellation payment of $4,236. The cancellation and extension options were not reasonably certain of being exercised and were therefore not recognized as part of the
right-of-use
asset and lease liability.
Other leases also include extension, automatic renewal and termination provisions. These provisions were also not reasonably certain of being exercised and were therefore not recognized as part of the
right-of-use
asset and lease liability.
During the three months ended March 31, 2021, the Company recognized an impairment charge of $303
resulting from the derecognition of a right-of-use asset upon exiting its London office in February 2021, as well as costs incurred to restore the office space to its original condition. 
The following table discloses future minimum lease payments at March 31, 2021 with respect to the Company’s operating lease liabilities:
 
Remainder of 2021
   $ 2,218  
2022
     2,958  
2023
     2,958  
2024
     3,037  
2025
     3,148  
2026 and thereafter
     11,456  
    
 
 
 
Total future minimum lease payments (undiscounted)
   $ 25,775  
    
 
 
 
 
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The following table reconciles the future minimum lease payments at March 31, 2021 (disclosed above) to the operating lease liabilities recognized in the Company’s Consolidated Balance Sheet:
 
Amounts recognized in the Company’s Consolidated Balance Sheet
        
Lease liability – short term
   $ 2,958  
Lease liability – long term
     17,012  
    
 
 
 
Subtotal
     19,970  
Difference between undiscounted and discounted cash flows
     5,805  
    
 
 
 
Total future minimum lease payments (undiscounted)
   $ 25,775  
    
 
 
 
13. Contingencies
The Company may be subject to reviews, inspections and investigations by regulatory authorities as well as legal proceedings arising in the ordinary course of business.
Closure of the WisdomTree WTI Crude Oil 3x Daily Leveraged ETP
In December 2020, WMAI, WTMAML, WTUK and WisdomTree Ireland Limited were served with a writ of summons to appear before the Court of Milan, Italy, and in January 2021, WTUK was served with a writ of summons to appear before the Court of Udine, Italy. Investors had filed actions seeking approximately €9,000 ($10,565), in the aggregate, resulting from the closure of the WisdomTree WTI Crude Oil 3x Daily Leveraged ETP (“3OIL”) in March 2020. The product was dependent on the receipt of payments from a swap provider to satisfy payment obligations to the investors. Due to an extreme adverse move in oil futures relative to the oil futures’ closing price, the swap contract underlying 3OIL was terminated by the swap provider, which resulted in the compulsory redemption of 3OIL, all in accordance with the prospectus.
The Company is currently assessing these claims and an accrual has not been made with respect to these matters at March 31, 2021 and December 31, 2020.
14. Variable Interest Entities
VIEs are entities with any of the following characteristics: (i) the entity does not have enough equity to finance its activities without additional financial support; (ii) the equity holders, as a group, lack the characteristics of a controlling financial interest; or (iii) the entity is structured with
non-substantive
voting rights.
Consolidation of a VIE is required for the party deemed to be the primary beneficiary, if any. The primary beneficiary is the party who has both (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity. The Company is not the primary beneficiary of the entity in which it has a variable interest as it does not have the power to direct the activities that most significantly impact the entity’s economic performance. Such power is conveyed through the entity’s board of directors and the Company does not have control over the board.
The following table presents information about the Company’s variable interests in
non-consolidated
VIEs:
 
    
March 31,

2021
    
December 31,

2020
 
Carrying Amount – Assets (Securrency)
                 
Preferred stock – Series A Shares
   $ 8,349      $ 8,112  
Preferred stock – Series B Shares
     5,500         
    
 
 
    
 
 
 
Total (Note 7)
   $ 13,849      $ 8,112  
    
 
 
    
 
 
 
Maximum exposure to loss
   $ 13,849      $ 8,112  
    
 
 
    
 
 
 
 
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15. Revenues from Contracts with Customers
The following table presents the Company’s total revenues from contracts with customers:
 
    
Three Months Ended
 
    
March 31,

2021
    
March 31,

2020
 
Revenues from contracts with customers:
                 
Advisory fees
   $ 71,616      $ 62,950  
Other
     1,214        924  
    
 
 
    
 
 
 
Total operating revenues
   $ 72,830      $ 63,874  
    
 
 
    
 
 
 
 
The Company recognizes revenues from contracts with customers when the performance obligation is satisfied, which is when the promised goods or services are transferred to the customer. A good or service is considered to be transferred when the customer obtains control, which is represented by the transfer of rights with regard to the good or service. Transfer of control happens either over time or at a point in time. When a performance obligation is satisfied over time, an entity is required to select a single method of measuring progress for each performance obligation that depicts the entity’s performance in transferring control of goods or services to the customer.
Substantially all the Company’s revenues from contracts with customers are derived primarily from investment advisory agreements with related parties (Note 16). These advisory fees are recognized over time, are earned from the Company’s ETPs and are calculated based on a percentage of the ETPs’ average daily net assets. There is no significant judgment in calculating amounts due which are invoiced monthly in arrears and are not subject to any potential reversal. Progress is measured using the practical expedient under the output method resulting in the recognition of revenue in the amount for which the Company has a right to invoice.
There are no contract assets or liabilities that arise in connection with the recognition of advisory fee revenue. In addition, there are no costs incurred to obtain or fulfill the contracts with customers, all of which are investment advisory agreements with related parties.
Geographic Distribution of Revenue
The following table presents the Company’s total revenues geographically as determined by where the respective management companies reside:
 
    
Three Months Ended
 
    
March 31,

2021
    
March 31,

2020
 
Revenues from contracts with customers:
                 
United States
   $ 40,699      $ 39,870  
Jersey
     29,990        22,525  
Ireland
     2,141        1,114  
Canada (Note 22)
            365  
    
 
 
    
 
 
 
Total operating revenues
   $ 72,830      $ 63,874  
    
 
 
    
 
 
 
16. Related Party Transactions
The Company’s revenue
s
 are derived primarily from investment advisory agreements with related parties. Under these agreements, the Company has licensed to related parties the use of certain of its own indexes for the U.S. WisdomTree ETFs and WisdomTree UCITS ETFs. The Board of Trustees and Board of Directors (including certain officers of the Company) of the related parties are primarily responsible for overseeing the management and affairs of the entities for the benefit of their stakeholders and have contracted with the Company to provide for general management and administration services. The Company is also responsible for certain expenses of the related parties, including the cost of transfer agency, custody, fund administration and accounting, legal, audit, and other
non-distribution
services, excluding extraordinary expenses, taxes and certain other expenses, which is included in fund management and administration on the Company’s Consolidated Statements of Operations. In exchange, the Company receives fees based on a percentage of the ETPs’ average daily net assets. A majority of the independent members of the Board of Trustees are required to annually approve the advisory agreements of the U.S. WisdomTree ETFs and these agreements may be terminated by the Board of Trustees upon notice.
The following table summarizes accounts receivable from related parties which are included as a component of accounts receivable on the Company’s Consolidated Balance Sheets:
 
    
March 31,
2021
    
December 31,
2020
 
Receivable from WTT
   $ 14,347      $ 13,030  
Receivable from ManJer Issuers
     11,134        11,693  
Receivable from WMAI and WTI
     1,777        2,125